Companies & Tax



Companies

A company is one of the most common form of business structure because it provides advantages that one should look at when going into business. The shareholders are not the business but only have shares in the business.


Company Losses

There is no time limit set on when a net loss can be carried forward by a company. If the losses are incurred in two or more income years and carried forward they are deducted or set off in the order in which they have arisen.



Qualifying Companies

The purpose of the qualifying company rules was to treat small closely held companies in a similar way as that afforded partnerships. This deems the shareholders and the qualifying company to be one entity for tax purposes.


LAQC

A qualifying company can become a LAQC by election allowing it to attribute its losses to its shareholders in proportion to their effective interest in the company thereby giving shareholders full tax advantage.



Imputation

Imputation is a system that lets companies pass on to their shareholders the benefit of the NZ income tax they have already paid. Companies do this by "imputing" (attaching) tax credits to the dividends they pay out.