Title How to account for dividends and bonuses paid by a cooperative society as allowable deductions.
Description

Dividends and bonuses are treated as allowable deductions, against total taxable income.



  • A Society designated co-operative society, other than a designated primary society can pay 100% of total income as dividends to and bonuses to its members.

  • The dividiends are subject to Withholding Tax at the rate of 15%, treated as Qualifying Dividends while bonuses would be subject to PAYE.

  • If a Society dividends and bonuses do not comprise 100% of total taxable income, then the remaining amount is subjected to 30% corporate tax

  • The dividends and bonuses payable cannot exceed 80% 100% of the society’s total income.


"designated co-operative society" means a co-operative society registered under the Co-operative Societies Act;


"primary society" means a co-operative society registered under the Co-operatives Societies Act whose membership of which is restricted to individual persons.


 


Deducting dividends and bonuses from adjusted income only happens if;



  • Payment is made in cash or by cheque to the members.

  • Payment is approved at the AGM by the members of the primary co-op society.

  • Payment is approved by the commissioner of co-op societies.


 


 


 


 
Category More about Corporation Tax