Section 45B - schemes to provide capital benefits. Did the Dividend Investment Plan (DIP) apply? 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. ITAA 1997 995-1(1) The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 49. 48. The following is a detailed contents list for this Ruling: Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. 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? 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). The return of capital was announ The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. If you provided your direct credit payment instructions by 4:00pm (Perth time) on Friday, 19November2021, the return of capital payment was made on Thursday, 2 December 2021 by direct credit to your financial institution if your registered address is in Australia, New Zealand or the UK. 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). The capital return was completed on 18 December 2003. The Record Date for the return of capital is expected to bein late November or early December 2014. ITAA 1936 44(1) 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. The distribution was entirely capital in nature with no dividend component. adjust the cost base and reduced cost base of your Wesfarmers shares. sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. How did the capital return work and what was the effect on the company? The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. 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. Record date for determining entitlement to participate in the return of capital. ITAA 1936 45B(5) 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. 30. 74. The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. 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. The Payment Date is anticipated to be late November to early December 2013. 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. ITAA 1936 45B 25. ITAA 1997 Div 230 ITAA 1997 975-300(3) ITAA 1936 45A 7. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. ITAA 1936 45B ITAA 1936 45C(2) ITAA 1997 104-25(3) 6. 21. The Class Since 2009, the dividend payout of Wesfarmers has been as follows: 14. 29. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. There was no share consolidation in relation to the capital return. Under subsection 855-10(1) of the ITAA 1997, an entity disregards a capital gain or capital loss from a CGT event if they are a foreign resident, or the trustee of a foreign trust for CGT purposes, just before the CGT event happens, and the CGT event happens in relation to a CGT asset that is not 'taxable Australian property'. 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? Make sure you have the information for the right year before making decisions based on that information. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. Australian Taxation Office for the Commonwealth of Australia. The Commissioner will not make a determination under either 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. 67. 34. 8. 43. This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. 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). All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. Since 2009, Wesfarmers has reported the following retained earnings: 17. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). 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. ITAA 1997 995-1(1) 80. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 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. 17. according to an ATO ruling. 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. 40. Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. 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. 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). ITAA 1997 116-20(1) In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. share capital, Legislative References: ITAA 1997 855-10(1) How can I calculate my return of capital payment and when will I receive this payment? 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)). The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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). ITAA 1997 Subdiv 115-A 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. The return of capital will be debited to Wesfarmers share capital account. 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)). A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). She must use the indexed cost base method in all future events affecting these shares. Other increases to share capital have been due to dividend reinvestment and employee incentives. 2. Commissioner of Taxation 60. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. ITAA 1936 45A(2) TR 2006/10 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. TAA 1953 The purpose which causes section 45B to apply may be the purpose of any party to the scheme. Section 45A - streaming of dividends and capital benefits. 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(3)(b) 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. 30. If, after the Record Date but before the Payment Date, a Wesfarmers shareholder ceases to own some, or all, of their shares in Wesfarmers, the right to receive the payment of the return of capital in respect of each of the shares disposed of will be retained by the shareholder and is considered to be a separate CGT asset. ITAA 1997 104-25 14. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 46. 2. Some of the information on this website applies to a specific financial year. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. However paragraph (d) of the definition of dividend specifically 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. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. 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). 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. 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). | August 8, 2022 ITAA 1936 45B(2)(b) Wesfarmers has advised the total market value of its assets that are not taxable Australian real property is greater than the market value of its taxable Australian real property assets. 10. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. ITAA 1997 104-135(4) 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. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. Australian Taxation Office (ATO) Class Ruling . ITAA 1997 104-135 The distribution comprised a return of capital of 75 cents per share and a fully-franked dividend of 25 cents per share. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. . 21. Mark purchased 200 Wesfarmers shares in December 2000. ITAA 1997 975-300 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). 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). 20. 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). 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. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. 42. 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). The amount of the capital gain is equal to that excess. The capital loss is equal to the amount of the difference (subsection 104-25(3) of the ITAA 1997). 31. