The proportion of funding from each source was determined having regard to the most cost-effective source of funding available as at the date of payment. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 55. . The payment was entirely capital in nature with no dividend component. As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. ITAA 1936 45A 37. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. How do I provide, update or check my bank account details? 6. 39. Section 45A applies in circumstances where capital benefits are streamed to certain shareholders (the advantaged shareholders) who derive a greater benefit from the receipt of capital and it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received or will receive dividends. Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. Australian Taxation Office (ATO) Class Ruling . A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. ITAA 1936 45B(9) You received $2.50 for each share that you held on the record date. Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. ITAA 1997 115-25(1) The ATO ruling, if 35. 9. 58. 61. The Commissioner will not make a determination under either These included the divestment of Wesfarmers interest in the Bengalla coal mining joint venture, Curragh coal mine, Kmart Tyre & Auto, Quadrant Energy and 10.1 per cent of Wesfarmers post-demerger 15 per cent shareholding in Coles. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). 67. 56. ATO references: Unless the amount of the distribution exceeds the cost base of the shares, there will only be a cost base reduction under CGT event G1 (section 104-135 of the ITAA 1997). 20. You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. Corporations Act 2001 256C. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. 29. 24. Therefore, Wesfarmers shareholders will obtain a tax benefit from the return of capital. This is clearly marked. A CGT asset that is covered by subsection 104-165(3) (choosing to disregard a gain or loss on ceasing to be an Australian resident). 80. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. There was no dividend component as part of this capital management initiative. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. Will my shares be worth less after the capital return? The return of capital will be affected by way of an equal reduction of capital under section 256B of the Corporations Act 2001 (Corporations Act), and requires shareholder approval by ordinary resolution under section 256C of the Corporations Act. Aussie supermarkets set to capitalise on high inflation, but softer demand ahead, WESFARMERS LIMITED : Ex-dividend day for interim dividend, Out of lockdown, Kmart pushes Australia's Wesfarmers to higher profit, Transcript : Wesfarmers Limited, H1 2023 Earnings Call, Feb 15, 2023, Wesfarmers Raises Dividend as Fiscal H1 Profit, Revenue Increase, Australian Stock Exchange - 12:10:24 2023-03-01 am EST. Return of capital is not a dividend for income tax purposes. The discount factor for resident individuals and trusts is one-half and for complying superannuation funds is one-third. 72. The test of purpose is an objective one. CGT events G1-G3 - shares ITAA 1936 6(1) 29. ITAA 1997 975-300(3) a CGT asset that is covered by subsection 104-165(3) of the ITAA 1997 (choosing to disregard a capital gain or capital loss on ceasing to be an Australian resident). ATO references: 23. This will bring the total dividend for the year to $2.1 billion. ITAA 1936 45A(2) The return of capital was an equal reduction of capital under section 256B of the Corporations Act 2001 and required shareholder approval by ordinary resolution under section 256C of the Corporations Act 2001. an indirect Australian real property interest not covered by item 5; a CGT asset used at any time in carrying on a business through a permanent establishment in Australia and which is not covered by item 1, 2 or 5; an option or right to acquire a CGT asset covered by item 1, 2 or 3, and. 32. However, the list of relevant circumstances in subsection 45B(8) is not exhaustive and regard may be had to other circumstances on the basis of their relevance. You made a capital gain when CGT event G1 happened if the return of capital of $2.00 per Wesfarmers share you received was more than the share's cost base (subsection 104-135(3)). Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. 38. 58. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. 60. In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. 25. Under with section 112-25 of the ITAA 1997, the consolidation of Wesfarmers shares will not result in a CGT event happening where the company converts its shares in accordance with section 254H of the Corporations Act. 7. ITAA 1997 Div 112 34. The Commissioner will not make a determination under either subsection 45A(2) of the ITAA 1936 or paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to any part of the return of capital of $2.00 per Wesfarmers share you received on the Payment Date. The discount factor for resident individuals is one-half. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . ITAA 1936 45B(2)(c) Accordingly, the Commissioner will not make a determination under subsection 45B(3) of the ITAA 1936 that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the return of capital. The Payment Date is anticipated to be in mid to late December 2014. The Payment Date is anticipated to be late November to early December 2013. Wesfarmers Chemicals, Energy and Fertilisers, People development, diversity and inclusion, Chairman and Managing Director's 2022 sustainability message, Bunnings collaborates with Indigenous artists through exclusive plant pots range, Bunnings support for flood affected communities, Bunnings launches national battery recycling programs, Bunnings expands fleet with all electric trucks, Information for participants of the Wesfarmers employee share plans. ITAA 1936 47 22. 48. The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). You calculate your capital gain using the: Indexed cost base or discount method, whichever gives you the better result*, On or after 21 September 1999 and before 15December 2002, Discount method (after applying any capital losses - including unapplied capital losses from previous years). A Wesfarmers shareholder will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. 75. 42. 