Has my company lost its LAQC status?

Question from sarah updated on 22nd February 2011:

I am Kiwi who now lives in Australia. I own 3 properties set up LAQC style with my now ex-husband. He is the Director and owns 99% of the shares. Through reading on here - I see that a LAQC is now not valid (as management does not reside in NZ). I/we would like to know the best way of restructuring these properties so that we can reduce our personal tax while living and earning in Australia. All 3 homes have bank mortgages with little equity. Once again.. thanks!

Our expert Mark Withers responded:

The question of whether your company has lost its LAQC status as a result of your move is complex. A NZ incorporated company would become tax resident in Australia if it carries on business in Australia and its central management and control is from Australia or the voting power is contoled by persons resident in Australia. In the case on an LAQC company which might own NZ rental property it is debatable as to whether that would amount to the carrying on of a business in Australia. It is probably best though to assume that the company has lost it's LAQC status and proceed accordingly. This would typically mean passing the asssets out in conjunction with placing the company into liquidation. You should seek specific tax advice both in NZ and Australia before taking any action.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

 

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