To set up a holding company in Australia, you register a proprietary company with ASIC whose job is to own things rather than trade: shares in your operating company, and often your IP, cash reserves or property. The holding company then holds all (or more than half) of the shares in each trading company, which makes those companies its subsidiaries under the Corporations Act 2001 (Cth).
Most founders start thinking about this after a scare. A big contract with a nasty liability clause. A new co-founder. A year where profit piled up with nowhere sensible to park it. The registration itself is a few hours of admin. What goes wrong is the order you do things in, and fixing the order later costs real money.
- Register the holding company first. Then register each operating company with the holding company listed as its shareholder, so the group is correct from day one.
- Budget $636 per company to register in 2026-27. Every company in the group also pays ASIC a $342 annual review fee and lodges its own tax return.
- Limited liability has limits. A holding company can be liable for a subsidiary’s insolvent trading, and any guarantee you sign cuts straight through the structure.
- Adding a holding company to an existing company is a tax event. Rollover relief can defer capital gains tax if ownership proportions stay identical, so get tax advice before you swap shares.
- Timing is the cheapest tax strategy. Restructure before the business or its IP is worth much, and the CGT and duty questions shrink to almost nothing.
What is a holding company, and do you actually need one?
A holding company owns. The operating company trades. Your operating company signs customer contracts, employs staff and carries the day-to-day risk. The holding company sits above it and keeps the things you’d hate to lose.
Under section 46 of the Corporations Act, a company is a subsidiary of your holding company if the holding company controls who sits on its board, can cast more than half the votes at a general meeting, or holds more than half its issued share capital. A subsidiary of a subsidiary counts too. Most small groups pass all three by owning 100%.
| Holding company | Operating company | |
|---|---|---|
| Main job | Owns shares, IP, cash or property | Sells to customers and runs the business |
| Who it contracts with | Mostly its own subsidiaries | Customers, suppliers, staff, landlords |
| Income | Dividends, licence fees, interest | Sales revenue |
| Risk exposure | Low, if kept out of trading | High: claims, debts, disputes |
| Typical name | [Brand] Holdings Pty Ltd | [Brand] Pty Ltd or [Brand] Services Pty Ltd |
So who needs one? It earns its keep when you have something worth protecting, more than one business line, or investors on the horizon. It’s overkill for a solo consultant with one client and a laptop. Two companies means two lots of ASIC fees, two tax returns and double the paperwork. If that’s you, one well-run company is fine for now.
What’s an ultimate holding company?
If your holding company is itself owned by another company, the company at the very top of the chain is the ultimate holding company. ASIC asks you to name it when you register each subsidiary. Get this wrong on the form and you’ll be lodging corrections later.
How to set up a holding company in Australia, step by step
Here’s the sequence our lawyers walk clients through. Steps 1 and 2 are the thinking. The rest is admin you can finish in a day or two.
- Draw the group chart. On one page, show who owns the holding company (you, your co-founders or a family trust), what it owns, and which company signs customer contracts. Decide where the IP lives before anyone writes code or designs a logo.
- Get every director a director ID. Each director needs one before they’re appointed to any company in the group. It’s free, it’s done once for life, and you apply through the Australian Business Registry Services.
- Register the holding company. You need at least one director who ordinarily lives in Australia, a registered office address in Australia, and at least one shareholder. A company secretary is optional for a Pty Ltd, whatever some guides claim. The ASIC fee is $636 in 2026-27.
- Adopt a constitution. The default replaceable rules in the Corporations Act weren’t written with groups in mind. A tailored company constitution lets you record the holding company’s purpose and set share classes before investors ask for them.
- Register each operating company with the holding company as its shareholder. Put the holding company on the application from the start and name the ultimate holding company. If you register the operating company in your own name and “move it across next week”, that’s a share transfer with tax consequences.
- Actually pay for the shares. If shares are issued as fully paid, the subscription money has to move from the shareholder’s account into the company’s account. Skip this and your records say one thing while your bank statements say another.
- Sort tax registrations and bank accounts. The operating company needs an ABN, and GST registration once its turnover reaches $75,000. A holding company that only owns shares and receives dividends may not be carrying on an enterprise, so it may not need an ABN at all. Every company still needs a TFN and its own bank account.
- Paper the dealings between your companies. If the holding company owns the brand or software, license it down under an IP holding company operating agreement. If it lends money to a subsidiary, record it in a loan agreement with repayment terms.
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How much does it cost to set up a holding company in Australia?
The government fees are small and predictable. ASIC indexes them every 1 July, so these are the 2026-27 figures.
| Cost | Amount (2026-27) | What to know |
|---|---|---|
| ASIC registration, per company | $636 | A holding company plus one operating company is $1,272 |
| ASIC annual review, per company | $342 a year | Due within two months of each company’s review date |
| ASIC late fee | $102 or $428 | Less than or more than one month late |
| Director ID | Free | One per director, kept for life |
| Tax return and financial statements | Per company | A second company means a second return from your accountant |
| Restructure or rollover advice | Quoted | Only if you’re moving an existing business under a new holding company |
ASIC fees are the cheap part. The real ongoing cost is accounting for two or more entities every year. Price that in before you decide, not after.
