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From what I can see, LL, from a laymans perspective not a lot has really changed ... tax losses can still be passed from a LTC to be offset against personal income, just as they were under LAQC's .... the only difference being when the company becomes profitable, profits are also passed to the shareholders for tax purposes, rather than being taxed at the company tax rate as they were under LAQC's.
There is, of course, the removal of building depreciation, which makes any tax losses smaller ... but that was only ever a bonus, and not really _the_ reason to be in the game anyway ...
I am heading overseas in January for good (2-5 years at this stage) and am wanting to know what this new ruling will mean for me. I currently own one property held in an LAQC and im 100% shareholder. I knew i was going to loose the LAQC status when i went overseas, so if i change to a LTC what are the implications if the Director and Shareholder are not in the country?
Thanks in advance,
Frozen
You dont need to lose LAQC status - who told you that ? That's nonsense. Just appoint an NZ director and you are protected as remaining an LAQC.
Of course the new rules make an LAQC really a QC, so no loss flow through.
So you will need ot elect to be an LTC. BUT i dont know if you need an NZ director - flick me an email and Ill have a look for you.
We breath this stuff - come and get a review done and we will sort it out for you. Then keep your accountants if you wish. We can give you a cheap, specialist view of it and then you can relax knowing you are on the right path.
Thanks for your advice - and your piece above makes me feel better. Soft sell is a much nicer way to do business in my opinion. Seriously. Will be in touch.
My LAQC is currently owned between my wife (5%) and I (95%). Is it possible to transition it to have all assets owned personally under my name? Would it be considered "sole trader"?
The way I see it none of the alternative structures provides asset protection nor allows moving shares without triggering depreciation claw back, as such, why not just have the rentals under one's own name.
Can I assume that my wife's 5% share could be gifted to me as it would be less than the 20 something k gifting amount?
The answer is yes you can, but why not simply elect LTC at little to no cost ? Seems cheaper and more practical to me. Later when the LTC becomes tax positve, you can sell the shares to your Trust and not pay conveyancing again, albeit you will trigger depreciation recovered.
Hi Matt, Thanks for the info. I read somewhere that under the LTC regime tax credits are likely to flow through to the shareholders. So does this mean an LTC that owns shares in anther company, and receives dividends with imputation credits attached, can pass the imputation credits though to the shareholders along with the income? Or are the imputation credits stuck in the company? Regards
Bryan
Is it possible to set up an LTC now, so that you're "future proofed" for when the legislation comes into force?
If a company is set-up (say) this week and has a cash flow +ve property (or several) in it, under what regime does it come under?? The one that is in effect when the company is created, or when the first tax returns are filed??
If a company is an LAQC and making a small tax loss, when should it become an LTC?? Can the shareholding change at the same time at the company designation?? ie from LAQC (99%/1% split) to a LTC (with a 50%/50%) split. Would there be depreciation clawback incurred at that time??
Can the shares of an LTC be owned by a FT?? So that any losses (and profits) can flow to the FT.
With the new transition six months is it possible to elect out of an LAQC to an ordinary company within this time and not get depreciation clawback. (Will still be making losses this year but not next year
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