Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). 57. 22. ITAA 1936 47 Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 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. 36. 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). 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). Collectively, shareholders received a total distribution of approximately $1,143 million. Accordingly, section 45A has no application to the return of capital. 30. 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 item 1, 2 or 5; an option or right to acquire a CGT asset covered by item 1, 2 or 3, and. ITAA 1936 45A(2) The ruling applies from 1 July 2021 to 30 June 2022. The Record Date for the return of capital is expected to be on 15 November 2013. 80. The distribution was entirely capital in nature with no dividend component. 16. 4 September 2013. 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. . 31. 19. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. 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. The capital return was completed on 18 December 2003. ITAA 1997 115-25(1) Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). 60. 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. Division 230 does not apply to individuals unless they have made an election for it to apply. 35. The only relevant category of taxable Australian property is table item 2 of section 855-15. 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. 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 Div 110 Section 45A - streaming of dividends and capital benefits. How can I calculate my return of capital payment and when will I receive this payment? 44. 29. 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. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 38. ITAA 1997 104-135(3) 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. 39. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. 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 . The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to 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. 32. Please find below some information and frequently asked questions in relation to the 2021capital return. 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. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. ITAA 1997 977-50 16. 22. 54. Return of Capital = $750 Fully Franked Dividend = $250 Units on hand after consolidation: 983 (1000 x 0.9827 - rounded to the next whole number of shares - See Point 25 in the ATO Class Ruling 2014/76 ). Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. ITAA 1936 45A(3)(b) ATO references: 44. 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). 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 assets disposed of were Wesfarmers' interests in Wesfarmers Bengalla Pty Ltd, Wesfarmers Curragh Pty Ltd, Tyre & Auto Pty Ltd and Quadrant Energy Holdings Pty Ltd, as well as 10.1% of Wesfarmers' 15% shareholding in Coles Group Limited. 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. In broad terms, section 45B of the ITAA 1936 applies where: 49. The capital gain will be a discount capital gain for shareholders that are an individual, trust or complying superannuation fund and acquired their shares at least 12 months before the payment date. After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. 3. ITAA 1997 Div 112 Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. 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. 61. 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 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. NO 1-4UM8A44, Related Rulings/Determinations: The capital return distribution was paid on Thursday, 2 December 2021. 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. This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. Income tax: Capital management distribution: Wesfarmers Limited . For each of these shares, you have made a capital gain of: For shares with a cost base equal to or greater than $2.50, you have made no capital gain as a result of the return of capital. 55. 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. 65. 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(3)(b) The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . The capital return was $2.50 per share. 81. 'Share capital account' is defined in section 975-300 of the ITAA 1997 as an account which the company keeps of its share capital, or any other account created after 1 July 1998 where the first amount credited to the account was an amount of share capital. 18. The distribution comprised a return of capital of 75 cents per share and a fully-franked dividend of 25 cents per share. Each of these conditions is considered in this Ruling. Mark purchased 200 Wesfarmers shares in December 2000. 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). The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. Return of capital is not a dividend for income tax purposes. 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. 79. 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. 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. 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 payment was entirely capital in nature with no dividend component. It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. Commissioner of Taxation 10. 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. Foreign-resident shareholders able to disregard capital gains tax. ITAA 1997 104-25 A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. 26. 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. How much did I receive and how was the payment made? In particular: 26. 7. 36. Collectively, shareholders received a total distribution of approximately $2,268million. 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 104-165(3) TD 2000/10, Subject References: return of capital on shares A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. 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). ITAA 1936 45A(2) 49. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 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). 78. 59. ITAA 1997 995-1(1) There was no share consolidation in relation to the capital return. Make sure you have the information for the right year before making decisions based on that information. This is clearly marked. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. 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. 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). 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. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). 68. 24. Under the return of capital, all shareholders were treated in the same manner. 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). A Wesfarmers shareholder who is a foreign resident or the trustee of a foreign-resident trust for capital gains tax (CGT) purposes, and received the return of capital, can disregard any capital gain made if CGT event G1 happened or disregard any capital gain or capital loss if CGT event C2 happened under section 855-10, provided also that your Wesfarmers share or your right to receive the return of capital on the Wesfarmers shares: 15. 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. 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 Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 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. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. Wesfarmers operates a diverse business which covers home improvement, office supplies, department stores and an industrials division with businesses in chemicals, energy and fertilisers, and industrial and safety products. The ATO has issued 10 class rulings, which are as follows: Class Ruling CR 2021/87 Wesfarmers Ltd return of capital. 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. 11. TAA 1953 This payment was: A CGT event happened on 18 December 2003, when Wesfarmers made a capital return on the shares that you held in the company. 3. 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