Issue of Patronage Shares by Co-Operatives

It has come to the notice of Revenue that certain co-operatives have issued “patronage shares” to members. A particular scheme has involved the issuing by the co-operative of shares to members arising from the trading relationship between the member and the co-operative (or a nominated purchaser). Where the number of shares issued is based on and dependent on the level of business between the member and the co-operative or the nominated purchaser, and where the co-operative does not receive the market price for the shares issued, it is considered that the profit accruing to the member, the difference between the market value of the shares issued and the price paid for these shares, is a trading receipt of the relevant business of the member.

Taxpayers are accordingly invited to review their returns submitted and to avail of the qualifying disclosure facility under Revenue’s Code of Practice for Revenue Audit and other Compliance Interventions where incorrect returns may have been submitted.

22 November 2016