ato class ruling wesfarmers return of capital

The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. Taxation Administration Act 1953. Following the payment of the special dividends, Wesfarmers determined that $2.3 billion of the remaining balance of the proceeds from the asset disposals of approximately $2.925 billion was surplus to its capital requirements. Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. The capital return has been approved by the shareholders. ITAA 1936 318 Some of the information on this website applies to a specific financial year. 54. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. 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. 17. Commissioner of Taxation work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). 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). 59. 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. 36. Mark received a total of $500 (200 x $2.50) in the return of capital. The only relevant category of taxable Australian property is table item 2 of section 855-15. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. In particular: 26. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. 31. 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. You will make a capital gain from CGT event G1 happening if the amount of the return of capital of $2.00 per Wesfarmers share is more than the cost base of your Wesfarmers share. The return of capital will be paid equally to each holder of a Wesfarmers share who is registered on the Wesfarmers share register on the Record Date. ITAA 1997 855-30 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. Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. Taxation Administration Act 1953. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. 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. Wesfarmers Limited (WES) - Demerger . 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. ITAA 1936 45B(2)(a) Shareholders are sent return of capital payment advice. ITAA 1936 45C 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. 69. ITAA 1997 104-135(3) Return of capital amount - $5.68 for each entitled WES share. 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)). The distribution was entirely capital in nature. 70. Mark has not made a capital gain on his shares as a result of the capital return so he does not have to put anything on his 2003-04 tax return to reflect this event. 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. ITAA 1997 104-135 Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. This is due to the outflow of funds to shareholders. If the scheme is not carried out as described, this Ruling cannot be relied upon. ITAA 1997 Div 112 If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. CGT event G1 happened on the Payment Date when Wesfarmers paid you the return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and continued to own at the Payment Date (section 104-135). Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. 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. . 30. ITAA 1936 44 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. 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). At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved 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. 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 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. 37. If Maria chooses the discount method, she calculates her capital gain by subtracting her cost base from the amount she received in the return of capital. 42. ITAA 1936 45B(8) TAA 1953 ITAA 1997 116-20(1) ATO references: Make sure you have the information for the right year before making decisions based on that information. 75. The capital return distribution was paid on Thursday, 2 December 2021. ITAA 1997 Div 115 The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. The Commissioner will not make a determination under either Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. 16. Accordingly, section 45A has no application to the return of capital. Each of these conditions is considered in this Ruling. There was no dividend component as part of this capital management initiative. 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. The Class Ruling confirms the availability of demerger tax relief for certain Wesfarmers shareholders. 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. ITAA 1997 Div 197 The Record Date for the return of capital is expected to be on 15 November 2013. 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. 32. 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. 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. Accordingly, the Commissioner will not make a determination under subsection 45B(3) of the ITAA 1936 that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the return of capital. TAA 1953 Recording the capital gain on the tax return. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. Please find below some information and frequently asked questions in relation to the 2021capital return. The following description of the scheme is based on information provided by the applicant. A specific financial year component as part of this capital Management Initiative Key Dates Scenario: the held. 1953 Recording the capital return has been approved by the Wesfarmers shareholders will be no tax! To calculate your payment, multiply the number of shares held on the tax.... 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