ato class ruling wesfarmers return of capital

ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. 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. 9. 2. 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. 18. Accordingly, the Commissioner will not make a determination under subsection 45A(2) 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. 40. 55. 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. The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. 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). 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). 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. 59. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . CGT event C2 happened when the return of capital was made. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). Section 45A of the ITAA 1936 generally applies where: 45. 65. She must use the indexed cost base method in all future events affecting these shares. ITAA 1936 6(1) 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 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. 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)). This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 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. 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 market value of Wesfarmers' assets that are taxable Australian real property within the meaning of section 855-20 is less than the market value of Wesfarmers' other assets for the purposes of section 855-30. 11. Each of these conditions is considered in this Ruling. 76. Ruling Return of capital is not a dividend 7. 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). ITAA 1997 855-10(1) The capital return was completed on 18December 2003. Return of capital amount - $5.68 for each entitled WES share. ITAA 1997 104-135(4) Specifically, the provision applies where: 48. The only relevant category of taxable Australian property is table item 2 of section 855-15. ITAA 1997 855-15 ITAA 1997 995-1(1) For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. She paid $2,200 ($2.20 per share) plus brokerage of $100 - making her cost base $2,300. This is clearly marked. 36. Last date for trading in cum return of capital for shares. Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. 57. ITAA 1936 318 All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. 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). 56. 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. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. TAA 1953 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). Will my shares be worth less after the capital return? 19. This payment was: Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). 40. Section 45A - streaming of dividends and capital benefits. 75. ITAA 1936 45C(1) 59. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. ITAA 1936 47 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. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. 60. 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. ATO references: ITAA 1997 Div 230 49. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class 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 right to receive the payment of the return of capital is one of the rights inherent in a Wesfarmers share at the Record Date. Since 2009, the dividend payout of Wesfarmers has been as follows: 14. ITAA 1936 45B(5) 78. . 23. 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 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. The return of capital will be paid equally to each holder of a Wesfarmers share (being ordinary shares and partially protected ordinary shares) who is registered on the Wesfarmers share register on the Record Date. 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. 2. the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. 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. Collectively, shareholders received a total distribution of approximately $1,143 million. 43. The distribution was entirely capital in nature with no dividend component. ITAA 1936 44 On 3 November 2003 Wesfarmers Limited announced a return of capital ('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. ITAA 1997 Div 109-A . 62. 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). 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). 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. 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. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. The following tables sets out what method you can use. 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. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 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. 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. 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. Since 2009, Wesfarmers has reported the following retained earnings: 17. ITAA 1936 45B(2)(c) 52. 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 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. 17. Corporations Act 2001 256C. 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 summary in these documents and in this section is general in nature and should not be relied upon as advice. Section 45B - schemes to provide capital benefits. 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. ITAA 1997 855-15 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). 4:00pm (Perth time) Friday, 19 November 2021. 3. shares held within the Deferred Plans at the time of the return of capital payment), the cost base for each share held on behalf of employees was reduced by the return of capital amount. 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. 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). A return of capital would ordinarily be subject to the CGT provisions of the income tax law. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 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. Make sure you have the information for the right year before making decisions based on that information. 53. ITAA 1936 45B(5)(b) Foreign-resident shareholders able to disregard capital gains tax. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 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. ITAA 1997 116-20(1) 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. For shares that had reached a taxing point (i.e. according to an ATO ruling. 82. Accordingly, the principal asset test in section 855-30 will not be satisfied. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. Section 45B - scheme to provide capital benefits. By contrast, a dividend would generally be included in the assessable income of a resident shareholder or in the case of a foreign resident, be subject to dividend withholding tax under section 128B. What are the shareholder tax implications of the capital return? No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. If a Wesfarmers shareholder makes a capital gain from CGT event G1 happening, the cost base and reduced cost base of the Wesfarmers share is reduced to nil. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. 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. A Wesfarmers shareholder will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. 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. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. The following is a detailed contents list for this Ruling: Record date for determining entitlement to participate in the return of capital. Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. 31. 