Investment Structures for Doctors in Australia: Trusts, Companies, Bonds and Super
Common Investment Structures for Doctors in Australia
Doctors often face unique financial challenges. Your income may be high, but so are taxes. Depending on your speciality, you may also worry about legal risks. On top of that, you’ll want to grow wealth for retirement and your family, while protecting it along the way.
That’s where investment structures come in. Instead of holding investments in your own name, you can use structures like trusts, companies, bonds or superannuation. Each option has different tax rules, costs, and benefits.
Here’s a brief look at the main structures doctors in Australia use.
1. Family Trusts
A family trust is a legal structure where a trustee (either a person or company) holds investments for the benefit of family members (the beneficiaries).
How it works:
The trust earns income from its investments.
The trustee decides how much income to distribute to each beneficiary every year.
The beneficiaries then pay tax on their share at their own marginal tax rates.
Why doctors use them:
Tax flexibility: Instead of you paying tax at the top rate (up to 47%), income can be spread across family members who might be on lower tax brackets.
Asset protection: If structured properly, trust assets may be harder for creditors or lawsuits to access — important in the medical profession.
Estate planning: You can keep assets in the trust and pass income or capital to your children or grandchildren without forcing ownership transfers.
Things to watch:
Set-up and running costs: You’ll need a trust deed, an accountant, and ongoing compliance.
Rules on distributions: Income must be distributed properly each year to avoid penalty tax.
Dividends and franking credits: Trusts aren’t always the most tax-efficient structure for dividend-paying shares.
2. Company (Pty Ltd)
A company is a separate legal entity that can own assets and investments.
How it works:
The company pays tax on profits at a flat rate (25% for base-rate entities, 30% for larger ones).
Profits can be kept in the company to reinvest.
If profits are paid out to you as dividends, they carry franking credits to avoid double taxation.
Why doctors use them:
Tax rate advantage: If you’re personally on the top marginal tax rate, holding investments in a company can mean less tax upfront.
Reinvestment: Keeping money in the company lets you grow wealth at the company tax rate.
Siloed approach: Doctors who already have a practice owned by a company sometimes set up a separate investment company for wealth building.
Things to watch:
Double taxation: If you take money out as dividends, you may still pay extra tax depending on your own tax rate.
Less flexible for estate planning: Company shares pass through your estate, but company assets belong to the company itself.
Compliance: Annual ASIC filings, bookkeeping, and financial statements are mandatory.
3. Investment Bonds
An investment bond (sometimes called an insurance bond) is like a managed fund wrapped inside an insurance-style structure.
How it works:
You invest through a provider (AMP, Australian Unity, Genlife etc.).
The bond pays tax internally at a maximum of 30% (often lower if there are franking credits or capital gains discounts).
If you hold it for 10+ years, withdrawals can be tax-free under current rules.
Why doctors use them:
Tax simplicity: You don’t include annual income in your tax return — it’s all handled inside the bond.
Tax-free after 10 years: Great for long-term saving goals like education or extra retirement funds.
Flexibility for estate planning: You can nominate beneficiaries directly, bypassing your estate.
Protected against litigation: If the worst occurs and you end up bankrupt, bonds are protected like the family home and super.
Things to watch:
Contribution limits: You can only add up to 125% of your previous year’s contributions.
Costs: Some providers charge higher management fees compared to direct investing.
Less tax-effective than super: For retirement planning, superannuation usually offers lower tax rates overall.
4. Superannuation
Superannuation (super) is Australia’s main retirement savings system. It’s often the most tax-effective place to grow wealth — but with restrictions.
How it works:
You (or your employer) make contributions into your super fund which can reduce taxable income.
Contributions are generally taxed at 15% going in.
Investment earnings inside super are also taxed at a max 15%.
Once you reach retirement age and start a pension, withdrawals are tax-free.
Why doctors use it:
Tax benefits: For high-income earners, putting money into super can save thousands in tax compared to holding investments in your own name.
Compounding: The concessional tax rate allows your money to grow faster over the long term.
Tax-free retirement income: At pension stage, super is one of the best structures available.
Things to watch:
Access restrictions: Your money is locked away until you meet a condition of release (usually retirement age).
Contribution caps: There are strict annual limits on how much you can put in (both concessional and non-concessional).
Rule changes: Governments regularly adjust super rules, so strategies may need review.
Quick Comparison
| Structure | Pros | Cons |
|---|---|---|
| Family Trust | Split income with family, asset protection, flexible for estate planning | Complex to set up and run, higher costs, not ideal for dividend income |
| Company (Pty Ltd) | Flat 25–30% tax rate, reinvest profits at company rate, useful for private practice | Extra tax when profits paid out, compliance obligations, less flexible for estate planning |
| Investment Bond | No annual tax return, tax paid internally, withdrawals tax-free after 10 years, portable and protected | Contribution rules, provider fees, usually less tax-effective than super |
| Superannuation | 15% tax on contributions and earnings, strong compounding, tax-free withdrawals in retirement | Locked until retirement, contribution caps, government rules can change |
Which Structure Should Doctors Use?
There isn’t a single “best” investment structure for doctors in Australia. It depends on:
Your income and tax rate
Whether you run a practice or work as an employee
Your family’s situation
Your goals: saving for retirement, protecting assets, or passing on wealth
In many cases, doctors use a combination. For example:
A trust for flexibility and family distributions
Super for retirement savings
An investment bond for long-term tax-free savings outside super
A company for reinvesting profits at a lower tax rate. May be owned inside trust.
Final Thoughts
Doctors face unique financial challenges, but also have powerful opportunities to build wealth. By choosing the right investment structure, you can lower tax, protect your assets, and set yourself up for long-term success. While we favour simplicity over complexity for the sake of it, these structures can be very useful, when we first engage with clients we look at where they want to be in 20 or even 50 years and begin work with that end in mind.
👉 At NOR Financial, we specialise in helping doctors choose the right investment structures for their needs. If you’d like to explore your options, we’d love to have a confidential chat.