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. ITAA 1997 115-25(1) * 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. The Record Date for the return of capital is expected to bein late November or early December 2014. 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. Payments made to credit unions may take longer. ITAA 1997 104-135 Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). 35. 60. 22. 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'. You made a capital gain when CGT event G1 happened if the return of capital of $2.00 per Wesfarmers share you received was more than the share's cost base (subsection 104-135(3)). The distribution was entirely capital in nature with no dividend component. You have made a capital gain if your cost base per share on the record date (15December 2003) was less than the amount you received for each share ($2.50). 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. 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). 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. The capital return has been approved by the shareholders. 48. After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. 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 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. 8 December 2021. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. You received 200 cents for every share you held as a registered holder on the record date of 4:00pm (Perth time) Friday, 19 November 2021. Components of the capital return The capital return was $2.50 per share. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. 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. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. 2. 51. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 31. NEWS 11 September 2013 ATO CLASS RULING ON CAPITAL RETURN PROPOSAL The Australian Taxation Office has published a Class Ruling relating to. 4:00pm (Perth time) Friday, 19 November 2021. Did the Dividend Investment Plan (DIP) apply? 41. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. 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. ITAA 1997 104-165(3) 6. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. TAA 1953 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. If the return of capital ($0.50 per fully paid share) is not more than the cost base of the Wesfarmers share at the Payment Date, the cost base and reduced cost base of the share will be reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4) of the ITAA 1997). 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. The capital gain is equal to the amount of the excess. 9. It states that a person is provided with a capital benefit if: 52. ITAA 1936 45B(5)(b) 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). ITAA 1997 855-10(1) 46. 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). We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 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). Collectively, shareholders received a total distribution of approximately $1,143 million. The capital return distribution was paid on Thursday, 2 December 2021. 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. | August 8, 2022 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. 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. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 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 1936 45A(3)(b) She must use the indexed cost base method in all future events affecting these shares. A return of capital would ordinarily be subject to the CGT provisions of the income tax law. 31. 24. 61. ITAA 1936 45B 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. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 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 purpose which causes section 45B to apply may be the purpose of any party to the scheme. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. The discount factor for resident individuals and trusts is one-half and for complying superannuation funds is one-third. Note: '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. Return of capital amount - $5.68 for each entitled WES share. 1. In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). 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. 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. The phrase 'provided with a capital benefit' is defined in subsection 45B(5). Make sure you have the information for the right year before making decisions based on that information. 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. 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. 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 ATO ruling, if ITAA 1936 6(1) If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. 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. share capital, Legislative References: 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. ITAA 1997 116-20(1) 21. ITAA 1997 Subdiv 115-A 19. As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. 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. ITAA 1997 104-25 For Wesfarmers shares you acquired after 19September 1985* you must: * Shares acquired before 20 September 1985 are pre-CGT assets and you therefore disregard any capital gain or capital loss you make on them. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. 16. ITAA 1997 855-15 Where the original shares were acquired on or after 20 September 1985, subsection 112-25(4) of the ITAA 1997 provides that each element of the cost base and reduced cost base of the converted shares is the sum of the corresponding elements of each original share. ITAA 1997 Div 110 21. 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. 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. CGT event C2 happened when the return of capital was made. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . How much did I receive and how was the payment made? CGT event G1 (section 104-135 of the ITAA 1997) happens when. 66. 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. Return of capital is not a dividend for income tax purposes. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . 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. Wesfarmers has confirmed that its share capital account (as defined in section 975-300 of the ITAA 1997) is not tainted (within the meaning of Division 197 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. 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. This Ruling applies from 1 July 2021 to 30 June 2022. Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. 25. The requisite purpose does not have to be the most influential or prevailing purpose but it must be more than an incidental purpose. The Payment Date is anticipated to be late November to early December 2013. Return of Capital = $750 Fully Franked Dividend = $250 Units on hand after consolidation: 983 (1000 x 0.9827 - rounded to the next whole number of shares - See Point 25 in the ATO Class Ruling 2014/76 ). The ATO has issued Class Ruling CR 2018/59 . ato class ruling wesfarmers return of capital. The Class Accordingly, section 45A has no application to the return of capital. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. The high dividend payout policy is intended to be maintained following the return of capital to shareholders. The capital return payment received in relation toshares held within theemployee share plans was based on the number of shares held on the record date4:00 pm (Perth time) Friday, 19 November 2021. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 47. 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 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. 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