Business Structure Tax Advisory for Australian SMEs
At $200k profit, a sole trader pays around $60,138 in tax. A base rate company pays $50,000. That ~$10k gap is the starting point — the real cost is in the strategies the wrong structure shuts down.
Find out which structure saves you the most tax
Choosing the Right Business Tax Structure for Your SME
The best business structure for Australian SMEs changes as revenue grows. Most owners choose their structure when they launched, based on what was simplest. That choice now quietly costs them thousands every year.
Your structure determines how much tax you pay, which concessions you can access, and which strategies are even available to you. The sections below break down exactly how each structure affects your tax at different profit levels, and which ones are probably off the table right now.
Most sole traders started that way because the setup cost nothing and the paperwork was minimal. That made sense at $50k profit. At $200k profit, the same structure costs roughly $10,000 a year more in tax than a base rate company at the same profit — and significantly more once income splitting and retained earnings strategies are factored in. The original decision was correct for the original revenue. The problem is that nothing automatically prompts a review when the numbers stop making sense, so the gap compounds quietly, year after year.
Structure also depends on what comes next. If you plan to retain profits to fund growth, a company holds that capital at 25% rather than your marginal rate. If a spouse or family member sits on a lower bracket, a trust opens up income splitting that a sole trader cannot access. If you are five years from selling, the small business CGT concessions are worth six-figure sums, but only if the entity qualifies. Choosing the wrong structure today is rarely a single visible cost; it is a series of options you didn't know you had being quietly closed off.
Sole Trader vs Company vs Trust: How Each Structure Affects Your Tax
Each structure creates a different tax outcome at the same revenue. Here's how they compare for Australian small business owners.
Business Structure Tax Comparison at $100k, $200k, and $500k Profit
Sole trader vs company vs trust tax outcomes become clearer as profit grows. Here's what each structure costs at three profit levels.
| Benefits | Sole Trader | Company (Pty Ltd) | Trust (distributed) |
|---|---|---|---|
| Tax at $100k profit | $22,788 | $25,000 | Varies by beneficiary |
| Tax at $200k profit | $60,138 | $50,000 | As low as $36,734* |
| Tax at $500k profit | $201,138 | $125,000 | Varies by beneficiary |
| Effective rate at $200k | 30.07% | 25% | 18.4%* |
| Annual compliance cost | $500 - $1,500 | $2,000 - $5,000 | $3,000 - $6,000 |
| Income splitting available | No | Limited (salaries) | Yes (distributions) |
| CGT concession access | Direct | Via shareholder tests | Via beneficiary tests |
| Asset protection | None | Yes (limited liability) | Yes (trustee structure) |
Sole Trader
Company (Pty Ltd)
Trust (distributed)
Based on 2024-25 resident tax rates. Sole trader figures include the 2% Medicare levy. Company figures assume base rate entity status (turnover under $50M, ≤80% passive income); the standard 30% rate applies otherwise. Trust figures (*) assume distribution to a spouse with no other income; actual outcomes depend on beneficiary circumstances. Indicative only — get specific advice for your situation.
You have seen the numbers. Now see yours.
Business Structure Tax Strategies Only Available to the Right Entity
Income splitting: Up to $22,000 saved per year
A trust distributes income to family members on lower marginal rates; a reasonable spouse salary through a company does the same. Sole traders have zero splitting options, every dollar is taxed at their marginal rate. Distributing $100k to a spouse with no other income saves roughly $22,000 versus the top rate. This assumes the distribution is genuinely available to and benefits the spouse — Section 100A and Part IVA both apply where distributions are not aligned with actual circumstances.
Retained earnings: Grow at 25%, not 45%
A company retains profits at 25% rather than distributing them to you at your marginal rate. This is a deferral strategy, not avoidance. It gives you cash flow flexibility and funds growth at a lower tax cost. Sole traders cannot separate business earnings from personal income. Every dollar of profit hits your personal return in the year it is earned.
CGT concessions: Worth hundreds of thousands at exit
The small business CGT concessions can substantially reduce or, where all four concessions apply, eliminate CGT on a sale. Getting the wrong structure today means losing access to concessions worth hundreds of thousands. Your business structure tax advisory relationship catches these risks before they become irreversible.
Not sure if you should change? These three triggers tell you.
Three Signs Your Structure Needs a Review
Taxable profit above $100k for two or more years
This is the crossover point where a company structure becomes more tax efficient than sole trader. Two years above this threshold means you're already overpaying. A tax planning review quantifies the cumulative cost for small business owners at this level and is easily the one they interact with.
Hiring staff or acquiring significant assets
These operational changes increase liability exposure and create new tax planning opportunities a sole trader structure cannot accommodate. Structure becomes both a tax and a risk management decision. If you are bringing in employees or significant equipment, the question is no longer whether to change but when.
Planning to sell or exit within five years
CGT eligibility is structure-dependent. Change too late and you disqualify yourself from concessions worth hundreds of thousands. Restructuring has costs, stamp duty, new compliance obligations, trust transfers. Parkview manages the listed business structuring and ongoing reporting within your existing engagement.
Structure Advice Built Around Your Numbers
Raised at every revenue milestone, not once at setup
Parkview flags structure as a strategic question at every revenue milestone, not just once at setup. Each review is profit-specific, we bring the analysis to you with numbers relevant to your situation.
Modelled on your real P&L and exit timeline
Recommendations are built from your actual profit, your exit timeline, and your goals. We model the structure that's optimal for your situation. If you need to restructure, we will tell you that directly.
No hourly billing, no conflicted advice
Parkview charges a monthly retainer, not hourly fees. That means we benefit from finding planning opportunities, not from billing hours when June arrives.
One team manages the entire transition
A structure change triggers tax planning, compliance transfers, and ongoing reporting. All of it sits within your existing engagement, no separate engagements, no handoffs to other firms.
Find Out What the Right Business Structure Saves You
A specific recommendation modelled on your actual profit, not a generic assessment.
In a focused structure review, Parkview models your tax position under each structure option for your current revenue. The review also covers future scenarios: bringing in partners or investors, retaining profits for growth, and planning your eventual exit.
- Your tax modelled under sole trader, company, and trust
- Dollar cost of staying in your current structure
- Timeline and cost to restructure if the numbers support it
