Hubert / Sunova Common & Surplus Share Payout | Page 3 | Hubert Financial | Discussion forum

Loonie said

Perhaps it's the same issue at DUCA?
Rec'd "Class A Share Dividend" on Jan 1 and don't know what to make of it, how to access it, etc. I've never rec'd anything like this before Would rather not have this complication for such a relatively small amount!

According to Profit Sharing: Fine Print, DUCA pays Patronage and Dividends.

For 2017, Patronage was "equal to 2% of interest paid or received in 2017 (up to a maximum of $1,000) by individual Members" provided it amounted to at least $10. There was also a Dividend paid on the shares owned at the end of 2017, based on DUCA's performance as a credit union throughout 2017.

Both Patronage and Dividends were paid in Class A shares.

So for anybody with more then 1 share... Are you still getting paid your surplus!?

Thanks, Norman...looks like you've certainly got into the "income tax weeds," with your knowledge of LRIPs and GRIPs. Wow!

Cheers,
Doug

I purchased the maximum shares of $1000 and put it in a TFSA Share Account, but I only did that near the end of 2018, so I won't probably know until 2020 what or how that might benefit me. lol

christinad said
How do you purchase shares?  

There's a form to fill out, I believe, on the Hubert website, or you may just be able to message the Hubert reps via live chat, tell them how many $5 shares you wish to purchase (currently limited to $1000, so 200 shares). However, they regularly have equity offering promotions whereby you can purchase up to $20-40,000 in equity shares, so watch out for those.

Cheers,
Doug

Loonie said
I just spoke to DUCA and was told the Class A Shares will be counted as interest income (not dividend) for CRA purposes.
It's not a huge amount of money, but I resent, in principle, the idea that you have to pay tax now on money you can't get at yet. It's the same issue with compound interest, but, in that case, you usually do have a choice to receive the interest annually.  

Hi Loonie,

Based on Norman's extensive analysis of the Income Tax Act, I suspect most, if not all, Canadian CU share dividends are classified as "interest income."

On compound interest, when you say receiving the interest annually, do you mean an interest credit to your compounded GIC account or annually paid interest to a demand deposit (i.e., savings or chequing) account? I don't mind having the compound interest paying paid to my GIC, even though I can't touch it until maturity (usually), but I do want to see an annual credit to the GIC account so that I can reconcile the reported T5 amounts.

In related news, I received my first Coast Capital Savings Federal Credit Union T5 early last week. Sadly, they don't offer online T5s yet, but hopefully that'll come. 🙁

Cheers,
Doug

Loonie said

… Anyone who had a lot of business with them might want to discontinue their membership simply in order to access the funds accumulated in these shares. That is really counterproductive for the corporation.

On the contrary, the situation is highly beneficial to the credit union.

The members end up with the tax liability. The credit union ends up with the before-tax earnings!

Kind of like the designated beneficiary of an RRSP receiving the full value of the RRSP, with no tax withholding, and the estate gets the tax liability of the RRSP withdrawal.

Yeah, right. But i's counterproductive for them if the member quits and thus stops generating profits for them, even if member does have to wait 7 years to get their money.
DUCA is not so wonderful or unique that I would want to leave a large amount of money there indefinitely and without access, if that's what I had. There are many more fish in the sea, and other CUs don't operate this way.

I suspect this CU was originally closed bond, restricted to the Dutch-Cdn community. Those early members may have felt a greater loyalty, for the good of their community, than modern open-bond members do.