Buying an established business in Australia means paying for proven cash flow instead of starting from zero, but the price is only part of the deal. The three things that decide whether it is a good buy are due diligence (verifying the numbers and risks), structure (which entity buys it and how it is protected), and tax (stamp duty, GST and how the purchase price is allocated). Get those right before you sign.

Buying a business can be the fastest way to grow, and one of the easiest ways to overpay. You are buying someone else’s history, their contracts, their staff and sometimes their problems. In our experience working with buyers across Melbourne, the deals that go well are the ones where the structure and tax were sorted before the contract was signed, not renegotiated afterwards. Mina Baselyous, a Chartered Tax Advisor (CTA), CPA and Registered Tax Agent, advises buyers on exactly these decisions. This guide walks through due diligence, how to structure the acquisition, and the tax that quietly makes or costs you tens of thousands of dollars.

Asset purchase or share purchase: the first decision

Most small business acquisitions are structured as an asset purchase, where you buy the specific assets (goodwill, plant, stock, contracts) rather than the company that owns them. This lets you leave behind unknown liabilities and start with fresh cost bases. A share purchase, where you buy the company itself, is simpler on paper but carries every past liability with it, so it demands far deeper due diligence.

The choice affects your risk, your tax and your price. In an asset sale you generally step into new, higher cost bases for depreciating assets and can walk away from historical tax, litigation and employee issues. In a share sale you inherit the company’s entire history, including any hidden debts, so buyers usually pay less or demand stronger warranties. Which path suits you depends on the business, the seller’s tax position and how the two sides split the benefit, which is why this is a negotiation to have with your adviser early.

Due diligence: what you actually need to check

Due diligence is the process of verifying that the business is worth what you are paying and does not hide nasty surprises. At a minimum, confirm the reported profit is real and sustainable, that key customers and contracts will transfer, that staff entitlements are accounted for, and that there are no undisclosed tax or legal liabilities. Never rely on the seller’s summary alone.

The financial checks matter most. Look behind the headline profit for owner add backs (personal expenses run through the business, above market or below market owner wages) that change the true earnings. Confirm the figures against tax returns, BAS lodgements and bank statements, not just a spreadsheet. Then work through the non financial risks: lease terms and whether the landlord will assign the lease, customer concentration, supplier contracts, employee leave entitlements you will inherit, and any regulatory licences. As Mina Baselyous (CPA, CTA) says, the deals that hurt are almost always the ones where the buyer trusted the add back schedule without tracing a single number back to a lodged return.

How to structure the acquisition

The entity that buys the business should be chosen before you sign, because changing it later can trigger tax and duty. The right structure protects your other assets, positions you for the most efficient tax outcome, and sets you up for a clean exit down the track. For most established buyers this means a company, a discretionary trust, or a combination, rather than buying in your own name.

Buying in your personal name exposes your home and savings to business risk and usually gives the worst tax result. A well chosen structure separates business risk from personal wealth and can access valuable concessions later: the small business capital gains tax concessions, available where the business has aggregated turnover under $2 million or maximum net asset value under $6 million as at the 2025-26 year (see the ATO small business CGT concessions), can save a future seller hundreds of thousands of dollars. Read our guides on business structures in Australia and company versus trust to see how the options compare.

The tax angle: stamp duty, GST and price allocation

Three tax issues quietly move the real cost of the deal. Stamp duty may apply to the transfer of business assets and varies by state. GST can often be avoided if the sale qualifies as the supply of a going concern. And how the purchase price is allocated across goodwill, plant, and stock changes your future deductions and the seller’s tax, so it is negotiated, not automatic.

The GST going concern exemption is the one buyers most often miss. Where the seller supplies everything necessary for the business to keep operating and both parties agree in writing that it is a going concern, the sale can be GST free under the ATO going concern rules, saving you funding the GST up front. Price allocation is just as important: loading value into depreciating plant gives you faster deductions, while goodwill sits on capital account. These are competing interests between buyer and seller, and the contract should reflect what you agreed. This is core tax planning territory, and getting it wrong is expensive to unwind.

Financing, valuation and the handover

Once the structure and tax are settled, the remaining questions are what to pay and how to fund it. Business valuation is rarely a single number: it is a range built from the sustainable earnings, the multiple a business like this commands, and the risk you are taking on. A sensible buyer also plans the handover so customers, staff and suppliers stay through the transition. Knowing how to value a business is just as important on the buy side as the sell side.

Fund the purchase in a way that keeps the business cash flow healthy rather than starving it from day one, and build a transition plan with the seller (a handover period, introductions to key customers, and vendor finance where appropriate to keep them invested in your success). Ongoing management reporting from the first month tells you quickly whether the business is performing to the numbers you paid for, which is exactly where a Virtual CFO engagement adds value. If you are weighing buying against building, compare it with our guide on starting a business in Australia.

Frequently Asked Questions

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Yes. Your self managed super fund can buy the commercial premises your business trades from, because business real property is a specific exception to the rules that normally stop a fund acquiring assets from its members. The fund then leases the property back to your business at market rent, so the rent you already pay builds wealth inside super instead of enriching a landlord.

For many established business owners, the single biggest lever they never pull is owning their own premises through their SMSF. You already write a rent cheque every month. The question worth asking is who that money should be building wealth for. In our experience working with Melbourne business owners, buying the premises through an SMSF is one of the most powerful long term structuring moves available, and also one of the easiest to get wrong. Mina Baselyous, a Chartered Tax Advisor (CTA), CPA and Registered Tax Agent, has structured these arrangements for trading businesses across a range of industries. This guide explains how the business real property strategy works, the rules that make or break it, and when it is genuinely worth doing.

What is business real property?

Business real property is land and buildings used wholly and exclusively in one or more businesses. It is the one asset class an SMSF is allowed to buy from a related party, including from you or your own company, and lease back to your business. Ordinary residential property cannot be acquired this way, and a property with mixed personal use usually fails the test.

The exception sits in section 66 of the Superannuation Industry (Supervision) Act 1993. It matters because two rules would otherwise block the deal: the ban on acquiring assets from related parties, and the in-house asset rule. A factory, warehouse, office, shop, medical suite or workshop used in your trading business will generally qualify as business real property, provided the use is genuinely business use. A farm can also qualify even where a modest home sits on the land. Read the ATO guidance on restrictions on SMSF investments before you assume a property qualifies.

Why buy your business premises through your SMSF?

The core benefit is that rent leaves your business as a deductible expense and lands inside a superannuation fund, where investment earnings are taxed at just 15 percent and can fall to zero in retirement pension phase. You convert an ongoing cost into a wealth building asset you control, held in the most tax effective structure available to Australians.

The SMSF sector is large and growing: as at the March 2026 quarter there were 672,805 SMSFs holding around $1.06 trillion in assets, according to the ATO SMSF quarterly statistical report. A meaningful slice of that is business real property held by owners doing exactly this. The advantages we see clients value most are:

• Asset protection. The premises sit inside super, quarantined from most trading risk if the business ever strikes trouble.
• Rent stays in the family. Your business pays market rent to your fund, not to an external landlord, so the money compounds toward your retirement.
• Concessional tax on earnings. Net rent is taxed at 15 percent inside the fund, well below most business owners’ marginal rates.
• Capital gains treatment. If the property is sold after 12 months the gain is taxed at an effective 10 percent in accumulation phase, and potentially zero if sold while the fund is fully in pension phase.
• Security of tenure. You are no longer at the mercy of a landlord deciding not to renew your lease.

The rules you cannot ignore

The strategy only works if the arrangement is run strictly at arm’s length. The lease must be on genuine commercial terms, the rent must be at market rate, and it must actually be paid on time, every time. Get this wrong and the ATO can tax the income as non-arm’s length income at 45 percent, which destroys the whole benefit.

Three rules do the heavy lifting. First, the in-house asset rule limits most related party investments to 5 percent of the fund, but business real property leased to your business is specifically excluded from that cap, which is what makes the strategy possible. Second, the lease must be documented and the rent set by reference to comparable market evidence, not a number that suits your cash flow. Third, any income that is not on arm’s length terms is taxed as non-arm’s length income at the top rate. As Mina Baselyous (CPA, CTA) puts it, the mistake we see most is treating the rent as flexible: inside an SMSF, a discounted or unpaid rent is not a favour to your business, it is a compliance breach.

