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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.