Distributions: Types of Maori authority distributions
Examples of Maori 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 Maori authority distribution statement. For more information, go to the section "Accounting for tax".
| Type | Example |
|---|---|
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An amount paid or credited by the Maori authority to a member in any manner or under any name. |
A Maori authority pays a gross distribution of $90.00 to a member and attaches $10.00 in Maori authority credits. |
|
A taxable bonus issue made by the Maori authority. |
Issuing shares in the Maori authority. |
|
An amount that is applied by the Maori authority exclusively for the member. |
A Maori 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 Maori authority to a member to the extent that the advancement is not a bona fide investment by the Maori authority. |
A Maori authority may extend a loan to a member on an interest-free basis. However, if the Maori 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 Maori authority has essentially forgone any chance of earning interest. The amount forgone by the Maori authority is treated as a distribution to the member who received it. |
|
Property that is disposed of by the Maori authority to a member without consideration or where consideration is less than the market value of the property. |
A Maori authority owns a hectare of land worth $30,000. If the Maori 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 Maori authority for consideration that is more than the market value of the property. |
A Maori authority member owns a hectare of land worth $30,000 that the Maori authority wishes to use for its own purposes. If the Maori 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 Maori 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.
Maori authorities must ensure that in distributing this income to members, that members receive proportionate shares of both taxable and non-taxable incomes.
| Example | |
|---|---|
|
A Maori authority of two members wishes to distribute $2,000. Of the $2,000, $1,000 is a taxable Maori authority distribution, and the other $1,000 is not. The Maori authority cannot "stream" the taxable Maori authority distribution to the member who has most use for any Maori authority credits that may be attached. Instead, the Maori authority must distribute a $500 taxable Maori authority distribution and a $500 non-taxable distribution to each of the two members. | |
Date published: 04 Apr 2006
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