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. Corporations Act 2001 256B 6. 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. Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. 39. ITAA 1997 104-135(3) The cost base of the right does not include the cost base or reduced cost base of the share previously owned by the Wesfarmers shareholder that has been applied in working out a capital gain or capital loss made when a CGT event happened to the share - for example, when the Wesfarmers shareholder disposed of the share after the Record Date. 5. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. 3. 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. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. However, having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme was entered into or carried out for a more than incidental purpose of enabling Wesfarmers shareholders to obtain a tax benefit. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. ITAA 1997 104-25(3) Mark received a total of $500 (200 x $2.50) in the return of capital. ITAA 1936 45A(3)(b) The return of capital was not eligible to participate in the DIP. This payment was: For those shareholders who are tax residents of Australia and hold their shares on capital account at the time the return of capital is paid, no part of the return of capital should be treated as a dividend for income tax purposes. 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. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. The Commissioner will not make a determination under either NEWS 11 September 2013 ATO CLASS RULING ON CAPITAL RETURN PROPOSAL The Australian Taxation Office has published a Class Ruling relating to. This is a Tax Office ruling on the tax consequences arising from this return of capital. In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. 60. The payment was entirely capital in nature with no dividend component. Under the return of capital, all shareholders were treated in the same manner. 1. 73. Collectively, shareholders received a total distribution of approximately $1,143 million. ITAA 1997 Div 197 For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. You calculate your capital gain using the: Indexed cost base or discount method, whichever gives you the better result*, On or after 21 September 1999 and before 15December 2002, Discount method (after applying any capital losses - including unapplied capital losses from previous years). ITAA 1997 855-10 65. Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. 13. The ruling applies from 1 July 2021 to 30 June 2022. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). '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. If the amount of the return of capital of $2.00 per Wesfarmers share is not more than the cost base of your Wesfarmers share, the Cost base / reduced cost base of the share are reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4)). 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. It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. 14 December 2018 Demerger of Coles Group Limited - ATO Class Ruling The Australian Commissioner of Taxation has today issued Class Ruling CR 2018/59 (Class Ruling) covering the Australian income tax implications of the demerger of Coles Group Limited (Coles) for shareholders of Wesfarmers Limited (Wesfarmers).The Class Ruling confirms the availability of demerger tax relief for certain . 13. The capital gain will be a discount capital gain for shareholders that are an individual, trust or complying superannuation fund and acquired their shares at least 12 months before the payment date. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. ITAA 1997 975-300(3) ITAA 1936 45B(2)(c) 45. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). 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. Mark has not made a capital gain on his shares as a result of the capital return so he does not have to put anything on his 2003-04 tax return to reflect this event. Section 45B applies where certain capital payments are made to shareholders in substitution for dividends. 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, you can treat a capital gain made when CGT event C2 happened to your right to the payment of the return of capital as a discount capital gain under Subdivision 115-A if you acquired your Wesfarmers share at least 12 months before the Payment Date (subsection 115-25(1)) provided the other conditions in Subdivision 115-A are satisfied. The return of capital was recorded as a debit to Wesfarmers untainted share capital account. Ruling Return of capital is not a dividend 7. On 3 November 2003 Wesfarmers Limited announced a return of capital ('capital return'). 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. 40. 46. 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. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. Collectively, shareholders received a total distribution of approximately $2,268million. ITAA 1997 855-15 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. TAA 1953 ITAA 1997 Div 112 This is clearly marked. Taxation Administration Act 1953. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). 32. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. 36. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 25. CGT event G1 in section 104-135 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 and continue to own at the Payment Date. If the return of capital is approved by shareholders at the 2013 . 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. 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 distribution was entirely capital in nature. Shareholders are sent return of capital payment advice. Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. 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 Div 230 15. ITAA 1997 855-30 The return of capital . For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). ATO references: If, after the Record Date but before the Payment Date, you ceased to own a Wesfarmers share in respect of which the return of capital was payable, the right to receive the return of capital in respect of that share is retained by you and is a separate CGT asset from the Wesfarmers share. 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. 41. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. 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. For those shareholders who are not tax residents of Australia and hold their shares on capital account, no Australian income tax implications should arise as a consequence of the return of capital. The Record Date for the return of capital is expected to be on 15 November 2013. . 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. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. Accordingly, the principal asset test in section 855-30 will not be satisfied. July 2021 to 30 June 2022 all legislative references in this Ruling are to return... Method in all future events affecting these shares was applied to each outstanding Loan balance a proposed return capital. 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