ato class ruling wesfarmers return of capital

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). This Ruling applies from 1 July 2013 to 30 June 2014. 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. 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. ITAA 1997 104-135(4) ITAA 1997 855-20 32. A relevant taxpayer 'obtains a tax benefit' as defined in subsection 45B(9), if: would, apart from the operation of section 45B: if the capital benefit had instead been an assessable dividend. 39. The cost base of your right to receive each return of capital is worked out under Division 110 (modified by Division 112). 2. Record date for determining entitlement to participate in the return of capital. How can I calculate my return of capital payment and when will I receive this payment? 28. ITAA 1936 45B Maria purchased 1,000 Wesfarmers shares in December 1986. the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. 56. For more information on how to work out the cost base and the reduced cost base of shares, see the Guide to capital gains tax. If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. Make sure you have the information for the right year before making decisions based on that information. CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. 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. Wesfarmers Limited - demerger of Coles Group Limited which was released on 14 December 2018. Eligible shareholders received 1 COL share for each WES share owned. 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 only relevant category of taxable Australian property is table item 2 of section 855-15. ITAA 1997 855-15 82. 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. A capital benefit was provided to Wesfarmers' shareholders. This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. Payments made to credit unions may take longer. 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. ITAA 1936 45B(8) 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. 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. 1. ITAA 1997 104-135(3) | August 8, 2022 to make a short-term or 'one-off' commercial gain. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. 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. 24. ITAA 1936 45A(2) 18. 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. It is anticipated that the share consolidation will have no effect on the value of each shareholder's shares relative to the total market value of Wesfarmers. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. ITAA 1936 44(1) 5. 63. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. * If you choose to index the cost base of shares you acquired before 21September 1999, you cannot apply the CGT discount when you dispose of them. 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. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. 8 December 2021. 30. For those shareholders who are tax residents of Australia and hold their shares on capital account at the time the return of capital is paid, no part of the return of capital should be treated as a dividend for income tax purposes. adjust the cost base and reduced cost base of your Wesfarmers shares. For the purposes of paragraph 45B(2)(c), the Commissioner is required to consider the 'relevant circumstances' set out in subsection 45B(8) to determine whether any part of the scheme would be entered into for a purpose, other than an incidental purpose, of enabling a relevant taxpayer to obtain a tax benefit. The capital return was completed on 18 December 2003. 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. The amount of the capital gain is equal to that excess. ITAA 1936 47 65. 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. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. 44. ITAA 1936 45A(3)(b) Income tax: Capital management distribution: Wesfarmers Limited . He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. 18. 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. This amount represents your capital proceeds. ITAA 1997 116-20(1) As such, paragraph (d) of the definition of 'dividend' in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. The distribution was entirely capital in nature. In working out the capital gain or capital loss when CGT event C2 happens, the capital proceeds are equal to the amount of the return of capital ($2.00 per Wesfarmers share) (subsection 116-20(1)). 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)). 36. 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 payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . ITAA 1997 104-165(3) Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. 13. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. 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. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. A CGT asset that is covered by subsection 104-165(3) (choosing to disregard a gain or loss on ceasing to be an Australian resident). AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. 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. The capital return was $2.50 per share. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. ITAA 1936 45B(2)(a) 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. 16. 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). ITAA 1997 855-10 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. ATO references: 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: 50. 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. 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 distribution comprised a return of capital of 75 cents per share and a fully-franked dividend of 25 cents per share. 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). Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. Each of these conditions is considered in this Ruling. 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). A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. 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 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. 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. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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. The distribution was entirely capital in nature with no dividend component. 38. 62. 36. 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. 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. This is due to the outflow of funds to shareholders. 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. 33. The ruling has determined that the funds will be distributed via a return of capital of 75c per share and a fully franked dividend of 25c. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. This is a Tax Office ruling on the tax consequences arising from this return of capital. For your other shares - reduce the cost base and reduced cost base by $2.50 each. How did the capital return work and what was the effect on the company? For shares that had reached a taxing point (i.e. ITAA 1997 995-1(1) ITAA 1936 45B(3) Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. 20. Depending on the outcome, you may have to include some details on your 2003-04 tax return. ITAA 1936 45A(2) 54. 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. Subsection 44(1) includes in a shareholder's assessable income any dividends, as defined in subsection 6(1), paid to the shareholder out of profits derived by the company from any source (if the shareholder is a resident of Australia) and from an Australian source (if the shareholder is a non-resident of Australia). 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). 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. 8. 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. Who this Ruling applies to 4. 23. 70. The converted shares will have the same date of acquisition as the original shares to which they relate. ITAA 1936 45B(2)(c) 8. The return of capital will be affected by way of an equal reduction of capital under section 256B of the Corporations Act 2001 (Corporations Act), and requires shareholder approval by ordinary resolution under section 256C of the Corporations Act. 76. 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. 61. Did the Dividend Investment Plan (DIP) apply? 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? Receive this payment Wesfarmers returning to each shareholder $ 0.50 per fully paid.... 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