SearchWages for wife
Chieu asks:
(updated on Wednesday, December 17th 2014)
We currently have two investment properties in a look through company (LTC) owned fully by me. My wife is a stay-at-home mum and carries out all the property management duties like checking rents received, advertising for new tenants, property inspections, liaising with our accountant when doing tax returns and much more. The advice we have received is the LTC should make her a contracted PAYE employee and pay her market rates for the duties performed. Is this a viable option to pay her for performing duties that I would otherwise be paying a professional property management company?
Our Experts Answer:
The LTC rules contain a restriction that prevents a deduction being gained for a salary payment to a working owner where the LTC is mainly engaged in investing in land. Whilst your wife is not directly a shareholder in the LTC you and your wife are associated persons under the associated persons rules. The property held by the LTC is deemed to be held by the individual shareholder for tax purposes. The aggregation rules in the associated persons legislation essentially treat anything held by you as also being held by a person you are associated with, in this case your wife. Accordingly, I believe the company would be denied a deduction for any salary paid to your wife rendering this plan unsuitable for a LTC.
Most Read
| Unity First Home Buyer special | 3.99 |
| SBS FirstHome Combo | 3.99 |
| TSB Special | 4.39 |
| Co-operative Bank - First Home Special | 4.39 |
| ICBC | 4.39 |
| SBS Bank Special | 4.49 |
| Unity Special | 4.49 |
| ANZ Special | 4.49 |
| Westpac Special | 4.49 |
| Kiwibank Special | 4.49 |
| Co-operative Bank - Owner Occ | 4.49 |
| ICBC | 4.59 |
| ANZ Special | 4.69 |
| TSB Special | 4.69 |
| BNZ - Std | 4.69 |
| Wairarapa Building Society | 4.79 |
| Nelson Building Society | 4.87 |
| Westpac Special | 4.89 |
| Co-operative Bank - Owner Occ | 4.89 |
| Kiwibank Special | 4.89 |
| SBS Bank Special | 4.89 |
| Unity Special | 4.89 |
| ICBC | 5.19 |
| Westpac Special | 5.29 |
| TSB Special | 5.29 |
| BNZ - Std | 5.29 |
| SBS Bank Special | 5.69 |
| Co-operative Bank - Owner Occ | 5.69 |
| Kainga Ora | 5.69 |
| ASB Bank | 5.69 |
| AIA - Go Home Loans | 5.69 |
| Kiwibank Special | 5.79 |
| Westpac | 5.89 |
| SBS FirstHome Combo | 3.29 |
| AIA - Back My Build | 3.34 |
| SBS Construction lending for FHB | 3.74 |
| CFML 321 Loans | 3.95 |
| Co-operative Bank - Owner Occ | 4.99 |
| Co-operative Bank - Standard | 4.99 |
| Heartland Bank - Online | 5.30 |
| ICBC | 5.39 |
| Kiwibank - Offset | 5.65 |
| Kiwibank | 5.75 |
| Unity Standard | 5.79 |
