Ideal ownership structure for future dev sites

I've been considering the best structure to purchase future development sites in, and have been looking through old threads here. In this thread @Mike A suggests Trusts as the landowners and a company owned by a Trust as the development company. However, in this thread some benefits of company ownership are shown.

I am currently doing a couple developments in a Disc Trust. Some profits will be distributed to my wife, but the bulk will go into a bucket company (I am on top tax bracket so no distributions to me). I will distribute some funds to my wife each year from the bucket company but most of the funds held in bucket company will be rolled into other development projects.

Moving forward it seems the ideal structure to limit tax is:
- Buy dev sites in companies (new company for each site, ie SPV. Close company after that project is complete)
- Loan from my bucket company to each dev company without Div 7A issues (which would have been the case if loaning to trusts)
- Future profits go back into the bucket company (so tax only paid at 30%). Bucket company essentially becomes the 'bank' holding all funds
- Repeat above, essentially limiting tax at 30% and not exposing the bucket company holding the cash to any direct risk
- Ideally bucket company has 2nd mortgage over sites held by the dev companies/SPVs

I guess the other considerations will be:
- How buying in a company affects funding (ie is it harder than buying in a trust?)
- What happens if a development makes a loss, not a profit. Maybe reuse that company for the next profitable development?
- Potential land tax costs and no CGT discount if I end up keeping a development long-term in a company (trust may be a better structure for keeping long term, but sometimes plans can change unexpectedly)
- How do the dev. companies send profits to bucket company?
- How do I make use of wife's low income if all future profits go to company? Would I distribute from bucket company to trust, then distribute to partner

(Sorry if the last 2 questions are basic - have a bit of experience with trusts but very little experience with companies to date, so not sure how to 'distribute' income from them.)

Any advice/thoughts on the above would be appreciated.

PS: Will get paid advice before my next project but just ensuring I understand all the pros/cons myself first.

 

There is no such things as a 'best structure'. Different ownership structures all have their benefits and detractions and it will all come down to the unique situation of where the land is, the personal circumstances of related parties and what the short and longer term plans are.

If build and sell then either a company or a trust will be the way to go. It won't make much difference as income can be retained either way. Land tax could be an issue, but will depend. There is no CGT with developments - just income tax.
Need to consider legal and tax aspects.

 

agree there is no best structure. that post was an example not a best way.

im doing a presentation at the Property Mastermind seminar and have 3 structures ill be discussing.

it does involve working through the various pros and cons of each and then making a decision.

but what you are suggesting isnt unreasonable

i also like having the shares in land owner co held by another company rather than going through a trust to a bucket company. tax reasons.

i still prefer keeping dev co seperate and that isnt just for asset protection reasons. can have some tax benefits as well.

 

A key issue could be the parties. A trust and different owners may by problematic when compared to a company with shareholders...each with a family trust.
Think of a pyramid upside down.. But a fixed unit trust could be better. Or a class disc trust. Whats that?

What about if smsfs are involved?
Who is borrowing?