Latest News [index] LTC eligibility rules
The new look through company (LTC) regime will apply from 1 April 2011. From this date existing loss attributing qualifying companies (LAQCs)will no longer be able to attribute losses. This means that the shareholders of LAQCs must decide whether to become a LTC or to remain a qualifying company that cannot attribute losses.
The LTC regime is also available to companies other than existing LAQCs.
Before the decision is made to enter the LTC regime it is important to appreciate that a LTC is not just an LAQC with another name. The new regime has different eligibility criteria and different rules regarding the availability of losses.
This article, the first of a number of articles on LTCs, provides an overview of the eligibility criteria to become a LTC.
- To become an LTC a company must be a New Zealand tax resident company.
- All the shares in the company (subject to a count test) must be owned by a natural person (or persons), trustees or another LTC.
- All the company's shares must be of the same class and must provide that each owner of shares has the same rights and obligations as any other share owners.
- The LTC must have a maximmum of five "look-through counted owners". The "look-through counted owners" are the ultimate recipients of any income or losses from the LTC.
Special rules apply to determine how trustee owners and related owners of shares are counted to calculate the number of owners. The number of shareholders is not necessarily the number of look-through counted owners for the purposes of the LTC rules.
If you have any questions about how to determine eligibility for the LTC regime, or whether a LTC has a place in your asset and estate planning structure please contact a member of the Ayres Legal team.