How to fund the purchase: cash or an LRBA

If the fund has enough to buy outright, the purchase is straightforward. If it does not, the fund can borrow using a limited recourse borrowing arrangement, where the property is held in a separate holding trust until the loan is repaid. The lender’s recourse is limited to the property itself, protecting the rest of the fund’s assets.

An LRBA lets a fund with a solid balance and steady contributions acquire premises worth more than its current cash. The mechanics of the holding trust matter and are easy to get wrong, so we have written a separate guide on how the SMSF bare trust and LRBA structure works. A common approach is for members to pool their super into one fund, then use concessional and non concessional contributions to service the loan and build the balance over time. If you have not established a fund yet, start with our guide on how to set up an SMSF in Australia.

The tax angle: rent, deductions and selling the property

The tax outcomes are what make owners lean in. The rent your business pays is a deductible business expense, exactly as it would be to any landlord. Inside the fund that same rent is taxed at only 15 percent, and the eventual capital gain is concessionally taxed, or tax free if the property is sold in pension phase. The result is a legitimate, ATO sanctioned way to shift wealth into the lowest tax environment available.

This is where the strategy connects to the rest of your plan. The premises become a retirement asset that is separate from your trading entity, which supports both asset protection and succession. It also interacts with your broader business structure and, when you eventually exit, with the small business capital gains tax concessions on the business itself. Coordinating the fund, the trading entity and your personal position is exactly the kind of forward planning a Virtual CFO engagement is built around, and where proactive tax planning earns its keep.

Is this strategy right for your business?

The strategy suits established owners with a reasonable super balance, a stable business that will occupy the premises for years, and a genuine intention to hold long term. It is less suitable if your super balance is small, your occupancy needs are uncertain, or you may need the capital back quickly, because super is preserved and cannot simply be withdrawn.

In practice the decision turns on your numbers: the value of the premises, your combined super balances, your business cash flow and how close you are to retirement. It is not a do it yourself exercise. The lease, the valuation, any borrowing and the fund’s investment strategy all have to be right, and the cost of an error is measured in tens of thousands of dollars of unnecessary tax. This is a conversation to have before you sign a contract of sale, not after.

GST and the going concern exemption when your SMSF buys

If your fund is buying a commercial property that is already tenanted, the sale may qualify to be GST free as a supply of a going concern, which avoids having to fund an extra 10 percent at settlement. There is a catch that trips funds up: to claim the concession the fund must be registered, or required to be registered, for GST. A going-concern clause in the contract does not help if the fund is not registered, so the seller then has to charge GST.

A fund leasing commercial property is carrying on a leasing enterprise, so it must register for GST once the rent reaches the $75,000 threshold, and can register voluntarily below it, in the name of the fund itself rather than the corporate trustee. Get this in place before settlement. Our full explainer on the GST going concern exemption and margin scheme on commercial property walks through the conditions in detail.

Frequently Asked Questions

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The electric vehicle FBT exemption lets a business provide an eligible electric car for an employee’s private use without paying fringe benefits tax, which otherwise runs at 47%. To qualify the car must be a battery electric or hydrogen fuel cell vehicle, first held and used on or after 1 July 2022, and priced under the luxury car tax threshold for fuel-efficient vehicles ($91,661 for 2026-27).

Provide a car to yourself or a staff member the ordinary way and fringe benefits tax can add thousands to the cost every year. Do it with an eligible electric vehicle and that FBT can be nil. It is one of the few genuinely generous concessions left for business owners, but the eligibility rules are strict and one of them changed in April 2025. I am Mina Baselyous, a Chartered Tax Advisor (CTA) and CPA, and this guide covers exactly who qualifies, how to use the exemption, and the traps that catch people out.

What the electric vehicle FBT exemption is

Normally, when a business provides a car for an employee’s private use, that private use is a car fringe benefit and the employer pays fringe benefits tax on it at 47%. The electric car exemption removes that FBT entirely for eligible electric cars, including cars provided under a salary packaging or novated lease arrangement (ATO, electric cars exemption). For a business owner who was going to buy a car through the company anyway, that is a substantial saving, which is why the concession has driven so much interest.

Which vehicles qualify

To be exempt, the vehicle must meet every one of the ATO’s conditions. It must be a zero or low emissions vehicle, which since 1 April 2025 means only a battery electric vehicle or a hydrogen fuel cell vehicle. It must be a car designed to carry less than one tonne and fewer than nine passengers, so motorcycles and scooters do not qualify. It must be first held and used on or after 1 July 2022. And luxury car tax must never have been payable on it.

The plug-in hybrid change from 1 April 2025

This is the change that catches people. From 1 April 2025, a plug-in hybrid electric vehicle is no longer treated as a zero or low emissions vehicle and is not eligible for the exemption. There is limited grandfathering: you can keep applying the exemption to a PHEV only if it was used, or available for use, before 1 April 2025 and you have a financially binding commitment to continue providing that private use on and after that date. New PHEV arrangements from April 2025 do not qualify.

The luxury car tax threshold trap

The exemption only applies if luxury car tax has never been payable on the car, which in practice means its value must sit below the LCT threshold for fuel-efficient vehicles at the first retail sale and any later sale. That threshold is $91,387 for 2025-26 and $91,661 for 2026-27 (ATO, luxury car tax thresholds). Go a dollar over when the car is first sold and LCT applies, which permanently disqualifies the car from the FBT exemption, even for a later owner. Checking the price against the current threshold before you buy is essential.

How business owners actually use it

There are two common ways owners access the exemption. The first is a company-owned or company-financed electric car provided for private use. The second is salary packaging or a novated lease, where an employee (which can include a working director) sacrifices salary to fund an eligible EV and the private use is FBT-exempt. Either way, the associated running costs are also exempt: registration, insurance, repairs and maintenance, and the cost of electricity or fuel to charge and run the car are all covered.

One nuance on charging. A home charging station is not treated as an exempt car expense, though it may be a separate property or expense payment fringe benefit. To value home charging electricity, the ATO allows a shortcut rate under PCG 2024/2 (5.47 cents per kilometre for the 2026-27 FBT year), provided you keep the records to support it. This is exactly the kind of detail we build into a client’s tax planning so the saving is captured cleanly.

The reportable fringe benefit catch

Exempt from FBT does not mean invisible. The private use of an eligible electric car is still a reportable fringe benefit, so you must work out its notional taxable value and, where the threshold is met, report it on the employee’s income statement. A reportable fringe benefits amount does not attract income tax directly, but it can affect income-tested measures such as the Medicare levy surcharge, private health rebate, family assistance and certain repayment obligations. In our experience this is the part owners most often forget.

In practice, says Mina Baselyous (CPA, CTA, Registered Tax Agent), the exemption is genuinely valuable, but it is not a free-for-all. Get the vehicle type wrong, cross the luxury car tax threshold, or ignore the reporting, and the saving unravels. Done properly, it is one of the cleanest ways to fund a car through a business right now.

Caveats and what is coming

The exemption is current, but the government has said it will complete a review of the electric car FBT exemption by mid-2027 to consider electric car take-up, so the settings could change for future purchases. That is a reason to act on a genuine need now rather than assume the concession will look the same indefinitely, and a reason to lock in eligibility correctly from day one. Keep evidence of the purchase price, the first held-and-used date, and your charging records. This sits alongside the wider fringe benefits tax rules every employer should understand, and our guide to minimising fringe benefits tax covers the other levers. If you also use vehicles in the business more broadly, see how to claim motor vehicle expenses.

Frequently Asked Questions

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Section 100A is an anti-avoidance rule that lets the ATO cancel a family trust distribution where the beneficiary’s entitlement is really part of a reimbursement agreement, meaning someone else gets the benefit and tax is reduced. If it applies, the trustee is taxed on that income at the top marginal rate of 47%, and there is no time limit on the ATO amending.

This guide is part of our complete guide to trusts in Australia.

