If the LTC received income from another LTC, write the details at Question 15.
A partnership does not receive income or deductions from an LTC. If two or more people jointly receive income or deductions from an LTC, they should show these on their own returns, not the partnership’s return.
LTCs are transparent (looked through), meaning the owners are treated as having received the income and incurred the loss of the company.
The LTC will normally supply the information required to complete your return.
Don’t include any of the following types of income received from another LTC at Question 15:
interest and RWT—show these at Question 11
dividends, imputation credits, and dividend RWT—show these at Question 12
Maori authority distributions and credits—show these at Question 13
overseas income and any credits attached—show these at Question 16, see IR7 Question 16 Overseas income
residential property income - show there at Question 18, see IR7 Question 18 Income and expenditure from residential property
other rental income—show this at Question 19, see IR7 Question 19 Other rental activites income
taxable property sales/disposals - show this at Question 20, see IR7 Question 20 Income from taxable sale/disposals of property
other income—show this at Question 21, see IR7 Question 21 Other income.
Before the 2017-2018 income year the amount of deductions an LTC owner (shareholder) could claim was subject to the loss limitation rule.
This rule limits the amount of deductions an owner can claim to the amount of their “owner’s basis”, which represents their economic interest in the LTC.
The loss limitation rule no longer applies to most LTC owners. It continues to apply for owners of LTCs that are in a partnership or joint venture that includes another LTC.
If the loss limitation rule no longer applies, any deductions which have been carried forward will be claimable this year. The example below explains how the tax return should be completed where this applies.
Add up all the other income from LTCs and include the total in Box 15B. If a loss, put a minus sign in the last box.
Add up any other tax credits and include the total in Box 15A.
Add up any non-allowable deductions this year from LTCs and include the total in Box 15C.
There shouldn’t be non-allowable deductions this year, unless the loss limitation rule still applies.
If you had any non-allowable deductions brought forward from last year, you may be able to claim some, or all, of the brought forward amount this year. Print the amount claimable in Box 15D prior years’ non-allowable deductions claimed this year.
You will be able to claim the full amount of non-allowable deductions brought forward from last year if the loss limitation rule no longer applies.
If you have an amount in Box 15C, add this to Box 15B and put the total in Box 15E.
If you have an amount in Box 15D, subtract this from Box 15B and put the total in Box 15E.
If you don’t have any amounts in Box 15C or Box 15D, copy the amount from Box 15B into Box 15E.
Box 15E is your adjusted LTC income.