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Income Tax Act 2007

Memorandum accounts - Imputation credit accounts (ICA)

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

You could also call this:

“How co-op companies' special distributions are treated as dividends for shareholders”

When a co-operative company gives you a notional distribution with an imputation credit attached, it’s considered a dividend. You get this dividend as a shareholder of the company.

To work out how much your dividend is worth, you use a special calculation. You take the amount of the imputation credit attached to your distribution and divide it by the tax rate. Then, you subtract the imputation credit from that result.

The tax rate used in this calculation is the basic rate of income tax for the income year. You can find this rate in the Income Tax Act 2007.

You’re considered to have received this dividend on the day the co-operative company decides to make the notional distribution.

There’s a special rule in section OZ 15 that might change how this calculation works in some cases.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518950.

Topics:
Money and consumer rights > Taxes
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OB 79: Co-operative companies attaching imputation credits to notional distributions, or

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

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OB 81: Co-operative companies attaching FDP credits, or

“This rule about co-operative companies and tax credits no longer applies”

Part O Memorandum accounts
Imputation credit accounts (ICA)

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

  1. A notional distribution referred to in section OB 79 that has an imputation credit attached is a dividend under section CD 13 (Notional distributions of producer boards and co-operative companies) derived by a shareholder of the co-operative company.

  2. The amount of a shareholder’s dividend is calculated using the formula—

    (credit attached ÷ tax rate) − credit attached.

    Where:

    • In the formula,—

    • credit attached is the amount of imputation credit attached to the shareholder’s distribution:
      1. 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.

        1. The shareholder derives the dividend on the date the co-operative company chooses under section OB 79 to make a notional distribution.

        2. Section OZ 15 (Attaching imputation credits and notional distributions: modifying amounts) may apply to modify subsection (2).

        Compare
        Notes
        • Section OB 80(2) formula: substituted (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 114(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
        • Section OB 80(3)(b): amended, on , by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section OB 80(5) heading: added, on , by section 503 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section OB 80(5): added, on , by section 503 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section OB 80 list of defined terms basic rate: repealed, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).