Section DV 19 — Income Tax Act 2007: Association rebates

DV 19 Association rebates When this section applies (1) This section applies when an association— (a) enters into a mutual transaction with a member; and (b) in relation to the transaction, pays an association rebate to a member. Deduction (2) The association is allowed a deduction for the lesser of— (a) the amount described in subsection (4); or (b) the amount calculated using the formula in subsection (5). Allocation (3) The deduction is allowed in the income year corresponding to the accounting year for which the association rebate is paid. Amount paid (4) The amount referred to in subsection (2)(a) is the total amount that the association pays as association rebates to members for those mutual transactions with members that arise in the income year and which the association takes into account in determining its net income or net loss. In the calculation of the total amount, it is irrelevant that the amount paid may be limited or reduced because a member of the association has a share or interest in the capital of the association. Amount under formula (5) The amount is calculated using the formula— assessable income − (deductions + amount distributed). Definition of items in formula (6) In the formula,— (a) assessable income is the total amount of the association’s assessable income attributable to mutual transactions with members: (b) deductions are the total deductions that the association is allowed, other than under this section, that are attributable to the assessable income referred to in paragraph (a): (c) amount distributed is the total amount that the association distributes to members in the income year through a cash distribution for which a determination is made under section OB 82(1)(a) (When and how co-operative company makes election). Statutory producer boards’ deductions (7) When an association is a statutory producer board that pays an association rebate to a member— (a) the amount allowed as a deduction is the amount referred to in subsection (4): (b) the board may choose whether the rebate is a deduction in the income year in which the amount is paid, or in the income year in which the mutual transaction giving rise to the amount is made. Link with subpart DA (8) This section supplements the general permission and overrides the capital limitation. The other general limitations still apply. Defined in this Act: accounting year , amount , assessable income , association , association rebate , capital limitation , deduction , general permission , imputation credit , income , income year , member , mutual transaction , net income , net loss , pay , share , statutory producer board , Compare: 2004 No 35 s HF 1(2), (3)(a), (b), (4) Section DV 19(1): substituted (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 25(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section DV 19(1)(a): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 20(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section DV 19(3): substituted (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 25(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section DV 19(4): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 20(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section DV 19(6)(a): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 20(3)(a) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section DV 19(6)(b): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 20(3)(b) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section DV 19 list of defined terms accounting year : inserted (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 25(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).