Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from equity

CD 23B: Returns of capital: shares repurchased under profit distribution plans

You could also call this:

“Shares sold back to company under profit plans aren't considered dividends”

When a company gives you a share as part of a profit distribution plan, you might have the choice to sell it back to the company. If you decide to do this, the money you get from the company for the share is not counted as a dividend. This means the company isn’t giving you extra income when they buy back the share. Instead, they’re just giving you back the value of the share you had.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4880803.

Topics:
Money and consumer rights > Taxes
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“How to calculate the value of company shares for tax purposes”

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CD 24: Returns of capital: on-market share cancellations, or

“Rules for when a company buys back its own shares from the market”

Part C Income
Income from equity

CD 23BReturns of capital: shares repurchased under profit distribution plans

  1. This section applies when a company has issued a share to a shareholder under a profit distribution plan and the shareholder exercises the option to have the share repurchased by the company.

  2. The amount paid by the company to repurchase the share is not a dividend.

Notes
  • Section CD 23B: inserted (with effect on 1 October 2012), on , by section 9 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).