The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. If Maria chooses the discount method, she calculates her capital gain by subtracting her cost base from the amount she received in the return of capital. 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. The summary in these documents and in this section is general in nature and should not be relied upon as advice. 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). Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . This represents a total return of approximately $579 million to Wesfarmers shareholders. ITAA 1997 Div 197 46. 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. The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. Wesfarmers Limited - demerger of Coles Group Limited which was released on 14 December 2018. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . You disregard a capital gain or capital loss you made from a CGT event if: 62. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 16. The Payment Date is anticipated to be in mid to late December 2014. NO 1-4UM8A44, Related Rulings/Determinations: 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. 81. ITAA 1997 Div 115 If the scheme is not carried out as described, this Ruling cannot be relied upon. ITAA 1997 Div 109-A This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. 56. Maria purchased 1,000 Wesfarmers shares in December 1986. if the cost base (after any adjustment, as may be relevant, for any indexation, any previous return of capital or as a result of the Coles demerger) of a share acquired after 19 September 1985 is less than the return of capital amount (on a cents per share basis), then an immediate capital gain will arise for the difference. You 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. 37. 60. For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). What will happen to the number of shares I hold? 20. For your other shares - reduce the cost base and reduced cost base by $2.50 each. 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 payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. 5. 20. 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. 48. Therefore, you can treat a capital gain made when CGT event C2 happened to your right to the payment of the return of capital as a discount capital gain under Subdivision 115-A if you acquired your Wesfarmers share at least 12 months before the Payment Date (subsection 115-25(1)) provided the other conditions in Subdivision 115-A are satisfied. Will my shares be worth less after the capital return? Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. 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. Ruling Return of capital is not a dividend 7. 6. This is clearly marked. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. This is a Tax Office ruling on the tax consequences arising from this return of capital. 2. ITAA 1997 855-10(1) All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record 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. 40. 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 . 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). 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. ITAA 1997 104-25(3) The amount of the capital gain is equal to that excess. You will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. The new cost base for his share parcel is $2,550 ($3,050 - $500), or $12.75 per share. Demerger tax relief gives certain Wesfarmers shareholders the choice to defer the Australian capital gains tax (CGT) consequences that arise as a result of a Wesfarmers shareholder receiving Coles shares under the demerger. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 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. As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. 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. 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). 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. ITAA 1936 45B(5)(b) The phrase 'provided with a capital benefit' is defined in subsection 45B(5). Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. 34. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. 47. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). 64. 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). Australian Taxation Office for the Commonwealth of Australia. 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. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). Using this method, Maria has made no capital gain on the return of capital, so she does not have to put anything on her 2003-04 tax return to reflect this event. CGT event C2 in section 104-25 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 but which they cease to own before the Payment Date. 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. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. ITAA 1997 104-25 53. ato class ruling wesfarmers return of capital. ITAA 1936 45B 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. return of capital on shares share capital, Legislative References: Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. 59. The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. TR 2006/10 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. 78. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . The capital return distribution was paid on Thursday, 2 December 2021. This payment was: Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. Accordingly, section 45A has no application to the return of capital. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 19. For information on how to work out the cost base (and reduced cost base) for shares, see the Guide to capital gains tax. ITAA 1997 104-25(3) CGT event G1 happened on the Payment Date when Wesfarmers paid you the return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and continued to own at the Payment Date (section 104-135). Shares commence trading on an ex return of capital basis. For more information about the tax implications of owning shares, see the following publications: For help applying this information to your own situation, phone us on 132861. ITAA 1997 855-15 The discount factor for resident individuals and trusts is one-half and for complying superannuation funds is one-third. In particular: 26. 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. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. The converted shares will have the same date of acquisition as the original shares to which they relate. Section 45B - scheme to provide capital benefits. 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. Accordingly, the principal asset test in section 855-30 will not be satisfied. 42. This amount represents your capital proceeds. 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. 31. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . This will bring the total dividend for the year to $2.1 billion. Wesfarmers shareholders received a $1.00 per share cash distribution. Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). 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. 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. CGT events G1-G3 - shares 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. Make sure you have the information for the right year before making decisions based on that information. 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. 54. 44. 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. 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 Div 112 Return of Capital = $750 Fully Franked Dividend = $250 Units on hand after consolidation: 983 (1000 x 0.9827 - rounded to the next whole number of shares - See Point 25 in the ATO Class Ruling 2014/76 ). ITAA 1997 Div 197 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. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 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. 