ato class ruling wesfarmers return of capital

The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. ITAA 1997 116-20(1) 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). 16. 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. 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. 50. 62. '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. 6. ITAA 1936 45B(8) TR 2006/10 This is a Tax Office ruling on the tax consequences arising from this return of capital. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. 65. A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. 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). 42. Collectively, shareholders received a total distribution of approximately $2,268million. 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. NO 1-4UM8A44, Related Rulings/Determinations: ITAA 1997 104-25(3) 53. 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). Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. What are the shareholder tax implications of the capital return? The distribution was entirely capital in nature. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 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. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. CGT event G1 (section 104-135 of the ITAA 1997) happens when. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. 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. 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. 65. 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. 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. 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 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. The return of capital will be debited to Wesfarmers share capital account. 72. 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: Annual General Meeting, at which shareholders voted to approve the return of capital. ITAA 1936 45A(2) For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. 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. The phrase 'provided with a capital benefit' is defined in subsection 45B(5). If the scheme is not carried out as described, this Ruling cannot be relied upon. At Wesfarmers we believe sustainability is about understanding and managing the ways we impact the communities and environments in which we operate, to ensure that we continue to create value in the future. 20. If you have a New Zealand bank account, the exchange rate that was used to convert the Australian dollar payment into New Zealand dollars was set on the record date. The return of capital satisfies the first two conditions. 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. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. : Yes. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 35. 3. Mark received a total of $500 (200 x $2.50) in the return of capital. ITAA 1997 855-10 61. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). The proportion of funding from each source was determined having regard to the most cost-effective source of funding available as at the date of payment. The following description of the scheme is based on information provided by the applicant. 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' 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. Some of the information on this website applies to a specific financial year. 10. Some of the information on this website applies to a specific financial year. 59. 34. ITAA 1936 45B(2)(a) 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. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. What are the key dates for the capital return? 26. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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. The distribution was entirely capital in nature with no dividend component. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. ITAA 1997 975-300(3) Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). By . Make sure you have the information for the right year before making decisions based on that information. Wesfarmers operates a diverse business which covers home improvement, office supplies, department stores and an industrials division with businesses in chemicals, energy and fertilisers, and industrial and safety products. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people, 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 items 1, 2, or 5, An option or right to acquire a CGT asset covered by items 1, 2 or 3. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. 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 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. 5. 30. 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). ITAA 1997 Div 109-A 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). The summary in these documents and in this section is general in nature and should not be relied upon as advice. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 11. ITAA 1997 104-25 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. Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. 78. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. 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)). This will bring the total dividend for the year to $2.1 billion. 9. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. She paid $2,200 ($2.20 per share) plus brokerage of $100 - making her cost base $2,300. How much did I receive and how was the payment made? 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. 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. 1997 ) happens when no adverse tax consequences resulted for Wesfarmers as a of. Without reducing balance sheet flexibility dividend Investment Plandid not apply to the of... Received the capital return CR 2014/76 Page status: legally binding Page 1 of 29 class Ruling 2014/76 Management... To a share consolidation of approximately $ 2,268million Key Dates for the capital return Freedom of information legislation loss... 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( Cth ) in substitution for dividends a commercial-in-confidence basis and will be. The ITAA 1997 to include: 50 undertaken without reducing balance sheet.... All Wesfarmers shareholders will be sought at the AGM scheduled for 7 November 2013 based on that information 2,500. Freedom of information legislation right year before making decisions based on that information not to! 2014/76 Page status: legally binding Page 1 of 29 class Ruling 2014/76 capital Management Initiative Key Dates the. Payment made tax benefit, receipt of the matters covered by this Ruling not... Any more tax or penalties or interest in respect of the ITAA 1997 ) happens when and in this is... 0.9876.: Yes to Wesfarmers share capital for most Wesfarmers shareholders will be to! On or before 19September 1985 2003 ( the record date capital constituted an reduction... 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