QLD Equity Investment - Loan to New Company Under Commercial Law?

[heb]

I'm looking to buy an office property to rent to my related trading company - company 1. I want to set up company 2 to buy it & company 1 lease it. Should I, as the director of both companies, loan the money to company 2? Or make an equity investment into company 2, for company 2 to then buy the real estate?

Company 2 would then pay me personally back in franked dividends (vs interest payments from a loan). What are the pros & cons from a commercial law and tax point of view?

 

[heb]

This might be part of the answer:

Q9. What transactions may be considered as a dividend under Division 7A?
A:The following types of transactions may be considered as a dividend under Division 7A: payments made by a private company to a shareholder or shareholder's associate

Q 16. What is the effect on the private company's franking account if the company is taken to pay a dividend at the end of an income year?
A: In general, amounts treated as dividends under Division 7A are not frankable, even though they are taken to be paid out of the private company's profits