GRA Blogs

Articles by Matthew Gilligan

LAQCs are no longer the right fit for property investors. Have you made the switch?

AUTHOR: Matthew Gilligan

POSTED: 26 January 2011

As you will now be well aware, the LAQC / LTC tax changes are fast approaching. They take effect 1 April 2011.

If you have an LAQC and you have not yet discussed with us what course of action to take, you need to contact us urgently and book an LAQC/LTC review meeting. As a recap, some of the key points to note in respect of the rule changes are as follows:

If you do nothing, your LAQC will remain an LAQC, but a rule change from 1 April 2011 means shareholders of LAQCs can no longer claim tax losses. In other words the LAQC loses the ability to attribute its losses to shareholders. In most cases doing nothing is not an option.
In conjunction with the LAQC/LTC changes, depreciation can no longer be claimed on buildings. In many cases this means that tax losses that are currently being experienced will turn to tax profits. Therefore you need to ask the question as to whether your current structure is appropriate given this change in tax result.
Broadly speaking, if you have an LAQC at present you have a number of options available to you including the following:

Convert the LAQC to an LTC, but leave everything else the same.
Convert the LAQC to an LTC, but at the same time examine whether the shareholding structure in relation to the company is appropriate.
Convert the LAQC into an ordinary company and potentially restructure the shares as well.

In summary, the changes to the LAQC rules and the implementation of the LTC regime means that all existing LAQC clients need to have their affairs reviewed to determine what the best structure is for them from 1 April 2011 onwards. We are offering LAQC/LTC review meetings at a discounted cost of $150 plus GST. Do not delay in setting this meeting up as you need to have the advice in advance of 31 March 2011.

Request a Meeting

Matthew Gilligan
Director

09 522-7955

mg@gra.co.nz

© 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.

Comments

Testimonials

Hi Anna, It was very nice meeting you in person today. Thank you so much for coming up with this precise summary so promptly. I feel very blessed to have you, a diligent and efficient professional lady taking care of my accounting/tax needs.

- Jackie Zhang, July 2023

We can help

Here's how

Investing in residential property?

Put this at the top of your reading list.

If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.

Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.