What Does Patronage Dividend Mean?
A dividend or distribution that a co-operative pays to its members or investors. Patronage dividends are given based on a proportion of profit made by the business. Once this amount is figured out the dividend is calculated according to how much each member has used the co-op’s services. Tax rules view these profits essentially as an overcharge, which can be returned to patrons and deducted from the co-op’s taxable income.