New Zealand Look Through Companies

The New Zealand Look-Through Company is an entity providing all the advantages of separate corporate identity and limited liability, but with look-through treatment for tax purposes.

Criteria

The criteria for Look-Through Company status include:

• The Company must be New Zealand tax resident and must not be treated as a non-resident under any Double Tax Agreement.
• Shares in the Company can only be owned by individuals, trustees or by another Look-Through Company.
• All shares must be of the same class providing the same rights and obligations to each shareholder.
• There must be five or less look-through counted owners.
• Shareholders within two degrees of relationship are counted as a single look-through counted owner.
• Special rules apply for determining the number of look-through counted owners where shares are held on trust.
• Look-Through Company status ceases on revocation or as a result of no longer meeting the eligibility criteria.

Taxation of Off-Shore Shareholders

As a Look-Through Company is not taxed at company level, all its income flows through to its shareholders, much like a partnership.

This means that non-resident shareholders pay no tax in New Zealand provided the Look-Through Company does not derive New Zealand sourced income.

Summary

In summary, the key advantages of a New Zealand Look-Through Company include:

• Corporate identity;
• Limited liability;
• No tax liability at Company level; and
• Flow through taxation to shareholders and trustee shareholders.

Conclusion

The New Zealand Look-Through Company is a tax efficient and straightforward vehicle for shareholders looking for the advantages of corporate identity, limited liability and an entity operating out of a stable and well respected jurisdiction.

For more details, please contact us at info@jones-law.co.nz