![]() ![]() Such dividends usual relate to co-operatives in which the consumer is a member. Patronage dividends, by definition, are payments a customer receives based on a percentage of the business that customer gives the co-op over a period of time. Taxation would occur only at a later date when either the co-op buys back the shares or the member otherwise disposes of them. True to his word, Finance Minister Ralph Goodale released a draft amendment to the Income Tax Act in August that means ag co-op members would no longer be taxed immediately on patronage dividends received in the form of shares or equity in the co-op. ![]() The association had lobbied for a tax deferral on patronage dividends paid to co-op members, which would enable agricultural co-operatives to keep more cash in their coffers. This should help the co-op model remain a viable option for agribusiness. The Canadian Cooperative Association is pleased that the federal government will follow through on its 2005 budget commitment to reduce the tax burden of co-op patronage dividends. This is great news for co-op businesses looking to attract new members. If the finance minister gets his way, members of agricultural co-operatives will no longer have to pay income tax on uncashed patronage dividends.
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