Important LAQC Changes
How LAQC legislation changes affect you
From 1 April 2011 new legislation effectively removed the attribution of losses to shareholders for Loss Attributing Qualifying Companies. The Government wants to prevent companies retaining profits to obtain a lower company tax rate.
A new tax entity, called a Look Through Company (LTC) has been created who's profits or losses are passed to shareholders and deducted or taxed at their marginal tax rate.
What does this mean for me?
LTC status may create tax DISadvantages for your company.
The changes are complex so make an appointment to discuss with us the full implications as they affect your company.
Broadly what are my options?
- Become a Look Through Company.
- Remain as a Qualifying Company, unable to attribute losses to shareholders.
- Exit the QC regime and become a standard company.
- Restructure the ownership of your business/assets so they are owned by a Partnership, a Limited Partnership or a Sole Trader.
Transitional rules with tax concessions enable Advisory Accountants to transition you across to an LTC, a Partnership, a Limited Partnership or Sole Trader.
This does sound urgent. How long do I have?
We need to review your situation as soon as possible (unless you have early balance dates) even though you have until 30 September 2012 to become an LTC or other entity. We'll need to alter shareholdings in some instances and put firm tax and dividend plans in place for others.
What should I do?
Contact Accountant First and make an appointment to discuss the implications for your company immediately so we can take the most effective action for your circumstances.
More detailed information regarding LAQC changes and further implications.