The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. CGT event C2 happened when the return of capital was made. ITAA 1997 995-1(1) At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. ITAA 1936 47 Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. The Class 3. 5. This is due to the outflow of funds to shareholders. ITAA 1997 855-10 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. 82. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 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. If the return of capital is approved by shareholders at the 2013 . 58. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. Although a 'capital benefit' (as defined in paragraph 45A(3)(b)) will be provided to participating Wesfarmers shareholders under the return of capital, the circumstances of the return of capital indicate that there will be no streaming of capital benefits to some shareholders and dividends to other shareholders. 2. 72. 78. 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. ITAA 1997 975-300(3) 65. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. 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. 33. A capital benefit was provided to Wesfarmers' 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. 22. 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. 37. For each of these shares, you have made a capital gain of: For shares with a cost base equal to or greater than $2.50, you have made no capital gain as a result of the return of capital. The Record Date for the return of capital is expected to be on 15 November 2013. 20. 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: Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. 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. ITAA 1997 855-15 55. Therefore, if the cost base or reduced cost base of the share previously owned by you has been fully applied in working out a capital gain or capital loss on the share, the right to receive the return of capital will have a nil cost base. 20. ITAA 1936 44(1) In broad terms, section 45B of the ITAA 1936 applies where: 49. 64. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 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. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. The return of capital was announ 45. 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. A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. For information on how to work out the cost base (and reduced cost base) for shares, see the Guide to capital gains tax. ITAA 1936 45B(3) The ATO has issued 10 class rulings, which are as follows: Class Ruling CR 2021/87 Wesfarmers Ltd return of capital. 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. 53. 22. This Ruling applies from 1 July 2021 to 30 June 2022. This payment was: This Ruling applies from 1 July 2013 to 30 June 2014. Maria's capital gain is $200 ($2,500 - $2,300). Copyright Act 1968 Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. ITAA 1936 318 The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . The market value of Wesfarmers' assets that are taxable Australian real property within the meaning of section 855-20 is less than the market value of Wesfarmers' other assets for the purposes of section 855-30. 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. 23. 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. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. 6. 44. Section 45B - scheme to provide capital benefits. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. 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. 33. ITAA 1997 104-25(3) Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. The requisite purpose does not have to be the most influential or prevailing purpose but it must be more than an incidental purpose. Accordingly, section 45A has no application to the return of capital. 66. 8 December 2021. 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). 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. 41. 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. Income tax: Capital management distribution: Wesfarmers Limited . Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. 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. How can I calculate my return of capital payment and when will I receive this payment? Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. Section 45A of the ITAA 1936 generally applies where: 45. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. 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 cost base of the right does not include the cost base or reduced cost base of the share previously owned by the Wesfarmers shareholder that has been applied in working out a capital gain or capital loss made when a CGT event happened to the share - for example, when the Wesfarmers shareholder disposed of the share after the Record Date. Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). For your other shares - reduce the cost base and reduced cost base by $2.50 each. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. The high dividend payout policy is intended to be maintained following the return of capital to shareholders. 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. The return of capital was recorded as a debit to Wesfarmers untainted share capital account. Last date for trading in cum return of capital for shares. 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). | August 8, 2022 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. 10. 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. 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. * 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. 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. A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. 12. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 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. The return of capital will be debited to Wesfarmers share capital account. The capital return was completed on 18 December 2003. ITAA 1997 855-20 ITAA 1997 109-5 76. Commissioner of Taxation ITAA 1997 855-15 All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. CGT event G1 (section 104-135 of the ITAA 1997) happens when. Mark received a total of $500 (200 x $2.50) in the return of capital. 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. 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. For shares that had reached a taxing point (i.e. This is clearly marked. ITAA 1997 975-300(3) Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). ATO references: Make sure you have the information for the right year before making decisions based on that information. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. 6. 46. 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). ITAA 1997 104-135 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 discount factor for resident individuals is one-half. If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. A return of capital would ordinarily be subject to the CGT provisions of the income tax law. 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. Wesfarmers shareholders received a 200 cents per share cash distribution. 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'. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. Corporations Act 2001 256C. The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. The table sets out these five categories of CGT assets: 77. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. ITAA 1997 855-30 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. 25. ITAA 1936 44 The capital gain is equal to the amount of the excess. ITAA 1997 975-300 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 . As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. The phrase 'provided with a capital benefit' is defined in subsection 45B(5). ITAA 1936 45B(8) 7. 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. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. 34. TD 2000/10, Subject References: The following tables sets out what method you can use. 44. At Wesfarmers we believe sustainability is about understanding and managing the ways we impact the communities and environments in which we operate, to ensure that we continue to create value in the future. Shares commence trading on an ex return of capital basis. 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. 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. There was no dividend component as part of this capital management initiative. 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. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. ITAA 1997 104-135(3) Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). You received $2.50 for each share that you held on the record date. Wesfarmers' return of capital will be recorded as a debit to the share capital account and Wesfarmers shareholders will receive a distribution of share capital to the value of $0.50 per share. Section 45B - schemes to provide capital benefits. The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. 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. ITAA 1936 45C(1) Did the Dividend Investment Plan (DIP) apply? The application of sections 45A, 45B and 45C to the return of capital. 25. 52. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. What are the key dates for the capital return? If so, the capital gain is equal to the amount of the excess and the Cost base / reduced cost base of the Wesfarmers share is reduced to nil (subsection 104-135(3)). 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. 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. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. Eligible shareholders received 1 COL share for each WES share owned. 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. 13. 73. Wesfarmers Limited (WES) - Demerger . 21. 25. 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). according to an ATO ruling. What will happen to the number of shares I hold? ITAA 1936 45A A public Ruling for the return of capital payment ( it was not classed as a result of ITAA. ) happens when received the capital return is intended to be maintained following the return capital... And 45C to the number of shares held on the record date application... On revenue account or as trading stock out these five categories of CGT assets:.. 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