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Income Tax Act 2007

Income - Terminating provisions

CZ 41: Distributions to supplying shareholders of Fonterra: 2022–23 to 2024–25 income years

You could also call this:

“ Tax rules for money Fonterra gives to its supplying shareholders from 2022 to 2025 ”

If you are a supplying shareholder of Fonterra, this law affects how some of the money they give you is treated for tax purposes. This applies to money Fonterra gives you in the 2022-23, 2023-24, and 2024-25 income years.

When Fonterra gives you money, it’s not counted as a dividend if it’s for your transaction shares, projected transactions shareholding, qualifying non-transaction shares, or projected qualifying non-transaction shareholding.

Fonterra doesn’t have to follow the usual 20-working-day rule when deciding who gets distributions. They can set a date within the year the distribution is for, even before they know who will get the money.

The law explains some special terms:

Fonterra means Fonterra Co-operative Group Limited.

Your projected qualifying non-transaction shareholding is the number of qualifying non-transaction shares you would have if all the trading you thought would happen actually did happen.

Your projected transactions shareholding is the number of shares you would need to have if all the trading you thought would happen actually did happen.

Your qualifying non-transaction shares are shares you own that aren’t for transactions, but there’s a limit on how many of these you can have.

You’re a supplying shareholder if you supply goods or services to Fonterra and own shares in the company.

Trading transactions are when you buy or sell things with Fonterra, but not when you’re selling your whole business.

Your transaction shares are the shares you have for trading that happened in the period the distribution is for.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS952658.

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Part C Income
Terminating provisions

CZ 41Distributions to supplying shareholders of Fonterra: 2022–23 to 2024–25 income years

  1. This section applies to a distribution by Fonterra to a supplying shareholder if the distribution is made for Fonterra’s 2022–23, 2023–24, or 2024–25 income year.

  2. The distribution is not a dividend to the extent to which the distribution is for the supplying shareholder’s—

  3. transaction shares:
    1. projected transactions shareholding:
      1. qualifying non-transaction shares:
        1. projected qualifying non-transaction shareholding.

          1. The 20-working-day rule for fixing a date in section 125(2) of the Companies Act 1993 does not apply to shareholders’ entitlements to receive distributions from Fonterra if, for the purposes of subsection (1) of that section, the board of Fonterra has fixed a date in relation to shareholders’ entitlements to receive distributions before the entitlements arise and that date is within the year or period to which the distributions relate.

          2. In this section,—

            Fonterra means Fonterra Co-operative Group Limited

              projected qualifying non-transaction shareholding means the number of qualifying non-transaction shares in Fonterra that the supplying shareholder would have held if the trading transactions actually had occurred that the supplying shareholder had projected, using reasonable assumptions, would occur in the period to which the distribution relates

                projected transactions shareholding means the number of shares in Fonterra that the supplying shareholder would have had to hold if the trading transactions actually had occurred that the supplying shareholder had projected, using reasonable assumptions, would occur in the period to which the distribution relates. The number of shares must determine the value of the trading transactions

                  qualifying non-transaction shares means the number of shares in Fonterra that the supplying shareholder holds—

                  1. that are not transaction shares and are not their projected transactions shareholding; but
                    1. not including any shares in Fonterra that the supplying shareholder holds described in paragraph (a) in excess of the nearest whole number to the number calculated by multiplying the supplying shareholder’s transaction shares on the date of entitlement for the distribution under section 125 of the Companies Act 1993 by 2.0303

                      supplying shareholder means a supplying shareholder, within the meaning of that term in section 34 of the Co-operative Companies Act 1996, in relation to Fonterra

                        trading transactions means transactions between the supplying shareholder and Fonterra that are—

                        1. the disposal and acquisition of trading stock of the vendor that is not intangible property; and
                          1. not subject to section CB 2 (Amounts received on disposal of business assets that include trading stock)

                            transaction shares means the number of shares in Fonterra that the supplying shareholder holds for trading transactions that occurred in the period to which the distribution relates. The number of shares must determine the value of the trading transactions.

                            Notes
                            • Section CZ 41: inserted (with effect on 1 July 2022), on , by section 34 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).