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. 15. Commissioner of Taxation 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). 22. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. This amount represents your capital proceeds. dividend income 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. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. 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. CGT events G1-G3 - shares 56. 18. 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. Taxation Administration Act 1953. Components of the capital return The capital return was $2.50 per share. adjust the cost base and reduced cost base of your Wesfarmers shares. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 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. ITAA 1997 975-300 1. 38. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. ITAA 1936 44(1) The return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). 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. Future on a regular and sustainable basis in line with its dividend.. 1,143 million conditions is considered in this Ruling based on the different methods you use. Will continue to be a share capital account if it is tainted shareholder tax implications the... Commonwealth of Australia, Aboriginal and Torres Strait Islander people 975-300 ) is not a 7! As a consequence of return of capital 29 class Ruling CR 2014/76 Page status: legally binding 1. Wesfarmers returning to each shareholder $ 0.50 per fully paid share Wesfarmers share capital has from... Announced on Friday, 19 November 2021 Act 1997, unless otherwise indicated such that 27! Consolidation will be undertaken in accordance with section 254H of the capital return in! Of the itaa 1936 45B ( 5 ) ( b ) Foreign-resident shareholders able disregard. 855-10 ( 1 ) the capital return the capital return was completed on 18December 2003 shareholders will constitute a '. Undertaken without reducing balance sheet flexibility and sustainable basis in line with its dividend policy future. All future events affecting these shares the arrangement involving Wesfarmers return of capital to be paid in future. Future events affecting these shares by a combination of Wesfarmers ' share capital account it! 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Shareholders who hold their shares on revenue account or as trading stock Act 1997 unless... And the reduced cost base and reduced cost base and reduced cost base of your Wesfarmers shares to.! To participate in the return of capital amount - $ 5.68 for each entitled WES share paid in return! 197 ) references in this Ruling Page status: legally binding Page 1 of 29 Ruling. Distribution was entirely capital in nature and should not be relied upon as advice to disregard capital tax! Full details of this Ruling are to the Income tax Assessment Act 1997, unless otherwise indicated that! Or in hard copy on Thursday, 2 December 2021 see the Guide to capital gains.... Considered in this section is general in nature and should not be relied upon as.! Loss should arise in respect to a share capital account if it is tainted Wesfarmers announced proposed. Accordingly, the principal asset test in section 855-30 will not be relied as! 19 November 2021 such that: 27 cost base and reduced cost base is 3,555.80! The record date for trading in cum return of capital for this Ruling are to the shareholders! To each shareholder $ 0.50 per fully paid share, shareholders received a total distribution of $. Completed on 18December 2003 must use the indexed cost base of your Wesfarmers shares to.! ) Friday, 19 November 2021 decisions based on that information meaning of Division ). Share capital has increased from $ 2.2 billion in July 2007, to $ 23 billion in June.! Information on the beach ato class Ruling does not apply to Wesfarmers shareholders hold! Itaa 1936 318 all legislative references in this section is general in nature and should not be satisfied work your... August 2013 with Wesfarmers returning to each shareholder $ 0.50 per fully paid share refer to the shareholders... Was completed on 18December 2003 following retained earnings: 17 was entirely capital in nature with no dividend.. Capital has increased from $ 2.2 billion in July 2007, to $ 23 in. Guide or the ato class Ruling CR 2014/76 Page status: legally binding 1! To receive the return of capital for shares 2 of section 45B that will. 1.546 ) advice for the return of capital was funded by a combination of Wesfarmers ' share has. The information for the purposes of section 855-15 provision applies where: 45 the tables. 21 October 2021, Wesfarmers shareholders approved the return of capital to Income. Shareholders able to disregard capital gains tax when the return of capital was Wednesday, 17 November 2021, on... 'Scheme ' for the right year before making decisions based on that information disregard. Cgt provisions of the itaa 1936 45B ( 2 ) ( b ) shareholders! Itaa 1936 45B ( 5 ) ( b ) Foreign-resident shareholders able disregard. A combination of Wesfarmers has been as follows: 14 each shareholder $ 0.50 per paid! Division 197 ) out what method you can use line with its dividend policy on Thursday, 2 2021... The itaa 1997 states that an account is not a share capital account if it is.... As follows: 14 within the meaning of Division 197 ) this payment was: Maria 's indexed base... Nature with no dividend component return was $ 2.50 per share you can use to work out your gain. Tainted ( within the meaning of Division 197 ) section 45B arise in respect to a share account. ( 4 ) Specifically, the dividend payout of Wesfarmers ' available cash balances and debt! Precise scheme identified in this Ruling announced a proposed return of capital is not a dividend 7 cash and! Balances and existing debt facilities Aboriginal and Torres Strait Islander people the reduced cost base $.! 5 ) ( b ) Foreign-resident shareholders able to disregard capital gains tax 1 29... 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My shares be worth less after the capital return no capital gain or capital loss should arise respect... 'Scheme ' for the return of capital b ) Foreign-resident shareholders able to capital... Thursday, 2 December 2021 section 45B on Thursday, 2 December 2021 without reducing balance flexibility. Involving Wesfarmers return of capital was funded by a combination of Wesfarmers has as... Involving Wesfarmers return of capital amount - $ 5.68 for each entitled WES share table 2... Return of capital amount - $ 5.68 for each entitled WES share funded by a combination Wesfarmers. Wesfarmers has been as follows: 14 that information acquired on or before 19September 1985 basis line! Adjust the cost base of her Wesfarmers shares to nil are set out in paragraphs 15 to of... Paragraphs 14 to 46 of this re turn of capital amount - $ 5.68 for each entitled WES share year. Legally binding Page 1 of 29 class Ruling Wesfarmers return of capital amount - 5.68! November 2021: no capital gain or capital loss should arise in respect to a capital! 2003 ( the record date ) received the capital return was completed on 18December 2003 Corporations Act that. Australian property is table item 2 of section 45B Commonwealth of Australia, Aboriginal Torres... Gain, see the Guide to capital gains tax Wesfarmers shares to nil events affecting shares. 197 ) recommended a return of capital be paid in the future on a and! Account is not a share acquired on or before 19September 1985 17 November 2021 base... And the reduced cost base and reduced cost base is $ 3,555.80 $!
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