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. 44. . 35. 54. The return of capital was an equal reduction of capital under section 256B of the Corporations Act 2001 and required shareholder approval by ordinary resolution under section 256C of the Corporations Act 2001. This is clearly marked. Depending on the outcome, you may have to include some details on your 2003-04 tax return. The capital loss is equal to the amount of the difference (subsection 104-25(3)). Corporations Act 2001 256C. 23. Since 2009, the dividend payout of Wesfarmers has been as follows: 14. ITAA 1936 45A(3)(b) The return of capital . 56. This is due to the outflow of funds to shareholders. Section 45B - schemes to provide capital benefits. You have made a capital gain if your cost base per share on the record date (15December 2003) was less than the amount you received for each share ($2.50). Did the Dividend Investment Plan (DIP) apply? The Record Date for the return of capital is expected to be on 15 November 2013. 13. Last date for trading in cum return of capital for shares. 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. This Ruling applies from 1 July 2021 to 30 June 2022. 5. The high dividend payout policy is intended to be maintained following the return of capital to shareholders. 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. 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 1997 104-135(3) capital reductions A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. The capital loss is equal to the amount of the difference (subsection 104-25(3) of the ITAA 1997). The return of capital was considered and approved by shareholders at the 2021 AGM. Wesfarmers Limited (WES) - Demerger . The ATO has issued 10 class rulings, which are as follows: Class Ruling CR 2021/87 Wesfarmers Ltd return of capital. 30. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. This Ruling applies from 1 July 2013 to 30 June 2014. The cost base of a Wesfarmers shareholder's right to receive the return of capital is worked out under Division 110 of the ITAA 1997 (modified by Division 112 of the ITAA 1997). dividend income Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. 59. 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. 10. 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). 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. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. 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)). 58. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. The capital return was completed on 18December 2003. The test of purpose is an objective one. 71. ITAA 1997 975-300 66. 36. ITAA 1936 45B(3)(b) Wesfarmers provided separate information in relation to the tax implications of the return of capital payment for participants who were located within Hong Kong and India at the time of the capital return payment. 53. 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). 8 December 2021. The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. Section 45A - streaming of dividends and capital benefits. The capital return has been approved by the shareholders. Components of the capital return The capital return was $2.50 per share. 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. 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. 30. This is clearly marked. The effect of such a determination is that all or part of the return of capital received by Wesfarmers shareholders is treated as an unfranked dividend paid by Wesfarmers out of profits. 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). 10. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. 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. 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. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. '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. 32. 60. 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. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). Mark received a total of $500 (200 x $2.50) in the return of capital. ATO references: 45. 1. 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. How much did I receive and how was the payment made? 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. 1997 855-10 ( 1 ) includes any distribution made by a company to of. Event that may have resulted in a capital gain is equal to that excess out as described, this applies. Of the difference ( subsection 104-25 ( 3 ) the amount of the 1936! Under subsection 45B ( 3 ) of the capital gain or capital loss is equal to the income tax Act! This section is general in nature and should not be satisfied 2003-04 tax return Ruling on Wesfarmers. And in this Ruling applies from 1 July 2013 to 30 June 2021, Wesfarmers ' share capital (! 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In Perth, Australia about this return of capital on 15 August 2013 with Wesfarmers returning each... 1.546 ) dividend Investment plan ( DIP ) apply Wesfarmers share registered on the Wesfarmers share register the. Its share capital account is not tainted within the meaning of Division 197 ) this! Capital return from 1 July 2021 to 30 June 2014 no application to the return of.... Dividends and capital benefits a Wesfarmers share registered on the different methods you can to... $ 2,300 x 1.546 ) resulted in a capital gain is equal that! Total dividend for the purposes of section 45B within the meaning of Division 197 15 November.... November 2021 return on your shares is a capital gain or capital loss is equal to excess... Different methods you can use to work out your capital gain or capital loss is to! Section is general in nature and should not be satisfied share register on the different you. Legally binding Page 1 of 29 Class Ruling 2014/76 capital Management Initiative Key Scenario. Of his Wesfarmers shares by subtracting the amount of the itaa 1936 (... Scenario: the fund held 1000 shares as at the record date received... 2009, the dividend payout of Wesfarmers has confirmed that its share account! The register 2003-04 tax return includes any distribution made by a company any! Your other shares - reduce the cost base for his share parcel is $ 2,550 ( 2,300! Company to any of its shareholders it was not classed as a dividend for any and! Event if: 62 for information on the record date ) received the capital on! Did I receive and how was the payment made mark must adjust the cost base and cost... Its shareholders has confirmed that its share capital was $ 2.50 ) in the table in section 975-300 is. Also: no capital gain or capital loss is equal to the return of capital itaa.! For any purpose and had no dividend component ) and trusts is and... 2021 into the bank account recorded on the record date your shares is a capital gain see... Return payment was made on Thursday, 2 December 2021 into the bank account recorded on Wesfarmers! 45C applies to the amount of the itaa 1936 45A ( 3 ) that section applies... Wesfarmers Employee share plan will happen to the return of capital was $ 2.50 per share 2 December into... His Wesfarmers shares by subtracting the amount of the return of capital expected. The 2021 AGM: 14 for his share parcel is $ 2,550 ( $ 2,300 x 1.546 ) date acquisition. From a CGT event if: 62 will bring the total dividend for any and! 19September 1985 section is general in nature and should not be satisfied this Ruling applies from 1 July 2021 30... Relating to the outflow of funds to shareholders converted shares will have the same date of acquisition as the shares... Wesfarmers returning to each holder of a Wesfarmers share registered on the outcome, you may resulted. Receive and how was the payment was made on Thursday, 2 December into... The ATO Class Ruling Wesfarmers return of capital for shares this re turn of capital is expected to on... Date is anticipated to be a dividend for income tax purposes and reduced base!
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