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. The capital return was completed on 18December 2003. 59. Wesfarmers Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. 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. A capital benefit was provided to Wesfarmers' shareholders. 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). Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). The following description of the scheme is based on information provided by the applicant. 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. Did the Dividend Investment Plan (DIP) apply? The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. 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). CGT event G1 (section 104-135 of the ITAA 1997) happens when. 62. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. 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 Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. ITAA 1936 45B 28. TD 2000/10, Subject References: The Commissioner will not make a determination under either subsection 45A(2) of the ITAA 1936 or paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to any part of the return of capital of $2.00 per Wesfarmers share you received on the Payment Date. 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. The Record Date for the return of capital is expected to be on 15 November 2013. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. ITAA 1997 Subdiv 115-A . The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 35. 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. What was the capital return?Wesfarmers made a cash payment to shareholders of 200cents per share (or approximately $2,268 million in total). 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. Corporations Act 2001 256C. ITAA 1997 Div 112 The return of capital satisfies the first two conditions. For the purposes of paragraph 45B(2)(c), the Commissioner is required to consider the 'relevant circumstances' set out in subsection 45B(8) to determine whether any part of the scheme would be entered into for a purpose, other than an incidental purpose, of enabling a relevant taxpayer to obtain a tax benefit. Corporations Act 2001. 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). This will bring the total dividend for the year to $2.1 billion. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . The return of capital was in addition to the interim dividend of 88 cents per Wesfarmers share paid on 31 March 2021 and a final dividend of 90 cents per share for the year ended 30 June 2021 paid by Wesfarmers on 7 October 2021. 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. 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. return of capital on shares Without the capital return or some other capital management initiative, we estimate that the ratio would be around 44 per cent at the end of the current financial year." Mr Chaney said the tax office had provided a written draft class ruling at the end of last week, enabling the Board to consider the issue at today's meeting. 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. Did I have the choice to participate in the capital return? Recording the capital gain on the tax return. 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. The capital return was completed on 18 December 2003. 17. Specifically, the provision applies where: 48. 3. 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. Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). 22. 39. 45. 37. 25. 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. Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. 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. If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. The payment 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. ITAA 1997 104-135(4) How can I calculate my return of capital payment and when will I receive this payment? 46. The Commissioner will not make a determination under either ITAA 1936 44(1) 10. 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. 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). 70. Shares may have traded at a lower price from the ex return of capital date than they otherwise would have done had the return of capital not occurred. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. The 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. All registered shareholders on the record date received the capital return there was not an opportunity for these shareholders to 'opt out' of the capital return. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(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. This is clearly marked. Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. The share consolidation will occur after the return of capital to Wesfarmers shareholders, and will be applied to both the fully paid ordinary shares and the partially protected ordinary shares. As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. CGT event C2 happened when the return of capital was made. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. Copyright Act 1968 adjust the cost base and reduced cost base of your Wesfarmers shares. Wesfarmers Limited (WES) - Demerger . ITAA 1997 116-20(1) Will my shares be worth less after the capital return? 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)). 51. 60. ITAA 1997 995-1(1) 60. 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. If the Wesfarmers share to which the return of capital relates was acquired by a Wesfarmers shareholder at least 12 months before the payment, a capital gain from CGT event G1 happening 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. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. Wesfarmers Chemicals, Energy and Fertilisers, People development, diversity and inclusion, Chairman and Managing Director's 2022 sustainability message, Bunnings collaborates with Indigenous artists through exclusive plant pots range, Bunnings support for flood affected communities, Bunnings launches national battery recycling programs, Bunnings expands fleet with all electric trucks, Information for participants of the Wesfarmers employee share plans. There was no dividend component as part of this capital management initiative. 81. Components of the capital return The capital return was $2.50 per share. The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. 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. Corporations Act 2001 256B As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 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. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. 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. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. dividend income share capital, Legislative References: What are the key dates for the capital return? ITAA 1997 975-300 Eligible shareholders received 1 COL share for each WES share owned. 18. The question is whether it would be concluded that a person who entered into or carried out the scheme did so for the purpose of obtaining a tax benefit for the relevant taxpayer in respect of the capital benefit. 5. The return of capital was recorded as a debit to Wesfarmers untainted share capital account. 14. 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). Each of these conditions is considered in this Ruling. ITAA 1936 45B(5)(b) Corporate Archer Materials Limited (ACN: 123 993 233) ATO Class Ruling Lot Fourteen, Frome Road, Adelaide SA 5000 ASX Announcement (ASX: AXE) 16 December 2021 Capital Return - ATO Class Ruling Published Archer Materials Limited ("Archer", the "Company", "ASX:AXE") advises that the Australian Taxation Office has published a Class Ruling (CR 2021/98) (the "Ruling") relating to the . On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). Some of the information on this website applies to a specific financial year. The cost base of the right does not include the cost base or reduced cost base of the share previously owned by you to the extent that it was applied in working out a capital gain or capital loss made when a CGT event happened to the share; for example, when you disposed of the share after the Record Date and before the Payment Date. The following tables sets out what method you can use. 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 This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . For participants in all other Australian employee share plans, the tax implications are as follows: For shares that had not reached their ESS deferred taxing point at the time of the return of capital payment (i.e. How do I provide, update or check my bank account details? This is clearly marked. 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. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 49. The high dividend payout policy is intended to be maintained following the return of capital to shareholders. The discount factor for resident individuals is one-half. 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. ITAA 1997 104-135(3) 76. ITAA 1936 45A(2) Commissioner of Taxation ITAA 1997 104-25(3) 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. 2021 and is solely responsible for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people tax relating! Was provided to Wesfarmers untainted share capital account scheme actually carried out is different! 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