January 28, 2021
All Tax Articles

When an agricultural cooperative corporation pays a patronage dividend, the recipient is normally required to include the dividend in the year of receipt. The cooperative is required to withhold tax on the dividend.

However, if the dividend is paid in the form additional shares of the cooperative, the inclusion of the dividend for the recipient is deferred to the year in which the shares are disposed of. Furthermore, the cooperative is not required to withhold tax when it pays the dividend in shares. Certain conditions apply (for example, normally the shares cannot be redeemable for at least five years).

This rule regarding dividends of shares was set to expire for shares issued after 2020. The federal government recently extended the rule to shares issued through the end of 2025.

This letter summarizes recent tax developments and tax planning opportunities from a third-party affiliate; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this blog post, which are appropriate to your own specific requirements. Please feel free to get in touch with Lee & Sharpe to discuss anything detailed above, we would be pleased to help.
Adam H. Sharpe

Hello, my name is Adam Sharpe, I am a partner at Lee & Sharpe.

Related Posts

Want to hear more?
Subscribe to our monthly newsletter below

Thank you! Your submission has been received!

Oops! Something went wrong while submitting the form