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What is it?

A Look-Through Company (‘LTC’) is similar to a traditional limited liability company, however its income and losses are treated differently for tax purposes. The tax structure of an LTC allows the company to transfer income and expenditure to its shareholders directly. In other words, the shareholders of an LTC become liable for income tax on the company’s profits while also being able to offset the company losses against any other income. There are many advantages to utilising an LTC, some of which are discussed in this article.


In 2010, the LTC was introduced to replace the former Loss Attributing Qualifying Company (‘LAQC’) and Qualifying Company (‘QC’). The need for such a change as identified by the Policy Advice Division of the Inland Revenue Department centred mainly around issues relating to arbitrage opportunities and the lack of loss limitation rules.

Key Features of the LTC Regime

LTCs are governed by Subpart HB of the Income Tax Act 2007 (‘the Act’). Some of the features and requirements for an LTC are: 

  • Shares can only be held by a natural person, trustee or another LTC. Additionally, all company shares must be of the same class and provide the same rights and obligations to each shareholder,
  • An LTC must have five or fewer owners (ownership interests of relatives within two degrees of relationship are combined),
  • An LTC’s income, expenses, tax credits, rebates, gains and losses are passed onto its shareholders. Such allocation to the shareholders will usually be in proportion to the number of shares they have in the LTC,
  • Any profit is taxed at the shareholder’s own marginal tax rate. The shareholder can use any losses against their other income, subject to the loss limitation rule, and
  • The loss limitation rule ensures that the losses claimed by a shareholder accurately reflect the level of that shareholder’s economic loss in the LTC.

Companies can elect to become an LTC, and existing LAQCs and QCs can elect to become an LTC without a tax consequence in the income years commencing 1 April 2011 and 1 April 2012. All shareholders of a company must elect for the LTC rules to apply in order for the conversion to be effective.



Some of the advantages of utilising an LTC as opposed to other business structures are: 

  • An LTC allows a shareholder to hold an investment in defined shares with other parties. A trust on the other hand (generally a discretionary trust) would not provide for such definitive shares to be held,
  • Shareholders have the ability to sell their shares or bring other investors into the LTC (provided the relevant LTC disposal provisions are followed under the Act),
  • Added creditor protection is offered by the LTCs limited liability, and
  • An LTC can be particularly useful where investors have varying tax positions.

For more information on LTCs, please speak to an accountant, lawyer or the Inland Revenue Department.

Feel free to contact:

Ross Dillon: 09 970 8813 /

John Jon: 09 970 8829  /

Tina Hwang: 09 970 8812 /