Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from equity

CD 7B: Shares issued under profit distribution plans

You could also call this:

“Shares given as part of a profit-sharing plan count as dividends”

When a company gives you a share under a profit distribution plan, it counts as a dividend. This means it’s like the company is giving you some of its profits.

The amount of the dividend is the same as what the company offers to pay if they want to buy the share back from you.

There’s a rule called Section CD 22 that usually applies to shares, but it doesn’t apply to shares given out under a profit distribution plan if the company buys them back as part of the plan.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4879704.

Topics:
Money and consumer rights > Taxes
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Part C Income
Income from equity

CD 7BShares issued under profit distribution plans

  1. A share issued by a company under a profit distribution plan is a dividend.

  2. The amount of the dividend is the amount offered by the company for the repurchase of the share.

  3. Section CD 22 does not apply in relation to a share issued under a profit distribution plan and repurchased by the company as part of the plan.

Notes
  • Section CD 7B: inserted (with effect on 1 October 2012), on , by section 7 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).