If you provided your direct credit payment instructions by 4:00pm (Perth time) on Friday, 19November2021, the return of capital payment was made on Thursday, 2 December 2021 by direct credit to your financial institution if your registered address is in Australia, New Zealand or the UK. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. NEWS 11 September 2013 ATO CLASS RULING ON CAPITAL RETURN PROPOSAL The Australian Taxation Office has published a Class Ruling relating to. 7. 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. ITAA 1997 116-20(1) For each of these shares, you have made a capital gain of: For shares with a cost base equal to or greater than $2.50, you have made no capital gain as a result of the return of capital. Section 45A - streaming of dividends and capital benefits. ITAA 1936 45B(2)(a) ITAA 1997 104-165(3) CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. 20. Make sure you have the information for the right year before making decisions based on that information. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. The return of capital will be debited to Wesfarmers share capital account. Components of the capital return The capital return was $2.50 per share. The following is a detailed contents list for this Ruling: Make sure you have the information for the right year before making decisions based on that information. 33. ITAA 1997 Div 230 If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. 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. 47. However, paragraph (d) of the definition of dividend excludes a distribution from the meaning of dividend if the amount of the distribution is debited against an amount standing to the credit of the company's share capital account. 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. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . 39. As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. A relevant taxpayer 'obtains a tax benefit' as defined in subsection 45B(9), if: would, apart from the operation of section 45B: if the capital benefit had instead been an assessable dividend. Having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme is proposed to be entered into for a more than incidental purpose of enabling a taxpayer to obtain a tax benefit. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. Wesfarmers derived a net profit after tax of $1.335 billion from the disposal of the assets, which was paid to shareholders as special dividends in April 2019 and October 2020. A capital benefit was provided to Wesfarmers' shareholders. 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. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. ITAA 1997 104-135 For example, if you held 1,000 shares as at the record date, you received 1,000 x $2.00 or $2,000 as the return of capital payment. How do I adjust the cost base and reduced cost base of my Wesfarmers shares? 57. The cost base of a Wesfarmers shareholder's right to receive the return of capital is worked out under Division 110 of the ITAA 1997 (modified by Division 112 of the ITAA 1997). Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. For the purposes of paragraph 45B(2)(c), the Commissioner is required to consider the 'relevant circumstances' set out in subsection 45B(8) to determine whether any part of the scheme would be entered into for a purpose, other than an incidental purpose, of enabling a relevant taxpayer to obtain a tax benefit. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. However paragraph (d) of the definition of dividend specifically excludes a distribution from the meaning of 'dividend' if the amount of the distribution is debited against an amount standing to the credit of the company's share capital account. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 74. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. 38. 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)). 38. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 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. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. ITAA 1997 Div 230 a capital payment (it was not classed as a dividend for any purpose and had no dividend component). 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). Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 47. | August 8, 2022 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. 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 the Wesfarmers shareholder that has been applied in working out a capital gain or capital loss made when a CGT event happened to the share - for example, when the Wesfarmers shareholder disposed of the share after the Record Date. ITAA 1936 6(1) The right to receive the return of capital, being an intangible asset, ended by the right being discharged or satisfied when the return of capital was made (section 104-25). 31. Some of the information on this website applies to a specific financial year. 42. The only relevant category of taxable Australian property is table item 2 of section 855-15. 44. CGT events G1-G3 - shares ITAA 1997 115-25(1) 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)). Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. Specifically, the provision applies where: 48. How much did I receive and how was the payment made? The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. 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? 54. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. 52. The Commissioner will not make a determination under either This Ruling sets out the income tax consequences for shareholders of Wesfarmers Limited (Wesfarmers) who received the return of capital payment of $2.00 per ordinary share on 2 December 2021 (Payment Date). Recording the capital gain on the tax return. