As many of you will know on 1 April 2011 LAQCs are being outlawed
Clients with LAQCs have a number of options for restructuring their entities and the IRD has given a transition period for restructuring.
Options include changing status to
- Qualifying Company
- Limited liability partnership
- Partnership
- Sole trader
- Standard company
- Look through company
A new structure has been created called a Look Through Company (LTC).
It is a company from a legal perspective, but from a tax perspective
the IRD look through it straight to the shareholders. Profits and losses
will be assessed in the shareholders’ tax returns.
LTC’s do not pay income tax as all of the income is directly passed to shareholders (who are responsible for their own tax).
The LTC regime is complex, and transferring from the LAQC structure may create real tax disadvantages for some of our clients.
Unfortunately there is no one size fits all solution, so we are performing reviews for those who want to ensure they transition to the most appropriate structure.