Differences between a unit trust and a company A Unit Trust (UT) is a trust in which unit holders have a fixed percentage entitlement to income and/or capital of the trust - there are many different types of unit trusts. A company is an artificial legal person in which shareholders have an interest which is a fixed percentage of the company. Trusts are not legal entities so the beneficiaries/unit holders have an interest in the assets of the trust. Shareholders on the other hand do not have any interest in the assets of the company. Their interest is in the company itself. A unit holder could lodge a caveat over real property held by the trustee. But a shareholder could not lodge a caveat over real property owned by a company. Regulation is another difference. Companies are regulated by the Corporations Act which is administered by ASIC. Company records are publicly searchable. Trusts are private arrangements regulated by the trust terms in the deed and the Trustee Acts of the various states. Trust records are not searchable as they are private arrangements between the trustee and the beneficiaries. Tax issues are very different too. A trust is generally a flow through entity for tax. The trust itself pays no tax as it is the recipients of the income, the unit holders, who pay the tax. Any accumulated income would be taxed at the top tax rate. A company is a separate tax person and it pays a flat tax rate of 30%. Income can be accumulated and paid out at later dates with a credit given to the shareholder for the tax paid. But the income of a company changes character. A company may sell a property and make a captial gain, but when it comes out to the shareholders this income comes out as a dividend and not a capital gain. It therefore cannot be used to offset capital losses of the shareholders. Trusts are different as a capital gain will generally come out as a capital gain to the unit holder. Lots of other differences too especially in tax.