This will bring the total dividend for the year to $2.1 billion. Using this method, Maria has made no capital gain on the return of capital, so she does not have to put anything on her 2003-04 tax return to reflect this event. 14. 6. 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. It is anticipated that the share consolidation will have no effect on the value of each shareholder's shares relative to the total market value of Wesfarmers. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. ato class ruling wesfarmers return of capital. * 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. ITAA 1936 45B(3) Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. ITAA 1997 104-165(3) 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. 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. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 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. The return of capital was made possible by the Wesfarmers Groups continued strong cash flow generation and the receipt of approximately $4.3 billion in proceeds from the sales of a number of assets during FY2018 to FY2020. The capital loss is equal to the amount of the difference (subsection 104-25(3)). The return of capital satisfies the first two conditions. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. This is due to the outflow of funds to shareholders. In working out the capital gain or capital loss made when CGT event C2 happens, the capital proceeds will be the amount of the return of capital ($0.50 per fully paid share) (subsection 116-20(1) of the ITAA 1997). For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). 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. 3. 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 method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. 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 Commissioner makes this Ruling based on the precise scheme identified in this Ruling. Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. 22. 19. It states that a person is provided with a capital benefit if: 52. CGT event C2 happened when the return of capital was made. Annual General Meeting, at which shareholders voted to approve the return of capital. 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. 29. ITAA 1997 115-25(1) ITAA 1997 855-20 capital reductions 61. sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. ITAA 1997 Div 112 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. 71. ITAA 1997 Div 112 43. Make sure you have the information for the right year before making decisions based on that information. 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. capital gains tax 25. 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 ). 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. Section 45B - scheme to provide capital benefits. 52. 4. 6. 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. 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. 36. 21. The Class Ruling confirms the availability of demerger tax relief for certain Wesfarmers shareholders. 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. 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. 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)). Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. If, after the Record Date but before the Payment Date, a Wesfarmers shareholder ceases to own some, or all, of their shares in Wesfarmers, the right to receive the payment of the return of capital in respect of each of the shares disposed of will be retained by the shareholder and is considered to be a separate CGT asset. 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. The return of capital was announ The application of sections 45A, 45B and 45C to the return of capital. 16. 33. 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: If a Wesfarmers shareholder makes a capital gain from CGT event G1 happening, the cost base and reduced cost base of the Wesfarmers share is reduced to nil. ITAA 1997 Div 110 This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. A return of capital would ordinarily be subject to the CGT provisions of the income tax law. 48. 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. ITAA 1936 47 The capital return has been approved by the shareholders. 8. The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. 16. 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. 57. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. 24. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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). Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. 62. How much did I receive and how was the payment made? The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. The Class 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. 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). 2. 73. 56. 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. ITAA 1997 Div 109-A 53. 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. 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. The phrase 'provided with a capital benefit' is defined in subsection 45B(5). 19. How do I provide, update or check my bank account details? After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. 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. 22. 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. 54. 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. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. ITAA 1997 104-135 In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. 15. This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. return of capital on shares 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 capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. 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. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. 79. Sections 45A and 45B of the ITAA 1936 are two anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C of the ITAA 1936 applies. 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. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 14 December 2018 Demerger of Coles Group Limited - ATO Class Ruling The Australian Commissioner of Taxation has today issued Class Ruling CR 2018/59 (Class Ruling) covering the Australian income tax implications of the demerger of Coles Group Limited (Coles) for shareholders of Wesfarmers Limited (Wesfarmers).The Class Ruling confirms the availability of demerger tax relief for certain . ATO references: Australian Taxation Office (ATO) Class Ruling . ITAA 1936 45B(8) Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. The return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. ITAA 1997 Div 197 As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 37. 46. Corporations Act 2001. 58. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. 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. If the return of capital ($0.50 per fully paid share) is not more than the cost base of the Wesfarmers share at the Payment Date, the cost base and reduced cost base of the share will be reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4) of the ITAA 1997). 25. Commissioner of Taxation Neither Wesfarmers nor any of its officers, employees or advisors assumes any liability or responsibility for advising shareholders about the tax consequences of the return of capital. 2. 8 December 2021. 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. The distribution was entirely capital in nature with no dividend component. In the event that the return of capital did represent a dividend rather than a capital benefit, it is likely that a Wesfarmers shareholder would incur a greater tax liability. ITAA 1936 45C(2) It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. 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. 20. Corporate Archer Materials Limited (ACN: 123 993 233) ATO Class Ruling Lot Fourteen, Frome Road, Adelaide SA 5000 ASX Announcement (ASX: AXE) 16 December 2021 Capital Return - ATO Class Ruling Published Archer Materials Limited ("Archer", the "Company", "ASX:AXE") advises that the Australian Taxation Office has published a Class Ruling (CR 2021/98) (the "Ruling") relating to the . 28. Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. 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. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. ITAA 1936 45A ITAA 1997 116-20(1) 22. This is clearly marked. 11. If the return of capital is approved by shareholders at the 2013 . The capital gain is equal to the amount of the excess. ITAA 1997 975-300(3) The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 40. 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). We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. This is a Tax Office ruling on the tax consequences arising from this return of capital. The following tables sets out what method you can use. 36. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. The capital return was $2.50 per share. ITAA 1997 855-10 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 1936 45B(3)(b) ATO references: 54. 32. 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. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). ITAA 1997 Subdiv 115-A Shares may have traded at a lower price from the ex return of capital date than they otherwise would have done had the return of capital not occurred. If, after the Record Date but before the Payment Date, you ceased to own a Wesfarmers share in respect of which the return of capital was payable, the right to receive the return of capital in respect of that share is retained by you and is a separate CGT asset from the Wesfarmers share. 55. 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). She paid $2,200 ($2.20 per share) plus brokerage of $100 - making her cost base $2,300. 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 will be paid equally to each holder of a Wesfarmers share who is registered on the Wesfarmers share register on the Record Date. . A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. 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. CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. 80. All registered shareholders on the record date received the capital return there was not an opportunity for these shareholders to 'opt out' of the capital return. ITAA 1997 104-135(3) 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. 70. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. dividend income ITAA 1997 855-15 ITAA 1936 45C 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. 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). 63. ITAA 1936 45B(2)(b) Australian Taxation Office for the Commonwealth of Australia. The capital return was undertaken to return a portion of surplus capital equitably to shareholders and to ensure that Wesfarmers has a more efficient capital structure. TAA 1953 Please find below some information and frequently asked questions in relation to the 2021capital return. The Ruling continues to apply after 30 June 2014 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. The table sets out these five categories of CGT assets: 77. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 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. Wesfarmers' retained earnings (on a stand-alone basis) for the year ended 30 June 2021 was $697 million post-payment of the final dividend for the year. Return of capital amount - $5.68 for each entitled WES share. 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 maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. NO 1-4UM8A44, Related Rulings/Determinations: For shares that had reached a taxing point (i.e. Shareholders are sent return of capital payment advice. How did the capital return work and what was the effect on the company? ITAA 1936 45B Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. 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. 13. ITAA 1997 975-300 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. ITAA 1997 975-300(3) 7. 21. 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. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 59. As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. 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 amount of the capital gain is equal to that excess. 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