Look-Through Company (LTC) 2027 Tax Calculator (NZ)
Compare NZ LTC flow-through tax (profits taxed at shareholders' marginal rates) vs ordinary company tax (flat 28%). Useful for property partnerships and small business owners. Free, private, no sign-up.
| Item | LTC method | Company method |
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What is an LTC and how does flow-through tax work?
A Look-Through Company (LTC) is a NZ company that has elected, via IRD form IR862, to be treated as transparent for tax purposes. Instead of paying the flat 28% company tax on its profits, the LTC's net income flows through to shareholders who pay tax at their own marginal rates (10.5%, 17.5%, 30%, 33%, or 39%). Losses also flow through, allowing shareholders to offset them against other personal income — subject to the owner's basis loss limitation rule.
When LTC saves you tax (and when it doesn't)
LTC is generally better when shareholders sit in tax brackets below 28% — owners on the 10.5%, 17.5%, or 30% bracket pay less tax via LTC flow-through than the 28% company rate. LTC is also useful when the company makes losses (losses flow through to reduce other personal income immediately, not stuck inside the company). However, if all owners are on the 33% or 39% bracket, paying 28% company tax then issuing fully imputed dividends is usually more efficient.
Example: 50/50 husband-wife rental LTC
A property LTC owned 50/50 by spouses produces NZ$100,000 profit. Husband earns NZ$80,000 from his job; wife earns NZ$40,000. LTC method: each gets NZ$50,000 from LTC. Husband's total = NZ$130,000 → tax NZ$31,810 (marginal 33% on top slice). Wife's total = NZ$90,000 → tax NZ$20,920. Combined personal tax ~NZ$52,730. Company method: NZ$100,000 × 28% = NZ$28,000 company tax. Then if NZ$72,000 distributed as fully imputed dividends, top-up = NZ$3,600 (33%-bracket part) - NZ$5,000 imputation credit refund (17.5%-bracket part) = roughly NZ$30,600 total. LTC pays more here because the husband sits at 33%.
How to use this LTC calculator
Enter the LTC net profit, your shareholding percentage, your other taxable income (job, interest, dividends), and your partner/co-owner's other income. The calculator computes the LTC flow-through tax for both owners plus the company-tax alternative, then shows the annual saving (or extra cost) of using LTC. Compare both before electing IRD form IR862 — wrong choice locks you in for years.
Source: ird.govt.nz — Look-Through Companies (LTC) Income Tax Act 2007 ss HB 1-13. Updated May 2026.