Patronage Refund: A payment from a cooperative to a. patron from net margins based on quantity or value of business done with or for the patron. The refund may be in cash and/or in the form of a document evidencing the patron’s decision to have the cooperative retain the refund as an investment by the patron.
How is patronage refund calculated?
A patronage refund is a distribution a cooperative pays to its member-owners (investors). Patronage refunds are given based on a proportion of profit made by the business. Once this amount is determined, the refund is calculated according to how much each member has spent during that fiscal year at the Co-op.
Which type of business would distribute patronage refunds?
A patronage dividend, also known as a patronage refund, is a distribution that a cooperative pays to its members or investors. Patronage dividends are given based on a proportion of profit that the business makes.
How do you calculate patronage?
The average balance that is used by the Patronage Dividend tool is computed by adding the member’s daily balances and dividing by the number of days they were active (meaning the account was open) in the month.
What is a patronage account?
Each member has a patronage capital account, which represents that member’s ownership in the cooperative. Cooperatives operate differently than other businesses in two ways: We are not designed to create a profit for a small number of shareholders, as many businesses are.
Are patronage allocations taxable?
(Patronage returns are normally only taxable for business persons, farmers, contractors, etc.) Note: The amount indicated in Box 30 of your T4A is the total patronage allocation amount for the tax year. This number is the total allocation of cash and equity, not the amount of your general cash repayment cheque.
