(iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 59. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. 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)). . ITAA 1997 104-165(3) Return of capital amount - $5.68 for each entitled WES share. Annual General Meeting, at which shareholders voted to approve the return of capital. 61. As such, paragraph (d) of the definition of 'dividend' in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. 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. 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. For your other shares - reduce the cost base and reduced cost base by $2.50 each. 66. The distribution comprised a return of capital of 75 cents per share and a fully-franked dividend of 25 cents per share. Where the original shares were acquired on or after 20 September 1985, subsection 112-25(4) of the ITAA 1997 provides that each element of the cost base and reduced cost base of the converted shares is the sum of the corresponding elements of each original share. 36. CGT event C2 happened when the return of capital was made. 44. ITAA 1997 977-50 Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. Wesfarmers shareholders received a $1.00 per share cash distribution. . 8. The application of sections 45A, 45B and 45C to the return of capital. ITAA 1997 104-25(3) 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. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. 64. Make sure you have the information for the right year before making decisions based on that information. If Maria chooses the discount method, she calculates her capital gain by subtracting her cost base from the amount she received in the return of capital. The return of capital will be paid equally to each holder of a Wesfarmers share who is registered on the Wesfarmers share register on the Record Date. Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. 25. A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. The return of capital will be debited to Wesfarmers share capital account. 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. 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. There was no dividend component as part of this capital management initiative. Copyright Act 1968 If there was any residual from the return of capital payment after the payment had been applied to your loan balance, the remaining balance was paid directly into your bank account on Thursday, 2 December 2021. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. ITAA 1997 Div 230 Our diverse business operations cover: home improvement and outdoor living; apparel and general merchandise; office supplies;health, beauty and wellbeing; and an Industrials division with businesses in chemicals, energy and fertilisers, and industrial and safety products. 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 capital gain is equal to the amount of the excess. 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). 58. ITAA 1997 115-25(1) As a result, you will, in those circumstances, make a capital gain equal to the capital proceeds, being $2.00 per Wesfarmers share owned at the Record Date. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. This amount represents your capital proceeds. She paid $2,200 ($2.20 per share) plus brokerage of $100 - making her cost base $2,300. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. Commissioner of Taxation CGT event G1 happened when Wesfarmers made the return of capital to you in respect of Wesfarmers shares you owned at the Record Date and continued to own at the Payment Date (section 104-135). No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. 9. ITAA 1936 44(1) The return of capital was announ The effect of such a determination is that all or part of the return of capital received by Wesfarmers shareholders is treated as an unfranked dividend paid by Wesfarmers out of profits. 58. adjust the cost base and reduced cost base of your Wesfarmers shares. You will make a capital gain from CGT event G1 happening if the amount of the return of capital of $2.00 per Wesfarmers share is more than the cost base of your Wesfarmers share. Shareholders are sent return of capital payment advice. Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. ITAA 1997 104-135 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). ITAA 1936 6(1) 5. 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. return of capital on shares CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. A capital benefit was provided to Wesfarmers' shareholders. Wesfarmers credited $12,733 million to its share capital account on the issue of Wesfarmers ordinary shares and partially protected ordinary shares to Coles Group shareholders in part payment for the acquisition of all the issued shares in Coles Group. 19. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. 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. 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. Section 45B - schemes to provide capital benefits. The discount factor for resident individuals is one-half. The Record Date for the return of capital is expected to bein late November or early December 2014. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. Will my shares be worth less after the capital return? Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. For those shareholders who are not tax residents of Australia and hold their shares on capital account, no Australian income tax implications should arise as a consequence of the return of capital. Mark has not made a capital gain on his shares as a result of the capital return so he does not have to put anything on his 2003-04 tax return to reflect this event. 15. The capital return distribution was paid on Thursday, 2 December 2021. The following tables sets out what method you can use. If you have a New Zealand bank account, the exchange rate that was used to convert the Australian dollar payment into New Zealand dollars was set on the record date. The capital gain is equal to the amount of the excess. Accordingly, if the Wesfarmers share was acquired by the Wesfarmers shareholder at least 12 months before the return of capital was paid, a capital gain from CGT event C2 happening on the ending of the corresponding right 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. ITAA 1936 45B(5)(b) ITAA 1997 Div 112 Ruling Return of capital is not a dividend 7. Under the return of capital, all shareholders were treated in the same manner. What are the key dates for the capital return? For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. 57. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . ITAA 1997 855-10 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. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). Section 45B applies where certain capital payments are made to shareholders in substitution for dividends. 