Shaky ground for business and investment structures

Every client and business is different so there are no magic bullets. However, a common structure being considered is a trading company with the shares held not by a holding (discretionary) trust, but in a holding company. The shares in the holding company are then often then still held in a discretionary trust (for asset protection). This places the profit retention vehicle (Hold Co) between the Trading Co and the ultimate discretionary trust shareholder, thereby allowing for profits to be retained at 25% tax without the prospect of the discretionary trust minimum tax applying.

And what about dividend access shares? Are these being considered in this structure?

Yes, they’re certainly being considered. Prior warnings from the ATO on dividend access shares and Part IVA,  such as TA 2012/4, deal with dividend access shares being issued and used after the accumulation of retained profits; if the structure is set-up with dividend access shares prior to the profits accumulating, the characteristics set-out in TA 2012/4 don’t exist. So some accountants are looking at dividend access shares to various family members at the Holding Co level. 

Is there still a risk with these dividend access shares? What do you think the ATO position will be?

Yes, there could be a risk. I think it likely we could have the ATO releasing a ‘traffic-light’ PCG – Green Zone, Amber Zone, Red Zone etc – on arrangements involving dividend access shares in the future. The other risk I’ve heard spoken of is the ATO potentially arguing that franking credits cannot flow through dividend access shares, depending on the rights attached to these shares and the timing of the payment of dividends compared with when the franking credits arose. It’s a technical argument, yet one that bears consideration.

Can we talk asset protection for Directors in this structure – does this afford the same protection as the prior ‘go-to’ structure of Trading Co, Holding (Discretionary) Trust and Bucket Company?

Technically it does not give the same level of asset protection. This is because Holding Companies can be liable for the debts of their subsidiaries under s588V of the Corporations Act 2001 if the subsidiary was insolvent when it incurred further debt and the director(s) of Hold Co knew, or should have known, about the insolvency position of Sub Co. The Hold Co assets could therefore be at risk in such insolvency scenarios, while profits held in a Bucket Company are not at risk per s588V or an equivalent. 

What about the small business CGT concessions? Do dividend access shares ruin access?

Not necessarily. If the dividend access shares are redeemable, section 152-70(2) ITAA 1997 does not count these for the purposes of the small business participation percentage. So you can still establish the 20% requirement (for significant individual and CGT concession stakeholder) through the ordinary shares (owned by Hold Co and the Discretionary Trust). If the shares are not redeemable then the structure is ineligible for the small business CGT concessions.

What about other share classes that are not dividend access shares?

Ye,s these are being considered. If you have several classes of share issued to other members of the family these can be used to distribute profits from Hold Co as well. However, do you want all members of the family to have shares with voting rights? Or rights to capital on wind-up? Every family and business is different, and all these considerations need to be weighed up. Another variation of this structure is for several family members to hold – separately – the shares in the trading company indirectly. For example, three family members own a third of the shares each in the trading company via their own Hold Co. This ‘nesting’ approach allows for the retention of profits separately and for continued access to the small business CGT concessions. However, from an asset protection point of view, the shares in the Hold Cos can still be at risk for those family members who are Directors of the Trading Company.

Every client now has a structuring question

Bringing AI to help with structuring and restructuring decisions is front of mind for Ian Youngman, Co-founder and Managing Director of Elfworks. For decades, practitioners have relied on hard-won experience in business and investment structuring and tax planning. The 2026 Budget has upended much of it. With that comes a very human pressure: the fear of getting it wrong for a client who is trusting you with their livelihood.

"The 2026 Budget changed decades of stored best-practice approaches and added numerous tasks to an already groaning to-do list for accountants," says Youngman. "That same Budget made us expand the Elfworks platform. We started with tax research and advice drafting. Now it's a platform where the safe harnessing of AI is channelled towards helping public practice accountants navigate the next three to four years."

That navigation cuts both ways, says Youngman. "It's not just about the new client walking through the door asking what structure to use. It's just as much about the client you've had for fifteen years, sitting in an old trading-trust-bucket-company arrangement that made perfect sense before the Budget and now needs a hard second look. Elfworks helps accountants work through both scenarios — deciding on the right structure for a new business or investment from scratch, and methodically assessing whether an existing client's structure still holds up, or needs to be restructured, under the new rules."

Where AI genuinely helps

AI won't replace professional judgement, and it shouldn't. What it can do is take the heavy, repetitive and high-stakes analysis off your desk, so you have more time for the conversations that matter — the ones where a client needs to hear, in plain terms, what the changing landscape means for the business they've spent years building. Whether you're mapping out a brand-new structure for a client's first venture, or working through whether an established Trading Co, Holding Trust and Bucket Company arrangement still stacks up, Elfworks' agentic tools work through the specific facts step by step, apply the relevant legislation and show their working at every stage — so the decision reaching your client is one you can stand behind, and one they can trust.

If you would like a free demonstration of the Elfworks platform, please visit www.elfworks.ai or email This email address is being protected from spambots. You need JavaScript enabled to view it.

For questions around structures and restructuring, please email This email address is being protected from spambots. You need JavaScript enabled to view it.