If you run your business through a family trust, Section 100A is the single most important integrity rule to understand right now. Since the ATO finalised its guidance in December 2022, distributions that families treated as routine for years are being tested against a much sharper standard. I am Mina Baselyous, a Chartered Tax Advisor (CTA) and CPA, and in our work with trust clients this is the area where good documentation and a clear commercial rationale separate a safe arrangement from an expensive one. This article explains what Section 100A catches, how the ATO’s risk zones work, and what to do about it.

What Section 100A is, and why the ATO cares now

Section 100A of the Income Tax Assessment Act 1936 is a long-standing anti-avoidance provision aimed at “reimbursement agreements”, where a beneficiary is made presently entitled to trust income but the real benefit of that income flows to someone else, usually someone on a lower tax rate. It sat quietly for decades. In December 2022 the ATO finalised Taxation Ruling TR 2022/4 and Practical Compliance Guideline PCG 2022/2, setting out its view of the law and how it will apply compliance resources (ATO, trust taxation reimbursement agreement). That guidance is why every trust distribution now needs to stand up to scrutiny.

What actually counts as a reimbursement agreement

Section 100A applies when four things are present: a beneficiary is made presently entitled to trust income; that entitlement arises out of an agreement; the agreement provides for a benefit to be given to someone other than that beneficiary; and a purpose of the agreement is that someone pays less tax. If all four are met and no exception applies, the distribution is a reimbursement agreement.

The classic pattern is an adult child on a low income being made entitled to trust income, but the cash never reaching them: it is paid to the parents, gifted back, lent back, or simply kept in the business. The child is taxed at a low rate on paper while the family enjoys the money. That mismatch between who is taxed and who benefits is exactly what Section 100A targets.

The consequence: trustee taxed at 47%, with no time limit

Where Section 100A applies, the beneficiary’s present entitlement is disregarded for tax purposes and the trustee is assessed on that share of the net income at the top marginal rate of 47%, including the Medicare levy (2025-26, per the ATO individual income tax rates). Worse, Section 100A carries no statutory time limit, so the ATO is not restricted to the usual two or four year amendment periods; it can look back many years. A distribution made in good faith years ago can still be reopened.

The ATO risk zones: green versus red

PCG 2022/2 sorts arrangements into risk zones. A white zone covers arrangements entered into before 1 July 2014 that the ATO will not review. The green (low risk) zone covers common, straightforward arrangements the ATO will not dedicate compliance resources to, for example distributing to an adult beneficiary who actually receives and keeps the money, or retaining funds that are genuinely applied for that beneficiary. The red (high risk) zone flags arrangements that attract attention, such as circular distributions and gift-back or loan-back schemes designed mainly to lower tax.

Being in the green zone does not mean Section 100A cannot apply; it means the ATO is unlikely to review you. Being in the red zone does not automatically mean you have breached the law, but you should expect scrutiny and be ready to defend the arrangement. Knowing which zone each distribution falls into is the practical starting point.

Safe arrangements versus risky arrangements

The safest distributions are the simplest: the beneficiary is entitled to the income, actually receives it, and uses it as they choose. Distributions to a spouse or adult child who genuinely gets the money, and retention of profits in a corporate beneficiary (a bucket company) that keeps the funds, are typically low risk. The risky arrangements are the ones where the money loops back: the beneficiary’s entitlement is gifted or lent back to the parents or trust, the entitlement is never paid, or the cash follows a circular path so that the person taxed and the person benefiting are different.

In practice, says Mina Baselyous (CPA, CTA, Registered Tax Agent), the mistake we see most is families distributing to adult children on paper while the funds are quietly kept in the business, with no loan agreement, no repayment, and no commercial reason. That is the pattern the ATO built Section 100A guidance around. Where a family trust needs to retain profits, a family trust and bucket company structure is usually a cleaner answer than an unpaid entitlement to an individual.

The “ordinary family or commercial dealing” exception

Section 100A does not apply to an agreement entered into in the course of ordinary family or commercial dealing. This is the exception most families rely on, but it is narrower than it sounds. A dealing is not “ordinary” just because it happens within a family; the ATO looks at whether the arrangement, viewed as a whole, is the kind of thing families genuinely do for real reasons, rather than a contrived series of steps whose main point is to shift tax. Good trust distribution minutes and a clear, contemporaneous commercial rationale are what make this exception available.

What business owners with family trusts should do now

Review how your trust has distributed over recent years and ask, for each beneficiary, whether they actually received and kept the benefit. Where entitlements were left unpaid, understand why and document a genuine reason or pay them. Put your distribution resolutions in place before 30 June each year, keep proper minutes, and make sure any loans or retained funds have real agreements behind them. Most importantly, plan distributions before the year ends, not in a scramble afterwards. Our guides to trust distribution strategies and family trust distributions set out how to do this well, and ongoing tax planning keeps it on track.

Frequently Asked Questions

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To sell your business in Australia tax-effectively, plan the exit years ahead: get the structure right, qualify for the CGT small business concessions (the $2 million turnover or $6 million net asset value tests), time the sale to use the 12-month CGT discount, and decide early whether you are selling to a third party or handing over through succession. If you are on the other side of the deal, see our guide to buying a business in Australia. Before you sell, it helps to understand how to value a business and what drives the number.

Most owners think about selling their business the year they want out. By then, the biggest tax savings are already off the table. The difference between a well-planned exit and a rushed one is routinely hundreds of thousands of dollars, and often the difference between a clean sale and a deal that falls over in due diligence. I am Mina Baselyous, a Chartered Tax Advisor (CTA) and CPA, and at Pinnacle Accounting & Advisory we treat an exit as a multi-year project, not a transaction. This is the pillar guide that pulls the pieces together; each section links to the deeper article on that lever.

Why exit planning starts years before the sale

The most valuable exit levers need time to work. The CGT 15-year exemption requires continuous ownership for at least 15 years. A restructure into a more sale-ready entity should be done well before a buyer is at the table. A business that depends entirely on the owner is worth less than one that runs without them, and reducing that dependence takes years. In our experience, owners who start three to five years out consistently keep more of the sale price than those who start three months out.

In practice, says Mina Baselyous (CPA, CTA, Registered Tax Agent), the exits that go well are the ones where the tax planning, the structure and the sale readiness were all set up long before the business was on the market. You cannot retrofit 15 years of ownership or clean up five years of messy books in the weeks before settlement.

Get the structure right before you sell

Your business structure decides how a sale is taxed and whether you can access the concessions at all. A sale can be structured as an asset sale (the business sells its assets and goodwill) or a share or unit sale (you sell your interest in the entity). Buyers usually prefer asset sales; sellers often prefer share sales; the tax outcomes differ significantly, and the right answer depends on your structure and the concessions you can reach.

If your current structure is not sale-ready, the small business restructure rollover can let you move to a better structure without triggering an immediate tax bill, provided you meet the conditions. This is exactly why we review structure early: choosing between a company, a trust or a combination is far easier before a buyer exists. Our guide to business structures in Australia covers the trade-offs in detail.

The CGT small business concessions: the biggest lever

The small business CGT concessions are the most powerful tax tool available when you sell. To access any of them you must first meet the basic conditions: you satisfy either the aggregated turnover test of under $2 million or the maximum net asset value test of $6 million or less, and the asset being sold passes the active asset test (ATO, small business CGT concessions eligibility, current as at the 2025-26 year). Where you sell shares or units, additional conditions apply. Our full guide to the CGT small business concessions works through the eligibility maze.

The 15-year exemption

If you have continuously owned the asset for at least 15 years, are aged 55 or over, and are selling in connection with your retirement (or are permanently incapacitated), the entire capital gain can be disregarded. This is the gold standard: a zero-tax exit. You can also contribute the proceeds to super under a special CGT cap. See our detailed walkthrough of the CGT 15-year exemption.

The 50% active asset reduction

If the 15-year exemption does not apply, the active asset reduction cuts the remaining gain in half. Stacked on top of the general 50% CGT discount for assets held over 12 months, an individual can be left paying tax on as little as 25% of the original gain before other concessions are applied.

The retirement exemption

The retirement exemption lets you disregard up to $500,000 of capital gain in your lifetime. You do not have to actually retire to use it, but if you are under 55 the exempt amount must be paid into super. Our guide to the CGT retirement exemption explains how it combines with the other concessions.

