As your business grows, so does your exposure to legal, financial, and operational risks. That’s why many savvy business owners turn to holding company structures — a smart way to protect assets, optimise tax outcomes, and prepare for future expansion.
A holding company helps you strike the right balance between growth and security, providing both a shield against trading risks and a platform for long-term business strategy. A holding company isn’t just for large corporations. For growth-minded SMEs, it can provide a smart, strategic foundation — offering asset protection, tax planning opportunities, and flexibility to evolve.
Before you restructure, speak with your accountant or adviser. With the right legal and tax advice, a holding company can become one of your most valuable business tools.
What Is a Holding Company?
A holding company is a business entity that exists primarily to own shares in other companies, rather than operate a business itself. It may hold assets such as:
- Shares in subsidiaries
- Real estate
- Intellectual property
- Cash or investments
Under Australian law (Corporations Act 2001), a company becomes a holding company when it owns more than 50% of another company or controls its board.
Holding Company vs Subsidiary: What’s the Difference?
A holding company sits at the top of the structure. It owns, manages, and protects assets but doesn’t trade. A subsidiary company conducts day-to-day business — selling products, managing projects, or servicing clients. Though legally separate, the holding company controls the subsidiary — a setup that’s key to asset protection and risk management.
Why Use a Holding Company?
- Asset Protection
Separate ownership of assets and trading operations can shield valuable property, cash, and IP (Intellectual Property) if your trading business faces legal action or insolvency.
- Dividends can be moved from the trading company to the holding company
- IP, property or plant can be transferred to the holding company
- If the subsidiary fails, the holding company’s assets remain protected
- Tax Efficiency
With the right planning, a group structure can deliver significant tax benefits:
- Franking credits on dividends passed between companies can be tax-free
- Retained profits in the holding company can be reinvested or loaned out
- Succession planning and investor onboarding can be simplified
- Intercompany loans can be structured in line with Division 7A compliance
- Strategic Growth
A holding company structure is ideal for:
- Managing multiple business units
- Investing in new ventures or businesses
- Bringing in partners or future shareholders
- Scaling operations while minimising risk
What Are the Potential Drawbacks of Setting Up a Holding Company?
To set up a holding company, you will need to incorporate an additional company. This means that you will face additional set-up and maintenance costs as well as reporting requirements from ASIC.
This is something that you will need to consider because operating two businesses may not be in your best financial interests. For reporting purposes with ASIC and the ATO, if your company structure meets the requirements under the relevant accounting standards, you may be eligible to submit one consolidated financial statement and corporate tax returns for all of your entities. This will assist you in streamlining the requirements and may make the reporting obligations more manageable.
Setting up a holding company isn’t always the right fit. Keep in mind:
- Setup and admin costs: Two or more companies = more ASIC fees, bookkeeping, and compliance
- Complexity: More entities = more tax returns (unless consolidated reporting applies)
- Tax triggers: Transferring shares or assets may cause Capital Gains Tax or stamp duty
- Division 7A risks: Intercompany loans must be properly documented and repaid to avoid tax penalties
———————————————————————————————————————-
BOOK YOUR FREE 15 MINUTE CONSULTATION
We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection.
Please complete the form and a member of our team will be in touch shortly- CLICK HERE TO BOOK YOUR FREE CONSULTATION
How can we help?
If you have any questions or would like further information or you are seeking property tax advice, please feel free to contact our office via email –info@investplusaccounting.com.au or phone 02 9299 7000 to either speak with someone or arrange a time for a meeting so we can discuss your requirements in more detail.
We have offices in Bankstown, Cronulla, Sydney CBD, Bowral, Liverpool, Adelaide, New Zealand and Dubai. You can arrange a free 15 minute no obligation chat to discuss your options. Please arrange an appointment with our office by clicking here
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Investment Plus Accounting Group, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.