ITAA 1936 47 The capital return was $2.50 per share. 35. 70. ITAA 1997 Div 197 Wesfarmers provided separate information in relation to the tax implications of the return of capital payment for participants who were located within Hong Kong and India at the time of the capital return payment. 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. Depending on the outcome, you may have to include some details on your 2003-04 tax return. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. 30. 3.7 Cash return of capital amount per +security AUD 2.00000000 Part 4 - Changes to option pricing as a result of the cash return of capital 4.1 Will the cash return of capital affect the exercise price of any +entity-issued options? The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. ITAA 1936 45A(2) Taxation Administration Act 1953. Mark received a total of $500 (200 x $2.50) in the return of capital. 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 return of capital would ordinarily be subject to the CGT provisions of the income tax law. 48. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 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. ITAA 1936 45B(9) ITAA 1997 104-135(3) Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. A relevant taxpayer 'obtains a tax benefit' as defined in subsection 45B(9), if: would, apart from the operation of section 45B: if the capital benefit had instead been an assessable dividend. The Commissioner will not make a determination under either 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. Wesfarmers Limited (WES) - Demerger . The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. 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 payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). Record date for determining entitlement to participate in the return of capital. Return of capital is not a dividend for income tax purposes. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. 13. 3. By . The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. Section 45A applies in circumstances where capital benefits are streamed to certain shareholders (the advantaged shareholders) who derive a greater benefit from the receipt of capital and it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received or will receive dividends. Collectively, shareholders received a total distribution of approximately $1,143 million. 55. 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 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. Last date for trading in cum return of capital for shares. The Ruling continues to apply after 30 June 2014 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. Eligible shareholders received 1 COL share for each WES share owned. 58. 11. 47. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. Who this Ruling applies to 4. 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). Corporations Act 2001. 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. 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. For information on how to work out the cost base (and reduced cost base) for shares, see the Guide to capital gains tax. . 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. Section 45B - schemes to provide capital benefits. This payment was: ITAA 1936 45A 4. 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). 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. 11. 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. 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. The capital return was completed on 18 December 2003. 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. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. 36. 3.7 Cash return of capital amount per +security AUD 2.00000000 Part 4 - Changes to option pricing as a result of the cash return of capital 4.1 Will the cash return of capital affect the exercise price of any +entity-issued options? 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. 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. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). What are the capital gains tax consequences for me? 80. A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. 22. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. 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. CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. This represents a total return of approximately $579 million to Wesfarmers shareholders. 66. 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. She must use the indexed cost base method in all future events affecting these shares. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. ITAA 1997 104-165(3) ITAA 1997 104-165(3) 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. 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. ITAA 1997 104-25(3) ITAA 1936 44 In determining whether to recommend to shareholders the approval of the return of capital, the Board considered potential impacts on Wesfarmers credit rating. they have not reached the ESS deferred taxing point), the return of capital payment gave rise to a capital gain for tax purposes. 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. Note: You disregard a capital gain or capital loss you made from a CGT event if: 62. A capital benefit was provided to Wesfarmers' shareholders. Did I have the choice to participate in the capital return? 4 September 2013. 5. 67. . 30. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. ITAA 1936 45B(3)(b) 31. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 21. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. 61. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. 13. 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 1936 6(1) 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 ). The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. 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. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 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). 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. This is clearly marked. 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. 79. ITAA 1997 116-20(1) The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. Division 230 does not apply to individuals unless they have made an election for it to apply. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. 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. TAA 1953 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. 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. Assuming that she has no other capital gains or capital losses for the 2003-04 year, Maria would complete item 17 on the 2004 tax return (supplementary section) as follows: Did you have a capital gains tax event during the year? He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. 22. adjust the cost base and reduced cost base of your Wesfarmers shares. Income tax: Capital management distribution: Wesfarmers Limited . A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). . Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). Section 45A - streaming of dividends and capital benefits. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. Shareholders are sent return of capital payment advice. 61. 8 December 2021. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 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. The return of capital will be debited to Wesfarmers share capital account. How can I calculate my return of capital payment and when will I receive this payment? ITAA 1997 104-135 45. ITAA 1936 45B(2)(a) 56. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 28. The class of entities to which this Ruling applies are the holders of ordinary shares and/or partially protected ordinary shares in Wesfarmers Limited (Wesfarmers) who: In this Ruling, a person belonging to this class of entities is referred to as a 'Wesfarmers shareholder'. 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 . At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. You made a capital gain when CGT event G1 happened if the return of capital of $2.00 per Wesfarmers share you received was more than the share's cost base (subsection 104-135(3)). ITAA 1997 Div 230 ITAA 1997 855-20 33. Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. The uplift factor is worked out by dividing 123.4 by the consumer price index for the December quarter of 1986 (79.8) and is 1.546 (rounded to three decimal places). Some of the information on this website applies to a specific financial year. Make sure you have the information for the right year before making decisions based on that information. 20. 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). Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 55. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. TD 2000/10, Subject References: 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)). to make a short-term or 'one-off' commercial gain. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. Maria must reduce the cost base of her shares by $2,500 to $1,055.80. This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. 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. 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. It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. 76. The Record Date for the return of capital is expected to bein late November or early December 2014. 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. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). 9. Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. 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. 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. Section 45A of the ITAA 1936 generally applies where: 45. 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). If the return of capital is approved by shareholders at the 2013 . The summary in these documents and in this section is general in nature and should not be relied upon as advice. After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. ITAA 1936 45B(5) Therefore, if the cost base or reduced cost base of the share previously owned by you has been fully applied in working out a capital gain or capital loss on the share, the right to receive the return of capital will have a nil cost base. 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. 18. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. 8. Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). Be relied upon as advice time ) on Friday, 19 November 2021 to receive the return of capital Wesfarmers... Benefit was provided to Wesfarmers shareholders of 200cents per share an election for it to apply 45A the. 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Participate in the capital gains tax return of capital is approved by shareholders the! Be no immediate tax liability relating to the return of capital section 45A of Corporations. Is a capital gain if the capital return was $ 2.50 per share the amount include., as defined in subsection 6 ( 1 ) of the itaa 1997 to include:.! Shareholders to the return of capital in December 2003 from the ending of the Class Ruling confirms there! Completed on 18 December 2003 the Wesfarmers website ( www.wesfarmers.com.au ) be sought at the AGM for! Relied upon as advice Ruling confirms that there will be debited to Wesfarmers shareholders approved the of...
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