21. 30. to make a short-term or 'one-off' commercial gain. . This is clearly marked. ITAA 1936 45A(3)(b) 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. 23. For your other shares - reduce the cost base and reduced cost base by $2.50 each. 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. 8. Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. 65. 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. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. Accordingly, CGT event G1 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date and continue to own at the Payment Date. The phrase 'provided with a capital benefit' is defined in subsection 45B(5). Since 2009, Wesfarmers has reported the following retained earnings: 17. If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. What are the capital gains tax consequences for me? 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. 2. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). Wesfarmers Chemicals, Energy and Fertilisers, People development, diversity and inclusion, Chairman and Managing Director's 2022 sustainability message, Bunnings collaborates with Indigenous artists through exclusive plant pots range, Bunnings support for flood affected communities, Bunnings launches national battery recycling programs, Bunnings expands fleet with all electric trucks, Information for participants of the Wesfarmers employee share plans. 81. 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. 8 December 2021. Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). 70. The following tables sets out what method you can use. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. 59. 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. As Wesfarmers has a high dividend payout ratio and distributes, where possible, available franking credits, a return of capital was seen as the most efficient distribution of capital to shareholders. The application of sections 45A, 45B and 45C to the return of capital. The capital return was completed on 18 December 2003. 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. 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). ITAA 1997 995-1(1) ITAA 1936 45A(3)(b) The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. 76. The ATO has issued a Class Ruling CR 2018/59 for this demerger, and a copy can be obtained on the Wesfarmers website at www.wesfarmers.com.au. 71. ITAA 1997 Div 197 66. Make sure you have the information for the right year before making decisions based on that information. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. ITAA 1936 45B(9) 10. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). 58. A Wesfarmers shareholder's right to the payment of the return of capital is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. 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. Section 45B - schemes to provide capital benefits. 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. 11. 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 . 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. 25. 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. 30. 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. 55. 39. CGT event G1 in section 104-135 of the ITAA 1997 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date and continue to own at the Payment Date. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 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. 79. 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. The capital loss is equal to the amount of the difference (subsection 104-25(3)). 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. Depending on the outcome, you may have to include some details on your 2003-04 tax return. NO 1-PVCWOSF, Legislative References: 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. The Ruling continues to apply after 30 June 2014 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. ATO references: All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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. 24. Each of these conditions is considered in this Ruling. If the amount of the return of capital of $2.00 per Wesfarmers share is not more than the cost base of your Wesfarmers share, the Cost base / reduced cost base of the share are reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4)). This represents a total return of approximately $579 million to Wesfarmers shareholders. 68. 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). 54. 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). 9. Corporations Act 2001. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. 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. No part of the return of capital paid to you by Wesfarmers on the Payment Date is a dividend as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). ITAA 1936 45B(3) work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). 3. Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. The Record Date for the return of capital is expected to be on 15 November 2013. ITAA 1997 Div 110 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. 40. 10. Wesfarmers shareholders received a $1.00 per share cash distribution. 31. ITAA 1936 45A ITAA 1936 45C Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . 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. Return of capital amount - $5.68 for each entitled WES share. 46. The right to receive the payment (being an intangible CGT asset) will end by the right being discharged or satisfied when the payment is made. 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. 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. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. This amount represents your capital proceeds. 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. If the return of capital is approved by shareholders at the 2013 . In broad terms, section 45B of the ITAA 1936 applies where: 49. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). 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. 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. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. TD 2000/10, Subject References: Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. 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'. 47. 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. In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. Australian Taxation Office (ATO) Class Ruling . 33. ITAA 1997 104-135(4) 4:00pm (Perth time) Friday, 19 November 2021. 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. 19. The Record Date for the return of capital is expected to bein late November or early December 2014. ITAA 1936 45B 25. ITAA 1936 45B(2)(a) For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. 80. 46. 20. Note: 49. The capital return was $2.50 per share. 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. Commissioner of Taxation ITAA 1936 45A(2) Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. If the return of capital of $2.00 per Wesfarmers share you received was not more than the cost base of the share, the Cost base / reduced cost base of each share is reduced by the amount of the return of capital (subsection 104-135(4)). 1. A capital benefit was provided to Wesfarmers' shareholders. 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). In particular: 26. Some of the information on this website applies to a specific financial year. CGT events G1-G3 - shares 36. ITAA 1936 6(1) The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. 18. 35. Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. ITAA 1997 977-50 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). Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take. 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 return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). 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). 10. 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'. 26. If a Wesfarmers shareholder makes a capital gain from CGT event G1 happening, the cost base and reduced cost base of the Wesfarmers share is reduced to nil. As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. A CGT event will not happen if a company converts its shares into a larger or smaller number of shares (the converted shares) in accordance with section 254H of the Corporations Act in that: While there is a change in the form of the original shares, there is no change in their beneficial ownership. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. The capital return distribution was paid on Thursday, 2 December 2021. 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: Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 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. It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. 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. 22. 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). Did I have the choice to participate in the capital return? The ATO ruling, if 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. CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. As with dividend payments, payments of the distribution to shareholders with a registered address in Australia, New Zealand and the United Kingdom were made by way of direct credit to a financial institution in Australia, New Zealand or the United Kingdom, as applicable, (including a bank, building society or credit union account). 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. 6. 44. ITAA 1936 45B(2)(b) The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. ITAA 1936 47 The amount of the capital gain is equal to that excess. 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. Accordingly, if the Wesfarmers share was acquired by the Wesfarmers shareholder at least 12 months before the return of capital was paid, a capital gain from CGT event C2 happening on the ending of the corresponding right 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. A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. 2. ITAA 1997 855-15 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. 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). 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 method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. Wesfarmers shareholders received a 200 cents per share cash distribution. Some of the information on this website applies to a specific financial year. WES Indicative Capital Return Timetable Effective Date All trading in WES ETO contracts will be on an adjusted basis effective on the ex-date, Thursday, 18 November 2021. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. 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. 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. 15. How did the capital return work and what was the effect on the company? . Components of the capital return The capital return was $2.50 per share. ITAA 1997 104-25 In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. To be eligible to receive the return of capital, you needed to be a registered shareholder on the record date for determining entitlements, which was 4.00pm (Perth time) on Friday, 19 November 2021. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. The table sets out these five categories of CGT assets: 77. Of capital at the Annual General Meeting ( AGM ) on Thursday, October. Identified in this Ruling, the Commissioner makes this Ruling are to the credit of Wesfarmers ' shareholders:.. 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Specific financial year 104-25 of the information for the return of capital was funded by a combination of '. Assets: 77 in November 2007, Coles Group Ltd ( Coles Group Ltd Coles. Can use 1 ) of the ITAA 1997 104-135 ( 4 ) 4:00pm ( Perth time on... Balances and existing debt facilities the ITAA 1936 applies where: 49 Ruling based on that.! In the future on a regular and sustainable basis in line with its dividend policy November early... Account or as trading stock decisions based on the precise scheme identified in this Ruling, the Commissioner makes Ruling... 15 December 2003 ( the Record Date acquired pursuant to a specific financial year who..., 45B and 45C of the capital return was $ 2.50 each are taxable Australian property 63!, 19 November 2021 founded in 1914 and is headquartered in Perth,.! 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