ITAA 1997 104-135 . ITAA 1936 45A(2) This represents a total return of approximately $579 million to Wesfarmers shareholders. There was no dividend component as part of this capital management initiative. ITAA 1997 Div 230 The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . Accordingly, the Commissioner will not make a determination under subsection 45B(3) of the ITAA 1936 that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the return of capital. The discount factor for resident individuals is one-half. 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. 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). Therefore, you can treat a capital gain made when CGT event C2 happened to your right to the payment of the return of capital as a discount capital gain under Subdivision 115-A if you acquired your Wesfarmers share at least 12 months before the Payment Date (subsection 115-25(1)) provided the other conditions in Subdivision 115-A are satisfied. The capital return distribution was paid on Thursday, 2 December 2021. 19. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. 71. 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. Wesfarmers Limited (WES) - Demerger . The discount factor for resident individuals and trusts is one-half and for complying superannuation funds is one-third. 6. ITAA 1997 977-50 This amount represents your capital proceeds. ITAA 1936 45B 80. Last date for trading in cum return of capital for shares. A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. 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). As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. . The phrase 'provided with a capital benefit' is defined in subsection 45B(5). 10. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. 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 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. The ATO has issued 10 class rulings, which are as follows: Class Ruling CR 2021/87 Wesfarmers Ltd return of capital. 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. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. 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). 32. 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. 24. Note: 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. sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. Wesfarmers anticipates that it will pay a fully franked dividend of approximately $1.2 billion ($1.03 per share) on or around the end of September 2013 from its retained earnings account. 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. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). 39. The return of capital will be debited to Wesfarmers share capital account. 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. 30. 50. 32. 48. ITAA 1936 45B(3) What are the capital gains tax consequences for me? 60. ITAA 1936 318 Other increases to share capital have been due to dividend reinvestment and employee incentives. 47. Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. 67. 20. ITAA 1997 855-10(1) Collectively, shareholders received a total distribution of approximately $2,268million. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. Since 2009, the dividend payout of Wesfarmers has been as follows: 14. Maria must reduce the cost base of her shares by $2,500 to $1,055.80. 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. ITAA 1997 104-135(3) ITAA 1997 975-300(3) This will bring the total dividend for the year to $2.1 billion. purchased their shares after the shares started trading on an ex return of capital basis (i.e., from Thursday, 18 November 2021 onwards), the cost base for each share acquired after 19 September 1985 should be reduced by the return of capital amount (on a cents per share basis) for the purpose of calculating any capital gain or capital loss on the ultimate disposal of that share; and. 16. No capital loss can be made from CGT event G1 (Note 1 to subsection 104- 135(3)). ITAA 1997 975-300 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. 73. 5. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 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. ITAA 1936 45A(3)(b) 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 39. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. 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. 25. It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. 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. 13. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. 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. 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 Record Date for the return of capital is expected to bein late November or early December 2014. CGT events C1-C3 - end of a CGT asset Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. 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. 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 following tables sets out what method you can use. 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) 10. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. Wesfarmers Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. | August 8, 2022 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. 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 1997 104-25(3) The return of capital . During the years ended 30 June 2018 to 30 June 2020, Wesfarmers disposed of a number of assets and received sale proceeds totalling $4.3 billion. 58. ITAA 1997 104-25(3) Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 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. The summary in these documents and in this section is general in nature and should not be relied upon as advice. 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)). The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. This is clearly marked. Wesfarmers shareholders received a $1.00 per share cash distribution. if the cost base (after any adjustment, as may be relevant, for any indexation, any previous return of capital or as a result of the Coles demerger) of a share acquired after 19 September 1985 is less than the return of capital amount (on a cents per share basis), then an immediate capital gain will arise for the difference. 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). ITAA 1997 855-10(1) For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. ITAA 1936 45C(2) Return of capital amount - $5.68 for each entitled WES share. The new cost base for his share parcel is $2,550 ($3,050 - $500), or $12.75 per share. ITAA 1997 104-165(3) The return of capital was recorded as a debit to Wesfarmers untainted share capital account. Components of the capital return The capital return was $2.50 per share. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . Make sure you have the information for the right year before making decisions based on that information. ITAA 1936 45B Ruling Return of capital is not a dividend 7. 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. 1. A Wesfarmers shareholder will make a capital gain if the amount of the return of capital ($0.50 per fully paid share) is more than the cost base of the Wesfarmers share (subsection 104-135(3) of the ITAA 1997). Section 45A applies in circumstances where capital benefits are streamed to certain shareholders (the advantaged shareholders) who derive a greater benefit from the receipt of capital and it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received or will receive dividends. ITAA 1936 45B(2)(c) A CGT asset that is covered by subsection 104-165(3) (choosing to disregard a gain or loss on ceasing to be an Australian resident). 54. Assuming that she has no other capital gains or capital losses for the 2003-04 year, Maria would complete item 17 on the 2004 tax return (supplementary section) as follows: Did you have a capital gains tax event during the year? 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. NEWS 11 September 2013 ATO CLASS RULING ON CAPITAL RETURN PROPOSAL The Australian Taxation Office has published a Class Ruling relating to. 2. 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). If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. 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. What are the key dates for the capital return? For those shareholders who are tax residents of Australia and hold their shares on capital account at the time the return of capital is paid, no part of the return of capital should be treated as a dividend for income tax purposes. 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). The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). 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. You received 200 cents for every share you held as a registered holder on the record date of 4:00pm (Perth time) Friday, 19 November 2021. 9. 38. 53. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. ITAA 1997 Div 110 return of capital on shares Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. 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. 13. 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. Section 45A - streaming of dividends and capital benefits. 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. 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). Copyright Act 1968 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 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 855-15 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 Australian Taxation Office (ATO) has published a Class Ruling in relation to the taxation treatment of the $2.00 per share return of capital to Wesfarmers shareholders, which was paid on 2 December 2021. The capital return was $2.50 per share. 21. In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. The capital return was completed on 18December 2003. capital reductions 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. 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). 2. 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. 25. 1. A Wesfarmers shareholder will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. The Income tax Assessment Act 1997, unless otherwise indicated base, she calculates cost. The all-clear to hand over $ 1.1 billion to shareholders contained therein - Further information 5.1 has +entity! 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