Quick answer
For a Perth tradie with a spouse who has no other income, and a household that lives on $100,000 a year after tax, here is what switching from sole trader to a Pty Ltd saves in 2026–27, after paying the extra accounting and ASIC fees:
- $150,000 profit: about $10,400 a year;
- $300,000 profit: about $40,100 a year;
- $500,000 profit: about $84,100 a year.
A family trust with a bucket company saves a little more today. But the Government's proposed 30% minimum tax on discretionary trusts from 1 July 2028 means a Pty Ltd is our starting point for most tradies setting up now. One warning: if you're a labour-only subbie working mainly for one builder, the personal services income (PSI) rules can cancel the saving. Check that first.
Potential tax savings for Perth tradies at a glance
| Net profit | Tax as a sole trader | Tax saving: Pty Ltd | Extra accounting & ASIC fees | Net saving after fees: Pty Ltd | Net saving after fees: Trust + bucket company* | Net saving: Pty Ltd over 5 years |
|---|---|---|---|---|---|---|
| $150,000 | $38,600 | $11,900 | −$1,682 | $10,400 | $11,900 | $52,000 |
| $300,000 | $105,900 | $41,700 | −$1,682 | $40,100 | $41,700 | $200,500 |
| $500,000 | $199,900 | $85,700 | −$1,682 | $84,100 | $85,700 | $420,500 |
Annual figures, 2026–27 rates. Household of business owner plus spouse with no other income, living on $100,000 a year after tax, with the rest of the profit kept in the business. Net savings are after the extra yearly accounting and ASIC fees of each structure (and the tax deduction for those fees); see the compliance cost table below. 5-year figure assumes the same profit each year. *Trust figures are under current law; a 30% minimum tax on discretionary trusts is proposed from 1 July 2028.
"Should I go Pty Ltd?" is the question I get asked most by WA tradies. It usually comes up after a big year, a scary tax bill, or a mate on site saying his accountant set him up as a company.
The real answer is that it depends on your numbers, so here are the numbers. I'm Colm Delaney, a Chartered Accountant and founder of Reacco Chartered Accountants, a Perth accounting firm in Warwick that works only with construction and trades businesses across Western Australia: builders, electricians, plumbers and gasfitters, tilers, carpenters, roofers, concreters, painters and other contractors. Structure advice is one of the most common jobs we do for Perth tradies. Below are the real 2026–27 tax figures for a tradie household at three profit levels, across the three structures we see every week: sole trader, Pty Ltd company, and family trust with a bucket company.
The assumptions behind the numbers
Every comparison online uses different assumptions, which is why they never agree. Here are ours, so you can compare them with your own situation:
- Tax year: 2026–27 (1 July 2026 to 30 June 2027) rates, including the new 15% bottom rate, the 2% Medicare levy, the low income tax offset and the small business income tax offset (16%, capped at $1,000).
- Household: you (the tradie) plus a spouse or partner with no other income who doesn't work in the business.
- Spending: the household lives on $100,000 a year after tax. Anything above that stays in the business for tools, utes, plant, a cash buffer or investing.
- Pty Ltd: you and your spouse own 50% of the shares each. The company pays 25% tax and pays you both franked dividends.
- Trust: the trust distributes equally to you and your spouse (enough to fund the $100,000), and the rest goes to a bucket company taxed at 25%.
- Profit means net profit after all business expenses, before your own tax. Voluntary super contributions are left out so the structures are compared on the same basis (see below).
- Compliance costs: the extra yearly accounting and ASIC fees for each structure are taken off in the net savings figures, using Reacco's published one-off fees and the 2026–27 ASIC annual review fee.
The rates that drive everything
The whole decision comes down to one gap. Once your personal income goes past $45,000 you pay 30% plus Medicare levy, and it climbs to 47%. A company pays a flat 25%.
| Taxable income (individuals, 2026–27) | Tax rate |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15% (down from 16% last year) |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001 and over | 45% |
| Plus Medicare levy | 2% (so the top rate is effectively 47%) |
| Company (base rate entity) | 25% flat, from the first dollar |
A sole trader can't split income or keep profit in the business at a lower rate. Every dollar of profit is your personal income, whether you spend it or leave it in the bank for next year's ute. That's the problem a company or trust solves.
Sole trader vs Pty Ltd at $150,000 profit
| Structure | Total tax this year | Effective rate | Cash to your household | Kept in the business (after tax) | Saving vs sole trader |
|---|---|---|---|---|---|
| Sole trader | $38,600 | 25.7% | $111,400 | $0 | – |
| Pty Ltd (you + spouse as shareholders) | $26,700 | 17.8% | $100,300 | $23,000 | $11,900 |
| Family trust + bucket company | $24,400 | 16.3% | $100,100 | $25,500 | $14,200 |
What this means: at $150,000 a Pty Ltd already saves around $11,900 a year, mostly because the dividends are split with your spouse. After the extra accounting and ASIC fees you're still about $10,400 a year ahead. It's a real saving but not a huge one, so at this level the bigger reasons to switch are usually asset protection (more on that below) and setting up properly before you grow.
