The capital loss is equal to the amount of the difference (subsection 104-25(3)). 47. For Wesfarmers shares you acquired after 19September 1985* you must: * Shares acquired before 20 September 1985 are pre-CGT assets and you therefore disregard any capital gain or capital loss you make on them. 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. The converted shares will have the same date of acquisition as the original shares to which they relate. ITAA 1936 45A This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. Australian Taxation Office (ATO) Class Ruling . Accordingly, if the Wesfarmers share was acquired by the Wesfarmers shareholder at least 12 months before the return of capital was paid, a capital gain from CGT event C2 happening on the ending of the corresponding right may qualify as a discount capital gain under subsection 115-25(1) of the ITAA 1997, provided the other conditions in Division 115 of the ITAA 1997 are satisfied. 34. 55. ITAA 1936 6(1) 36. A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. The summary in these documents and in this section is general in nature and should not be relied upon as advice. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. CGT event G1 happened when Wesfarmers made the return of capital to you in respect of Wesfarmers shares you owned at the Record Date and continued to own at the Payment Date (section 104-135). Ruling Return of capital is not a dividend 7. ITAA 1936 45B(9) ITAA 1997 995-1(1) 53. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 3. If the return of capital is approved by shareholders at the 2013 . 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. 60. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. The Commissioner will not make a determination under either 41. Maria must reduce the cost base of her shares by $2,500 to $1,055.80. In broad terms, section 45B of the ITAA 1936 applies where: 49. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid 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. 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. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. 22. 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). 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. ATO references: Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). ITAA 1936 45A(3)(b) ITAA 1997 995-1(1) 40. ITAA 1936 44 Accordingly, the principal asset test in section 855-30 will not be satisfied. 43. 70. . Sections 45A, 45B and 45C of the ITAA 1936 do not apply. Some of the information on this website applies to a specific financial year. . Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. All Wesfarmers shareholders on 15 December 2003 (the record date) received 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. 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). 15. 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. 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. You 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. NO 1-4UM8A44, Related Rulings/Determinations: The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. Return of capital amount - $5.68 for each entitled WES share. 12. ITAA 1997 104-135 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. You can treat a capital gain made when CGT event G1 or CGT event C2 happened as a discount capital gain if you acquired your Wesfarmers shares 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 announced on 27 August 2021 and was approved by shareholders at the Wesfarmers Annual General Meeting on 21 October 2021. 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)). 2. 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). 67. This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. This represents a total return of approximately $579 million to Wesfarmers shareholders. 20. 35. Note: ITAA 1936 45A If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. The capital return was completed on 18December 2003. 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. In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. 38. 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. 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. 4. Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. ITAA 1997 Div 112 No capital loss can be made from CGT event G1 (Note 1 to subsection 104- 135(3)). CGT event C2 in section 104-25 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 but which they cease to own before the Payment Date. 58. Therefore, Wesfarmers shareholders will obtain a tax benefit from the return of capital. 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. 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. Corporations Act 2001. 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. 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. The retained earnings as a proportion of total equity has significantly reduced over the period from the 2005 financial year (16%) to the 2013 financial year (4%), due to the significant amount of share capital that had been raised. The following description of the scheme is based on information provided by the applicant. Shares in Wesfarmers will be 'an indirect Australian real property interest' if (among other things) they pass the principal asset test in section 855-30. ITAA 1936 45B . 1. ITAA 1997 Div 230 TAA 1953 The capital return was $2.50 per share. 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). If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. The Record Date for the return of capital is expected to bein late November or early December 2014. 54. 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. 68. 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. Section 45A - streaming of dividends and capital benefits. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. The following is a detailed contents list for this Ruling: 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 . The discount factor for resident individuals and trusts is one-half and for complying superannuation funds is one-third. ITAA 1997 116-20(1) 45. TAA 1953 39. CGT event C2 happened to your right to receive the return of capital on the Payment Date when Wesfarmers paid you a return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and ceased to own before the Payment Date (section 104-25). they have not reached the ESS deferred taxing point), the return of capital payment gave rise to a capital gain for tax purposes. 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. What will happen to the number of shares I hold? 65. Income tax: Capital management distribution: Wesfarmers Limited . 31. 42. ITAA 1936 45B(8) 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. 5. Mark purchased 200 Wesfarmers shares in December 2000. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. Depending on the outcome, you may have to include some details on your 2003-04 tax return. 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). As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. Some of the information on this website applies to a specific financial year. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. 13. 46. As with dividend payments, payments of the distribution to shareholders with a registered address in Australia, New Zealand and the United Kingdom were made by way of direct credit to a financial institution in Australia, New Zealand or the United Kingdom, as applicable, (including a bank, building society or credit union account). 43. ITAA 1936 45B(3)(b) We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. Foreign-resident shareholders able to disregard capital gains tax. 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. 51. 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. 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). Since 2009, the dividend payout of Wesfarmers has been as follows: 14. By . All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. 3. | August 8, 2022 44. 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