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. As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. 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. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. 34. 44. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. Make sure you have the information for the right year before making decisions based on that information. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 43. 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. CGT events C1-C3 - end of a CGT asset In working out the capital gain or capital loss when CGT event C2 happens, the capital proceeds are equal to the amount of the return of capital ($2.00 per Wesfarmers share) (subsection 116-20(1)). Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 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? ato class ruling wesfarmers return of capital. 25. ITAA 1936 45B(3) 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). 21. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. 64. * 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. 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 45C 15. 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. ITAA 1936 47 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. 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 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. ITAA 1997 Div 230 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. 34. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. 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. 2. For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). 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). Wesfarmers Limited (WES) - Demerger . 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. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 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. 11. 59. 8. Corporations Act 2001 256C. The return of capital was not eligible to participate in the DIP. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. The capital return has been approved by the shareholders. Shares commence trading on an ex return of capital basis. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. ITAA 1997 855-30 . Last date for trading in cum return of capital for shares. This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. 24. Return of capital amount - $5.68 for each entitled WES share. dividend income ITAA 1997 Div 110 ITAA 1997 104-25(3) 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. 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. How do I adjust the cost base and reduced cost base of my Wesfarmers shares? Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 36. 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. 78. Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. 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 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. Australian Taxation Office (ATO) Class Ruling . As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. 48. This will bring the total dividend for the year to $2.1 billion. 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. Copyright Act 1968 The return of capital was recorded as a debit to Wesfarmers untainted share capital account. 39. 79. 20. ITAA 1936 6(1) 5. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. This is clearly marked. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. 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. Taxation Administration Act 1953. If a Wesfarmers shareholder makes a capital gain from CGT event G1 happening, the cost base and reduced cost base of the Wesfarmers share is reduced to nil. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). The cost base of your right to receive each return of capital is worked out under Division 110 (modified by Division 112). 58. Depending on the outcome, you may have to include some details on your 2003-04 tax return. ITAA 1997 855-10 Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 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. If you have a New Zealand bank account, the exchange rate that was used to convert the Australian dollar payment into New Zealand dollars was set on the record date. 18. 24. ITAA 1997 975-300(3) If you provided your direct credit payment instructions by 4:00pm (Perth time) on Friday, 19November2021, the return of capital payment was made on Thursday, 2 December 2021 by direct credit to your financial institution if your registered address is in Australia, New Zealand or the UK. This is clearly marked. 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? ITAA 1936 45B(2)(c) 58. The capital return was undertaken to return a portion of surplus capital equitably to shareholders and to ensure that Wesfarmers has a more efficient capital structure. 35. 53. 43. 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. Accordingly, section 45A has no application to the return of capital. 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. It states that a person is provided with a capital benefit if: 52. 1. 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. Maria must reduce the cost base of her shares by $2,500 to $1,055.80. What will happen to the number of shares I hold? Wesfarmers' return of capital will be recorded as a debit to the share capital account and Wesfarmers shareholders will receive a distribution of share capital to the value of $0.50 per share. 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). Foreign-resident shareholders able to disregard capital gains tax. capital gains tax The distribution was entirely capital in nature with no dividend component. 41. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. Please find below some information and frequently asked questions in relation to the 2021capital return. Wesfarmers has consistently maintained a high dividend payout ratio, with an average payout ratio of approximately 90% since 2009, and has also paid special dividends where it has disposed of assets. 67. Taxation Administration Act 1953. 75. Each of these conditions is considered in this Ruling. The summary in these documents and in this section is general in nature and should not be relied upon as advice. A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. The return of capital will be debited to Wesfarmers share capital account. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. 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. 71. ITAA 1936 45B(5) The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. 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. 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. 46. 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. 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. 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. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. 74. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. 37. The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). 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