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Income Tax Act 2007

Memorandum accounts - Imputation credit accounts (ICA)

OB 79: Co-operative companies attaching imputation credits to notional distributions

You could also call this:

“Co-operative companies can give tax credits on theoretical payments to shareholders”

You are a co-operative company that is an ICA company. This means you can choose to attach an imputation credit to a notional distribution for an income year. When you do this, your members get a dividend. The amount of this dividend is worked out using a formula in section OB 80.

To make this choice, you need to follow two rules. First, you must give the distribution to everyone who was a shareholder of your company at some point during the income year. Second, you can’t make any other choice to pay a notional distribution for that same income year.

When you attach an imputation credit to a notional distribution, each shareholder gets a share of it. To work out how much each shareholder gets, you use a formula. The formula looks at how much the shareholder paid or received for their produce compared to the total amount of all shareholders’ produce payments. You then multiply this by the amount of credit attached to the distribution.

The formula uses three parts:

  1. ‘Produce payments’ is how much money went to or from the shareholder for their produce during the income year.
  2. ‘Total payments’ is how much money went to or from all shareholders for produce during the income year.
  3. ‘Credit attached’ is how much imputation credit you attached to the distribution.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518943.

Topics:
Money and consumer rights > Taxes
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“Co-op companies can attach tax credits to group cash payments”

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OB 80: Co-operative companies’ notional distributions that are dividends, or

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Part O Memorandum accounts
Imputation credit accounts (ICA)

OB 79Co-operative companies attaching imputation credits to notional 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 notional distribution, as a result of which a member derives a dividend of an amount calculated under section OB 80.

  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
    1. no other election to pay a notional distribution is made for the income year.

      1. The amount of a shareholder’s share of an imputation credit attached to a notional distribution is calculated using the formula—

        (produce payments ÷ total payments) × credit attached.

        Where:

        • In the formula,—

        • produce payments is the amount of all payments to or by the shareholder for the shareholder’s produce transactions during the income year:
          1. total payments is the amount of all payments to or by shareholders for produce transactions during the income year:
            1. credit attached is the amount of imputation credit attached to the distribution.

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