Income tax: Capital management distribution: Wesfarmers Limited . The capital return was completed on 18 December 2003. Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. 34. A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. Note: CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. Components of the capital return The capital return was $2.50 per share. 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. 1. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. 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. Some of the information on this website applies to a specific financial year. 11. 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. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. 46. Corporations Act 2001 256C. 25. 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. 63. | August 8, 2022 Sections 45A, 45B and 45C of the ITAA 1936 do not apply. 16. 18. Foreign-resident shareholders able to disregard capital gains tax. Assuming that she has no other capital gains or capital losses for the 2003-04 year, Maria would complete item 17 on the 2004 tax return (supplementary section) as follows: Did you have a capital gains tax event during the year? Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. ITAA 1997 104-25 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. 39. The capital gain is equal to the amount of the excess. The distribution comprised a return of capital of 75 cents per share and a fully-franked dividend of 25 cents per share. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. 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. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. 35. The amount of the capital gain is equal to that excess. ITAA 1997 104-25 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. Wesfarmers shareholders received a 200 cents per share cash distribution. 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. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. 11. 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. 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). 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. ITAA 1997 116-20(1) The Commissioner will not make a determination under either The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. 12. ITAA 1936 318 25. ITAA 1936 45B(5)(b) 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. This is clearly marked. 2. ITAA 1997 855-10 In broad terms, section 45B of the ITAA 1936 applies where: 49. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. The following is a detailed contents list for this Ruling: ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. NO 1-PVCWOSF, Legislative References: As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. Some of the information on this website applies to a specific financial year. 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. Each of these conditions is considered in this Ruling. Mark received a total of $500 (200 x $2.50) in the return of capital. 43. 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. 19. If the scheme is not carried out as described, this Ruling cannot be relied upon. 3. A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. ITAA 1997 Div 112 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. 56. The Class 3. 37. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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, 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: The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. The converted shares will have the same date of acquisition as the original shares to which they relate. 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). ITAA 1997 855-15 How do I provide, update or check my bank account details? Ruling Return of capital is not a dividend 7. 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. How can I calculate my return of capital payment and when will I receive this payment? Shares commence trading on an ex return of capital basis. 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). 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 has been approved by the shareholders. 49. TD 2000/10, Subject References: . ITAA 1997 115-25(1) 47. 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). to make a short-term or 'one-off' commercial gain. 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. 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. TAA 1953 We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 6. Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. ITAA 1997 Div 230 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). CGT event G1 (section 104-135 of the ITAA 1997) happens when. 24. 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. 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. 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. dividend income 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). She paid $2,200 ($2.20 per share) plus brokerage of $100 - making her cost base $2,300. 79. 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. 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 share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. The ATO has issued Class Ruling CR 2018/59 . The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. ITAA 1997 104-25(3) Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. By contrast, a dividend would generally be included in the assessable income of a resident shareholder or in the case of a foreign resident, be subject to dividend withholding tax under section 128B. 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). Commissioner of Taxation Bunnings Limited shareholders offered $11.20 for each Bunnings share or $25.80 plus 2 Wesfarmers shares plus 1 Wesfarmers option ($12.50) for every 4 Bunnings shares 6 Nov 1989 Renounceable rights offer - 1 for 7 at a price of $4.25 per share 13 Jan 1989 Share split - each $1.00 share split into 2 x 50 cent shares 22 Apr 1987 ITAA 1997 Div 110 The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. 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. Last date for trading in cum return of capital for shares. 47. ITAA 1997 975-300(3) Corporations Act 2001 256B The phrase 'provided with a capital benefit' is defined in subsection 45B(5). 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. 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. 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. 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