Qualifying companies have tax rules that aim to treat the company and its shareholders as one entity.
You cannot choose for your company to become a qualifying company. Only companies that were already qualifying companies before their income year started on or after 1 April 2011 can still be qualifying companies.
Qualifying companies have certain special tax requirements:
- Shareholders only pay tax on dividends with imputation credits attached.
- Capital gains can be distributed tax free without winding up the company.
- Interest that shareholders have paid to acquire shares cannot be fully claimed as an expense against their income.
- Qualifying companies that make a profit can only receive a loss offset from and make a subvention payment to another qualifying company.