30 September 2012 is the final date that existing Qualifying Companies (QCs) (or ex Loss Attributing Qualifying Companies (LAQCs)) can transition into another entity and take advantage of the transitional tax concessions.
To take advantage of the transitional tax concessions the transition to another entity must be fully completed by 30 September 2012 – transitioning after that date means the tax concessions will be lost.
For all tax years commencing on or after 1 April 2011 a LAQC becomes a QC, meaning that any tax losses of the company can no longer be attributed to the shareholders to offset against their other income.
However the transitional tax concessions, which expire on 30 September 2012, enable the owners of a QC to transition the company into a Look-Through Company (LTC), Partnership or a Sole-trader without any tax consequences.
Note that these other structures will generally allow the owner to get the benefit of any tax losses, similar to what was achievable under the old LAQC regime.
If you miss the deadline the company remains a QC, however if later you want to switch to one of the other structures, it may not be able to be done without a tax cost.
Please contact us if you would like to take action to change your company’s status before the 30 September deadline expires.