The rollover

The small business rollover lets you defer a capital gain by acquiring a replacement active asset within two years. It suits owners who are selling one business but reinvesting into another rather than fully cashing out.

Timing your sale

Timing changes the tax bill. Holding an asset for at least 12 months before sale unlocks the general 50% CGT discount for individuals and trusts (ATO, CGT discount). The income year in which you sell matters too: settling in a year of otherwise lower income, or spreading proceeds and earn-out payments across years, can keep more of the gain in lower brackets. Our explainer on the 50% CGT discount rule covers the holding-period trap that catches owners who sell too soon.

Succession versus a third-party sale

Not every exit is a sale to an outside buyer. The right path depends on who you want to take over and how much you need to extract from the business. The main options are a trade sale to a competitor or investor, a management buyout by your existing team, a family succession to the next generation, or a gradual transition where you sell down over time. Each has different tax, structuring and funding implications, and family successions in particular need careful handling to be fair to family members and defensible to the ATO.

Whichever path you choose, the concessions and structuring above still apply. A management buyout or family succession is still a CGT event, and getting the timing and eligibility right matters just as much as it does for a trade sale. Understanding how capital gains tax works for business owners is the foundation for all of it.

Getting sale-ready: due diligence starts with your books

Buyers pay more for a business they can trust, and they discount hard for anything that looks messy. Clean, accurate financial records over several years, documented systems and processes, contracts and leases in order, and a business that is not wholly dependent on the owner all lift the price and speed up due diligence. This is where proactive business advisory in Melbourne pays for itself: the same clean numbers and management reporting that run a better business also survive a buyer’s scrutiny. Ongoing tax planning in the years before sale keeps the structure and the numbers exit-ready.

Common mistakes we see

• Leaving it too late. Starting the year of sale forfeits the levers that need lead time, especially the 15-year exemption and any restructure.
• Assuming the concessions are automatic. The basic conditions, active asset test and (for shares) the extra conditions are technical and easy to fail without planning.
• Ignoring the net asset value test creep. Growth can push you over the $6 million threshold; timing and structure matter.
• Messy books. Buyers discount uncertainty, and poor records can sink a deal in due diligence.
• Forgetting super and family. Contributing exempt proceeds to super and planning succession fairly are part of a good exit, not afterthoughts.

Frequently Asked Questions

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Division 296 is now law. From 1 July 2026, if your total superannuation balance exceeds $3 million on 30 June, you pay an extra 15% on the proportion of your fund’s realised earnings above that threshold, taking the effective rate to about 30%. A second tier adds 25% (about 40% effective) on earnings above $10 million.

Want a quick estimate first? Try our Division 296 tax calculator to see the additional tax on the earnings of your super balance above $3 million.

For years the $3 million super tax was a proposal that might never happen. It has happened. The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 received royal assent on 13 March 2026 and applies from the 2026-27 financial year, with the first test taken on 30 June 2027 (ATO, Better targeted superannuation concessions). If you are a business owner who has spent a decade building super, or an SMSF trustee holding a factory, a commercial premises or your business’s operating property inside the fund, this is now a live planning issue, not a headline. This article is the action-focused companion to our general Division 296 explainer: it is written for owners and trustees who need to know what to actually do before 30 June 2027. I am Mina Baselyous, a Chartered Tax Advisor (CTA) and CPA, and at Pinnacle Accounting & Advisory we are already restructuring client positions in response to this law.

What Division 296 is now that it is law

Division 296 is an additional tax on the earnings attributable to the part of your total superannuation balance (TSB) that sits above $3 million. It does not replace the tax your fund already pays; it stacks on top. The concessional environment inside super still applies to your first $3 million. Above that, the concession is wound back. The law received royal assent on 13 March 2026 and takes effect for 2026-27 and later years.

Two features matter for planning. First, the tax is levied on the individual, not the fund, and it is assessed on your TSB across all your super accounts combined, not fund by fund. Second, after a long and contested consultation, the final law taxes actual realised earnings, not the unrealised paper gains that dominated the original 2023 proposal. In our experience that single change transforms how a well-advised trustee should hold assets inside super.

Who actually gets caught

You are caught if your total superannuation balance exceeds $3 million on 30 June of the relevant year. The threshold (called the large super balance threshold) is set at $3 million for 2026-27 and is indexed to CPI in $150,000 increments; the second threshold is $10 million, indexed in $500,000 increments. Crucially, this is a rising tide: balances comfortably under $3 million today can cross it through contributions and growth.

The two groups we see most exposed are established business owners who have maximised super for years and now sit near or above $3 million, and SMSF trustees holding lumpy, illiquid assets. If your self-managed fund owns your business premises, a commercial property, or the land your operation runs from, a single revaluation or a sale can push your TSB well past the threshold in one year. The people who feel this hardest are not the ultra-wealthy; they are ordinary owners whose largest asset happens to sit inside a fund.

How the tax is calculated: a worked example

Division 296 uses a proportion method. You do not pay the extra tax on all your earnings, only on the slice attributable to the balance above the threshold. The formula is the additional rate multiplied by the proportion of your TSB above $3 million, multiplied by your realised earnings for the year.

Take Megan, aged 58, with a TSB of $4.5 million on 30 June 2027 and $500,000 of realised earnings in 2026-27. The proportion of her balance above $3 million is ($4.5m minus $3m) divided by $4.5m, which is 33.33%. Her Division 296 tax is 15% multiplied by 33.33% multiplied by $500,000, which equals $25,000. That $25,000 is on top of the tax her fund already paid on those earnings, and she can choose to pay it personally or release it from super.

The $10 million tier and the real effective rates

Above $10 million, a second tier applies. Earnings attributable to the proportion of your TSB between $3 million and $10 million carry an additional 15% (roughly 30% effective once the fund’s own tax is counted), while earnings attributable to the proportion above $10 million carry an additional 25% (roughly 40% effective). The design is graduated, so only the slice of earnings tied to the highest band pays the top rate.

Thirty to forty per cent is still competitive against the top personal marginal rate of 47% (including Medicare levy, 2025-26, per the ATO individual income tax rates). That is the point most commentary misses: Division 296 narrows the super advantage, it does not erase it. Whether super remains the right home for a given dollar becomes a genuine calculation rather than an automatic yes.

Why SMSF trustees with property or illiquid assets must act first

The liquidity trap is the biggest practical risk for SMSFs. Division 296 tax is assessed personally, but you can elect to release the amount from your fund. If your SMSF’s main asset is a building, there may be no cash to release, and a tax bill triggered by a paper revaluation followed by an eventual sale can force an awkward decision at the worst time. Because the final law taxes realised earnings, the timing of when you crystallise gains inside the fund is now something you control and should plan.

In practice, says Mina Baselyous (CPA, CTA, Registered Tax Agent), the mistake we see most is trustees treating a large SMSF property as set-and-forget. Under Division 296 the questions become: when will this asset be revalued, when might it be sold, and does the fund hold enough liquidity to fund a resulting liability without a fire sale. Those questions should be answered now, not in the year of sale.

Planning responses before 30 June 2027

There is no single fix, and anyone promising one should be treated with caution. What works is a considered mix, chosen for your circumstances, put in place before the first test date. These are the levers we work through with clients.

• Reconsider whether super is still the right destination. If you are near $3 million, additional concessional and non-concessional contributions may now push more of your earnings into the Division 296 zone. For some owners, directing surplus profit into a bucket company capped at the 30% corporate rate, or into investments held personally or in a family trust, is more efficient than adding to a balance already above the threshold.
• Review structure across the household. Two members with $2.5 million each are outside Division 296; one member with $5 million is inside it. Contribution splitting and evening balances between spouses over time is a legitimate, long-game response.
• Plan the timing of realised gains. Because only realised earnings count, when you sell or crystallise assets inside the fund now matters. Spreading disposals across years, or timing them against years of lower TSB, can materially change the bill.
• Fix the liquidity gap. SMSFs holding property should model the worst-case liability and ensure the fund, or the members, can meet it without being forced to sell.
• Get valuations right. Since the balance on 30 June drives everything, defensible, well-timed asset valuations are no longer a compliance afterthought; they are a planning tool.

