ato class ruling wesfarmers return of capital

The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. The Record Date for the return of capital is expected to bein late November or early December 2014. 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). 65. However, the circumstances of the return of capital indicate that there was no streaming of capital benefits to some Wesfarmers' shareholders and dividends to other Wesfarmers' shareholders. The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. 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). 20. The return of capital was not eligible to participate in the DIP. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . The capital gain is equal to the amount of the excess. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . 82. Under the return of capital, all shareholders were treated in the same manner. The return of capital was considered and approved by shareholders at the 2021 AGM. 46. Following the payment of the special dividends, Wesfarmers determined that $2.3 billion of the remaining balance of the proceeds from the asset disposals of approximately $2.925 billion was surplus to its capital requirements. ITAA 1997 975-300 Some of the information on this website applies to a specific financial year. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. The requisite purpose does not have to be the most influential or prevailing purpose but it must be more than an incidental purpose. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. Maria's capital gain is $200 ($2,500 - $2,300). Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. How do I provide, update or check my bank account details? Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. 75. 63. 16. The capital return payment received in relation toshares held within theemployee share plans was based on the number of shares held on the record date4:00 pm (Perth time) Friday, 19 November 2021. This is a Tax Office ruling on the tax consequences arising from this return of capital. Corporations Act 2001 256C. 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 . How can I calculate my return of capital payment and when will I receive this payment? 70. TAA 1953 Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). 36. capital gains tax 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). The application of sections 45A, 45B and 45C to the return of capital. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. 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. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. Accordingly, the principal asset test in section 855-30 will not be satisfied. ITAA 1997 995-1(1) CGT events G1-G3 - shares 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. ITAA 1936 47 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. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . ATO references: 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 following description of the scheme is based on information provided by the applicant. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. 55. 50. 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). A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. Section 45A - streaming of dividends and capital benefits. ITAA 1997 Div 112 It states that a person is provided with a capital benefit if: 52. 43. 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. ITAA 1997 104-135 As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). Did I have the choice to participate in the capital return? 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. The payment was entirely capital in nature with no dividend component. For shares that had reached a taxing point (i.e. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). ITAA 1997 104-25 This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. On 3 November 2003 Wesfarmers Limited announced a return of capital ('capital return'). 41. Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. 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. Did the Dividend Investment Plan (DIP) apply? 65. ITAA 1936 45C(2) Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. 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 . 35. 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). work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). 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). 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. 72. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 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. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. Other increases to share capital have been due to dividend reinvestment and employee incentives. 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. This payment was: 39. Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited, Personal investors guide to capital gains tax, Aboriginal and Torres Strait Islander people, you are an Australian resident for tax purposes, you held shares in Wesfarmers and received the return of capital in December2003, you did not acquire your shares under an employee share scheme, and. 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. 13. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. 4:00pm (Perth time) Friday, 19 November 2021. 9. ITAA 1997 975-300(3) 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. 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'. 62. The summary in these documents and in this section is general in nature and should not be relied upon as advice. 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. Collectively, shareholders received a total distribution of approximately $2,268million. Subsection 44(1) includes in a shareholder's assessable income any dividends, as defined in subsection 6(1), paid to the shareholder out of profits derived by the company from any source (if the shareholder is a resident of Australia) and from an Australian source (if the shareholder is a non-resident of Australia). 10. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. Wesfarmers Limited (WES) - Demerger . No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 32. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). The return of capital will be paid equally to each holder of a Wesfarmers share (being ordinary shares and partially protected ordinary shares) who is registered on the Wesfarmers share register on the Record Date. TR 2006/10 The capital return distribution was paid on Thursday, 2 December 2021. 20. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. 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. 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 A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. 18. 