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). 47. Maria purchased 1,000 Wesfarmers shares in December 1986. The Record Date for the return of capital is expected to be on 15 November 2013. 52. 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). ITAA 1997 104-25(3) 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). 66. Depending on the outcome, you may have to include some details on your 2003-04 tax return. ITAA 1997 109-5 TAA 1953 As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. The assets disposed of were Wesfarmers' interests in Wesfarmers Bengalla Pty Ltd, Wesfarmers Curragh Pty Ltd, Tyre & Auto Pty Ltd and Quadrant Energy Holdings Pty Ltd, as well as 10.1% of Wesfarmers' 15% shareholding in Coles Group Limited. In working out the capital gain or capital loss when CGT event C2 happens, the capital proceeds are equal to the amount of the return of capital ($2.00 per Wesfarmers share) (subsection 116-20(1)). Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. 18. 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. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. ITAA 1997 104-135 ITAA 1936 45A(2) Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. The return of capital was recorded as a debit to Wesfarmers untainted share capital account. 25. 26. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. 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. Corporations Act 2001 256B 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. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. 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. 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. 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 45A This Ruling applies from 1 July 2021 to 30 June 2022. ITAA 1997 Div 112 Section 45B applies where certain capital payments are made to shareholders in substitution for dividends. 48. 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. ITAA 1936 45A(2) The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). Last date for trading in cum return of capital for shares. ITAA 1997 116-20(1) ITAA 1997 104-25 Maria must reduce the cost base of her shares by $2,500 to $1,055.80. 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 publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . 42. ITAA 1997 975-300(3) 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. 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. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. This is due to the outflow of funds to shareholders. 19. 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. : Yes. You received $2.50 for each share that you held on the record date. 2. However, having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme was entered into or carried out for a more than incidental purpose of enabling Wesfarmers shareholders to obtain a tax benefit. Record date for determining entitlement to participate in the return of capital. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. Wesfarmers shareholders received a 200 cents per share cash distribution. Some of the information on this website applies to a specific financial year. 31. ITAA 1936 45B(2)(a) 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). The following is a detailed contents list for this Ruling: 18. For more information about the tax implications of owning shares, see the following publications: For help applying this information to your own situation, phone us on 132861. * 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. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. 43. Collectively, shareholders received a total distribution of approximately $1,143 million. Eligible shareholders received 1 COL share for each WES share owned. 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 term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. This Ruling applies from 1 July 2013 to 30 June 2014. 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 . 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. 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. 5. The payment was entirely capital in nature with no dividend component. ITAA 1936 318 'Share capital account' is defined in section 975-300 of the ITAA 1997 as an account which the company keeps of its share capital, or any other account created after 1 July 1998 where the first amount credited to the account was an amount of share capital. 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. Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. 38. Commissioner of Taxation The ruling applies from 1 July 2021 to 30 June 2022. 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'. capital reductions Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. 55. ITAA 1997 975-300(3) 20. 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). ITAA 1997 Div 197 The capital gain will be a discounted capital gain for shares allocated at least 12 months before the payment date of Thursday, 2 December 2021. The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. The capital gain is equal to the amount of the excess. 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. In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. 30. ITAA 1997 975-300 The purpose which causes section 45B to apply may be the purpose of any party to the scheme. ITAA 1936 6(1) 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. 55. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. 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. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. The requisite purpose does not have to be the most influential or prevailing purpose but it must be more than an incidental purpose. ATO Class Ruling - return of capital to shareholders. ITAA 1997 Div 197 A capital benefit was provided to Wesfarmers' shareholders. 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. 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. For information on how to work out the cost base (and reduced cost base) for shares, see the Guide to capital gains tax. 64. Wesfarmers shareholders received a $1.00 per share cash distribution. 32. 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). 50. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). 67. Wesfarmers Limited (WES) - Demerger . The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. according to an ATO ruling. For the purposes of Subdivision 109-A, you are considered to have acquired the right at the time when you acquired your Wesfarmers share. 22. 59. In particular: 26. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. 46. 7. ITAA 1997 995-1(1) 62. By contrast, a dividend would generally be included in the assessable income of a resident shareholder or in the case of a foreign resident, be subject to dividend withholding tax under section 128B. 47. 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. 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. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. Collectively, shareholders received a total distribution of approximately $2,268million. Ruling Return of capital is not a dividend 7. The discount factor for resident individuals is one-half. 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). 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. 61. 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. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 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. You 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. 2. Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. 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. How much did I receive and how was the payment made? ITAA 1936 47 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. The capital return distribution was paid on Thursday, 2 December 2021. 33. The Class Ruling confirms the availability of demerger tax relief for certain Wesfarmers shareholders. Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. ITAA 1997 Subdiv 115-A 53. Commissioner of Taxation 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. Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). The return of capital was considered and approved by shareholders at the 2021 AGM. 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. She paid $2,200 ($2.20 per share) plus brokerage of $100 - making her cost base $2,300. 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. ITAA 1997 Div 110 4:00pm (Perth time) Friday, 19 November 2021. 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. 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). 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. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. She must use the indexed cost base method in all future events affecting these shares. 24. 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. ITAA 1997 855-10(1) ITAA 1997 855-10(1) Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. The application of sections 45A, 45B and 45C to the return of capital. Accordingly, section 45A has no application to the return of capital. How do I provide, update or check my bank account details? 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). At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. How did the capital return work and what was the effect on the company? The following description of the scheme is based on information provided by the applicant. sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. . NO 1-PVCWOSF, Legislative References: The only relevant category of taxable Australian property is table item 2 of section 855-15. It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. 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. The ATO ruling, if ITAA 1936 45B(3)(b) 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. 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. 57. 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. ITAA 1936 45B(8) 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'. 30. 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). Income tax: Capital management distribution: Wesfarmers Limited . 36. 37. 65. 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. For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. 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). Wesfarmers provided separate information in relation to the tax implications of the return of capital payment for participants who were located within Hong Kong and India at the time of the capital return payment. Section 45B - scheme to provide capital benefits. Components of the capital return The capital return was $2.50 per share. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. ITAA 1936 45C(1) ITAA 1997 995-1(1) Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. 3. 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. 9. 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). 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. 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. 58. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. 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. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. Since 2009, the dividend payout of Wesfarmers has been as follows: 14. 40. This is a Tax Office ruling on the tax consequences arising from this return of capital. This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. 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. 17. The following tables sets out what method you can use. ITAA 1997 855-10 . The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 11. 8 December 2021. The amount of the capital gain is equal to that excess. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. 44. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . What are the shareholder tax implications of the capital return? 9. 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 . 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. 28. ITAA 1936 45B(2)(b) The Class ITAA 1997 104-165(3) 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). 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I provide, update or check my bank account details did I receive and how was the payment was capital! Of capitalsiesta key luxury hotels on the precise scheme identified in this Ruling of returning a portion of surplus ato class ruling wesfarmers return of capital! Application to the amount of the excess 15 November 2013 dividends will continue be... Wesfarmers expects that dividends will continue to be on 15 December 2003 ( record! Ruling CR 2003/105W: return of capital purpose which causes section 45B applies where capital!
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