The government will introduce new rules preventing loss attributing qualifying companies (LAQCs) from passing losses on to their shareholders, Revenue Minister Peter Dunne says.The move follows public consultation on proposals for reforms of the tax rules
The government will introduce new rules preventing loss attributing qualifying companies (LAQCs) from passing losses on to their shareholders, Revenue Minister Peter Dunne says.
The move follows public consultation on proposals for reforms of the tax rules announced in the budget.
Mr Dunne said today they would also provide flow-through income tax treatment for closely held companies which choose to use them.
Business income and losses will be able to be passed to shareholders who will pay any tax due but the rules will allow a business to still have the benefits of of a company, such as limited liability.
"In response to feedback from small business, the government has also decided to review the tax rules for dividends, with a view to simplifying them for closely held companies," Mr Dunne said.
"Until this review is undertaken, existing qualifying companies and LAQCs can continue to use the current qualifying company rules, but without the ability to attribute losses."
Draft legislation will be available later this week.