Which holding company structure suits your business?
Start with what you’re protecting, then pick the shape. These are the structures we see most across Australian small businesses.
The simple two-company structure
The holding company owns 100% of one operating company. IP and surplus cash sit at the top, and trading happens below. This dual company structure suits a single business that has built something valuable, like software, a brand or a customer list.
A family trust on top
A discretionary trust, run by a corporate trustee, owns the holding company. You get flexibility over how income flows to family members, and your shareholding stops sitting in your personal name. The trade-off is more admin: annual trustee resolutions, a trust tax return, and a discretionary trust deed that has to allow the distributions you plan to make.
One holding company, several subsidiaries
Each business line or location gets its own operating company. You can sell one without touching the others, and a partner can invest in a single subsidiary. Be careful here. Once an outsider owns part of a subsidiary, it’s no longer wholly owned, which rules it out of tax consolidation.
Is a real estate holding company a good idea?
A holding company can own property. But companies don’t get the 50% CGT discount that individuals and trusts can claim when they sell an asset held for over 12 months. On a property that grows in value for a decade, that difference is serious money. Our advisers regularly suggest holding investment property in a trust instead. Decide before you sign the contract, because moving property between entities later triggers duty.
When you don’t need a holding company at all
Is your real goal flexible income distribution rather than protecting assets? Then a family trust with a company beneficiary (a “bucket company”) can do the job without a holding company in the middle. More entities isn’t more protection. It’s more paperwork.
Can you add a holding company to an existing company?
Yes. It’s called inserting (or interposing) a holding company. The new holding company buys all the shares in your existing company and pays for them by issuing its own shares to you. Your business keeps its ABN, contracts and bank account. Only the owner on the share register changes.
That swap is a disposal of your shares, so capital gains tax is in play. Two rollovers do most of the work. Division 615 of the Income Tax Assessment Act 1997 (Cth) can defer the gain when the new holding company ends up owning 100% and every shareholder keeps exactly the same proportion they had before. The small business restructure rollover is another path for eligible businesses. Both have conditions, so get written tax advice before anyone signs.
Duty depends on your state. Most states no longer charge duty on transfers of shares in private companies. The exception is landholder duty, where the company owns land above a state threshold. Transferring business assets like goodwill directly, rather than shares, is a different transaction and can be dutiable.
Watch for these practical traps:
- Leases, finance and big customer contracts often have change-of-control clauses. Check whether you need consent before the swap, not after.
- ASIC needs to hear about the share changes within 28 days, and your bank will want to know the new ownership chain.
- Record the swap in a written share sale agreement so there’s a paper trail showing what was exchanged and at what value.
One shortcut worth knowing. If your existing company is brand new, with no assets, contracts or trading history, you can repurpose it as the holding company and register a fresh operating company underneath. No share swap needed.
How is a holding company taxed in Australia?
Each company in the group pays company tax on its own profit: 25% for a base rate entity, 30% otherwise. Whether your holding company qualifies for 25% depends on its turnover and how much of its income is passive. Ask your accountant to test it rather than assuming.
Profit moves up the group through franked dividends. The operating company pays tax, then pays a dividend to the holding company with franking credits attached. Those credits offset the tax on the dividend, so the same profit isn’t taxed twice. The holding company can reinvest it, or pay it on to you in a year when your personal tax rate suits.
Wholly-owned groups can also elect to form a tax consolidated group. The ATO then treats the group as one taxpayer: dealings between your companies are ignored for income tax and losses in one company can offset profits in another. The catch? The choice is irrevocable while the group stays wholly owned. Model it before you elect.
Then there’s Division 7A, the rule founders trip over most. If a private company lends money to a shareholder or an associate, like your family trust, the ATO can treat the loan as an unfranked dividend unless it’s repaid or put on a complying Division 7A loan agreement. Using the holding company’s bank account as a personal float is how this happens.
GST is simpler than people expect. Dividends aren’t taxable supplies, so a pure holding company often doesn’t register for GST. That changes the moment it starts charging your operating company management or licence fees.
Does a holding company really protect your assets?
Mostly, yes. Each company is a separate legal person, so creditors of your operating company generally can’t reach assets owned by the holding company. That separation is the whole point. But it has four well-known gaps.
- Insolvent trading. Under section 588V of the Corporations Act, a holding company can be liable for debts its subsidiary ran up while insolvent, where there were reasonable grounds to suspect insolvency and the holding company or its directors knew or should have known.
- Guarantees. Banks and landlords routinely ask the holding company, or you personally, to guarantee the operating company’s debts. Sign one and the ring fence is gone for that debt. Read up on director’s guarantees before you sign the next one.
