MEC is owned by members. The $5 lifetime membership you buy to become a member represents your part-ownership in the Co-op. Each share can only be in one person’s or organization’s name.
Shares and what they mean
When you join MEC, your $5 goes towards one membership share. There’s another type of share, too: patronage shares. Patronage shares are connected to the concept that MEC is a co-op and its earnings belong to members. Every member has an account that shows the value of patronage shares in their name.
So how do you get patronage shares? You get them through patronage returns. In years when MEC earns a surplus, the Board looks at our surplus earnings and decides how much to retain to operate MEC and how much should go back to members; this portion is called a patronage return. Then they divide the total earnings up between individual members based on how much money each member spent at MEC over that year. Your portion of the patronage return is called a patronage dividend, and it gets allocated to you as a quantity of patronage shares, each worth $5.
A share redemption is one of the unique benefits of being a Co-op member. Most members know share redemptions as the time when MEC sends you a gift card. Share redemptions are governed by MEC’s Rules of Co-operation (Rule 6.06), and here’s how they work:
- Each year, the Board looks at MEC’s finances and figures out if there are enough funds to meet the Co-op’s future needs.
- If there are enough funds, then the Board decides on the amount of the share redemption. They direct MEC to buy back patronage shares from eligible members (see above to learn how you gain patronage shares).
- MEC sends eligible members the value of the shares we bought back. We send them out as gift cards by email or mail.
- The amount you receive in a share redemption is based on how much you spent at MEC.
As of 2019, MEC has issued 16 share redemptions and returned $35 million to members.
MEC will not be issuing a share redemption in 2019. After careful consideration, the Board decided that retaining capital within MEC was the best course to follow in light of the capital-intensive projects, such as new IT systems, that are presently underway.
MEC is legally required by the Canada Revenue Agency to issue credit notes to eligible members. Most members don’t need to take any action with the information in their credit note. In 2014, members voted in favour of changing MEC Rules to appoint an agent to accept delivery of the annual credit notes on behalf of all qualified members. Issuing credit notes to an agent saves your Co-op money and cuts down on paper use.
If you’d like to receive your credit note directly, please call our Service Centre 1 (888) 847-0770 or email firstname.lastname@example.org to request it. Or you can contact our credit note agent at email@example.com or by mail at:
MEC Credit Note Agent,
c/o Borden Ladner Gervais LLP
Barristers & Solicitors
1200 Waterfront Centre
200 Burrard Street
P.O. Box 48600
Vancouver, BC, V7X 1T2
Credit notes are the way MEC tells members about their patronage dividends (Canada Revenue agency refers to them as patronage dividends, while MEC Rules call them patronage returns). The Canada Revenue Agency considers your patronage dividend a sales rebate. When you originally purchased items at MEC, you paid sales tax on those items. The Canada Revenue Agency requires us to provide you with information about your patronage dividends and the tax you paid on the amount that’s being refunded as a patronage dividend.
GST/HST/QST registrants (i.e., businesses) should consult tax advisors for appropriate treatment of the tax adjustment and patronage dividend amounts shown on their credit notes in their respective GST/HST/QST and income tax filings. Credit notes can’t be redeemed for cash, nor used for purchases.
Credit notes are only issued to eligible MEC members. Eligibility is based on 3 criteria:
- You’re a Canadian resident (including those living abroad)
- You made purchases at MEC in the year that patronage return applies
- You’re not tax exempt