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There are two main types of trust used in Australia, a unit trust and a discretionary trust.

A unit trust is similar in many ways to a company. Unitholders, like shareholders, acquire units in the trust (similar to shares) as beneficiaries to which certain rights are attached such as the right to vote at meetings, and the right to receive distributions of trust income. Generally, the unitholder's entitlement is linked to the number of units held.

Unit trusts are a popular alternative to private companies and are often used as the structure underpinning a business.

In contrast, under a discretionary trust, the trustee has discretion as to how trust income is distributed among trust beneficiaries. Discretionary trusts are especially popular with family groups where the beneficiaries are restricted to family members. This provides a potent tool for tax planning because income can be channelled