“In some cases, superannuation is still the right place (to invest) but there are other structures available as an alternative [for additional investment options],” Douglas said.

“However, there are considerations that need to be taken into account [if looking at alternative structures] including whether the fund has two members, or just one, as that impacts the availability of the tax-free threshold outside of super. You must also consider the availability of SIS and tax dependents. What other assets do members hold, what is the marginal rate of tax, and what are the estate planning considerations?”

In thinking about alternative structures for investment, Douglas said it is important to try and find a vehicle that can tax-effectively build wealth, but also provides a level of asset protection.

“That means that we wouldn't be thinking about a partnership, and a unit trust is probably also not going to be suitable for these purposes as they can be less flexible and you can't accumulate income in them without adverse tax consequences,” she said.

“There is a difference between a company and a discretionary trust, and in that respect, fundamentally, what we are doing is weighing up the flexibility we might have with one of these structures against the ability to accumulate or retain income in the other, but of course, there are several other considerations to take into account as well.”

Douglas said a discretionary trust has flexibility that allows trustees to choose who they are distributing to in each income year, and the ability to change that from one year to the next without any real tax ramifications.

“However, if you are looking to apply the small business CGT concessions, then you may need to be careful about whom you are distributing to ensure you meet the relevant eligibility criteria,” she said.

In contrast, a company allows trustees to “park the profits, pay the tax” and “drip feed that out to mum and dad in the form of franked dividends”, who will receive a franking credit for the tax that has already been paid by the company.

Regarding asset protection, Douglas said a discretionary trust is effective particularly if using a corporate trustee, however, it is important to be mindful that they do not provide 100 per cent asset protection.

“For example, if you have large unpaid present entitlements owing to mum and dad, and the relationship breaks down, and either of them wants the trust to pay out their unpaid present entitlement, from a trust law perspective, that's an equitable right which must be paid out by the trust,” she said.

“On the other hand, one of the big advantages of a company is that they exist in perpetuity, subject to the operation of the Corporations Act, so a company can own the assets, which does give a degree of asset protection, because should the company be sued the liability of shareholders is limited to any unpaid amounts on the shares.”

She added that both the Corporations Act and the Income Tax Assessment Act impose a range of duties and obligations on company directors, going so far as to make them personally liable for certain liabilities in the event of defaults by the company.