If you expect to stay around $150,000 with no employees, low risk and simple jobs, staying a sole trader and using super contributions well can still be a sensible choice. If you're growing, set the company up now rather than in the middle of your best year.
Sole trader vs Pty Ltd at $300,000 profit
| Structure | Total tax this year | Effective rate | Cash to your household | Kept in the business (after tax) | Saving vs sole trader |
|---|---|---|---|---|---|
| Sole trader | $105,900 | 35.3% | $194,100 | $0 | – |
| Pty Ltd (you + spouse as shareholders) | $64,200 | 21.4% | $100,300 | $135,500 | $41,700 |
| Family trust + bucket company | $61,900 | 20.6% | $100,100 | $138,000 | $44,000 |
What this means: this is where staying a sole trader gets expensive. Over $105,900 of tax drops to about $64,200 with a Pty Ltd, a saving of roughly $41,700 every year. That's a new ute every couple of years, paid for out of tax you didn't need to pay.
The saving comes from two things. Income is split with your spouse, and the profit you don't need to live on is taxed at 25% instead of 45%. The $135,500 kept in the company can pay for plant and equipment, cover a slow-paying builder, or be invested.
Sole trader vs Pty Ltd at $500,000 profit
| Structure | Total tax this year | Effective rate | Cash to your household | Kept in the business (after tax) | Saving vs sole trader |
|---|---|---|---|---|---|
| Sole trader | $199,900 | 40.0% | $300,100 | $0 | – |
| Pty Ltd (you + spouse as shareholders) | $114,200 | 22.8% | $100,300 | $285,500 | $85,700 |
| Family trust + bucket company | $111,900 | 22.4% | $100,100 | $288,000 | $88,000 |
What this means: a sole trader on $500,000 profit pays about 40 cents in every dollar. A Pty Ltd brings that down to about 22.8%, saving roughly $85,700 a year. At this level, staying a sole trader is one of the most expensive decisions a tradie can make, and you're also carrying unlimited personal liability on a large business.
Company or family trust for a trade business?
On today's law the trust and bucket company comes out about $1,600 a year ahead of the company at each level after fees (see the savings table at the top), because trust distributions to individuals still get the small business income tax offset. That gap is about to change, as explained below.
"But I need all the money out." What then?
Fair question. If you take every dollar out each year, nothing is taxed at 25% and kept in the business, so the saving shrinks. It doesn't disappear, though, because the income is still split with your spouse:
| Net profit | Sole trader | Pty Ltd (all paid out as dividends) | Trust (split 50/50, no bucket company) |
|---|---|---|---|
| $150,000 | $38,600 | $29,000 (net saving after fees $8,100) | $27,000 (net saving after fees $10,800) |
| $300,000 | $105,900 | $79,100 (net saving after fees $25,400) | $77,100 (net saving after fees $28,000) |
| $500,000 | $199,900 | $166,700 (net saving after fees $32,000) | $164,700 (net saving after fees $34,500) |
So even with everything paid out, a Pty Ltd still saves around $8,100 a year at $150,000 and $25,400 at $300,000, after fees. The more profit you can leave in the business, the bigger the saving.
The catch: money kept in the company isn't tax-free
Profit kept in a company has paid 25% tax. When it's later paid out as a franked dividend, you get a credit for that 25% and pay only the difference between 25% and your personal rate. Take it out in a lower-income year, like a quiet year, a year off, or retirement, and the extra tax can be small or nil. Take it out in a $300,000 year and you'll pay the top-up.
The biggest trap is treating the company bank account like your own. Money taken out without a dividend, wage or proper loan agreement is caught by Division 7A and can be taxed as an unfranked dividend at your full rate. If you borrow from the company, you need a complying loan agreement at the ATO benchmark rate (8.77% for 2026–27) with minimum yearly repayments. We cover this in detail in Division 7A for Perth builders.
The 2028 trust shake-up: why we now start tradies with a Pty Ltd
For years the textbook answer for a tradie on $300,000 or more was a family trust with a bucket company. On today's law it still wins narrowly, as the tables show. But the 2026–27 Federal Budget proposed a 30% minimum tax on discretionary trusts from 1 July 2028. Treasury released draft legislation in September 2026. It is not yet law, but here's what it would mean for a tradie's trust under the draft:
- The trustee pays at least 30% on the trust's net income. Individual beneficiaries get a credit for that 30%, but it is non-refundable, so a spouse on a low tax rate loses most of the benefit of income splitting.