40. Payments made to credit unions may take longer. CGT event C2 in section 104-25 of the ITAA 1997 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date but which they cease to own before the Payment Date. The return of capital was in addition to the interim dividend of 88 cents per Wesfarmers share paid on 31 March 2021 and a final dividend of 90 cents per share for the year ended 30 June 2021 paid by Wesfarmers on 7 October 2021. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 64. ITAA 1936 44 The Record Date for the return of capital is expected to be on 15 November 2013. This payment was: ITAA 1936 45A(2) 33. 11. This is due to the outflow of funds to shareholders. The table sets out these five categories of CGT assets: 77. 62. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. ITAA 1997 855-10 This Ruling does not apply to anyone who is subject to the taxation of financial arrangements rules in Division 230 in relation to the scheme outlined in paragraphs 15 to 38 of this Ruling. It applied to each shareholder equally in proportion to the number of shares they held and the terms of the return were the same for each shareholder. ITAA 1936 45C(1) Wesfarmers' return of capital will be recorded as a debit to the share capital account and Wesfarmers shareholders will receive a distribution of share capital to the value of $0.50 per share. : Yes. How much did I receive and how was the payment made? ITAA 1936 45A(3)(b) Therefore, you can treat a capital gain made when CGT event C2 happened to your right to the payment of the return of capital as a discount capital gain under Subdivision 115-A if you acquired your Wesfarmers share at least 12 months before the Payment Date (subsection 115-25(1)) provided the other conditions in Subdivision 115-A are satisfied. If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. The right to receive the payment (being an intangible CGT asset) will end by the right being discharged or satisfied when the payment is made. This Ruling applies from 1 July 2021 to 30 June 2022. The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. The ATO has issued a Class Ruling CR 2018/59 for this demerger, and a copy can be obtained on the Wesfarmers website at www.wesfarmers.com.au. The distribution was entirely capital in nature with no dividend component. 39. Non-resident shareholders should seek specific advice in relation to the tax consequences arising from the return of capital under the laws of their country of residence. If the return of capital is approved by shareholders at the 2013 . ITAA 1936 45B(5)(b) Did the Dividend Investment Plan (DIP) apply? In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. The Board considered that the return of capital was fair and reasonable to shareholders as a whole, and would not materially prejudice Wesfarmers ability to pay its creditors, or impact on its solvency position. 21. Depending on the outcome, you may have to include some details on your 2003-04 tax return. The requisite purpose does not have to be the most influential or prevailing purpose but it must be more than an incidental purpose. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. Accordingly, CGT event G1 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date and continue to own at the Payment Date. Following the payment of the special dividends, Wesfarmers determined that $2.3 billion of the remaining balance of the proceeds from the asset disposals of approximately $2.925 billion was surplus to its capital requirements. You have made a capital gain if your cost base per share on the record date (15December 2003) was less than the amount you received for each share ($2.50). 23. 47. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. If the amount of the return of capital of $2.00 per Wesfarmers share is not more than the cost base of your Wesfarmers share, the Cost base / reduced cost base of the share are reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4)). 25. Demerger tax relief gives certain Wesfarmers shareholders the choice to defer the Australian capital gains tax (CGT) consequences that arise as a result of a Wesfarmers shareholder receiving Coles shares under the demerger. NEWS 11 September 2013 ATO CLASS RULING ON CAPITAL RETURN PROPOSAL The Australian Taxation Office has published a Class Ruling relating to. Return of Capital = $750 Fully Franked Dividend = $250 Units on hand after consolidation: 983 (1000 x 0.9827 - rounded to the next whole number of shares - See Point 25 in the ATO Class Ruling 2014/76 ). Corporations Act 2001. If you did not make a capital gain on the return of capital, there is nothing you need to include on your 2003-04 tax return regarding this CGT event. 21. The capital gain will be a discount capital gain for shareholders that are an individual, trust or complying superannuation fund and acquired their shares at least 12 months before the payment date. 82. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. For those employee shareholders who hold their shares within a New Zealand Wesfarmers employee share plan, are tax residents of New Zealand and only work in New Zealand, it is expected the return of capital payment will be treated as dividend income. 36. Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. The Australian Taxation Office (ATO) has published a Class Ruling in relation to the taxation treatment of the $2.00 per share return of capital to Wesfarmers shareholders, which was paid on 2 December 2021. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. On 27 August 2021, Wesfarmers announced that it will return share capital to Wesfarmers shareholders of $2.00 per Wesfarmers share totalling $2.3 billion (return of capital). During the years ended 30 June 2018 to 30 June 2020, Wesfarmers disposed of a number of assets and received sale proceeds totalling $4.3 billion. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). ITAA 1936 44(1) In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. 46. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. Wesfarmers has advised the total market value of its assets that are not taxable Australian real property is greater than the market value of its taxable Australian real property assets. 