ato class ruling wesfarmers return of capital

ITAA 1936 45A(3)(b) The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. ITAA 1997 975-300 In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. 54. 41. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. 10. ITAA 1936 45B As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. 26. 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 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. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. The ATO has issued Class Ruling CR 2018/59 . 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. 81. Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. The amount of the capital gain is equal to that excess. 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 Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. The return of capital was recorded as a debit to Wesfarmers untainted share capital account. : Yes. The return of capital was announ The only relevant category of taxable Australian property is table item 2 of section 855-15. 46. ITAA 1936 45A(2) 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. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. 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. ITAA 1936 45B(2)(b) CGT event C2 happened when the return of capital was made. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. 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. ITAA 1936 45C The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. 35. You received 200 cents for every share you held as a registered holder on the record date of 4:00pm (Perth time) Friday, 19 November 2021. 64. ITAA 1936 45A(2) 2. A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 22. 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). Taking into account Wesfarmers robust credit metrics and continued strong cash flows, the Board considered that the return of capital would not adversely affect Wesfarmers credit rating. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. Australian Taxation Office (ATO) Class Ruling . 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). ITAA 1997 855-20 Please find below some information and frequently asked questions in relation to the 2021capital return. By . 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 (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. If the return of capital ($0.50 per fully paid share) is not more than the cost base of the Wesfarmers share at the Payment Date, the cost base and reduced cost base of the share will be reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4) of the ITAA 1997). ITAA 1936 6(1) 55. During the years ended 30 June 2018 to 30 June 2020, Wesfarmers disposed of a number of assets and received sale proceeds totalling $4.3 billion. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 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. 43. For more information on how to work out the cost base and the reduced cost base of shares, see the Guide to capital gains tax. A CGT asset that is covered by subsection 104-165(3) (choosing to disregard a gain or loss on ceasing to be an Australian resident). To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. ITAA 1997 Div 109-A The capital return distribution was paid on Thursday, 2 December 2021. The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 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 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)). ATO Class Ruling - return of capital to shareholders. 1. ITAA 1997 Div 230 Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. In broad terms, section 45B of the ITAA 1936 applies where: 49. 49. The purpose which causes section 45B to apply may be the purpose of any party to the scheme. 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. ITAA 1936 44 . A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). 33. You calculate your capital gain using the: Indexed cost base or discount method, whichever gives you the better result*, On or after 21 September 1999 and before 15December 2002, Discount method (after applying any capital losses - including unapplied capital losses from previous years). The high dividend payout policy is intended to be maintained following the return of capital to shareholders. 67. 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. 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). The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. The capital loss is equal to the amount of the difference (subsection 104-25(3)). This amount represents your capital proceeds. 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. Division 230 does not apply to individuals unless they have made an election for it to apply. As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. This is clearly marked. 68. 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. 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). It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. She paid $2,200 ($2.20 per share) plus brokerage of $100 - making her cost base $2,300. 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. 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. 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. A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. This will bring the total dividend for the year to $2.1 billion. ATO 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)). 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. TAA 1953 13. For the purposes of Subdivision 109-A, you are considered to have acquired the right at the time when you acquired your Wesfarmers share. The question is whether it would be concluded that a person who entered into or carried out the scheme did so for the purpose of obtaining a tax benefit for the relevant taxpayer in respect of the capital benefit. How do I provide, update or check my bank account details? 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. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. CGT event G1 (section 104-135 of the ITAA 1997) happens when. 63. ITAA 1997 104-25(3) 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? Section 45A - streaming of dividends and capital benefits. Eligible shareholders received 1 COL share for each WES share owned. Foreign-resident shareholders able to disregard capital gains tax. The converted shares will have the same date of acquisition as the original shares to which they relate. CGT events C1-C3 - end of a CGT asset * If you choose to index the cost base of shares you acquired before 21September 1999, you cannot apply the CGT discount when you dispose of them. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . The return of capital was not eligible to participate in the DIP. 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 test of purpose is an objective one. ITAA 1936 45C(2) 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). Some of the information on this website applies to a specific financial year. Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. 2. ITAA 1997 104-25 The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . A return of capital would ordinarily be subject to the CGT provisions of the income tax law. 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. 2. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 9. share capital, Legislative References: 57. a CGT asset that is covered by subsection 104-165(3) of the ITAA 1997 (choosing to disregard a capital gain or capital loss on ceasing to be an Australian resident). Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. Wesfarmers has advised that, at the time CGT event G1 happens for any foreign resident Wesfarmers shareholder who is entitled to the return of capital, a Wesfarmers share will not be an indirect Australian real property interest (as defined in section 855-25 of the ITAA 1997). CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. The following tables sets out what method you can use. ITAA 1997 Div 110 The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. Other increases to share capital have been due to dividend reinvestment and employee incentives. 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. This is clearly marked. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. Each of these conditions is considered in this Ruling. 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. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. 23. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). If the return of capital is approved by shareholders at the 2013 . 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. For participants in all other Australian employee share plans, the tax implications are as follows: For shares that had not reached their ESS deferred taxing point at the time of the return of capital payment (i.e. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. ato class ruling wesfarmers return of capital. ITAA 1936 45A Last date for trading in cum return of capital for shares. 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