Patronage Dividend- FAQs
During the first week of December, a notification letter will be mailed to all Owners who a receiving a store credit. If you do not receive a notification letter, you may not have spent over $568 at the Co-op in our last fiscal year (July 1st, 2012- June 30th 2013). If you believe you are eligible for a store credit and have not received a letter by December 30th, please contact Leslie Jamison in our Owner Services Department, for more information about your purchases for FY2013 at (208) 472-1459 or email firstname.lastname@example.org.
Why a patronage dividend now? The Boise Co-op bylaws were amended in 2011 to allow for a Patronage Dividend for the first time in our 40 year history. Our fiscal year 2012-13, was a profitable year, and the Board determined that the Co-op is in a position financially to declare a patronage dividend to Owners. A patronage dividend rewards Owners for their financial support of the Co-op. The Co-op also benefits by not having to pay income tax on Net Profit that is declared a patronage dividend.
How is the patronage dividend calculated? The more you spent, the bigger your patronage dividend! Here’s how it works. The total amount of your patronage dividend is based upon all the purchases you made during the fiscal year, divided by the total purchases made by all active Owners, then the dividend is multiplied by your share (%).
Do I have to pay income taxes on the patronage dividend? No, patronage dividends are not taxable income unless your purchases were for business purposes rather than personal use. If this is the case for you, please consult your tax adviser.
If I cancel my Co-op Membership do I still receive a patronage dividend? To qualify for a patronage dividend, you must be an “active” Owner on the last day of the fiscal year, and must have made at least one purchase from the Co-op during that same fiscal year. If you choose to refund your membership, after the fiscal year ends, you would still qualify for the previous year’s dividend.
What purchases don’t count toward my patronage dividend? Certain purchases that are not physical merchandise will not count toward your patronage dividend such as Wine Class tuition, or equity payments.
Do sale items count toward my patronage dividend? Yes, except for the few items listed above. Sale items are credited only at the sale price.
Did every Owner receive a patronage dividend? Actually, no. Only Owners who used their member accounts as they shopped at the Co-op between July 1st 2012, and June 30th 2013, and spent enough money to earn a patronage dividend greater than $0.60 have been sent a letter notifying them of their patronage dividend amount.
What if I do not spend or cash my patronage dividend? The Co-op encourages you to spend or redeem your patronage dividend- you have earned it! You must use your store credit or cash you check before June 15th, 2014. The dividend is no longer available to you after that date. Unredeemed patronage dividends become taxable income for the Co-op, both the distributed and retained portions.
What if I cannot come to the Co-op to redeem my patronage dividend? Call Owner Services at (208) 472-1459. We can arrange to send you a check.
Will there be future patronage dividends? The Board determines the financial appropriateness of a patronage dividend annually. The Board’s primary concern is the continued health and prosperity of our Co-op. According to the IRS, at least 20% of the Owners’ patronage dividend must be distributed as cash or equivalent. The Board may choose to retain up to 80% of each Owner’s patronage dividend (as equity in Owners’ names) for projected capital improvements, growth and reduction of debt.
Is the patronage equity portion something I can take out at some point in the future? What does it mean that it’s retained in my “name”? The Co-op keeps records of each Owner’s retained equity. The only time that the retained portion of patronage equity is returned to Owners is if at some date in the future the Co-op Board is in a position to do so, and may disperse all the retained equity from a given year when the financial status of the Co-op allows it. It is unlikely that retained equity will be returned to Owners in this way. What is more likely, is that there may be future years in which our Board decides to retain a smaller percentage of the total dividend as equity and offer a larger percentage as store credit to Owners.