To become, and remain, a look-through company (LTC), a company must meet the following criteria for the whole of each income year:
- It must be a company but cannot be a flat-owning company.
- It must be a New Zealand tax resident and not treated as a non-resident under any double tax agreement.
- Its owners must have only look-through interests.
- It must have five or fewer look-through counted owners, who must be either natural persons or trustees (including corporate trustees).
- It must not have an owner which is a tax charity or a Māori authority, unless the tax charity or Māori authority are grandparented.
- If the total ownership interests in the LTC are more than 50% held by foreign LTC holders, the LTC must not have a foreign-sourced amount for the year that is more than $10,000 or 20% of the LTC’s gross income for the year (whichever is greater).
If an LTC fails to meet these criteria it automatically loses its LTC status.