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). No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. ITAA 1936 45B(3) Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. Maria purchased 1,000 Wesfarmers shares in December 1986. 8 December 2021. 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. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). 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. On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. However, the list of relevant circumstances in subsection 45B(8) is not exhaustive and regard may be had to other circumstances on the basis of their relevance. 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)). 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. 25. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. 47. ITAA 1997 104-25 If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. 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 item 1, 2 or 5; an option or right to acquire a CGT asset covered by item 1, 2 or 3, and. ITAA 1936 45B A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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. The payment was entirely capital in nature with no dividend component. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. 35. 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 . 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. For your other shares - reduce the cost base and reduced cost base by $2.50 each. 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. What are the key dates for the capital return? 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. 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. Maria's capital gain is $200 ($2,500 - $2,300). 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. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. ITAA 1936 45C(2) Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. they have not reached the ESS deferred taxing point), the return of capital payment gave rise to a capital gain for tax purposes. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. 10. TAA 1953 The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. 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 318 ITAA 1936 45B(5) ATO references: 81. 55. Since 2009, the dividend payout of Wesfarmers has been as follows: 14. 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). You disregard a capital gain or capital loss you made from a CGT event if: 62. 31. 76. Section 45A - streaming of dividends and capital benefits. The following is a detailed contents list for this Ruling: Foreign-resident shareholders able to disregard capital gains tax. 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). 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 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. 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 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)). 53. 47. 3.7 Cash return of capital amount per +security AUD 2.00000000 Part 4 - Changes to option pricing as a result of the cash return of capital 4.1 Will the cash return of capital affect the exercise price of any +entity-issued options? 44. Corporations Act 2001 256C. 69. 26. Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. This is clearly marked. 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 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. Mark received a total of $500 (200 x $2.50) in the return of capital. A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. 40. 5. 33. 53. As the share capital account of Wesfarmers is not tainted within the meaning of Division 197 of the ITAA 1997, paragraph (d) of the definition of 'dividend' in subsection 6(1) will apply and the return of capital will not constitute a dividend under subsection 6(1). Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. Will my shares be worth less after the capital return? 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. 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. 16. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. 68. A Wesfarmers shareholder who is a foreign resident just before CGT event G1 happens, disregards any capital gain made when CGT event G1 happens if their shares in Wesfarmers are not 'taxable Australian property' (section 855-10 of the ITAA 1997). ITAA 1936 45A(2) Without the capital return or some other capital management initiative, we estimate that the ratio would be around 44 per cent at the end of the current financial year." Mr Chaney said the tax office had provided a written draft class ruling at the end of last week, enabling the Board to consider the issue at today's meeting. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. ITAA 1997 115-25(1) 41. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. 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. 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 last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. Mark purchased 200 Wesfarmers shares in December 2000. ITAA 1936 45B(3) As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. 9. 37. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). Some of the information on this website applies to a specific financial year. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. If you made a capital gain on this CGT event, you must include it in your calculations when completing item 17 on your 2003-04 tax return (supplementary section). Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). There was no share consolidation in relation to the capital return. 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). 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. Eligible shareholders received 1 COL share for each WES share owned. 56. A capital benefit was provided to Wesfarmers' shareholders. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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. Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). The Commissioner will not make a determination under either 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. 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). 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. ITAA 1997 104-165(3) 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'. If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. 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. 3. ITAA 1936 45B(3)(b) 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). Section 45B applies where certain capital payments are made to shareholders in substitution for dividends. The Class 25. This is clearly marked. ITAA 1936 45B The capital return was completed on 18 December 2003. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). 72. By . 67. 3. You received $2.50 for each share that you held on the record date. This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. The cost base of your right to receive each return of capital is worked out under Division 110 (modified by Division 112). 33. 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). In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. 12. 54. 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. 35. 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. 36. This is due to the outflow of funds to shareholders. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). 45. 82. Wesfarmers has consistently maintained a high dividend payout ratio, with an average payout ratio of approximately 90% since 2009, and has also paid special dividends where it has disposed of assets. 25. ato class ruling wesfarmers return of capital. capital gains tax 19. 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 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 Div 112 adjust the cost base and reduced cost base of your Wesfarmers shares. ITAA 1936 45A(3)(b) ITAA 1997 104-165(3) CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. The only relevant category of taxable Australian property is table item 2 of section 855-15. Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. '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. return of capital on shares 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 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 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. 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). 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. Australian Taxation Office (ATO) Class Ruling . Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. 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. 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. 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. 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. This Ruling applies from 1 July 2013 to 30 June 2014. The application of sections 45A, 45B and 45C to the return of capital. The phrase 'provided with a capital benefit' is defined in subsection 45B(5). 60. How did the capital return work and what was the effect on the company? As a result, you will, in those circumstances, make a capital gain equal to the capital proceeds, being $2.00 per Wesfarmers share owned at 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. The capital loss is equal to the amount of the difference (subsection 104-25(3) of the ITAA 1997). 71. 7. Create your myGov account and link it to the ATO, Help and support to lodge your tax return, Occupation and industry specific income and work-related expenses, Residential rental properties and holiday homes, Instalment notices for GST and PAYG instalments, Your obligations to workers and independent contractors, Encouraging NFP participation in the tax system, Australian Charities and Not-for-profits Commission, Departing Australia Superannuation Payment, Small Business Superannuation Clearing House, Annual report and other reporting to Parliament, Complying with procurement policy and legislation, Wesfarmers Group Limited (Wesfarmers) return of capital. ITAA 1997 115-25(1) 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. How can I calculate my return of capital payment and when will I receive this payment? . Ruling Return of capital is not a dividend 7. 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. 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). 58. 25. 22. 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. 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. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 62. according to an ATO ruling. A return of capital would ordinarily be subject to the CGT provisions of the income tax law.
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