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Distributions: Types of Māori authority distributions
Your organisation may choose to make distributions to some or all of its members. Any distribution made will be either taxable or non-taxable and accounted for on a Māori authority distribution statement. For more information, go to the section "Accounting for tax".
|An amount paid or credited by the Māori authority to a member in any manner or under any name.||A Māori authority pays a gross distribution of $90.00 to a member and attaches $10.00 in Māori authority credits.|
|A taxable bonus issue made by the Māori authority.||Issuing shares in the Māori authority.|
|An amount that is applied by the Māori authority exclusively for the member.||A Māori authority may pay a member's electricity bill. Although this amount is not paid or credited to the member, it is treated as a distribution as it is applied for the benefit of that member.|
|An amount advanced by the Māori authority to a member to the extent that the advancement is not a bona fide investment by the Māori authority.||A Māori authority may extend a loan to a member on an interest-free basis. However, if the Māori authority invested the same amount of money in a bank account, it would receive interest on that amount. By loaning the money to a member, the Māori authority has essentially forgone any chance of earning interest. The amount forgone by the Māori authority is treated as a distribution to the member who received it.|
|Property that is disposed of by the Māori authority to a member without consideration or where consideration is less than the market value of the property.||A Māori authority owns a hectare of land worth $30,000. If the Māori authority sells that land to a member for $20,000 the $10,000 between the market price and the actual price paid will constitute a distribution to the member.|
|Property that is disposed of by a member to the Māori authority for consideration that is more than the market value of the property.||A Māori authority member owns a hectare of land worth $30,000 that the Māori authority wishes to use for its own purposes. If the Māori authority were to pay $40,000 for the land, the $10,000 that the member receives over and above the value of the land will constitute a distribution.|
Taxable and non-taxable distributions
Taxable distributions, which include as their source:
- gross income of the Māori authority received in the 2004 - 05 or subsequent income years
- gross income not exempt from tax.
Non-taxable distributions, which include as their source:
- tax paid income earned prior to the 2004 - 05 income year
- exempt income
- tax paid income received under other tax type rules.
Māori authorities must ensure that in distributing this income to members, that members receive proportionate shares of both taxable and non-taxable incomes.
A Māori authority of two members wishes to distribute $2,000. Of the $2,000, $1,000 is a taxable Māori authority distribution, and the other $1,000 is not.
The Māori authority cannot "stream" the taxable Māori authority distribution to the member who has most use for any Māori authority credits that may be attached.
Instead, the Māori authority must distribute a $500 taxable Māori authority distribution and a $500 non-taxable distribution to each of the two members.