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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:

"Fonterra's payments to shareholders who supply goods to the company, for 2022 to 2025."

Illustration for Income Tax Act 2007

This law is about how Fonterra pays its supplying shareholders. You are a supplying shareholder if you supply goods to Fonterra and own shares in the company. Fonterra is a big dairy company in New Zealand, also known as Fonterra Co-operative Group Limited.

When Fonterra pays you, it's not always considered a dividend. A dividend is a payment made to shareholders from the company's profits. The payment is not a dividend if it's for the shares you own that are related to the goods you supply to Fonterra. You can find more information about this in the Companies Act 1993.

There's a rule that says companies must follow a certain process when deciding who gets paid. But this rule doesn't apply to Fonterra if the company has already set a date for paying its shareholders. You can read about this rule in section 125 of the Companies Act 1993.

The law uses some special terms to describe the shares you own. Transaction shares are the shares you own that are related to the goods you supply to Fonterra. Qualifying non-transaction shares are the shares you own that are not related to the goods you supply. You can also have projected shares, which are the shares you would have owned if you had supplied the goods you planned to supply. The Co-operative Companies Act 1996 explains what a supplying shareholder is.

The law is talking about the years 2022 to 2025. It's saying how Fonterra should pay its supplying shareholders during these years. Fonterra must follow the rules when paying its shareholders.

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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 CIncome
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).