ato class ruling wesfarmers return of capital
The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. Wesfarmers has advised that, at the time CGT event G1 happens for any foreign resident Wesfarmers shareholder who is entitled to the return of capital, a Wesfarmers share will not be an indirect Australian real property interest (as defined in section 855-25 of the ITAA 1997). 29. 69. 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). 22. ITAA 1997 115-25(1) 36. 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. 30. 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). 57. 6. 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. 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. 52. 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. ITAA 1997 855-15 Unless the amount of the distribution exceeds the cost base of the shares, there will only be a cost base reduction under CGT event G1 (section 104-135 of the ITAA 1997). 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). 4:00pm (Perth time) Friday, 19 November 2021. 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. ITAA 1936 45B(9) This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. | August 8, 2022 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 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. 3. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. She must use the indexed cost base method in all future events affecting these shares. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). 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. ITAA 1936 45B(2)(c) ITAA 1997 Div 110 Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. 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. . 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. 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. Who this Ruling applies to 4. Section 45B - schemes to provide capital benefits. 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. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. 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. Record date for determining entitlement to participate in the return of capital. 31. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. 64. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). TR 2006/10 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. Some of the information on this website applies to a specific financial year. 16. For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. TAA 1953 56. 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). 71. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. 24. 21. Having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme is proposed to be entered into for a more than incidental purpose of enabling a taxpayer to obtain a tax benefit. 22. 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. This represents a total return of approximately $579 million to Wesfarmers shareholders. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 50. The return of capital . Wesfarmers' return of capital will be recorded as a debit to the share capital account and Wesfarmers shareholders will receive a distribution of share capital to the value of $0.50 per share. CGT event C2 happened when the return of capital was made. 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. Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). The discount factor for resident individuals is one-half. Sections 45A and 45B of the ITAA 1936 are two anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C of the ITAA 1936 applies. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. Ruling Return of capital is not a dividend 7. This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. 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. 18. 3. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. 32. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. 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. 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. 59. Wesfarmers shareholders received a $1.00 per share cash distribution. The Record Date for the return of capital is expected to be on 15 November 2013. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. 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. Under with section 112-25 of the ITAA 1997, the consolidation of Wesfarmers shares will not result in a CGT event happening where the company converts its shares in accordance with section 254H of the Corporations Act. This Ruling applies from 1 July 2013 to 30 June 2014. ITAA 1936 45C(1) 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). The return of capital was made possible by the Wesfarmers Groups continued strong cash flow generation and the receipt of approximately $4.3 billion in proceeds from the sales of a number of assets during FY2018 to FY2020. 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). 3. 75. The capital gain is equal to the amount of the excess. How do I adjust the cost base and reduced cost base of my Wesfarmers shares? Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 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. 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. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. 17. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . Maria's capital gain is $200 ($2,500 - $2,300). 66. 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. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). 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. How do I provide, update or check my bank account details? 2. 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. 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. 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. 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). Mark received a total of $500 (200 x $2.50) in the return of capital. 56. Section 45A - streaming of dividends and capital benefits. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. 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. The Class Non-resident shareholders should seek specific advice in relation to the tax consequences arising from the return of capital under the laws of their country of residence. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. 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). the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. Therefore, Wesfarmers shareholders will obtain a tax benefit from the return of capital. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . ITAA 1997 Div 197 Section 45A of the ITAA 1936 generally applies where: 45. TAA 1953 65. 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. 25. The new cost base for his share parcel is $2,550 ($3,050 - $500), or $12.75 per share. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. What will happen to the number of shares I hold? Note: 2. 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. ITAA 1997 Div 197 Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. ITAA 1936 47 If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. 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. It states that a person is provided with a capital benefit if: 52. You received $2.50 for each share that you held on the record date. 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. 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. If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. A capital benefit was provided to Wesfarmers' shareholders. Copyright Act 1968 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. 70. 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. The following description of the scheme is based on information provided by the applicant. 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. 58. Each of these conditions is considered in this Ruling. 32. 13. ITAA 1997 116-20(1) Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. 39. 20. This amount represents your capital proceeds. 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. dividend income The capital loss is equal to the amount of the difference (subsection 104-25(3) of the ITAA 1997). Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. 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). : Yes. 53. The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. 35. 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. Make sure you have the information for the right year before making decisions based on that information. 9. 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. ITAA 1997 104-165(3) For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. The distribution comprised a return of capital of 75 cents per share and a fully-franked dividend of 25 cents per share. The return of capital was not eligible to participate in the DIP. 7. 74. 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