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What is a look-through company?

The owners of a look-through company (LTC) are liable for income tax on the LTC's profits, while also being able to offset the LTC's losses against their other income. They do this by returning their proportion of the income and expenses in their own income tax return.

The look-through treatment does not apply to GST, PAYE, FBT, RWT, RSCT, ESCT or the income tax rules for company amalgamations.

Under the general company law, an LTC retains its corporate obligations and benefits, such as limited liability.

Who can become an LTC?

To become an LTC and maintain LTC status, a company must meet the following criteria for the whole of each income year that they are an LTC:

  • It must be a company (ie a body corporate or other entity with a legal existence separate from that of its members)
  • It must be a New Zealand tax resident and not treated as a non-resident under any double tax agreement
  • All owners must have only look-through interests. There are special requirements for look-through interests depending on when the company is an LTC.
  • There must be five or fewer look-through counted owners. Look-through counted owners must be either natural persons or trustees (including corporate trustees). There are special rules for determining the number of look-through counted owners.
  • It must not be a flat-owning company.

Additional criteria that apply for the 2017-18 and later income years


The foreign income restriction applies for income years starting on or after 1 April 2017.

If the LTC has an owner who is a trustee the trust cannot:

  • make a distribution to a company or Māori authority (unless the Māori authority is a grandparented Māori authority) which is directly or indirectly a beneficiary of the trust
  • make a distribution of income to a tax charity, unless the tax charity has no control or influence in relation to distributions from the trust or the operation of the LTC
See also