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HE 2: Classes of mutual transaction
or “Types of business dealings between an association and its members”
You could also call this:

“Money given back to members by their association”

When you’re part of an association, you might receive something called an association rebate. This is money that the association gives back to its members. Here’s what you need to know about association rebates:

An association rebate is a payment that an association makes to you if you’re a member. The association pays this money from its profits. They must give you this payment within 6 months after the end of their accounting year.

However, not all payments from an association are considered rebates. If the association is a statutory producer board or a co-operative company, and they’ve chosen to give you imputation credits instead, that’s not an association rebate. Also, if the payment is made when the association is closing down or moving overseas, or if it’s a special type of payment from a producer board or co-operative company, these aren’t association rebates either.

It’s important to understand what counts as an association rebate because it can affect how the payment is treated for tax purposes. There are special rules in the Income Tax Act about how to handle the income from these rebates and any related expenses.

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Next up: HE 4: Apportionment when transactions with members and non-members

or “How to divide costs between member and non-member transactions for associations”
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Part H Taxation of certain entities
Mutual associations

HE 3Association rebates

  1. In this subpart, and in sections CB 34 and DV 19 (which relate to income and deductions relating to mutual transactions), an association rebate means a payment by an association to a member that is made—

  2. through a distribution of profits of the association; and
    1. not later than 6 months after the end of the accounting year of the association in relation to which the payment is made.

      1. An association rebate does not include—

      2. a cash distribution in relation to which the association has made an election under section OB 73(1) or OB 78(1) (which relate to imputation credits of statutory producer boards or co-operative companies); or
        1. a distribution described in section CD 26 (Capital distributions on liquidation or emigration) or CD 33 (Payments corresponding to notional distributions of producer boards and co-operative companies).

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          Notes
          • Section HE 3(1)(a): amended, on , by section 215 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).