Plain language law

New Zealand law explained for everyone

HE 4: Apportionment when transactions with members and non-members
or “How to divide costs between member and non-member transactions for associations”

You could also call this:

“Rebates to members given as shares or reduced share payments”

When an association does business with its members, it might give back some money to them. This is called an association rebate. Sometimes, instead of giving cash, the association might give shares in the company or reduce what members owe on their shares. This can happen in two ways:

The association might give you new shares or add more value to the shares you already have.

The association might lower the amount you still need to pay for your shares.

When the association does this, it’s not treated as a bonus issue of shares. This means it’s handled differently for tax purposes.

This rule applies to all members who get this kind of rebate from their association.

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Next up: HF 1: Maori authorities and the Maori authority rules

or “Rules for special Māori groups that choose to join and how they handle money and taxes”

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Income Tax Act 2007
Taxation of certain entities
HE 5: Association rebates paid by shares or credit

Part H Taxation of certain entities
Mutual associations

HE 5Association rebates paid by shares or credit

This section applies when an association that enters into mutual transactions with members pays an association rebate to 1 or more members through—
issuing fully or partly paid-up shares in the association; or
providing credit for all or part of an amount unpaid on shares in the association.