These interact with your wider structure, which is why we look at Division 296 alongside your trading entity, your year-round tax planning and your broader superannuation strategy rather than in isolation.

What business owners should do now

First, calculate your real total superannuation balance across every account and project it forward three to five years including likely contributions and growth. Second, if an SMSF holds property or other illiquid assets, model a revaluation and a sale and check the fund’s liquidity. Third, decide, deliberately, where each future dollar of surplus should live: super, a company, a trust, or personally. None of this needs panic, but all of it needs a plan before 30 June 2027, because the levers that work best are the ones set up early.

Frequently Asked Questions

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A trust is a legal arrangement where a trustee holds and manages assets for the benefit of beneficiaries. In Australia, business owners use trusts, most commonly a discretionary (family) trust, to distribute income tax-effectively across a family group, protect assets from creditors, and plan succession. Set up and managed correctly, a trust remains one of the most powerful structures available for lowering tax legally.

If you are a business owner thinking about protecting your wealth and minimising tax, you have almost certainly heard the word “trust”. But there is not just one type of trust, and the way you set it up, who you appoint as trustee, and how you handle distributions each year make an enormous difference to your tax position and asset protection. This is the pillar guide to trusts in Australia. It explains every main type of trust, how bucket companies fit in, how distributions and Section 100A work, the proposed 30% trust tax, capital gains tax inside trusts, and how trusts protect assets. It also links to every detailed guide in the series.

Mina Baselyous (CPA and Chartered Tax Advisor, Registered Tax Agent) has structured trusts for Melbourne business owners for years, and Pinnacle Accounting & Advisory holds 81 five-star Google reviews. In our experience working with clients, the difference between a trust that saves tax and one that creates ATO risk is almost always in how it is managed year to year, not in the deed itself.

What Is a Trust in Australia?

A trust is a legal relationship where one person or entity, the trustee, holds and manages assets on behalf of others, the beneficiaries. A trust is not a separate legal entity in the way a company is; the trustee is the legal owner of the assets but holds them for the benefit of the beneficiaries under the terms of a trust deed.

Trusts are used in Australia for holding business assets and distributing income tax-effectively, protecting assets from creditors or personal liability, estate planning and succession, holding investments on behalf of family members, and separating the ownership of assets from those who control them. The trust deed sets out the rules, the beneficiaries, and the powers of the trustee. Getting the deed right from the start is critical, because changing it later can trigger stamp duty and other tax consequences.

The Main Types of Trusts in Australia

There are several types of trust, and the right one depends on your goals. Discretionary trusts suit family businesses and wealth building, unit trusts suit joint ventures with defined ownership, and testamentary trusts are an estate planning tool. Here is an overview of the structures most commonly used by business owners and investors in Australia.

1. Discretionary Trust (Family Trust)

A discretionary trust, also known as a family trust, is by far the most common trust structure used by small and medium business owners in Australia. The defining feature is that the trustee has full discretion over how trust income and capital is distributed among beneficiaries each year. Once the family has absorbed as much income as it can at low rates, the usual next step is a corporate beneficiary, which we cover in our complete guide to bucket companies. For an honest look at what a family trust does and does not deliver, see our guide to family trust benefits and the traps that come with them.

This flexibility is what makes discretionary trusts so powerful for tax planning. Each financial year the trustee can decide who receives income and in what amounts. If your spouse is on a lower income, they can receive a larger share. If you have adult children on lower tax rates, they can receive distributions too. This allows the family group to manage its overall tax bill in the most effective way possible.

Key features of a discretionary (family) trust:

• The trustee decides who receives income each year; beneficiaries have no fixed entitlement
• Beneficiaries are typically defined broadly (the named individual, their spouse, their children, and related entities)
• The trust can distribute to any eligible beneficiary in any proportion
• A family trust election can be made to access losses and franking credits, which restricts the family group for those purposes
• Income is generally taxed at each beneficiary’s marginal rate, making income splitting highly effective

Best for: Family groups and business owners wanting flexibility in tax planning, asset protection and long-term succession. The discretionary trust is the cornerstone of most business structuring strategies we implement at Pinnacle, and the detailed trust distribution strategies you use each year are what unlock the savings.

2. Unit Trust

A unit trust is a trust where the beneficial interest is divided into fixed units, similar to shares in a company. Each beneficiary holds a set number of units, and distributions are made proportionally based on those holdings. Unlike a discretionary trust, the trustee has no discretion over who receives what; distributions are fixed by unit ownership.

Unit trusts are commonly used in joint venture arrangements, investment structures, and commercial situations where multiple unrelated parties want a clear, documented stake in an asset or business.

• Fixed entitlements; each unitholder receives income in proportion to their units
• Units can be bought, sold or transferred subject to the trust deed
• Clear ownership structure, ideal when parties want defined interests
• Less flexible for tax planning than a discretionary trust
• More transparent and predictable, better suited to commercial arrangements between unrelated parties

Best for: Joint ventures, property investment syndications, and commercial arrangements where defined ownership interests are required.

3. Testamentary Trust

A testamentary trust is a trust created under a deceased person’s will; it comes into existence only upon death. The terms are set out in the will itself, and the trust holds assets from the deceased estate for the benefit of named beneficiaries such as a surviving spouse or minor children.

Testamentary trusts offer significant tax advantages, particularly when assets are held for minor children. Income distributed to children from a testamentary trust is taxed at adult marginal rates, not the punitive rates that normally apply to a minor’s unearned income, making them a highly effective estate planning tool. See our detailed guide to testamentary trusts in Australia.

Best for: Estate planning, particularly families with minor children or beneficiaries who need long-term asset protection.

4. Hybrid Trust

A hybrid trust combines elements of both a discretionary trust and a unit trust. It typically has two classes of beneficiaries: unit holders with fixed entitlements, and discretionary beneficiaries who receive distributions at the trustee’s discretion. Hybrid trusts were popular for several years as a way to claim deductions on funds borrowed to acquire trust units. However, the ATO has scrutinised these arrangements closely and many hybrid trust strategies have attracted adverse rulings. Specialist tax advice is essential before proceeding with a hybrid trust.

5. Fixed Trust

A fixed trust is one where the beneficial interests of each beneficiary are fixed and cannot be varied by the trustee. All beneficiaries have a defined, non-discretionary entitlement to income and capital. Fixed trusts are less common in small business contexts but appear frequently in managed investment schemes and property funds. They are also proposed to be excluded from the new 30% minimum trust tax discussed below.

6. Special Disability Trust

A special disability trust (SDT) is designed to hold assets for the benefit of a person with a severe disability. The ATO and Services Australia recognise SDTs and provide concessional treatment in means testing for government benefits. Contributions to an SDT may also attract gift and assets test concessions. This structure suits families with a member who has a severe disability who want to plan for long-term care and financial security.

Discretionary Trust vs Unit Trust: Key Differences

The two structures most commonly used by business owners are the discretionary trust and the unit trust. Here is how they compare.

Feature	Discretionary Trust	Unit Trust
Income distribution	At trustee’s discretion each year	Fixed by unit holdings
Tax flexibility	High, income split across beneficiaries	Low, distributions are proportional
Ownership clarity	No fixed interests, beneficiaries form a class	Clear, units define ownership percentage
Best use case	Family business, wealth building, tax planning	Joint ventures, commercial arrangements
Asset protection	Strong, creditors cannot attach a discretionary interest	Moderate, unit interests may be attachable

Bucket Companies: Capping Trust Tax at the Company Rate

A bucket company is a company set up to receive distributions from a family trust, so that income the trust cannot distribute tax-effectively to individuals is taxed at the company rate of 25% or 30% rather than a top marginal rate of 47%. It is one of the most common and effective tools paired with a discretionary trust for established business owners.

The reason bucket companies exist is a hard rule of trust taxation: a trust does not retain earnings at a low rate. All trust income must be distributed each year, or the trustee is taxed on the undistributed amount at 47%. Once the family members with low marginal rates have received sensible distributions, a bucket company can catch the surplus at the company rate. The retained funds inside the bucket company can then be used for investment or reinvested into the business. A holding company can sit above the structure to hold valuable assets away from trading risk.

