The following is a detailed contents list for this Ruling: This is clearly marked. 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. There was no dividend component as part of this capital management initiative. Section 45A - streaming of dividends and capital benefits. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 30 of this Ruling. 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. 54. 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. 29. 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. If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. For information on how to work out the cost base (and reduced cost base) for shares, see the Guide to capital gains tax. 47. 22. 2. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. 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. 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. A Wesfarmers shareholder who is a foreign resident just before CGT event C2 happens, disregards any capital gain or capital loss made when CGT event C2 happens if their right to the return of capital is not 'taxable Australian property' (section 855-10 of the ITAA 1997). 12. 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. The Class The Commissioner will not make a determination under either ITAA 1936 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? The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. | August 8, 2022 41. 73. ITAA 1997 104-25(3) Income tax: Capital management distribution: Wesfarmers Limited . A Wesfarmers shareholder who is a foreign resident just before CGT event C2 happens, disregards any capital gain or capital loss made when CGT event C2 happens if their right to the return of capital is not 'taxable Australian property' (section 855-10 of the ITAA 1997). 61. If the scheme is not carried out as described, this Ruling cannot be relied upon. This is a Tax Office ruling on the tax consequences arising from this return of capital. 19. Copyright Act 1968 The discount factor for resident individuals is one-half. How did the capital return work and what was the effect on the company? The application of sections 45A, 45B and 45C to the return of capital. ITAA 1936 45A(2) ITAA 1997 Div 197 The distribution was entirely capital in nature. ITAA 1997 Div 110 The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. 25. ITAA 1997 115-25(1) ITAA 1997 Div 110 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. 45. 37. 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. Division 230 does not apply to individuals unless they have made an election for it to apply. 11. any gain or loss you made on the shares is a capital gain or capital loss - this means that you held your shares as an investment asset. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. The Record Date for the return of capital is expected to bein late November or early December 2014. This is clearly marked. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. The Class Ruling and further details regarding the return of capital can be accessed via the Investor Centre section of the Wesfarmers website at www.wesfarmers.com.au. return of capital on shares Components of the capital return The capital return was $2.50 per share. In the event that the return of capital did represent a dividend rather than a capital benefit, it is likely that a Wesfarmers shareholder would incur a greater tax liability. The return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. This Ruling applies from 1 July 2013 to 30 June 2014. 80. ITAA 1936 45B(2)(a) Eligible shareholders received 1 COL share for each WES share owned. 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. 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. 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'. Payments made to credit unions may take longer. ITAA 1936 45B(3) This payment was: ITAA 1936 45B(8) 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. Make sure you have the information for the right year before making decisions based on that information. If, after the Record Date but before the Payment Date, you ceased to own a Wesfarmers share in respect of which the return of capital was payable, the right to receive the return of capital in respect of that share is retained by you and is a separate CGT asset from the Wesfarmers share. 9. 68. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. 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. 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). Some of the information on this website applies to a specific financial year. 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. This will bring the total dividend for the year to $2.1 billion. 58. 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. Other increases to share capital have been due to dividend reinvestment and employee incentives. 4:00pm (Perth time) Friday, 19 November 2021. ITAA 1997 104-165(3) 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. 13. 82. 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). Foreign-resident shareholders able to disregard capital gains tax. 43. ITAA 1936 45A(3)(b) 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. In working out the capital gain or capital loss made when CGT event C2 happens, the capital proceeds will be the amount of the return of capital ($0.50 per fully paid share) (subsection 116-20(1) of the ITAA 1997). 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). ITAA 1936 318 Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). 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. She must use the indexed cost base method in all future events affecting these shares. 4. ITAA 1936 45B 10. 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. A return of capital would ordinarily be subject to the CGT provisions of the income tax law. The return of capital was considered and approved by shareholders at the 2021 AGM. Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. 66. 2. Since 2009, Wesfarmers has reported the following retained earnings: 17. ITAA 1936 45B ITAA 1936 45B(5)(b) 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. 44. 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 . 43. adjust the cost base and reduced cost base of your Wesfarmers shares. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. 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. The summary in these documents and in this section is general in nature and should not be relied upon as advice. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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. 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. Make sure you have the information for the right year before making decisions based on that information. For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). By . Section 45B - scheme to provide capital benefits. ato class ruling wesfarmers return of capital. 34. 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. 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'. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. Aussie supermarkets set to capitalise on high inflation, but softer demand ahead, WESFARMERS LIMITED : Ex-dividend day for interim dividend, Out of lockdown, Kmart pushes Australia's Wesfarmers to higher profit, Transcript : Wesfarmers Limited, H1 2023 Earnings Call, Feb 15, 2023, Wesfarmers Raises Dividend as Fiscal H1 Profit, Revenue Increase, Australian Stock Exchange - 12:10:24 2023-03-01 am EST. If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. What will happen to the number of shares I hold? 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 following description of the scheme is based on information provided by the applicant. Depending on the outcome, you may have to include some details on your 2003-04 tax return. The requisite purpose does not have to be the most influential or prevailing purpose but it must be more than an incidental purpose. Some of the information on this website applies to a specific financial year. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. The ATO has issued 10 class rulings, which are as follows: Class Ruling CR 2021/87 Wesfarmers Ltd return of capital. Neither Wesfarmers nor any of its officers, employees or advisors assumes any liability or responsibility for advising shareholders about the tax consequences of the return of capital. 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. ITAA 1936 45C ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. Taking into account Wesfarmers robust credit metrics and continued strong cash flows, the Board considered that the return of capital would not adversely affect Wesfarmers credit rating. Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. Accordingly, section 45A has no application to the return of capital. Last date for trading in cum return of capital for shares. 64. During the years ended 30 June 2018 to 30 June 2020, Wesfarmers disposed of a number of assets and received sale proceeds totalling $4.3 billion. Section 45B - schemes to provide capital benefits. The capital return distribution was paid on Thursday, 2 December 2021. The cost base of the right does not include the cost base or reduced cost base of the share previously owned by the Wesfarmers shareholder that has been applied in working out a capital gain or capital loss made when a CGT event happened to the share - for example, when the Wesfarmers shareholder disposed of the share after the Record Date. Mark purchased 200 Wesfarmers shares in December 2000. Please find below some information and frequently asked questions in relation to the 2021capital return. 10. Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. ITAA 1936 45B(2)(c) ITAA 1997 Div 230 The Payment Date is anticipated to be in mid to late December 2014. Some of the information on this website applies to a specific financial year. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. Section 45A - streaming of dividends and 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. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. Under the return of capital, all shareholders were treated in the same manner. ITAA 1997 115-25(1) You received $2.50 for each share that you held on the record date. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 22. Ruling Return of capital is not a dividend 7. 30. 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 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). Wesfarmers' retained earnings (on a stand-alone basis) for the year ended 30 June 2021 was $697 million post-payment of the final dividend for the year. How much did I receive and how was the payment made? This Ruling applies from 1 July 2021 to 30 June 2022. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. CGT event G1 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). That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). 45A, 45B and 45C to the return of capital for most Wesfarmers shareholders in cum return of was... As part of this capital management initiative scheme is not a dividend 7 on when you the... Make a capital gain ( you can not make a capital gain ( you can not be relied.. And reduced cost base by an uplift factor I hold 2021capital return scheme is based on that....: this is a tax Office Ruling on the beach ATO Class Ruling confirms that there will be to. Application to the 2021capital return summary in these documents and in this section general! 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