Income tax Dates
When you automatically stop being a look-through company
A company that has chosen to be a look-through company (LTC) must continue to meet all the eligibility criteria. If it does not, the company’s status is automatically revoked - it stops being a look-through company and becomes an ordinary company.
This change is backdated to the first day of the income year that it stopped meeting the criteria. The company’s tax return for that year will need to be completed as an ordinary company and it cannot pass any losses on to shareholders.
When this happens the company or its tax agent should write to us telling us what caused the revocation and when.
Automatic revocations cannot be reversed. Company shareholders cannot choose to become a look-through company again for the:
- income year in which it automatically stopped being a look-through company
- two following income years.
Choosing to stop being a look-through company
Any look-through company owner can choose to revoke status to stop being a look-through company.
The owner should send in a Revocation of look-through company election - IR896 form. A revocation notice can also be submitted by web message in myIR or letter by a current owner. The company will stop being a look-through company from the start of any income year the owner chooses, but they cannot backdate the change.
A company can ask us to reverse this sort of voluntary revocation so it can remain a look-through company. They must ask us in writing before the date when the company stops being a look-through company. The only people who can ask us to reverse a voluntary revocation are the:
- owner who made the revocation request
- owner or owners who now have all the look-through interests of the owner who made the original revocation request.
Like with automatic revocations, any company that used to be a look-through company cannot become one again for the:
- income year in which it stopped being a look-through company
- two following income years.
To find out more about when companies stop being look-through companies, check out our guide.