Where the trust does not actually pay the cash across, the unpaid amount becomes an unpaid present entitlement. The Division 7A treatment of that entitlement changed in 2026. In Commissioner of Taxation v Bendel [2026] HCA 18, decided 10 June 2026, the High Court held that a private company which simply does nothing about its entitlement does not provide financial accommodation under section 109D(3)(b), so the entitlement is not a loan and no deemed dividend arises from it. The ATO accepted that outcome in its Bendel Decision Impact Statement, published 26 June 2026.

That does not remove the need for active management. As at September 2026, Subdivision EA can still deem a dividend where the trust pays, lends to, or forgives a debt of a shareholder of the bucket company or their associate while the entitlement is outstanding. Section 100A still applies to reimbursement agreements. And an entitlement already converted into a complying section 109N loan remains a loan that must keep being serviced. This is exactly the kind of detail that needs attention each year, which is why we treat a trust and bucket company structure as an annual advisory job, not a set-and-forget arrangement.

Trust Distributions and Section 100A

Trust distributions are the annual decisions the trustee makes about who receives the trust’s income. To be effective, they must be resolved and documented before 30 June each year; if they are not, the trustee is taxed on the income at 47%. Getting the resolution right, and making sure the distribution is genuine, is the single most important annual task for any family trust.

Two things matter here. First, the paperwork: the trustee resolution and the supporting trust distribution minutes must be in place by 30 June. Second, the substance: the ATO uses Section 100A to attack “reimbursement agreements”, where income is distributed on paper to a low-tax beneficiary but the real benefit flows back to someone else. Since the ATO finalised its guidance, this is one of the highest-risk areas in trust taxation, and the Bendel decision made it more important still, because section 100A and Subdivision EA are now the main integrity rules operating on unpaid entitlements. Our guide to Section 100A and trust reimbursement agreements explains what is safe and what is not, and the trust distribution strategies guide shows how to distribute correctly.

In practice, says Mina Baselyous (CPA, CTA), the mistake we see most is a trust that distributes to adult children who never actually receive the money. That is precisely the pattern Section 100A targets, and it is entirely avoidable with the right approach.

The Proposed 30% Minimum Tax on Discretionary Trusts

In the 2026-27 Federal Budget, announced on 12 May 2026, the Government proposed a 30% minimum tax on the taxable income of discretionary trusts from 1 July 2028. It is not yet law. If enacted, trustees would pay at least 30% on trust income, with beneficiaries other than corporate beneficiaries receiving non-refundable credits for the tax paid by the trustee.

The proposal is significant because it would limit the benefit of distributing income to family members on low marginal rates, which is the core advantage of a discretionary trust today. The measure is proposed to exclude fixed trusts, widely held trusts, complying superannuation funds, charitable trusts, special disability trusts and deceased estates, and it would come with a time-limited three-year restructure rollover to move assets out of discretionary trusts. Our guide to the proposed 30% family trust tax explains who it really affects. You can also read the ATO summary of the proposed minimum tax on discretionary trusts. Because it is still a proposal, the right response is not to panic or unwind a trust, but to have your structure reviewed so you are ready whichever way the legislation lands.

Capital Gains Tax Inside a Trust

Trusts can access the same capital gains tax concessions as individuals, and this is one of their biggest long-term advantages. When a trust sells an asset it has held for more than 12 months, the capital gain can be distributed to individual beneficiaries who then apply the 50% CGT discount on their share. Companies do not get the 50% discount, which is a key reason many owners hold appreciating assets in a trust rather than a company.

Trusts can also access the small business CGT concessions, which can dramatically reduce or eliminate the tax on the sale of an active business asset. Depending on your circumstances, these include the 15-year exemption, the 50% active asset reduction, the retirement exemption and the rollover. When a business is eventually sold, the interaction between the trust, the concessions such as the CGT 15-year exemption and the CGT retirement exemption, and superannuation contributions is where the largest tax savings are found, and where careful advance planning matters most.

Asset Protection: What a Trust Does and Does Not Do

A properly structured discretionary trust provides strong asset protection because no beneficiary has a fixed entitlement to trust assets. If a beneficiary is sued or becomes bankrupt, their creditors generally cannot reach assets held in the trust, because the beneficiary only has a right to be considered for a distribution, not an owned interest. This is a major reason business owners hold the family home, investments and business goodwill outside their personal names.

Protection is not absolute. It depends on who controls the trust, how and when assets were transferred in (transfers made to defeat known creditors can be clawed back), and whether a corporate trustee is used. We strongly recommend a corporate trustee rather than an individual, because it provides continuity, cleaner separation, and better liability protection. For businesses that borrow inside super to buy property, a specific kind of trust applies, explained in our guide to the SMSF bare trust used in limited recourse borrowing.

Which Type of Trust Is Right for Your Business?

The right structure depends on your goals, the nature of your business, and who else is involved. Here are some common scenarios:

You are a business owner wanting tax flexibility and asset protection. A discretionary (family) trust is almost always the starting point. It gives you maximum flexibility over distributions and strong protection for business assets. For a direct comparison with incorporating, see our company vs trust guide.

You are entering a joint venture or commercial partnership. A unit trust is typically more appropriate. Each party has a clearly defined interest, which avoids disputes over entitlements down the track.

You are planning your estate. A testamentary trust should be considered as part of your will, especially with minor children or complex family circumstances.

You hold investment property with business partners. A unit trust often suits better than a company, particularly where you want to pass through the 50% CGT discount to individual unitholders subject to the trust loss rules.

In many cases business owners operate more than one trust at once, for example a discretionary trust for business income alongside a unit trust for investment property held with a partner. Your structure should be designed with your complete picture in mind, not in isolation. Trusts also sit within the broader question of which entity to trade through, covered in our complete guide to business structures in Australia.

How to Set Up a Trust in Australia

Setting up a trust in Australia involves several key steps:

1. Decide on the trust type based on your goals, choosing the most appropriate structure
2. Appoint a trustee, either an individual or a corporate trustee. We strongly recommend a corporate trustee for most business trusts for better protection and continuity
3. Prepare the trust deed, drafted by a solicitor, setting out the rules, beneficiaries, trustee powers and distribution provisions
4. Pay stamp duty where applicable; some states charge stamp duty on trust establishment and requirements vary by state
5. Apply for a Tax File Number and ABN; the trust must have its own TFN, and an ABN is required if the trust carries on an enterprise
6. Open a trust bank account; all trust transactions must flow through a separate account in the trustee’s name as trustee for the trust
7. Register for GST if required, which applies once trust turnover exceeds $75,000

As a rough guide, expect $1,500 to $3,000 or more to set up a properly structured discretionary or unit trust including the deed, trustee company and associated registrations. At Pinnacle, we coordinate the full setup process for our clients, from choosing the right structure through to ensuring everything is lodged, operational and integrated into your broader tax strategy. Our business structuring services page explains how. For the ATO’s own overview, see the ATO’s guidance on trusts.

Explore the Trusts Series

This guide is the hub for our trust content. Use these detailed guides to go deeper on the topic you need right now:

• Trust distribution strategies: how to minimise tax with a family trust
• Section 100A and trust reimbursement agreements explained
• Trust distribution minutes: why they matter
• The proposed 30% family trust minimum tax
• Family trust election and interposed entity election
• Corporate trustee vs individual trustee
• What is a testamentary trust
• Does a family trust need to register for GST on residential rent
• SMSF bare trust and limited recourse borrowing
• Buying an investment property in a trust: tax, land tax and asset protection
• Company vs trust: which structure is right
• What is a holding company and do you need one

Frequently Asked Questions

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Most business owners do not fire their accountant. They just quietly grow past them. The accountant who was perfect when you were a sole trader with a shoebox of receipts is often the wrong fit once you have staff, multiple entities, and real decisions to make. The relationship does not fail loudly, it just stops keeping up.

This guide, written by Mina Baselyous (CTA, CPA) of Pinnacle Accounting & Advisory in Melbourne, lays out the clearest signs you have outgrown your accountant, and what a better relationship should feel like. If several of these ring true, it is probably time for a conversation.

1. You only hear from them at tax time

If the only contact you have with your accountant is an email in July asking for your records, you have a compliance service, not an adviser. A business past the start-up stage needs someone in the conversation during the year, when decisions are actually being made and tax can still be planned. Silence between lodgements is the most common sign of an outgrown relationship.

