Kerry Co-op advises shareholders to appeal patronage share tax demands
Kerry Co-op is advising those shareholders in receipt of additional income tax demands from the Revenue, linked to patronage shares issued by the organisation in 2011, 2012 and 2013, to bring their case to the Tax Appeals Commission on an individual basis.
This was the main outcome of a meeting held in Tralee last night.
The matter hinges on the Revenue’s assertion that the receipt of patronage shares in Kerry Co-op constitutes a form of trading income, thereby exposing the shareholders in question to income tax liabilities.
The meeting was attended by Kerry co-op board members, advisors of the co-op and some 100 tax advisors from the south west region.
A Kerry co-op spokesperson confirmed that the meeting was technical in nature.
It allowed the co-op’s advisors to discuss all relevant matters with the farmers’ representatives. The co-op continues to liaise with the Revenue on this matter.
The Kerry Co-op representative continued:
“The Revenue acted on this matter without any forewarning whatsoever.
“The co-op was not aware of the steps which the Revenue intended taking, nor were any of the practitioners in attendance at last night’s meeting prior to the issuing of the letters.
“The co-op can only advise on this matter. Depending on individual circumstances, it is up to each farmer affected to act on his or her counsel.
“But the core advice coming from the advisors to the co-op is that each of the 400 shareholders in receipt of the letter issued by the revenue can take their case up with Tax Appeals Commission.”
The co-op representative confirmed the existence of a grey market in Kerry Co-op shares.
Any transfer of shares is subject to approval by the board of the co-op. Heretofore, sales of co-op shares or patronage shares were subject to capital gains tax, where a gain was realised.
The co-op spokesperson said that Revenue is not acting on foot of any change in legislation.
“The patronage shares were issued in accordance with strict co-operative principles. Specifically, they were not offered in lieu of payment for milk supplied to the Kerry group.
“In fact, they were purchased by farmers at a nominal value of €1.25 per share,” he said.