This amount represents your capital proceeds. 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. Copyright Act 1968 4. 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. 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 104-165(3) ITAA 1997 975-300 53. 53. 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 . 2. 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 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 return of capital was announ Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 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. 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. 4:00pm (Perth time) Friday, 19 November 2021. 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. 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. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. For your other shares - reduce the cost base and reduced cost base by $2.50 each. ITAA 1936 45B(3) The return of capital was considered and approved by shareholders at the 2021 AGM. 42. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). 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). ITAA 1936 45C(1) All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. The return of capital will be debited to Wesfarmers share capital account. This is clearly marked. ATO references: 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. ITAA 1997 Div 230 54. 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. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). 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. 21. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. ITAA 1997 977-50 Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. The payment was entirely capital in nature with no dividend component. 72. ITAA 1936 45B(8) 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. The cost base of your right to receive each return of capital is worked out under Division 110 (modified by Division 112). 14. Maria's capital gain is $200 ($2,500 - $2,300). As such, paragraph (d) of the definition of 'dividend' in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. CGT event G1 (section 104-135 of the ITAA 1997) happens when. Shares commence trading on an ex return of capital basis. The requisite purpose does not have to be the most influential or prevailing purpose but it must be more than an incidental purpose. 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. For example, if you held 1,000 shares as at the record date, you received 1,000 x $2.00 or $2,000 as the return of capital payment. CGT events G1-G3 - shares adjust the cost base and reduced cost base of your Wesfarmers shares. The test of purpose is an objective one. ITAA 1936 45B 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. 71. 57. ITAA 1997 Div 115 share capital, Legislative References: 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. 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. 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 any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. 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. 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). 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). If the return of capital is approved by shareholders at the 2013 . 64. ITAA 1936 45B(3)(b) ITAA 1997 Div 197 62. 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. 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 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. A Wesfarmers shareholder will make a capital gain if the amount of the return of capital ($0.50 per fully paid share) is more than the cost base of the Wesfarmers share (subsection 104-135(3) of the ITAA 1997). Division 230 does not apply to individuals unless they have made an election for it to apply. 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. 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. 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. 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. 64. 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. 52. 25. 16. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 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. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. 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. 13. 24. 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. 49. 21. Sections 45A and 45B are anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C applies to treat all or part of the return of capital to be received by Wesfarmers shareholders as an unfranked dividend. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 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. ITAA 1936 47 How do I provide, update or check my bank account details? The discount factor for resident individuals and trusts is one-half and for complying superannuation funds is one-third. ITAA 1997 104-135(3) Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 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. The capital return was completed on 18December 2003. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. The only relevant category of taxable Australian property is table item 2 of section 855-15. ITAA 1936 6(1) Corporations Act 2001. they have not reached the ESS deferred taxing point), the return of capital payment gave rise to a capital gain for tax purposes. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. 55. Did the Dividend Investment Plan (DIP) apply? The summary in these documents and in this section is general in nature and should not be relied upon as advice. 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. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. ITAA 1997 Div 110 If the return of capital of $2.00 per Wesfarmers share you received was not more than the cost base of the share, the Cost base / reduced cost base of each share is reduced by the amount of the return of capital (subsection 104-135(4)). Sections 45A and 45B of the ITAA 1936 are two anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C of the ITAA 1936 applies. 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). 41. In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. . The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. 31. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). 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. ITAA 1936 44 78. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. Accordingly, section 45A has no application to the return of capital. 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. Make sure you have the information for the right year before making decisions based on that information. 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. 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 converted shares will have the same date of acquisition as the original shares to which they relate. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. For those employee shareholders who hold their shares within an Australian Wesfarmers employee share plan, are tax residents of Australia, only work in Australia and hold their shares on capital account at the time the return of capital was paid, the tax implications of the return of capital are as follows: Following the payment date, Wesfarmers provided Australian participants with a statement that set out the taxation implications of the return of capital payment and where applicable information in relation to any cost base adjustments. 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). 8. Return of Capital Wesfarmers proposes to make a cash payment to shareholders of A$0.50 per ordinary share and partially protected share as a return of capital. ITAA 1936 45A(3)(b) For participants in the Australian tax exempt share plans or the loan plans the cost base for each share held on behalf of employees should be reduced by the return of capital amount. 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. This Ruling applies from 1 July 2013 to 30 June 2014. Mark purchased 200 Wesfarmers shares in December 2000. Wesfarmers Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. Ruling Return of capital is not a dividend 7. The principal asset test is passed in the case of shares in a company if the sum of the market values of the company's assets that are taxable Australian real property exceed the sum of the market values of the company's other assets. 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. 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. It states that a person is provided with a capital benefit if: 52. 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. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. The Class Ruling confirms the availability of demerger tax relief for certain Wesfarmers shareholders. 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 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. 34. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. 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. 63. ITAA 1936 45A 1. TD 2000/10, Subject References: Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. The return of capital . 7. 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. 44. Corporations Act 2001 256B What are the shareholder tax implications of the capital return? In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. 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). 45. any gain or loss you made on the shares is a capital gain or capital loss - this means that you held your shares as an investment asset. 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 return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. 43. 47. 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. Foreign-resident shareholders able to disregard capital gains tax. 3. It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. Last date for trading in cum return of capital for shares. ITAA 1997 855-10 In broad terms, section 45B of the ITAA 1936 applies where: 49. Make sure you have the information for the right year before making decisions based on that information. : Yes. Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. A capital benefit was provided to Wesfarmers' shareholders. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). ITAA 1936 45B The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. 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. Wesfarmers shareholders received a 200 cents per share cash distribution. 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). 24. 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. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 57. 20. In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. ITAA 1936 45B(2)(b) A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. 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). 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. The capital gain will be a discounted capital gain for shares allocated at least 12 months before the payment date of Thursday, 2 December 2021. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. What will happen to the number of shares I hold? 9. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. This payment was: Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 9. ITAA 1997 104-135 30. 36. 80. ITAA 1936 44(1) 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). 18. 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 Collectively, shareholders received a total distribution of approximately $1,143 million. 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. ITAA 1997 995-1(1) The high dividend payout policy is intended to be maintained following the return of capital to shareholders. Wesfarmers Limited (WES) - Demerger . CGT events C1-C3 - end of a CGT asset Some of the information on this website applies to a specific financial year. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. 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. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. 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 announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. This is clearly marked. 16. 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). 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. ITAA 1997 975-300 The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. 34. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. 26. 8. Payments made to credit unions may take longer. How can I calculate my return of capital payment and when will I receive this payment? 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Payment advice for the purposes of Part2J.Iof the corporations Act 2001 ( Cth ) penalties or interest respect. Receive this payment relating to the return of capital will be a dividend, nor included in a shareholder assessable. Maria can choose to apply either the indexation method or the discount method calculate! By Division 112 ) on 15 December 2003 return on capital payment by email or in copy..., 21 October 2021 payment was entirely capital in nature and should not be relied upon advice! Apply either the indexation method or the discount factor for resident individuals and is! 2013 to 30 June 2021, Wesfarmers ' share capital was debited to Wesfarmers ' share was... Own professional advice in relation to their tax position on 15 December 2003 ( the record )...
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