As noted from an article in the Weekend Herald. Investors will now seriously need to reassess the structures in which they hold property after the IRD announced they are taking away the favourable tax status for the LAQC. (Loss Attributing Qualifying Companies). Investors should urgently seek the advice of a qualified Accountant and in their interest act sooner rather than later. An alternative could be the LTC (Look Through Company). This structure will pass losses or income to their shareholders which are taxed at the individuals marginal tax rate, but there will be a limitation of loss. LTC owners will not be able to claim losses greater than their equity in the company – which means they can’t be a nominal $1.00 shareholder – but claim considerable losses each year. Other structures could be Family Trusts, Limited Partnership or simply holding the property as a sole trader. Again we can not stress the importance of seeking the appropriate Professional Advice prior to undertaking any changes to your Investment Portfolio to meet your circumstances. If you require any assistance please contact us directly on 0800 2 87878. Happy Investing the Team at Property Conveyancing Services – Connecting People and Property 
Tag: Ird
Following on from our previous blog:
Employees – The Seller must provide you with a full list of staff and employment contracts. Furthermore assurance must be made by your Conveyancing Practitioner that all PAYE tax and any other payments due to the IRD are paid at settlement inclusive of payment of all due holiday pay to employees. Technically when a business is sold employees become redundant as employment contracts can not be transferred. New employment agreements would need to be negoitated.
Records – You may not be given full access to all business records but you should ensure limited due diligence where the seller discloses information to you in the form of a memorandum and the accuracy of this information is covered in the sellers warranties in the Agreement.
Stay posted for further tips and advice.
Do you need to pay tax on a property you have purchased in New Zealand? The Inland Revenue Departments state this depends on your reason or intention at the time you purchased the property. When the IRD decides whether or not you should pay tax on the profit from the sale of the property, intention is the deciding factor. If you purchased the property with the firm intention of selling it when prices rise to make a gain from the increase in the value the profit is likely to be taxable. However if you purchased the property to provide a home for your family, any profit from the eventual sale will most likely not be taxable. The test is to ask yourself “what was my reasons for purchasing this property” To be continued stay posted
