Property development can be one of the most rewarding and profitable ventures in Australia, but it’s also one of the riskiest. How you structure your development entity before you even sign a contract determines how profits are taxed, how liability is handled, and how easily you can finance future projects. 

At JD Scott + Co, we often meet developers who come to us after purchasing land, only to discover that the wrong structure is costing them tens or hundreds of thousands in unnecessary tax or exposure. The good news: with the right accounting and tax advice, property developers can build their projects on a solid legal and financial foundation. 

The Importance of Getting Structure Right

Every development from a small duplex to a $20 million mixed-use project needs a structure that matches its risk, funding, and exit strategy.

The right entity can: 

  • Protect your personal and business assets from project-specific risk
  • Enable clear profit sharing among investors and partners
  • Provide flexibility in distributing profits or retaining capital
  • Optimise tax outcomes under the Australian system
  • Simplify compliance, record-keeping, and lender requirements. 

Common Structures for Property Developers in Australia

Structure Pros Cons Best suited for
Company (Pty Ltd)
Separate legal entity. Flat 25% company tax rate.
  • Limits personal liability, with the company bearing the risk.
  • Flat 25% tax rate for base rate entities.
  • Easy to manage with clear share ownership.
  • Profits distributed as dividends may be taxed again in shareholders’ hands.
  • Limited flexibility for profit distribution.
  • Not ideal for long-term asset holding due to CGT treatment.
 Ongoing developer businesses and special purpose vehicles for single projects.
Trust
Discretionary or unit trust. Flexible distributions.
  • Flexibility in distributing profits among beneficiaries.
  • Potential CGT and tax advantages for long-term holds.
  • Can hold property on behalf of a group of investors.
  • Trustees bear personal legal responsibility.
  • Limited ability to retain profits within the trust.
  • Requires careful setup and ongoing annual compliance.
 Family developers, groups of investors, or long-term holding structures.
Partnership
A simple arrangement between two or more parties to carry on business together.
  • Simple and inexpensive to establish.
  • Income and losses flow directly through to each partner.
  • Each partner is personally liable for the partnership’s debts.
  • Not well suited to larger projects or partnerships between unrelated parties.
 Small-scale developments between individuals who know each other well.
Joint Venture (JV)
Allows multiple parties to collaborate while keeping ownership separate.
  • Parties share profits, costs, or output in agreed proportions.
  • Each party retains control of their own tax position.
  • Can be structured as either an equity or contractual joint venture.
  • Requires detailed legal documentation to protect all parties.
  • Can become complex where objectives or project timelines differ.
 Developers combining capital, land, or expertise for a single one-off project.
Special Purpose Vehicle (SPV)
A dedicated entity created solely for one project.
  • Isolates risk to the specific development, protecting other assets.
  • Simplifies reporting for investors and lenders.
  • Makes future audits and profit allocation more straightforward.
  • Additional compliance costs for each entity established.
  • May require group consolidation when arranging financing.
 Developers running multiple concurrent projects or investor syndicates.
large property development project

Whether small or large, choosing the right structure for your property development project is crucial.

Questions to Ask to Choose the Right Structure

When we advise our property developer clients at JD Scott + Co, we start with a few key questions.

  1. Who are the participants? (Individuals, companies, or family groups)
  2. How is the project being funded? (Private capital, bank finance, investor equity)
  3. What is the exit plan? (Sell, hold, refinance, or syndicate)
  4. What’s the risk profile? (High leverage, multiple partners, or simple build)
  5. How often will you develop? (One-off project vs. ongoing business) 

The answers to the above are likely to determine the appropriate structure requirements for the development business.

Example

A Small Developer Using an SPV

Scenario: A small Sydney-based developer purchases land to build four townhouses, planning to sell on completion. They form XYZ Developments Pty Ltd as a Special Purpose Vehicle:
  • The company holds the land, enters construction contracts, and receives sales revenue.
  • The parent company (XYZ Group Pty Ltd) provides management services and receives a fee.
  • Profits flow through as dividends, allowing clear separation from future projects.

Result:

  • Risk is isolated to that single project.
  • Financial tracking and GST reporting are simplified.
  • The developer maintains a clean, professional structure for lenders and investors.

Mistakes Developers Commonly Make

We see Property Developers make a few key mistakes when structuring their business. The following are most common:

  • Buying property in personal names to save time
  • Using the same company for multiple developments
  • Mixing business and private assets
  • Forgetting to register for GST before settlement, and
  • Not formalising joint venture agreements

Getting business structure or tax advice BEFORE you acquire land or sign contracts is valuable, to avoid monetary or legal consequences down the track.

When to Review or Change Your Structure

Review when projects increase in size or complexity, you introduce investors, hold completed projects, or expand across multiple developments. 

It’s important to note that the ATO is reviewing contrived property development arrangements, through structures they deem to be used to defer tax. This may be useful to consider when reviewing, or setting up a new structure.

Our experienced team at JD Scott + Co can help review your structure. Get in contact today.

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