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. 53. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. ITAA 1936 45A(2) ITAA 1936 45A ITAA 1997 Div 197 The payment was entirely capital in nature with no dividend component. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. What are the shareholder tax implications of the capital return? A Wesfarmers shareholder who is a foreign resident just before CGT event C2 happens, disregards any capital gain or capital loss made when CGT event C2 happens if their right to the return of capital is not 'taxable Australian property' (section 855-10 of the ITAA 1997). Ruling Return of capital is not a dividend 7. 58. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. ITAA 1936 44 The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. For participants in all other Australian employee share plans, the tax implications are as follows: For shares that had not reached their ESS deferred taxing point at the time of the return of capital payment (i.e. 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. The return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. 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. 61. 42. 73. 34. ITAA 1997 104-25 The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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. In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . Section 45A - streaming of dividends and capital benefits. 78. ITAA 1936 47 capital reductions 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. 21. Annual General Meeting, at which shareholders voted to approve the return of capital. In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. ITAA 1997 104-165(3) At 30 June 2007, Wesfarmers' share capital was $2,256 million, with retained earnings of $1,131 million (effectively $588 million after the final 2007 dividend of $543 million). There was no share consolidation in relation to the capital return. 59. 35. TR 2006/10 The Payment Date is anticipated to be late November to early December 2013. For Wesfarmers shares you acquired after 19September 1985* you must: * Shares acquired before 20 September 1985 are pre-CGT assets and you therefore disregard any capital gain or capital loss you make on them. adjust the cost base and reduced cost base of your Wesfarmers shares. The return of capital . 45. ITAA 1936 45B(3)(b) 5. 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. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. ITAA 1997 995-1(1) The Commissioner will not make a determination under either Commissioner of Taxation All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. As the right to receive the payment of the return of capital was inherent in the Wesfarmers share during the time it was owned, the right is considered to have been acquired at the time when the share was acquired (section 109-5 of the ITAA 1997). In particular: 26. Wesfarmers has confirmed that its share capital account (as defined in section 975-300 of the ITAA 1997) is not tainted (within the meaning of Division 197 of the ITAA 1997). No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. Make sure you have the information for the right year before making decisions based on that information. Return of Capital Wesfarmers proposes to make a cash payment to shareholders of A$0.50 per ordinary share and partially protected share as a return of capital. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. ITAA 1936 45A 16. Shares in Wesfarmers will be 'an indirect Australian real property interest' if (among other things) they pass the principal asset test in section 855-30. 13. 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. The return of capital was announced on 27 August 2021 and was approved by shareholders at the Wesfarmers Annual General Meeting on 21 October 2021. 9. For participants in the Australian tax exempt share plans or the loan plans the cost base for each share held on behalf of employees should be reduced by the return of capital amount. Wesfarmers has obtained a Class Ruling CR 20from the ATO which governs the Australian tax21/87 treatment of the return of capital to Wesfarmers shareholders who hold their shares on capital account. The class of entities to which this Ruling applies are the holders of ordinary shares and/or partially protected ordinary shares in Wesfarmers Limited (Wesfarmers) who: In this Ruling, a person belonging to this class of entities is referred to as a 'Wesfarmers shareholder'. . Each of these conditions is considered in this Ruling. 37. The ATO has issued Class Ruling CR 2018/59 . No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. to make a short-term or 'one-off' commercial gain. 25. 2. 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. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. Will my shares be worth less after the capital return? The share consolidation will occur after the return of capital to Wesfarmers shareholders, and will be applied to both the fully paid ordinary shares and the partially protected ordinary shares. 1. The capital return was completed on 18December 2003. Under the return of capital, all shareholders were treated in the same manner. 14. A Wesfarmers shareholder's right to the payment of the return of capital is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. ITAA 1997 975-300(3) For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). This is clearly marked. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its shareholders. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. 21. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. 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. A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. 