17. Shareholders who did not provide the share registry with their bank account details, may complete a paper Direct Credit Payment Form, which is available from Wesfarmers share registry, Computershare Investor Services Pty Limited, or provide their details online to Computershare at www.computershare.com.au/easyupdate/wes. ITAA 1997 975-300 The following description of the scheme is based on information provided by the applicant. to make a short-term or 'one-off' commercial gain. Who this Ruling applies to 4. 65. ITAA 1997 116-20(1) Bunnings Limited shareholders offered $11.20 for each Bunnings share or $25.80 plus 2 Wesfarmers shares plus 1 Wesfarmers option ($12.50) for every 4 Bunnings shares 6 Nov 1989 Renounceable rights offer - 1 for 7 at a price of $4.25 per share 13 Jan 1989 Share split - each $1.00 share split into 2 x 50 cent shares 22 Apr 1987 This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. 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). 61. The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. 24. Section 45B - scheme to provide capital benefits. CGT event C2 happened to your right to receive the return of capital on the Payment Date when Wesfarmers paid you a return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and ceased to own before the Payment Date (section 104-25). Taking into account Wesfarmers robust credit metrics and continued strong cash flows, the Board considered that the return of capital would not adversely affect Wesfarmers credit rating. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. By . 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). 54. 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). Accordingly, the Commissioner will not make a determination under subsection 45A(2) 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. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. This Ruling applies from 1 July 2021 to 30 June 2022. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . ato class ruling wesfarmers return of capital. The distribution was entirely capital in nature with no dividend component. CGT events C1-C3 - end of a CGT asset 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. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. This Ruling applies from 1 July 2013 to 30 June 2014. 11. 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. 9. The ruling applies from 1 July 2021 to 30 June 2022. The ATO ruling, if 40. 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). ITAA 1997 855-15 60. 54. However, the circumstances of the return of capital indicate that there was no streaming of capital benefits to some Wesfarmers' shareholders and dividends to other Wesfarmers' shareholders. 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. This is clearly marked. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. 25. ITAA 1936 45B 32. The capital return was completed on 18December 2003. 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. Create your myGov account and link it to the ATO, Help and support to lodge your tax return, Occupation and industry specific income and work-related expenses, Residential rental properties and holiday homes, Instalment notices for GST and PAYG instalments, Your obligations to workers and independent contractors, Encouraging NFP participation in the tax system, Australian Charities and Not-for-profits Commission, Departing Australia Superannuation Payment, Small Business Superannuation Clearing House, Annual report and other reporting to Parliament, Complying with procurement policy and legislation, Wesfarmers Group Limited (Wesfarmers) return of capital. Wesfarmers Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. The uplift factor is worked out by dividing 123.4 by the consumer price index for the December quarter of 1986 (79.8) and is 1.546 (rounded to three decimal places). There was no share consolidation as part of this capital management initiative and the number of Wesfarmers shares held by shareholders was not affected by the return of capital. 59. Some of the information on this website applies to a specific financial year. ITAA 1997 855-10 ITAA 1936 47 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. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. 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. ITAA 1936 45C Corporations Act 2001. Maria's capital gain is $200 ($2,500 - $2,300). 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. 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)). Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. 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. 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. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. 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. The only relevant category of taxable Australian property is table item 2 of section 855-15. Taxation Administration Act 1953. 8 December 2021. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. The Class Ruling and further details regarding the return of capital can be accessed via the Investor Centre section of the Wesfarmers website at www.wesfarmers.com.au. NO 1-PVCWOSF, Legislative References: CGT event G1 happened on the Payment Date when Wesfarmers paid you the return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and continued to own at the Payment Date (section 104-135). 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. 20. 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. ITAA 1936 44 ITAA 1997 104-25(3) This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. The ATO has issued Class Ruling CR 2018/59 . If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. Maria purchased 1,000 Wesfarmers shares in December 1986. ITAA 1936 45B(3) If the scheme is not carried out as described, this Ruling cannot be relied upon. ITAA 1997 104-135(3) 42. 56. 76. 33. 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. 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. 10. 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). After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. 4:00pm (Perth time) Friday, 19 November 2021. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). 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 Div 109-A 6. 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. CGT event G1 in section 104-135 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 and continue to own at the Payment Date. To purchase shares that are proportionately higher priced is conditional upon the approval by shareholders of ordinary. An 'indirect Australian real property interest ' as defined in section 855-25 of the excess event C2 happened the! Worth less after the capital gain is equal to the return of capital was made her cost.. Subsection 45B ( 3 ) of the ITAA 1936 45B ( 3 if! 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