2. Your tax bill is always a surprise

Tax should be planned, not discovered. If every year you are blindsided by what you owe, no one is doing proactive planning. A good adviser models your position before 30 June, tells you what is coming, and puts strategies in place while there is still time to act. Surprises at lodgement mean the planning window has already closed.

3. Your structure has never been reviewed

The structure that suited you as a sole trader is often wrong once you are profitable and growing. If your accountant has never raised whether a company, family trust, bucket company, or holding entity would serve you better, they are not thinking about your future, only your paperwork. Structure affects both tax and asset protection, and it should be revisited as you grow. Our guide to business structures in Australia explains the options.

4. You cannot get a straight, timely answer

Slow or vague communication is the complaint we hear most from business owners about their previous accountant. If emails go unanswered for a week and you feel like a nuisance for calling, the relationship is not serving you. You are running a business and you need answers when the decision is in front of you, not a fortnight later.

5. They cannot explain your own numbers to you

Your financial statements should be a tool you use, not a document you sign and file. If your accountant hands over reports without helping you understand what they mean for cash flow, margins, and decisions, you are missing the point of having them. An adviser who cannot translate the numbers into plain English is not helping you run a better business. This is exactly what proper management accounting is for.

6. They never bring you ideas

The best advisers come to you. They spot an opportunity to save tax, flag a risk before it becomes a problem, or suggest a smarter way to structure a purchase. If every idea in the relationship has to come from you, and your accountant simply processes whatever you bring, you have outgrown them. You are effectively paying for a service you could largely direct yourself.

7. You have big decisions coming and no one to talk to

Buying an asset, taking on a partner, hiring, expanding, or selling are the moments where good advice is worth the most. If you are facing decisions like these and your accountant is not someone you would think to call first, that gap is costing you. A proactive adviser wants to be in the conversation before the decision is made, not handed the result afterwards.

What a better relationship looks like

Outgrowing your accountant is not a criticism of them, it is a sign your business has moved to a stage that needs more. The right adviser at this stage keeps your books accurate, plans your tax throughout the year, reviews your structure as you grow, explains your numbers, and is genuinely available when you need them. That is the standard established owners should expect. If you are weighing up a change, our guide to choosing the best small business accountant in Melbourne walks through exactly what to look for, and switching is more straightforward than most owners assume.

Frequently Asked Questions

What are the signs I have outgrown my accountant?

The clearest signs are that you only hear from them at tax time, your tax bill is always a surprise, your structure has never been reviewed as you have grown, communication is slow, they cannot explain your numbers, and they never bring you proactive ideas. If your business now has staff, multiple entities, or big decisions coming and your accountant still treats it like a simple return, you have likely outgrown them.

Is it hard to change accountants?

No, changing accountants is more straightforward than most owners expect. Your new accountant handles the handover by requesting your records and history from the previous firm through a standard professional process called an ethical clearance. You can switch at any time of year, though just after lodgement or before tax planning season are the smoothest points.

When is the best time to switch accountants?

You can switch at any time, but the smoothest points are just after your annual returns are lodged or before tax planning season begins, so your new adviser can start with a clean slate and plan the year ahead. Do not stay with the wrong accountant simply because the timing feels awkward, the cost of waiting is usually greater than the inconvenience of switching.

Will changing accountants trigger an ATO problem?

No. Changing accountants is completely normal and does not attract ATO attention on its own. Your new registered tax agent simply updates their authority to act on your behalf and requests your prior records. Businesses change accountants regularly as they grow, and doing so is a routine part of finding the right adviser for your stage.

What should I look for in a new accountant?

Look for a Registered Tax Agent who is proactive rather than compliance-only, properly qualified (ideally CPA or Chartered Accountant plus a Chartered Tax Adviser designation), responsive, and able to explain your numbers in plain language. The best fit for an established business is an adviser who plans your tax during the year, reviews your structure, and is in the conversation before your big decisions are made.

Frequently Asked Questions

If these signs feel familiar, it may be time to talk to a proactive small business accountant in Melbourne who plans ahead rather than just lodging in June.

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“How much does an accountant cost?” is one of the most common questions business owners ask, and one of the hardest to get a straight answer to. Fees are rarely published, every business is different, and the honest answer is “it depends”. This guide gives you real ranges for Melbourne, explains what actually drives the price, and shows you why the cheapest accountant is almost never the best value.

It is written by Mina Baselyous, a Chartered Tax Advisor (CTA) and CPA who runs Pinnacle Accounting & Advisory in Melbourne. The aim is to help you understand what you should be paying, and more importantly, what you should be getting for it.

Typical accountant fees in Melbourne (2026)

Every business is different, so treat these as broad guides rather than quotes. As a general picture of the Melbourne market:

• Individual tax return (simple): roughly $150 to $400.
• Sole trader with business schedule: roughly $400 to $1,200.
• Company or trust financial statements and tax return: roughly $2,000 to $5,000+ per entity, depending on complexity.
• BAS preparation and lodgement: roughly $150 to $600 per quarter.
• Bookkeeping: roughly $60 to $120 per hour, or a fixed monthly package.
• Ongoing advisory or Virtual CFO support: commonly $1,000 to $5,000+ per month, depending on scope.

A small business running a company and a family trust, employing a few staff, and wanting proactive advice will typically invest somewhere between $5,000 and $15,000+ a year across compliance and advisory combined. That sounds like a lot until you compare it with the tax a good adviser can legally save you, which is often a multiple of the fee.

What drives the cost of an accountant?

Two businesses with the same turnover can pay very different fees. The main drivers are:

• Number of entities. Each company, trust, or self-managed super fund needs its own set of financial statements and tax return, so a multi-entity structure costs more than a single entity.
• Complexity of your affairs. Multiple income streams, property, investments, international dealings, and GST all add work.
• Quality of your records. Clean, reconciled books cost far less to work with than a shoebox of receipts. Good bookkeeping pays for itself here.
• Compliance only vs advisory. A return-and-lodge service is cheaper than a relationship where your accountant plans your tax, reviews your structure, and meets with you during the year.
• The experience and qualifications of the adviser. A Chartered Tax Adviser with deep expertise charges more than a junior processor, and usually saves you more.

Fixed fees vs hourly rates

Traditionally accountants charged by the hour, which left clients afraid to pick up the phone in case the clock was running. Most quality firms now offer fixed-fee arrangements with a clear scope, so you know exactly what you are paying and can call whenever you need to. Fixed fees are generally better for business owners because they make cost predictable and encourage the ongoing communication that actually creates value. When comparing accountants, ask whether the fee is fixed, what is included, and what would trigger an extra charge.

Why the cheapest accountant is rarely the best value

It is tempting to choose on price, especially when accountants can look interchangeable from the outside. But the real cost of an accountant is not the fee, it is the tax you overpay and the opportunities you miss when no one is planning ahead.

A cheap, compliance-only accountant files what happened and sends a bill. A proactive adviser who costs more but plans your tax during the year, gets your structure right, and helps you make better decisions will usually save you many times the difference in fees. We see this constantly: a business switches from the cheapest option to proper advisory and the tax saved in the first year alone dwarfs the increase in fees. If your goal is to pay less tax legally, the accountant you choose matters far more than the price you pay.

How to think about value, not just price

Before you compare quotes, get clear on what you actually need. A simple sole trader may genuinely only need an annual return. But an established business turning over $500,000 or more, with staff and growth ambitions, needs an adviser, and comparing that adviser purely on price is the wrong lens.

Ask instead: how much tax could this accountant save me, will they help me make better decisions, and will they be there when I need them? A useful next step is understanding what proactive support looks like, which we cover on our Virtual CFO and business advisory pages. If you are weighing up whether your current accountant is worth what you pay them, our guide to choosing the best small business accountant in Melbourne walks through exactly what to look for.

Frequently Asked Questions

How much does an accountant cost for a small business in Melbourne?

A small business in Melbourne typically pays between $2,000 and $5,000+ per year for company or trust financial statements and tax returns, and often $5,000 to $15,000+ a year in total once bookkeeping, BAS, and proactive advisory are included. The exact figure depends on how many entities you run, how complex your affairs are, and whether you want compliance only or full advisory support.

