OB 78Co-operative companies attaching imputation credits to cash distributions

1. On meeting the requirements of subsection (2), a co-operative company that is an ICA company may choose, for an income year, to attach an imputation credit to a cash distribution paid to the company’s shareholders.

2. A co-operative company may make an election under subsection (1) if—

3. the distribution is made to all persons who were shareholders of the company at a time during the income year; and
4. the distribution is based on the proportion for the income year in which the payments to or by a shareholder for their produce transactions are of total payments to or by all shareholders for all produce transactions; and
5. the company would, in the absence of this section, have a deduction for some or all of the distribution, whether as an association rebate under subpart HE (Mutual associations) or some other provision of this Act; and
6. no other election for a cash distribution is made for the income year.

7. The total amount of imputation credit attached to the distribution is calculated using the formula—

   $total\; net\; dividend\; \times \; tax\; rate\; ÷\; (1\; -\; tax\; rate).$

   Where:

8. In the formula in subsection (3),—

9. total net dividend is the total amount of the distribution excluding the amount of imputation credit:
10. tax rate is the basic rate of income tax set out in schedule 1, part A, clause 2 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) for the income year.

11. The amount of a shareholder’s share of the imputation credit attached as described in subsection (3) is calculated using the formula—

    $(shareholder\text{'}s\; distribution\; ÷\; total\; distribution)\times \; total\; imputation\; credit\; attached.$

    Where:

12. In the formula in subsection (5),—

13. shareholder’s distribution is the amount that is the shareholder’s share of the distribution, excluding the amount of imputation credit:
14. total distribution is the amount of the total distribution paid, excluding the amount of imputation credit:
15. total imputation credit attached is the total amount of imputation credit attached to the distribution calculated under subsection (3).

16. If a co-operative company chooses to treat a distribution as a dividend, it is denied a deduction under section DV 18 (Statutory producer boards and co-operative companies). The company must notify the Commissioner of an election under this subsection under section OB 82(3) for the election to be effective.

17. Section OZ 15 (Attaching imputation credits and notional distributions: modifying amounts) may apply to modify subsection (3).