LAQC's are ordinary companies aim to treat a company and its shareholders as one entity as much as possible for income tax purposes. This is similar to the way in which partnerships are treated.
Shareholders are allowed to have tax losses and capital gains incurred by the company 'flow through' to the shareholders tax returns.
What this means is that at the end of each financial year, losses vest to the shareholders pro-rata based on their respective share of the company throughout the year.
Additionally in the event that the company makes a capital gain (for example a rental property is sold for a gain), such gain can be distributed tax exempt to the shareholders. So the distribution of such non taxable gains from companies is an issue if you are not a qualifying company in NZ.