The long awaited LAQC reforms have finally been released.
The gist is that LAQC owners will be given the option to become a new “look-through company” where profits & losses will flow to owners or transition to a sole trader, partnership or limited partnership.
If no election to take up these options is made, the companies will remain QC’s without the ability to attribute losses.
Selecting the right option for your individual circumstances becomes critical.
We suggest LAQC owners first determine if their companies will become profitable in the absence of building depreciation.
Then determine if the shareholding split remains appropriate. If not, it will need to be changed before 01 April 2011. After that, depreciation recovery will be triggered by changing shareholding.
We suspect most LAQC owners will opt to become LTC’s and avoid the administrative costs of liquidating the companies and moving properties and mortgages back into personal names.
Talk to your advisors before 01 April 2011.