- Blurred lines. Shared bank accounts, contracts signed in the wrong company’s name, or the holding company paying the operating company’s bills all weaken the separation a liquidator would respect.
- Late transfers. Moving assets out of a struggling company to protect them can be clawed back by a liquidator. Structures protect you when they’re built early, not when creditors are already calling.
What documents does a holding company need?
Not every group needs all of these on day one. Most need at least four.
- A constitution for each company, setting out director powers, share classes and how decisions get made.
- A shareholders agreement at holding company level if there’s more than one owner. A shareholders agreement covers exits, deadlocks and what happens if a founder leaves.
- An IP licence from the holding company to each subsidiary that uses the brand, software or designs.
- Intercompany loan agreements for any money lent between companies, with interest and repayment terms your accountant is comfortable with.
- A services agreement if the holding company charges management fees, priced on commercial terms.
- A share sale or share swap agreement if you’re inserting a holding company above an existing one.
- Board minutes and registers for every company, kept up to date.
What we see in Lawpath consultations
Holding company questions come up constantly with our lawyers and accountants. These five patterns repeat more than any others.
Founders wait until the business is worth something. Our advisers keep recommending the same move: insert the holding company before you start trading, or before the IP has real value. A company with no contracts and no value can be restructured for close to nothing. The same company two years later is a CGT calculation and a valuation report.
People tweak ownership in the same step. A common request is “while we’re restructuring, can we also move my partner from 40% to 50%?” Rollover relief generally depends on everyone ending up with the same proportions they started with. Do the restructure cleanly first, then change percentages as a separate, documented step with its own tax advice.
An existing trading company becomes the shareholder. Founders sometimes have their other business own the new holding company. That drags an unrelated set of trading risks into the new group. Our lawyers recommend a family trust or a fresh, non-trading company as the owner instead.
The IP never makes it into the holding company. Code written before incorporation, a logo designed by a freelancer, a brand name a founder registered personally. All of it belongs to someone other than the holding company until it’s assigned in writing. Check the chain of title, then license the IP down to the operating company.
The paperwork doesn’t match the bank account. Shares recorded as fully paid with no money ever moving. One bank account for two companies. Contracts and insurance in the wrong entity’s name. Each of these hands a liquidator an argument that your companies were never really separate.
If you’d like a lawyer to look over your group chart before you register anything, our Legal Advice Plan puts you in front of one without an hourly meter running.
Frequently asked questions
Does a holding company need an ABN?
Not always. Every company gets an ACN, but you only need an ABN if the company carries on an enterprise. A holding company that just owns shares and receives dividends may not qualify. If it charges fees, licenses IP or employs staff, it will need one.
How long does it take to register a holding company?
Usually one to two business days once ASIC has complete details and every director has a director ID. The planning takes longer than the registration. Allow extra time if you’re restructuring an existing company and need tax advice first.
How do you register a holding company in Australia?
You register it the same way as any Pty Ltd, through ASIC, with at least one Australian-resident director, a registered office and a shareholder. What makes it a holding company is what happens next: registering your operating companies with the holding company as their shareholder.
Can I be a director of both the holding company and the operating company?
Yes, and in small groups that’s normal. Just remember you owe duties to each company separately. A decision that helps the group but harms the subsidiary still has to be justified from the subsidiary’s point of view.
Does a holding company need a company secretary?
No. A proprietary company doesn’t have to appoint a company secretary. Many small groups skip it and the directors handle the secretarial work themselves. Public companies are different and must have one.
Can a sole trader set up a holding company?
Not directly, because a sole trader business isn’t a company that can be owned. You’d register a holding company and an operating company, then move the business into the operating company. Rollover relief may be available for that move, so speak to an accountant before transferring assets.
Is a holding company worth it for a small business?
It’s worth it when you have valuable IP, surplus cash, more than one business line or investors coming. For a one-person service business with no real assets, the extra ASIC fees and second tax return usually outweigh the benefit. Start with one company and add a holding company when there’s something to protect.
Can a holding company own property?
Yes, a holding company can own real estate. The trade-off is tax: companies can’t claim the 50% CGT discount when they sell. That’s why investment property often sits in a trust rather than a company. Get advice before you buy, because moving property later triggers duty.
Should my holding company be registered for GST?
Only if it makes taxable supplies and meets the $75,000 GST turnover threshold, or chooses to register voluntarily. Dividends don’t count. A holding company that charges management or licence fees to its subsidiaries may need to register, so review this whenever those fees start.
How many companies can a holding company own?
There’s no limit. A holding company can own one subsidiary or twenty. Each one adds its own ASIC annual review fee, tax return and records, so add companies when there’s a reason: a new business line, a new location or a separate risk.
Ready to set up your holding company?
If you’ve read this far, you’re ahead of most founders, who only think about structure once something has gone wrong. You don’t need every tax question answered today. You need the right order: the holding company first, then the operating company under it, then the paperwork between them.
Register your holding company with Lawpath and get the first step done today.