37. What are the shareholder tax implications of the capital return? The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 30 of this Ruling. Ruling Return of capital is not a dividend 7. If the return of capital of $2.00 per Wesfarmers share you received was not more than the cost base of the share, the Cost base / reduced cost base of each share is reduced by the amount of the return of capital (subsection 104-135(4)). If the scheme is not carried out as described, this Ruling cannot be relied upon. The cost base of the right does not include the cost base or reduced cost base of the share previously owned by you to the extent that it was applied in working out a capital gain or capital loss made when a CGT event happened to the share; for example, when you disposed of the share after the Record Date and before the Payment Date. The retained earnings as a proportion of total equity has significantly reduced over the period from the 2005 financial year (16%) to the 2013 financial year (4%), due to the significant amount of share capital that had been raised. 6. ITAA 1997 104-135(4) The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. adjust the cost base and reduced cost base of your Wesfarmers shares. Since 2009, the dividend payout of Wesfarmers has been as follows: 14. 25. Some of the information on this website applies to a specific financial year. The principal asset test is passed in the case of shares in a company if the sum of the market values of the company's assets that are taxable Australian real property exceed the sum of the market values of the company's other assets. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. Under subsection 855-10(1) of the ITAA 1997, an entity disregards a capital gain or capital loss from a CGT event if they are a foreign resident, or the trustee of a foreign trust for CGT purposes, just before the CGT event happens, and the CGT event happens in relation to a CGT asset that is not 'taxable Australian property'. 18. 25. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people, An indirect Australian real property interest not covered by item 5, A CGT asset used at any time in carrying on a business through a permanent establishment in Australia and which is not covered by items 1, 2, or 5, An option or right to acquire a CGT asset covered by items 1, 2 or 3. Return of capital amount - $5.68 for each entitled WES share. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. If the Wesfarmers share to which the return of capital relates was acquired by a Wesfarmers shareholder at least 12 months before the payment, a capital gain from CGT event G1 happening may qualify as a discount capital gain under subsection 115-25(1) of the ITAA 1997, provided the other conditions in Division 115 of the ITAA 1997 are satisfied. 64. No part of the return of capital paid to you by Wesfarmers on the Payment Date is a dividend as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. The right to receive the payment of the return of capital is one of the rights inherent in a Wesfarmers share at the Record Date. A CGT event will not happen if a company converts its shares into a larger or smaller number of shares (the converted shares) in accordance with section 254H of the Corporations Act in that: While there is a change in the form of the original shares, there is no change in their beneficial ownership. Section 45B - schemes to provide capital benefits. TD 2000/10, Subject References: At Wesfarmers we believe sustainability is about understanding and managing the ways we impact the communities and environments in which we operate, to ensure that we continue to create value in the future. 50. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. This represents a total return of approximately $579 million to Wesfarmers shareholders. 3.7 Cash return of capital amount per +security AUD 2.00000000 Part 4 - Changes to option pricing as a result of the cash return of capital 4.1 Will the cash return of capital affect the exercise price of any +entity-issued options? This payment was: A CGT event happened on 18 December 2003, when Wesfarmers made a capital return on the shares that you held in the company. A Wesfarmers shareholder who is a foreign resident or the trustee of a foreign-resident trust for capital gains tax (CGT) purposes, and received the return of capital, can disregard any capital gain made if CGT event G1 happened or disregard any capital gain or capital loss if CGT event C2 happened under section 855-10, provided also that your Wesfarmers share or your right to receive the return of capital on the Wesfarmers shares: 15. ITAA 1997 104-135 The following tables sets out what method you can use. 43. ITAA 1997 104-25 For those shareholders who are tax residents of Australia and hold their shares on capital account at the time the return of capital is paid, no part of the return of capital should be treated as a dividend for income tax purposes. 31. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. How can I calculate my return of capital payment and when will I receive this payment? 20. Sections 45A and 45B are anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C applies to treat all or part of the return of capital to be received by Wesfarmers shareholders as an unfranked dividend. The Commissioner will not make a determination under either This amount represents your capital proceeds. 26. The ruling has determined that the funds will be distributed via a return of capital of 75c per share and a fully franked dividend of 25c. ITAA 1936 45C(2) 30. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. Taxation Administration Act 1953. 19. ITAA 1936 45B(5) 24. share capital, Legislative References: shares held within the Deferred Plans at the time of the return of capital payment), the cost base for each share held on behalf of employees was reduced by the return of capital amount. TR 2006/10 Expand Company Description ATO Class Ruling - return of capital to shareholders StockBot 357,511 posts about a year ago WES released this announcement to the ASX on 8 December 2021, 17:19. ITAA 1997 104-135 ITAA 1936 45B(3) Therefore, if the cost base or reduced cost base of the share previously owned by you has been fully applied in working out a capital gain or capital loss on the share, the right to receive the return of capital will have a nil cost base. With a capital gain, see the Guide to capital gains tax for an ATO Class Ruling relating this... 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ato class ruling wesfarmers return of capital