Moving From an LAQC to a Look Through Company (LTC)

[Invoke]

Hi All,

I own a residential property in Auckland which is tenanted whilst I am living in the UK.

I have recently received a letter from my accountants informing me of the changes that are in progress for LAQC companies. If these changes do come to fruition my accountants are suggesting that I move from an LAQC to a Look Through Company (LTC).

Because I am living in the UK this means that I don't really have any income, aside from the rental income which I have to top up every month. Because the exchange rate remains weak my father is covering my loan repayments, whilst I am saving the equivalent of these payments in GBP. When the exchange rate improves I will obviously repay him .

I am wishing to permanently move back to New Zealand in the next 12-24 months, reside in my rental property, and set up my own business therefore I am trying to ascertain the risks and considerations I should be taking into account when considering this change to a Look Through Company. Would be grateful for advice on these risks, and of course if there is any reason why I shouldn't go down this route, or if there is a preferable alternative?

I appreciate your feedback on this.

Thanks
Scott

[Orkibi]

Look Through Companies for Non Residents

Hi Invoke,

I would have thought your NZ accountant should outline the positive and negative which could affect you personally if you change the company.

Not just any NZ company can be a look-through company (LTC). And it can be rather detrimental to your tax situation if your company no longer meets the requirements as losses can be trapped within the company and a liquidation required to preserve your tax free capital gain. This article looks at the requirement that a LTC cannot be resident of another country.
A company may only be a LTC if it has 5 or fewer owners, is resident in NZ and is not treated as a non-resident under any double tax agreement.

For more info and Read more please visit this PT link:

http://www.propertytalk.com/forum/showthread.php?p=239085#post239085