Companies can be a good vehicle to hold property. But there can be a minor effect on income with the payment of franking credits because of non-cash expenses such as depreciation. The depreciation amounts reduce the taxable income of the company which reduces the amount of tax the company pays, which in turn reduces the amount of franking credits available. This has the affect of making money trapped in the company without it having franking credits attached. When this money is paid out the shareholder recipient won’t have the benefit of franking credits. Example Bart sets up a company to hold property. It has $100,000 of rental income and $20,000 in depreciation claims. The company’s taxable income is $80,000 because the depreciation is a non-cash deduction - so the company actually has an income of $100,000 but only $80,000 is taxable. Tax on $80,000 is $24,000 at 30% flat tax rate. Let’s say the company later pays a $80,000 dividend – this could be fully franked. But the company would still have $20,000 in retained ‘cash’. If this is paid out there can be no franking credits as there is no tax paid on this component. If the shareholder receiving $20,000 in unfranked dividend had an otherwise low income it may not matter too much, but if the shareholder had a high income they might end up paying more tax on this. A strategy might be to have a discretionary trust hold the shares and pay non-franked dividends to the 18 year old+ kids when they are not working – up to $22,000 per year to use leave more franking credits in there for others.