It is very interesting to observe the new loss limitation rules under the New Zealand Look Through Company (LTC) regime recently introduced which seems to have created more problems than it might have solved.
The New Zealand Institute of Chartered Accountants’ journal comments on these rules as being problematic particularly in respect of the transition from the old Loss Attributing Qualifying Company (LAQC) to the LTC.
Quote It is all very well for Inland Revenue to chant its mantra that you look at the intention of the legislation – but in these circumstances, what was the legislation trying to do? (page 47, Chartered Accountants’ journal, September 2011).
Loss limitation rules under the Internal Revenue Code are highly developed, well defined in stark contrast while it seems New Zealand struggles on with its (in my opinion – underdeveloped) tax code. In the near future, I will do a comparison between the LTC loss limitation rules and those that exist under the Internal Revenue Code for similar entities that exist at the Federal level, such as S-Corps and partnerships.