BUSINESS

Bad News about Look Through Companies (LTCs)

Sunday 21 April 2013, 12:14PM
By Andersen Accountants Limited
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Many people have been sold on the benefits of a look through company (LTC), however, there are significant disadvantages. The disadvantages include:

  • An LTC is usually the wrong structure if you are making profits.
  • Changing from an LTC can be costly and it can generate large taxable profits for which the shareholder are personally liable.
  • Shareholders may need to personally fund their share of the tax due on the company’s profits.
  • A company can lose its LTC status without the owners being aware that this has happened. Tax conequnces will result.
  • An unhappy ex spouse or ex business partner can easily and legally sabotage the LTC, causing the other shareholders to have huge tax complications.

For further details please read our in depth article.

Kristina Andersen
Andersen Accountants Limited
Telephone: 09 3695198
Email: Kristina@andersen.co.nz
Website: www.andersen.co.nz