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Electing to become a look-through company

You can elect to become a look-through company (LTC) by completing a Look-through company election (IR862) form. When shareholders choose to become an LTC they are agreeing to use the LTC rules for the company, including becoming liable for any income tax payable on the company's profit.

Completing the Look-through company election (IR862) form

Everyone who owns a look-through interest in the company must sign the election form for it to be valid.

If a person owns an interest in an LTC and does not have legal capacity to sign (that is, they are under 18 years old or not legally able to sign), a guardian, person with power of attorney, or a legal representative should sign for the person.

If shares are held by:

  • a trust, one trustee can sign on behalf of any co-trustees
  • an LTC, then that LTC must be looked through and the election signed by the ultimate individual or trustee owners of the LTC.

A director of the company, or an agent authorised by a director must complete the director's election on the form confirming that:

  • all shareholders of the company have signed the election, and
  • the company meets the eligibility criteria to become an LTC.

When the election form is due

New companies

When a company is newly incorporated or first starts to trade, the election form must be completed by the same date that their first return is due, including any extension of time. The election form can be completed after the return is filed, as long as it is received before the due date. It will then apply from the start of the first income year.

Existing companies

If a company has been in existence and trading for some time, you must send us the election form before the start of the income year it applies for.

Confirming LTC acceptance

We will send you a letter advising whether the company has been accepted as an LTC or not.

If your company has previously been an LTC

If your company has previously been an LTC, it can't become one again for the year LTC status was lost or for either of the two following income years.

When existing companies wish to become LTCs

When a company wishes to become an LTC, they need to consider a number of different factors.

Company losses

When a company becomes an LTC, any loss balance from previous years is extinguished and can't be carried forward. These losses can't be used by the LTC and are no longer available to the company.


If the LTC was a qualifying company (QC) or loss attributing qualifying company (LAQC) that transitioned to the LTC rules within either of the first two income years beginning on or after 1 April 2011, the owners of the LTC can use these losses against future LTC income.

First-year calculation

When an existing company becomes an LTC there is a calculation of income for each owner of the LTC. Each owner declares their proportion of this income in their own income tax return.

Find out more about tax in the first year for look-through company owners

Transitions from a QC/LAQC

There were special rules in the first or second income year starting on or after 1 April 2011 where an existing QC/LAQC could have transitioned to an LTC. This option is no longer available for existing QCs.

Find out more about transitions from a QC/LAQC to an LTC

See also