A Loss Attributing Qualifying Company is simply a standard limited liability company, which takes on a tax election, to give it Loss Attributing and Qualifying Company status with the Inland Revenue Department.
This regime is only available to companies with fewer than five shareholders. It was introduced to try to make the taxing of small family companies similar to that of partnerships. It has provided an excellent flexible structure for property investors.
Criteria for becoming an LAQC (summarised):
- Must not be a foreign company;
- Must have fewer than 5 shareholders;
- All shareholders and directors must have elected that the company become an LAQC and not have revoked this status;
- The directors must have elected to become personally liable for their share of any income tax not paid by the company (herein lies quite a big difference between regular companies and LAQCís);
- All shares in the company must carry the same rights