How much should I pay for an accountant?

You should pay based on the value the accountant creates, not just the lowest quote. A simple individual return might cost $150 to $400, while a growing business needing year-round advice will invest several thousand dollars a year. The right question is not “what is the cheapest?” but “how much tax will this accountant save me and how much better will my decisions be?”

Why do accountants charge so differently?

Accountant fees vary because of the number of entities you run, the complexity of your affairs, the quality of your records, whether you want compliance only or advisory, and the experience of the adviser. A qualified Chartered Tax Adviser doing proactive planning charges more than a junior processing returns, but usually saves you considerably more in tax.

Is a fixed-fee accountant better than hourly?

For most business owners, a fixed-fee arrangement is better. It makes your cost predictable, removes the fear of being charged every time you call, and encourages the ongoing communication that creates value. When comparing accountants, ask whether the fee is fixed, exactly what is included, and what would trigger an additional charge.

Can a good accountant save me more than they cost?

Yes. A proactive accountant who plans your tax during the year, gets your structure right, and helps you make better decisions will usually save you far more than the difference in their fees. For established businesses, the tax legally saved in the first year of proper advisory often exceeds the entire annual fee, which is why judging an accountant on price alone is a mistake.

Frequently Asked Questions

The real value is in the advice: see what to expect from a proactive small business accountant in Melbourne focused on saving you tax, not just filing it.

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Search “best accountant Melbourne” and you will get a wall of listicles, paid ads, and firms all claiming to be number one. None of that tells you what you actually need to know: how to tell a good small business accountant from an average one, what you should pay, and which questions separate a proactive adviser from someone who simply files last year’s numbers and sends a bill.

This guide answers those questions directly. It is written by Mina Baselyous, a Chartered Tax Advisor (CTA) and CPA who runs Pinnacle Accounting & Advisory in Melbourne, and it is built around the real decisions business owners face when they have outgrown a basic compliance accountant and want someone genuinely in their corner.

What a small business accountant should actually do for you

At a minimum, an accountant prepares and lodges your financial statements, business tax returns, and BAS, and keeps you compliant with the ATO. That is the floor, not the ceiling. A good small business accountant does considerably more: they review your structure, plan your tax throughout the year rather than in hindsight, help you read your numbers, and are in the conversation before you make big decisions like buying an asset, taking on a partner, or expanding.

The difference matters because most of the opportunities to save tax and structure a business well are only available before the financial year ends. An accountant who only appears after 30 June can tell you what happened. An accountant who is involved during the year can change what happens.

Compliance-only vs proactive advisory: the distinction that matters most

This is the single biggest decision when choosing an accountant, and most business owners do not realise there is a choice to make.

A compliance-only accountant is reactive. They wait until the year is over, record what happened, lodge it, and invoice you. You chase them for answers. They rarely call you unless a deadline is looming. For a very simple business this can be enough, but it leaves money and opportunities on the table.

A proactive advisory accountant plans ahead. They meet with you during the year, model your likely tax position before June, make sure your structure fits where the business is going, and give you management reporting you can actually use to make decisions. If you are turning over $500,000 or more, employing staff, and thinking about growth, this is the level of support that pays for itself. You can read more about what that looks like on our business advisory in Melbourne page.

How much should you pay for an accountant in Melbourne?

Fees vary widely depending on the complexity of your business, the number of entities you run, and whether you want compliance only or full advisory. A sole trader tax return might cost a few hundred dollars, while a company with a trust, staff, and year-round advisory support will pay several thousand dollars a year. The cheapest quote is rarely the best value, because a good accountant should save you far more in tax than they charge in fees.

We have written a full breakdown of the fee ranges and what drives them in our guide to how much an accountant costs in Melbourne. The short version: judge an accountant on the value they create, not the invoice they send.

7 questions to ask before you hire an accountant

Take these to any accountant you are considering. The answers will tell you very quickly whether you are dealing with a compliance processor or a genuine adviser.

• Do you do tax planning during the year, or only at year end? A proactive adviser will describe a mid-year planning process. A compliance-only firm will talk only about lodgement.
• Will you review my business structure? The right structure (company, family trust, bucket company, or a combination) affects both tax and asset protection. It should be reviewed, not assumed.
• How quickly do you respond to clients? Slow communication is the most common complaint business owners have about their accountant. Ask directly.
• Who will I actually deal with? In some firms you never speak to the qualified adviser. Make sure you know who is handling your work.
• Are you a registered tax agent, and what are your qualifications? Look for a Registered Tax Agent, and ideally CPA or Chartered Accountant status, plus a Chartered Tax Adviser (CTA) for genuine tax depth.
• Can you help me understand my numbers, not just lodge them? Management reporting and plain-English explanations are the mark of an adviser who wants you to make better decisions.
• How do you charge, and what is included? Fixed-fee arrangements with a clear scope prevent surprise bills and tell you the firm has thought about the relationship.

Red flags: signs an accountant will hold your business back

Some warning signs are obvious only in hindsight. Watch for these before you commit:

• You only hear from them once a year, at tax time.
• They never ask about your goals, only your receipts.
• Your tax bill is always a surprise, never a plan.
• They have never suggested reviewing your structure, even as you have grown.
• Emails and calls go unanswered for days or weeks.
• They cannot explain your own numbers to you in plain language.
• Their advice stops at “here is your return, please sign”.

If several of these sound familiar, you may have simply outgrown your current accountant. We cover that in detail in our guide to the signs you have outgrown your accountant.

How to check an accountant is qualified and registered

Anyone can call themselves an accountant, but only a Registered Tax Agent can legally charge to prepare and lodge your tax returns. Before you engage anyone, confirm their registration on the Tax Practitioners Board register.

You can search any adviser or firm for free on the TPB public register to confirm they hold current tax agent registration. Beyond registration, look for professional qualifications: a CPA or Chartered Accountant designation shows accounting rigour, and a Chartered Tax Adviser (CTA) from The Tax Institute signals genuine specialist tax knowledge. Mina holds all three.

Local vs online: does location still matter?

Cloud accounting means your accountant no longer has to be around the corner, and plenty of good advisers work with clients across the country. What matters more than a postcode is responsiveness, proactivity, and whether they understand your business. That said, a Melbourne-based adviser who knows Victorian payroll tax, local industry conditions, and can meet you when it counts still offers a real advantage for local business owners. If you want an adviser who combines both, our team works with owners across Melbourne and Australia-wide from our office in the south-east. Learn more about our approach as a small business accountant in Melbourne.

Frequently Asked Questions

How do I choose the best accountant for my small business?

Choose an accountant based on whether they are proactive rather than compliance-only, properly qualified and registered, responsive, and able to explain your numbers in plain language. Ask whether they do tax planning during the year, whether they will review your structure, and who you will actually deal with. The best accountant for a growing business is one who is in the conversation before decisions are made, not just after the financial year ends.

What qualifications should a good accountant have?

A good accountant should be a Registered Tax Agent, which you can verify on the Tax Practitioners Board register. Look also for a CPA or Chartered Accountant designation for accounting rigour, and a Chartered Tax Adviser (CTA) qualification for specialist tax expertise. These credentials show the adviser is held to professional standards and has genuine technical depth.

Is it worth paying more for a proactive accountant?

Yes, for most established businesses it is. A proactive accountant plans your tax throughout the year, reviews your structure, and helps you make better decisions, which typically saves far more than the difference in fees. The cheapest accountant is rarely the best value because they usually offer compliance only, leaving tax savings and opportunities untouched.

What is the difference between a compliance accountant and an advisory accountant?

A compliance accountant records and lodges what has already happened and is largely reactive. An advisory accountant plans ahead, meets with you during the year, reviews your structure, and gives you reporting you can use to make decisions. Advisory accountants are involved before big decisions are made, which is where the real value and tax savings come from.

How do I know if I have outgrown my current accountant?

Common signs are that you only hear from them at tax time, your tax bill is always a surprise, they have never suggested reviewing your structure as you have grown, and they are slow to respond. If your business is growing but your accountant still treats it like a simple tax return, you have likely outgrown them and would benefit from a proactive advisory relationship.

Frequently Asked Questions

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