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Qualifying companies have tax rules that aim to treat the company and its shareholders as one entity.

Tax summary

No new elections can be made to become a qualifying company. Only companies that were qualifying companies before their income year started on or after 1 April 2011 can still be qualifying companies.

Qualifying companies have certain tax requirements that relate only to them:

  • Only dividends with imputation credits attached are taxable to the shareholders.
  • Capital gains can be distributed tax free without winding up the company.
  • Interest that shareholders have paid to acquire shares is not fully deductible.
  • Qualifying companies that make a profit can only receive a loss offset and only make a subvention payment to another qualifying company.