What is the future of LAQCs....

[CJ]

CJ the QC regime allows you to elect up to the date your 1st tax return is due if it's your 1st year of taxable activity.
This differs from the IRD advice on a new LTC which they say "Elections must be received by the Commissioner before the start of the income year they apply to ."

Shame on you. Shame on you.

You should wash your mouth out with soap!!!!

Never listen to "IRD Advice".

Go to the legislation sHB13(3)(b) and your wishes will be answered.

[jace the ace]

CJ I can't seem to find the legislation you refer to.
Could you please post a link to it.

[CJ]

CJ I can't seem to find the legislation you refer to.
Could you please post a link to it.

The ITA on the this site is only updated to Nov 2010 so it isn't included yet. This is the relevant section of the ammending act:

link

[ADobson]

LAQC changes

Hi there,

First time poster, mid term investor. Just seeking some advice on LAQC changes that are happening at the moment. I've put it to my accountant and lawyer as well (awaiting their response) but interest in feedback from investors as well.

I have a couple of IP's in an LAQC currently however with the current changes I'm a bit confused on where to head with them. I'm interested in some advice on what the best options are going forward bearing in mind I see these as a long term investment for myself. Do I put them into a LTC, put them in my own name or are there other options?

I'm a Kiwi, living in Australia with the buy and hold strategy as I'm looking at my IP's long term.

Thanks

Andrew

[ChrisD]

What's the current shareholding structure of your LAQC? Do the properties currently make losses? What about after the depreciation changes? Do you intend on moving back to NZ and working here in the future?

[ADobson]

What's the current shareholding structure of your LAQC? Do the properties currently make losses? What about after the depreciation changes? Do you intend on moving back to NZ and working here in the future?

I own the LAQC so 100%. Properties currently making a loss. Not sure once the depreciation changes kick in but will probably still make a small loss. I see myself in Australia fairly long term at the moment but things change, retiring in NZ looks like the best option but that's 30 or so years away yet.

[CJ]

Hard to give advice as the australian implications will be a significant factor.

The options for you are, transition to sole trader, elect into LTC or do nothing and default into QC. Another option is to sell to say a family trust. You need to work out the pros and cons from a NZ and Austrlian perspective.

Considering you probably dont get access to the losses anyway in Australia (and no income in NZ???), probably default to a QC would be worth investigating.

[ADobson]

Thanks CJ,

Busy looking into the Australian side of things; but initial advice is that is doesn't matter since the IP's are in a company format (It would be different it they were privately owned and I wanted to sell them as capital gains kick in).

No income in NZ, but I can attribute losses in AU if the IP's are privately owned so that's certainly something to consider. As with anything, pro's and con's for all options. Having said that default to QC is perhaps most cost effective initially.

[lissie]

Be very careful about the Australian side - if they are in your name - and you leave Australia (become non-resident) - they can decide to charge you the CGT as if you sold the properties the day you stopped being resident in Australia - I'd stay with a company structure and not acknowledge the existance of it to the australians - the losses will accumulate and give you a nice tax free reentry when you come home

[ADobson]

Thanks Lissie,

Gosh they make it complicated and hard to do the right thing! Thanks for the heads up on the CGT side of things; the company keeps looking better and better.

A

[Wayne]

Any idea how exactly I make an election? Is there a form for the Directors to sign and somewhere to send it to?

[graemeh]

Any idea how exactly I make an election? Is there a form for the Directors to sign and somewhere to send it to?

Yes you sign a form but I was told last night that the IRD have not yet produced the form. You've got 6 months from your balance date to file the form so no great rush if that is what you have decided to do.

[lissie]

If you are out of the country - you really should have a competent accountant doing this stuff for you - DIY has its limits - I pay my accountant good money to do this stuff for me.

[Rolf]

Any idea how exactly I make an election? Is there a form for the Directors to sign and somewhere to send it to?

You fill out IR862 which only became available on their website 1st March.

[Wayne]

You fill out IR862 which only became available on their website 1st March.

thanks - that is brilliant. Simple form too!