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Income Tax Act 2007

Income - Terminating provisions

CZ 7: Primary producer co-operative companies: 1987–88 income year

You could also call this:

“Rules for primary producer co-ops selling assets or paying shareholders after 1987-88 deductions”

If you are a primary producer co-operative company and you sell an asset that you were allowed to deduct under section 200 of the Income Tax Act 1976 for the 1987–88 income year or earlier, you need to count some money as income. The amount you count as income is the smaller of two things: all the deductions you were allowed for that asset under section 200, or the amount you got from selling the asset.

If you’re a shareholder in a primary producer co-operative company that was allowed deductions under section 200, and you get a payment when you give up your shares or when the company closes down, part of that payment might be counted as your income. This applies to deductions from the 1987–88 income year or earlier.

The part of the payment that counts as income is any amount that’s more than the available subscribed capital per share of the shares you gave up or held when the company closed. It also has to be because of an increase in the company’s asset value that came from using the section 200 deduction.

A primary producer co-operative company is a company that, at the end of the 1987–88 income year, met the definition in section 200(1) and (9) and could get a deduction under section 200(4).

Section 200 was part of the Income Tax Act 1976 before it was removed. It generally let primary producer co-operative companies claim a deduction for profits they put back into certain primary produce activities and assets.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513510.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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Part C Income
Terminating provisions

CZ 7Primary producer co-operative companies: 1987–88 income year

  1. If a primary producer co-operative company disposes of an asset for which the company was allowed a deduction under section 200 of the Income Tax Act 1976 for the 1987–88 income year or an earlier income year, the company is treated as deriving income in the income year of disposal of an amount equal to the lesser of—

  2. the total of all deductions relating to the asset that were allowed under section 200; and
    1. the amount that the company derived from the disposal of the asset.

      1. If a primary producer co-operative company has been allowed a deduction under section 200 for the 1987–88 income year or an earlier income year, and a payment has been made to a shareholder of the company either on the surrender of any of their shares or on the liquidation of the company, part of the payment is treated as income of the shareholder. The part that is income is determined under subsection (3).

      2. The part of the payment that is treated as income is only such part as—

      3. is more than the available subscribed capital per share calculated under the slice rule of the shares surrendered or held on liquidation by the shareholder; and
        1. is attributable to an increase in the value of the company’s assets that was caused by the company applying or appropriating a deduction allowed under section 200.

          1. In this section,—

            primary producer co-operative company means a company that, at the end of the 1987–88 income year,—

            1. was a primary producer co-operative company, as defined in section 200(1) and (9); and
              1. could qualify for a deduction under section 200(4)

                section 200 means section 200 of the Income Tax Act 1976 as it was in force before it was repealed by section 41(1) of the Income Tax Amendment Act (No 5) 1988 (which, in general, allowed primary producer co-operative companies to claim a deduction for profits that were reinvested in certain defined primary produce activities and assets).

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                Notes
                • Section CZ 7(1) heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).