Tax impact from LAQC changes

Our Experts Answer:

Yes the loss in the QC will carried forward provided it is not the loss on disposal of the property you are refering to. Only the rental losses are deductible, not the capital loss on the property. Your ability to offset the loss against the consulting profits is determined by whether you are caught by the attribution rules on the consulting work. If 80% of the personal services income is generated from one customer the attribution rules apply and no loss offset is available. The Government did extend the transition to LTC election date to 30 September 2012 but the loss for the 2012 year will still be ring fenced if you elect in before then. If you elect to become a LTC after the transitional deadline the losses are wiped on entry into the regime. If ultimately the company will be profitable remaining as a QC should be an acceptable option and does offer you the 28% corporate tax rate if the profits remain in the company. As you say though, if you intend distributing the company profits as dividends the extra 5% tax must be paid anyway. They get you in the end one way or another !