LAQC / Look-Through Company
A Look-Through Company (LTC) is a special company structure where income, expenses, tax credits, and losses flow through to shareholders in proportion to their ownership interest, rather than being taxed at the company level. LTCs were introduced in 2011 to replace the older Loss Attributing Qualifying Company (LAQC) structure.
The main advantage of an LTC is that shareholders can offset company losses against their personal income — particularly useful for rental property investors who may have tax losses in early years. However, shareholders are personally liable for tax on their share of company income, and there are strict rules around loss limitation.
LTC status must be elected by all shareholders and the company must meet certain criteria (e.g. a maximum of 5 look-through counted owners). The rules are complex, especially around loss limitation, owner changes, and entry/exit — professional tax advice is strongly recommended before setting up or restructuring an LTC.
How it works
A Look-Through Company is still a normal company under company law — it can hold property, enter contracts, register for GST, and gives shareholders the same limited liability protection as any other company. What changes is purely how it's treated for tax: income, deductions, tax credits, and losses pass through directly to shareholders in their ownership proportion and are reported on each shareholder's own tax return, much like a partnership, even though the legal entity itself still exists.
The amount of LTC loss a shareholder can actually claim against their personal income is limited to what they have genuinely 'at risk' in the company — broadly their investment plus certain loans they've made to it — which stops shareholders from claiming tax losses beyond their real financial exposure to the business.
The LAQC regime was closed to new entrants when the LTC rules replaced it in 2011; existing LAQCs at the time had to either convert to LTC status, become ordinary companies, or restructure entirely. Today, 'LAQC' mostly survives as informal shorthand for older structures — any current New Zealand entity offering this kind of loss pass-through operates under the LTC rules, not the old LAQC rules directly.
Example: attributing an LTC loss to shareholders
An LTC with two shareholders — 60% and 40% — has a $50,000 rental loss for the year.
The 60% shareholder is attributed 60% x $50,000 = $30,000 of the loss; the 40% shareholder is attributed 40% x $50,000 = $20,000.
If the 60% shareholder has other personal income taxed at the 33% marginal rate, offsetting their $30,000 attributed loss against that income could reduce their tax by up to 33% x $30,000 = $9,900, assuming the at-risk loss limitation rules allow the full amount to be claimed.
Frequently asked questions
Is an LAQC the same thing as an LTC today?
Not quite — the Loss Attributing Qualifying Company (LAQC) regime was replaced by the Look-Through Company (LTC) regime in 2011; new companies can only elect LTC status now, so 'LAQC' mostly survives as a legacy term for older structures rather than something you can newly set up.
Can I claim an unlimited amount of LTC losses against my personal income?
No — the loss you can claim is limited to what you have genuinely 'at risk' in the company, broadly your investment and certain loans, which stops shareholders from claiming tax losses beyond their real financial exposure to the company.
Do I lose limited liability protection by using a Look-Through Company?
No — an LTC is still a normal limited-liability company under company law; the look-through treatment only changes how its income and losses are taxed, attributing them to shareholders instead of the company, not the legal protection shareholders have.
Related Terms
IRD
Inland Revenue Department (IRD), commonly known as Inland Revenue or simply IRD, is the New Zealand government agency responsible for collecting taxes, distributing social support payments, and enforcing tax compliance.
Income Tax
New Zealand income tax is calculated using a progressive bracket system.