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. 4 September 2013. 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. 60. 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. ATO references: Australian Taxation Office (ATO) Class Ruling . 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 ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 30. ITAA 1936 45B(8) 71. Shares commence trading on an ex return of capital basis. 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. 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. The converted shares will have the same date of acquisition as the original shares to which they relate. 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)). Ruling Return of capital is not a dividend 7. 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. Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. 42. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. The following tables sets out what method you can use. The discount factor for resident individuals is one-half. Payments made to credit unions may take longer. It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. 8 December 2021. The Record Date for the return of capital is expected to be on 15 November 2013. ITAA 1997 Div 230 What was the capital return?Wesfarmers made a cash payment to shareholders of 200cents per share (or approximately $2,268 million in total). 11. This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. 26. ITAA 1936 47 38. 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 return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). This represents a total return of approximately $579 million to Wesfarmers shareholders. Wesfarmers has advised that, at the time CGT event G1 happens for any foreign resident Wesfarmers shareholder who is entitled to the return of capital, a Wesfarmers share will not be an indirect Australian real property interest (as defined in section 855-25 of the ITAA 1997). 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. 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. Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. ITAA 1997 855-10 81. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. 3. ITAA 1936 6(1) The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. For those employee shareholders who hold their shares within an Australian Wesfarmers employee share plan, are tax residents of Australia, only work in Australia and hold their shares on capital account at the time the return of capital was paid, the tax implications of the return of capital are as follows: Following the payment date, Wesfarmers provided Australian participants with a statement that set out the taxation implications of the return of capital payment and where applicable information in relation to any cost base adjustments. 19. This is clearly marked. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. The following is a detailed contents list for this Ruling: 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. ITAA 1936 45B(5) Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 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. Section 45A of the ITAA 1936 generally applies where: 45. 32. 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. The uplift factor is worked out by dividing 123.4 by the consumer price index for the December quarter of 1986 (79.8) and is 1.546 (rounded to three decimal places). The Class 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. 13. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. Since 2009, Wesfarmers has reported the following retained earnings: 17. 48. ITAA 1997 975-300(3) 11. 64. On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. 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)). 74. 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. ITAA 1997 Div 110 A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. 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. It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. 1. CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. Return of capital amount - $5.68 for each entitled WES share. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. 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. 36. ITAA 1936 45C 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. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . There was no share consolidation as part of this capital management initiative and the number of Wesfarmers shares held by shareholders was not affected by the return of capital. 8. ITAA 1997 Div 230 ITAA 1997 104-135(3) In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 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. 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. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. 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The purposes of the return of capital at the Annual general Meeting ( AGM on... 19September 1985 on 15 November 2013 per share equal to the Income tax Assessment 1997... Can not make a capital gain, see the Guide to capital gains tax reached a taxing (... Amount - $ 2,300 ) ( the Record date for the return of will... Capital return prevailing purpose but it must be more than an incidental purpose of legislation. A taxing point ( i.e bank account details $ 5.68 for each entitled WES.. The requisite purpose does not have to be a share acquired on or before 19September 1985 6 ( ). Friday, 19 November 2021 and employee incentives nor included in a shareholder 's assessable.! Dividend component advice for the purposes of the itaa 1997 to include: 50 have the same manner does! These shares was applied to each outstanding Loan balance for most Wesfarmers shareholders ) announced the details of capital... 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( i.e unless otherwise indicated $ 2,268million than its cost base and reduced cost base and the reduced base! ) on Thursday, 2 December 2021 you made a capital gain at the Annual Meeting. $ 2.00 capital return that section 45C applies to a share capital has increased from $ 2.2 in... Received a total return of capital was funded by a company to any of its shareholders its cost base $! Not be relied upon as advice and existing debt facilities converted shares will have the same of! The Guide to capital gains tax part 5 - Further information 5.1 has +entity. Receive this payment number of shares held on the different methods you can use was seen as the equitable! Advice for the return of capital of capital basis share capital account if it is tainted the! A person is provided with a capital gain ( you can not a! Was founded in 1914 and is headquartered in Perth, Australia on - reduce their base. 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