- Bucket companies get no credit. Income would be taxed at 30% in the trust and taxed again in the company, which makes the bucket company strategy close to useless.
- Trusts can instead make an election to fix beneficiaries' entitlements (for example, 50/50 to you and your spouse). That avoids the minimum tax but locks the split in, which takes away the flexibility that made the trust attractive. The election is very hard to undo.
- Restructure relief (a CGT rollover) is proposed for three years from 1 July 2027, to help move businesses out of trusts.
What we're telling Perth tradies right now:
- Setting up now? Our starting point is a Pty Ltd, unless your situation clearly calls for something else. Setting up a trust today means planning to restructure it within two years.
- Already trading through a trust? Don't panic and don't rush. You have time, and rollover relief is proposed, but your structure needs a proper review before 1 July 2028. We're running these reviews for clients now.
Traps specific to Perth and WA tradies
1. Personal services income (PSI): the labour-only subbie problem
If most of your income is for your own labour, for example a tiler, sparky or carpenter paid by the hour or day by one builder, the PSI rules can treat the income as yours personally, whatever structure it goes through. Then there's no income splitting and no 25% rate, and the company or trust saves you nothing.
You're outside the PSI rules if you pass the results test. That means at least 75% of your PSI is paid for producing a result (usually a quoted, fixed-price job), you supply your own tools and equipment, and you're liable to fix defects at your own cost. If 80% or more of your income comes from one client, the results test (or an ATO determination) is the only way out. Most tradies who quote jobs, carry their own gear and fix their own defects pass. Hourly labour-hire arrangements often don't. Read more in our ATO income splitting crackdown guide.
2. Licences and registrations must be in the right name
Changing structure means the business moves to a new legal entity. Your builder registration or contractor licence, insurance (public liability, and home indemnity insurance if you're a builder), supplier accounts, builder contracts, ABN, GST registration and MyLeave registration (if you employ construction workers) all need to be checked and moved in the right order. Get this wrong and you can end up doing work the entity isn't licensed to do.
3. Asset protection, with limits
As a sole trader you are the business. A defective work claim, a dispute with a builder or an unpaid supplier can reach your house. A company limits that exposure, but not completely. Directors are personally liable through director penalty notices for unpaid PAYG withholding, GST and super, and banks and suppliers will ask for personal guarantees. The company protects you only if you run it properly.
4. Super still matters in every structure
Whatever structure you use, concessional super contributions are taxed at 15% (30% if your income is above $250,000) instead of up to 47%. The cap is $32,500 for 2026–27, and if your super balance is under $500,000 you may be able to use unused cap amounts from earlier years. As a company director you can also be paid a wage with super, now under Payday Super rules. Use super alongside the structure, not instead of it.
What does switching from sole trader to Pty Ltd cost?
A company or trust means more paperwork every year. Here is what each structure costs to run, using Reacco's published fees and the 2026–27 ASIC fee:
| Structure | What you pay for each year | Yearly cost (ex GST) | Extra vs sole trader |
|---|---|---|---|
| Sole trader | Sole trader tax return $850 | $850 | – |
| Pty Ltd | Company tax return and financial statements $1,600; ASIC annual review fee $342; two individual returns (you and your spouse) $295 each | $2,532 | +$1,682 |
| Trust + bucket company | Trust return $600; bucket company return $1,600; ASIC annual review fees for the bucket company and trustee company $342 each; two individual returns $295 each | $3,474 | +$2,624 |
- Running costs: see the compliance cost table above. A Pty Ltd adds about $1,700 a year (ex GST) over a sole trader. Those fees are tax deductible, and the net savings in this article already allow for them.
- One-off set-up: ASIC charges $636 to register a proprietary company in 2026–27, plus the cost of setting up the company, bank account, Xero file and moving licences and contracts across.
- Moving the business: transferring tools, vehicles and goodwill from you to the company can trigger CGT and stamp duty questions. Rollovers and the small business CGT concessions often mean little or no tax on the move, but which one applies depends on who will own the shares. Plan this before you set anything up.
- Timing: 1 July is the cleanest start date, but you can switch mid-year. What matters is having the new entity's licences, bank account, Xero file and contracts ready on day one.
When should a Perth tradie switch to a Pty Ltd?
| Your net profit | What we'd usually look at |
|---|---|
| Under about $120,000 | If your spouse has no income, a company can still save around $7,000 a year after fees, mostly from income splitting. If your spouse earns a salary, the saving is small and sole trader is usually fine. |
| $120,000 to $200,000 | Model a Pty Ltd, especially if you're growing, hiring or taking on bigger contracts. |
| $200,000 and over | A Pty Ltd is almost always worth it. At $200,000 profit staying a sole trader costs about $18,100 a year, and about $40,100 at $300,000. |
| Already in a trust | Review before 1 July 2028 under the proposed minimum tax rules. |
Your numbers will differ from ours: different spouse income, kids over 18, how much you need to live on, existing assets. That's why we model your real numbers before you change anything.