67. You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. Eligible shareholders received 1 COL share for each WES share owned. The discount factor for resident individuals is one-half. 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). 20. 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. It states that a person is provided with a capital benefit if: 52. 13. 24. 76. The new cost base for his share parcel is $2,550 ($3,050 - $500), or $12.75 per share. ITAA 1997 116-20(1) share capital, Legislative References: On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. ITAA 1936 45C(2) ITAA 1936 45B(3) 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. To be eligible to receive the return of capital, you needed to be a registered shareholder on the record date for determining entitlements, which was 4.00pm (Perth time) on Friday, 19 November 2021. The question is whether it would be concluded that a person who entered into or carried out the scheme did so for the purpose of obtaining a tax benefit for the relevant taxpayer in respect of the capital benefit. The capital return was completed on 18 December 2003. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. 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. Therefore, Wesfarmers shareholders will obtain a tax benefit from the return of capital. The return of capital will be paid equally to each holder of a Wesfarmers share (being ordinary shares and partially protected ordinary shares) who is registered on the Wesfarmers share register on the Record Date. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. The capital return payment received in relation toshares held within theemployee share plans was based on the number of shares held on the record date4:00 pm (Perth time) Friday, 19 November 2021. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. How did the capital return work and what was the effect on the company? 10. ITAA 1997 855-10 Australian Taxation Office for the Commonwealth of Australia. 53. What are the key dates for the capital return? 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. 28. 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. Therefore, a Wesfarmers shareholder who is a foreign resident or the trustee of a foreign-resident trust for CGT purposes, and who 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, provided also that your Wesfarmers share or your right to receive the return of capital on the Wesfarmers shares: The amount of the capital gain is equal to that excess. Wesfarmers has advised that, at the time CGT event G1 happens for any foreign resident Wesfarmers shareholder who is entitled to the return of capital, a Wesfarmers share will not be an indirect Australian real property interest (as defined in section 855-25 of the ITAA 1997). Therefore, if the full cost base or reduced cost base of a Wesfarmers share has been previously applied in working out a capital gain or capital loss made when a CGT event happened to that share, the right to receive the return of capital is likely to have a nil cost base. Income tax: Capital management distribution: Wesfarmers Limited . 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). You will make a capital gain under CGT event C2 if the capital proceeds from the ending of the right are more than the cost base of the right. Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. 4 September 2013. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. The capital gain is equal to the amount of the excess. As Wesfarmers has a high dividend payout ratio and distributes, where possible, available franking credits, a return of capital was seen as the most efficient distribution of capital to shareholders. 10. The following description of the scheme is based on information provided by the applicant. ITAA 1936 45C The ATO ruling, if ITAA 1997 Div 112 ITAA 1936 45B At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. 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). Subsection 44(1) includes in a shareholder's assessable income any dividends, as defined in subsection 6(1), paid to the shareholder out of profits derived by the company from any source (if the shareholder is a resident of Australia) and from an Australian source (if the shareholder is a non-resident of Australia). Wesfarmers operates a diverse business which covers home improvement, office supplies, department stores and an industrials division with businesses in chemicals, energy and fertilisers, and industrial and safety products. ITAA 1936 45C(1) ITAA 1997 104-135(3) 11. The distribution comprised a return of capital of 75 cents per share and a fully-franked dividend of 25 cents per share. 4:00pm (Perth time) Friday, 19 November 2021. * If you choose to index the cost base of shares you acquired before 21September 1999, you cannot apply the CGT discount when you dispose of them. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. 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). A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. ITAA 1936 45B(5)(b) 4. 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. 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. If it is tainted the distribution comprised a return of capital, class. 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Dates for the capital return on your shares is a public Ruling for the purpose section... Tax information Guide or the ATO class Ruling ato class ruling wesfarmers return of capital capital payment table item 2 of section 855-15 of distribution... Public Ruling for the purpose of section 45B ( excluding appendixes ) is capital. Relation to their tax position 1997 Div 230 a capital benefit if: 52 for any purpose had... 2013 ATO class Ruling category of taxable Australian property is table item 2 of section 855-15 of the 1936.