ato class ruling wesfarmers return of capital

In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. 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? Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. 36. Shareholders are sent return of capital payment advice. This is clearly marked. 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 ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . * 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. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. 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. The following tables sets out what method you can use. 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. If you made a capital gain on this CGT event, you must include it in your calculations when completing item 17 on your 2003-04 tax return (supplementary section). The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. 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. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. TAA 1953 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). Therefore, Wesfarmers shareholders will obtain a tax benefit from the return of capital. 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). | August 8, 2022 Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). ITAA 1997 104-165(3) TR 2006/10 . 4:00pm (Perth time) 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. 56. ITAA 1997 Div 110 All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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. 64. If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). 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. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. The return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. 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. Income tax: Capital management distribution: Wesfarmers Limited . 57. 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. 53. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. 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. Although a 'capital benefit' (as defined in paragraph 45A(3)(b)) will be provided to participating Wesfarmers shareholders under the return of capital, the circumstances of the return of capital indicate that there will be no streaming of capital benefits to some shareholders and dividends to other shareholders. 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). The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. 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. Commissioner of Taxation 6. Ruling Return of capital is not a dividend 7. Ruling Return of capital is not a dividend 7. 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. A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. 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. 69. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. Some of the information on this website applies to a specific financial year. Wesfarmers has obtained a Class Ruling CR 20from the ATO which governs the Australian tax21/87 treatment of the return of capital to Wesfarmers shareholders who hold their shares on capital account. ITAA 1936 45A(2) ITAA 1997 995-1(1) 60. Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. 7. ITAA 1997 Div 230 If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. ITAA 1997 104-135 65. 59. 54. The following is a detailed contents list for this Ruling: ITAA 1997 855-15 Payments made to credit unions may take longer. 34. ITAA 1997 104-25 ITAA 1936 45B(5)(b) Shares commence trading on an ex return of capital basis. ITAA 1997 975-300(3) 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. 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. 3. 71. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. 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. 29. dividend income To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. Having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme is proposed to be entered into for a more than incidental purpose of enabling a taxpayer to obtain a tax benefit. 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. In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. Collectively, shareholders received a total distribution of approximately $2,268million. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. ITAA 1936 45B(3)(b) As the right to receive the payment of the return of capital was inherent in the Wesfarmers share during the time it was owned, the right is considered to have been acquired at the time when the share was acquired (section 109-5 of the ITAA 1997). ATO references: Corporations Act 2001 256C. 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 application of sections 45A, 45B and 45C to the return of capital. 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). 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. Taxation Administration Act 1953. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 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. sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. 42. 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). 58. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 52. capital reductions The test of purpose is an objective one. Some of the information on this website applies to a specific financial year. 81. 23. The distribution was entirely capital in nature with no dividend component. 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. These included the divestment of Wesfarmers interest in the Bengalla coal mining joint venture, Curragh coal mine, Kmart Tyre & Auto, Quadrant Energy and 10.1 per cent of Wesfarmers post-demerger 15 per cent shareholding in Coles. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. 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. 5. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. ITAA 1936 45A 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. There was no dividend component as part of this capital management initiative. ITAA 1936 44(1) 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 Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. The ATO has issued 10 class rulings, which are as follows: Class Ruling CR 2021/87 Wesfarmers Ltd return of capital. 2. 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. The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. What are the shareholder tax implications of the capital return? 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. 25. ITAA 1936 45A(3)(b) For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. 17. 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. ITAA 1936 45B 31. ITAA 1997 115-25(1) 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. The only relevant category of taxable Australian property is table item 2 of section 855-15. 32. ITAA 1997 104-25 A return of capital would ordinarily be subject to the CGT provisions of the income tax law. Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. 44. ITAA 1997 Div 230 The following description of the scheme is based on information provided by the applicant. 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). Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. 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'. The return of capital satisfies the first two conditions. 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 purpose which causes section 45B to apply may be the purpose of any party to the scheme. 13. 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 . Wesfarmers Limited - demerger of Coles Group Limited which was released on 14 December 2018. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. The capital loss is equal to the amount of the difference (subsection 104-25(3)). 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. Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. 28. 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. Taking into account Wesfarmers robust credit metrics and continued strong cash flows, the Board considered that the return of capital would not adversely affect Wesfarmers credit rating. For your other shares - reduce the cost base and reduced cost base by $2.50 each. ITAA 1936 45B(9) This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . 73. It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. 79. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 20. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 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. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. Accordingly, CGT event G1 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 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. How can I calculate my return of capital payment and when will I receive this payment? 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). The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. This is clearly marked. ITAA 1997 Div 112 Specifically, the provision applies where: 48. In particular: 26. 45. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. 30. 22. Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. In broad terms, section 45B of the ITAA 1936 applies where: 49. It states that a person is provided with a capital benefit if: 52. ITAA 1997 104-135(4) The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . ITAA 1997 116-20(1) 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). Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 8. ITAA 1997 Div 109-A 74. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. ITAA 1997 Div 197 Last date for trading in cum return of capital for shares. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its shareholders. ITAA 1936 45B(2)(c) ITAA 1997 Div 110 The ruling applies from 1 July 2021 to 30 June 2022. 14. The ATO ruling, if Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. The high dividend payout policy is intended to be maintained following the return of capital to shareholders. 34. Wesfarmers Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. 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? Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. 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. ITAA 1936 45B Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). 76. What are the key dates for the capital return? ITAA 1997 855-10(1) The right to receive the return of capital, being an intangible asset, ended by the right being discharged or satisfied when the return of capital was made (section 104-25). A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. For shares that had reached a taxing point (i.e. 9. 62. The Record Date for the return of capital is expected to be on 15 November 2013. Did the Dividend Investment Plan (DIP) apply? 24. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 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. Collectively, shareholders received a total distribution of approximately $1,143 million. ITAA 1936 47 Did I have the choice to participate in the capital return? 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.

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