Changes to Qualifying Company Rules (LAQC & QC)

March 11

The 1st of April will see changes implemented to rules governing qualifying companies (QCs) and loss attributing qualifying companies (LAQC). It will also see the introduction of a new tax entity known as the look-through company (LTC).

These changes mean LAQCs, which automatically become QCs, will not have the ability to attribute losses to shareholders. Existing LAQCs and QCs do however have the option to transition into an alternative tax entity such as a LTC, partnership, limited partnership or sole tradership. Elections to become a QC or LAQC can also no longer be made from the 1st of April 2011.

The new LTC is similar in structure to a LAQC and retains corporate obligations and benefits under general company law, such as limited liability. One of the major changes mean shareholder’s are now liable for tax upon the company’s profit in addition to being able to offset company’s losses against their other income. 

Further information is available on the IRD website and we recommend you consult your tax professional.