New Zealand Look-through Companies (LTCs)

Incorporated under the Companies Act 1993, a New Zealand LTC retains its legal status separate from its shareholders and directors and it limited liability but by making certain elections, can be fully tax-transparent with the result that its shareholders will enjoy the benefit of taxable income and loss attribution and be taxed at their personal marginal tax rates on a current-year basis.

Such benefits make the New Zealand LTC an attractive and flexible vehicle for inclusion within international wealth preservation, tax planning and investment structures. LTCs are not taxed at the corporate level in New Zealand and are treated as fiscally transparent entities for tax purposes. An LTC´s owners/shareholders are however deemed to hold its assets directly and to carry on its activities personally. All the LTC´s income, expenses, tax credits, gains and losses are passed on to its owners in proportion to their effective interests in the company such income or losses, accordingly, being recorded in the owner´s personal tax return.

Where an LTC´s shareholder is a non-resident of New Zealand or is a NZ foreign trust, that owner will only be taxed on the LTC´s New Zealand-sourced income - if any.

Whilst LTCs file an annual tax return in New Zealand - declaring details of the worldwide income earned by the LTC and the allocation of that income to its shareholders - where any shareholder of the LTC is a non-resident individual or a New Zealand foreign trust, no obligation rests with that shareholder to file a New Zealand tax return.