ato class ruling wesfarmers return of capital

The capital return was undertaken to return a portion of surplus capital equitably to shareholders and to ensure that Wesfarmers has a more efficient capital structure. 41. 20. 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 Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. 35. 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. 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. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. 82. 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. 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. 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. How can I calculate my return of capital payment and when will I receive this payment? As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. 54. Mark received a total of $500 (200 x $2.50) in the return of capital. In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. Since 2009, Wesfarmers has reported the following retained earnings: 17. 22. 60. Did the Dividend Investment Plan (DIP) apply? Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). The ATO has issued Class Ruling CR 2018/59 . 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. 57. 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. She must use the indexed cost base method in all future events affecting these shares. No capital loss can be made from CGT event G1 (Note 1 to subsection 104- 135(3)). 4:00pm (Perth time) Friday, 19 November 2021. 22. After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. 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 977-50 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). ITAA 1936 45B(9) If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. Corporations Act 2001 256B 2. 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. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. 4 September 2013. 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). 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). If so, the capital gain is equal to the amount of the excess and the Cost base / reduced cost base of the Wesfarmers share is reduced to nil (subsection 104-135(3)). Some of the information on this website applies to a specific financial year. This payment was: A CGT event happened on 18 December 2003, when Wesfarmers made a capital return on the shares that you held in the company. 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. Income tax: Capital management distribution: Wesfarmers Limited . 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). ITAA 1936 45A(3)(b) Recording the capital gain on the tax return. 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 ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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). Each of these conditions is considered in this Ruling. Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. The payment was entirely capital in nature with no dividend component. The Commissioner will not make a determination under either The ATO has issued a Class Ruling CR 2018/59 for this demerger, and a copy can be obtained on the Wesfarmers website at www.wesfarmers.com.au. 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). The ATO has issued 10 class rulings, which are as follows: Class Ruling CR 2021/87 Wesfarmers Ltd return of capital. 46. 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. 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. 32. Payments made to credit unions may take longer. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. 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). 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). 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 Record Date for the return of capital is expected to be on 15 November 2013. 2. ITAA 1997 104-135(3) 34. 33. 38. 11. 23. Section 45A - streaming of dividends and capital benefits. Make sure you have the information for the right year before making decisions based on that information. 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. 81. 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. 67. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 57. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. 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. The return of capital . The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. capital gains tax In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. The application of sections 45A, 45B and 45C to the return of capital. The summary in these documents and in this section is general in nature and should not be relied upon as advice. What are the key dates for the capital return? CGT event C2 happened when the return of capital was made. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. For those employee shareholders who hold their shares within a New Zealand Wesfarmers employee share plan, are tax residents of New Zealand and only work in New Zealand, it is expected the return of capital payment will be treated as 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). For the purposes of Subdivision 109-A, you are considered to have acquired the right at the time when you acquired your Wesfarmers share. 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. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 26. Create your myGov account and link it to the ATO, Help and support to lodge your tax return, Occupation and industry specific income and work-related expenses, Residential rental properties and holiday homes, Instalment notices for GST and PAYG instalments, Your obligations to workers and independent contractors, Encouraging NFP participation in the tax system, Australian Charities and Not-for-profits Commission, Departing Australia Superannuation Payment, Small Business Superannuation Clearing House, Annual report and other reporting to Parliament, Complying with procurement policy and legislation, Wesfarmers Group Limited (Wesfarmers) return of capital. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. Accordingly, the Commissioner will not make a determination under subsection 45B(3) 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. 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)). . 16. 24. Accordingly, section 45A has no application to the return of capital. In particular: 26. 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. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. 30. 80. 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). This is due to the outflow of funds to shareholders. ITAA 1997 855-10(1) This is clearly marked. 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. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 62. On 3 November 2003 Wesfarmers Limited announced a return of capital ('capital return'). Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. 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). The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. 46. 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. It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. 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). 18. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. 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. Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. ITAA 1936 45B(3)(b) We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. ITAA 1997 855-15 Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). ITAA 1936 45C(2) The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). ITAA 1997 855-15 For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. Section 45A of the ITAA 1936 generally applies where: 45. 22. 71. Taxation Administration Act 1953. 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. ITAA 1997 104-25 ITAA 1936 45B The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. Having regard to Wesfarmers strong balance sheet and cash flow generation, together with its wellestablished funding sources and robust credit metrics, the Board was of the opinion that, consistent with Wesfarmers growth strategy, Wesfarmers was able to undertake the return of capital without materially prejudicing its ability to fund new investments, or to take advantage of value accretive opportunities, if they arise. Specifically, the provision applies where: 48. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 55. 43. ITAA 1997 116-20(1) If the scheme is not carried out as described, this Ruling cannot be relied upon. ITAA 1997 Div 230 Commissioner of Taxation 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. 36. 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