GRA Blogs

Articles by Matthew Gilligan

Matthew Gilligan

Don't Miss The Boat

The 2012 tax year began on 1 April 2011 for most taxpayers and with it new tax rules in relation depreciation on buildings and LAQCs finally came into force.  We have written a number of times on the potential impact these rules may have on you if you have an existing LAQC and have long been encouraging our clients to make contact with us in order to have their circumstances reviewed so that appropriate action can be taken. 

If you have an LAQC and have not yet obtained advice in relation to the impact of the new rules on you it is not too late but time is running out. Contact us at GRA for a meeting immediately.

By way of summary, the key changes are as follows:

  • Tax losses of an LAQC can no longer be attributed to shareholders.  This means if you have a loss making LAQC from the 2012 year onwards you will no longer be able to personally claim the tax losses produced by the LAQC.  If you are in this situation you need to take action.
  • Whilst LAQCs can continue to exist without the ability to attribute losses, no new companies can enter the LAQC or QC regime. 
  • In what can be regarded as a replacement of the LAQC regime the new Look Through Company (LTC) regime has been enacted.  An LTC is perhaps best described as a “cousin” of an LAQC. 
  • LTCs share some characteristics of the old LAQC regime in that tax losses can be attributed to shareholders and capital gains can be released from an LTC.
  • However, there are some significant differences including the fact that there are rules that effectively limit the amount of loss that shareholders can claim, profits are also attributed to shareholders rather than being regarded as company profits, shareholder salaries can not be paid from LTCs, and shareholders are regarded as owning the underlying assets for tax purposes, which means when you sell shares in an LTC you are regarded as selling the property which can have income tax implications for you if the LTC owns property that is on revenue account or depreciable property.

There are a variety of options available to those who have LAQCs and we also see the new LTC rules as offering opportunities for clients with existing companies and offshore operations in certain circumstances. Please contact us at GRA for a meeting to discuss the potential opportunities that the new LTC regime presents. 

Matthew Gilligan
Matthew Gilligan
© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
We were given a huge amount of information in Property School and learnt about multiple ways to buy/develop/sell property. I was impressed with the depth of knowledge of all of the presenters. - Anon, April 2019
We can help
Here's how

GRA logo

Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.

We help new, small and medium property investors become long-term successful investors through our education programmes and property portfolio planning advice. With our deep knowledge and experience, we have assisted hundreds of clients build wealth through property investment.

Learn More
GRA Senior Partners