Two SMSFs, One Company: A Guide to Joint Ownership of a Trading Business

Overview

What this guide covers

Most SMSF trustees are unaware that their fund can hold shares in an actively trading company, provided the ownership structure is set up correctly. When two genuinely unrelated SMSFs each hold 50% of a trading company, neither fund controls it, which means the company falls outside the related party rules. This single fact unlocks a structure that combines company-level asset protection with some of the most tax-efficient investment returns available in the Australian superannuation system.

KEY TAKEAWAYS

What you will learn

✔  Why the "related party" question is the most critical compliance issue — and how a genuine 50/50 unrelated split resolves it

✔  Why the in-house asset 5% rule does not apply to this structure, and why Regulation 13.22C is irrelevant for trading companies

✔  How franking credits flow from the company to your SMSF, producing refunds in accumulation phase and full cash refunds in pension phase

✔  What a shareholders agreement must cover in a 50/50 structure, including deadlock resolution and dividend policy

✔  The 10-point compliance checklist to complete before any shares are acquired

Why this structure is exceptionally tax-efficient

A small trading company with turnover below $50 million pays company tax at 25%, generating franking credits on dividends paid to shareholders. When those dividends flow into an SMSF in accumulation phase, taxed at 15%, the franking credit typically exceeds the fund's liability, producing a cash refund. In pension phase, where the SMSF pays 0% tax, the full franking credit is refunded. On a $100 pre-tax profit, a pension-phase SMSF receives $100 in total, the most tax-efficient outcome available in the Australian system.