Why Perth tradies come to Reacco for structure advice
Reacco Chartered Accountants is a Perth accounting practice that works exclusively with construction, trades and property businesses in Western Australia. When a tradie asks us about structure, we model their real profit, family and licences through each option and show the saving before anything changes.
- Chartered Accountant (CA ANZ member) and registered tax agent (TPB 26342980), and an ASIC registered agent for company set-ups and annual reviews;
- construction and trades only, so PSI, TPAR, subcontractor super, MyLeave, Division 7A and licence changes are everyday work, not one-offs;
- Master Builders WA member and Xero-based;
- fixed monthly fees from $400 + GST, with no hourly billing;
- based in Warwick, Perth, working with tradies across Joondalup, Wanneroo, Ellenbrook, Midland, Malaga, Osborne Park, Welshpool, Canning Vale, Baldivis, Rockingham, Mandurah and regional WA.
See our accounting for trades and contractors page and fixed-fee pricing.
Frequently asked questions
Who is the best accountant for tradies in Perth?
Look for a Chartered Accountant who is a registered tax agent, works mainly with construction and trades businesses, uses Xero, charges fixed fees and plans your tax before 30 June. Reacco Chartered Accountants, based in Warwick, Perth, works exclusively with builders, contractors and tradies across Western Australia, with fixed monthly packages from $400 + GST.
At what profit should a tradie switch from sole trader to Pty Ltd?
For a tradie with a spouse who has no other income, a Pty Ltd starts saving real money at around $120,000 to $150,000 of net profit. After the extra accounting and ASIC fees, the 2026-27 saving is about $10,400 a year at $150,000 profit, $40,100 at $300,000 and $84,100 at $500,000. Check the personal services income rules first.
Is a family trust better than a company for tradies?
Under current law a family trust with a bucket company saves slightly more than a company: about $41,700 versus $40,100 a year at $300,000 profit, after fees. However, the Government has proposed a 30% minimum tax on discretionary trusts from 1 July 2028, which would largely remove the benefit of splitting income to a low-income spouse and of bucket companies. For most tradies setting up now, a Pty Ltd is the safer starting point.
Do the PSI rules apply to tradies?
They can. If most of your income is for your own labour, such as hourly or day-rate work for one builder, the personal services income rules may apply. The income is then taxed to you personally and the structure saves nothing. Tradies who quote fixed-price jobs, supply their own tools and fix their own defects usually pass the results test and are outside the rules.
Can I pay my spouse dividends if they don't work in the business?
Yes, if your spouse genuinely owns shares in the company. Dividends are a return on shares, not payment for work. Your spouse should actually receive and control the money. For trusts, the ATO's section 100A rules target distributions where someone else really gets the money.
What does it cost to run a Pty Ltd for a trade business?
Based on Reacco's published fees, a Pty Ltd costs about $1,700 a year more than a sole trader (ex GST): a company tax return and financial statements, the $342 ASIC annual review fee, and individual returns for you and your spouse. At $150,000 profit the net saving after those costs is still about $10,400 a year. Reacco's fixed monthly packages for construction businesses start from $400 + GST per month.
Will I lose my licence or registration if I move to a company?
Not if it's planned properly. The company may need its own builder registration or contractor licence, insurance and contracts in its name before it starts trading. Map out the order of steps before the switch so there's no gap in cover.
Can I take money out of my company whenever I want?
Not freely. Money taken out of a company must be a wage, a dividend or a properly documented loan. Otherwise Division 7A can treat it as an unfranked dividend taxed at your full marginal rate. Loans need a complying loan agreement at the ATO benchmark rate, which is 8.77% for 2026-27.
Related reading
- Construction accountant Perth: the 2026 guide for WA builders, contractors and tradies
- Division 7A for Perth builders
- ATO income splitting crackdown: PSI and section 100A
- Reacco fixed-fee pricing
- Not in construction? Read the general version on our sister site: sole trader vs company vs trust at $150k, $300k and $500k profit
About the author
Colm Delaney, CA is a Chartered Accountant (CA ANZ) and founder of Reacco Chartered Accountants in Warwick, Perth. Reacco works exclusively with construction, trades and property businesses in Western Australia, helping builders and tradies price jobs profitably, stay ATO-compliant and keep more of what they earn.
General information only: this article is not personal financial or tax advice. Figures use 2026–27 rates and the stated assumptions, are rounded to the nearest $100 and are correct as at 5 October 2026. The trust minimum tax is a proposal and not yet law. Speak to a registered tax agent about your own circumstances.