36. 80. On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. 18. CGT event G1 (section 104-135 of the ITAA 1997) happens when. ITAA 1997 115-25(1) As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. 20. Commissioner of Taxation What will happen to the number of shares I hold? The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. Section 45A - streaming of dividends and capital benefits. ITAA 1997 855-30 The ATO has issued a Class Ruling CR 2018/59 for this demerger, and a copy can be obtained on the Wesfarmers website at www.wesfarmers.com.au. 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 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. TD 2000/10, Subject References: The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). 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. 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). 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. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. The converted shares will have the same date of acquisition as the original shares to which they relate. The Commissioner will not make a determination under either 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. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. 10. Wesfarmers derived a net profit after tax of $1.335 billion from the disposal of the assets, which was paid to shareholders as special dividends in April 2019 and October 2020. Components of the capital return The capital return was $2.50 per share. 66. This is due to the outflow of funds to shareholders. 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. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. 24. ITAA 1936 47 A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). ITAA 1997 855-10 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. Depending on the outcome, you may have to include some details on your 2003-04 tax return. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. 22. 56. 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). This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. 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. ITAA 1936 45C Corporations Act 2001 256B 61. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. 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. 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). This is clearly marked. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. Accordingly, section 45A has no application to the return of capital. 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. * 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 return of capital satisfies the first two conditions. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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. Each of these conditions is considered in this Ruling. What are the capital gains tax consequences for me? 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. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. ITAA 1936 45B(5)(b) For shares that had reached a taxing point (i.e. ITAA 1997 Div 110 The cost base of your right to receive each return of capital is worked out under Division 110 (modified by Division 112). 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. Wesfarmers Limited (WES) - Demerger . ITAA 1997 975-300 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. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. You received $2.50 for each share that you held on the record date. ITAA 1997 104-135(3) All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. 76. The Payment Date is anticipated to be late November to early December 2013. ITAA 1997 104-135 shares held within the Deferred Plans at the time of the return of capital payment), the cost base for each share held on behalf of employees was reduced by the return of capital amount. Will my shares be worth less after the capital return? Create your myGov account and link it to the ATO, Help and support to lodge your tax return, Occupation and industry specific income and work-related expenses, Residential rental properties and holiday homes, Instalment notices for GST and PAYG instalments, Your obligations to workers and independent contractors, Encouraging NFP participation in the tax system, Australian Charities and Not-for-profits Commission, Departing Australia Superannuation Payment, Small Business Superannuation Clearing House, Annual report and other reporting to Parliament, Complying with procurement policy and legislation, Wesfarmers Group Limited (Wesfarmers) return of capital. 28. The distribution was entirely capital in nature. How much did I receive and how was the payment made? Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. The return of capital was not eligible to participate in the DIP. 33. ITAA 1936 6(1) 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). 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). 28. Commissioner of Taxation 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. ITAA 1997 Div 230 Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). ITAA 1997 Subdiv 115-A 58. capital gains tax 20. 60. ATO references: Ruling Return of capital is not a dividend 7. There was no dividend component as part of this capital management initiative. 39. If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. This Ruling does not apply to anyone who is subject to the taxation of financial arrangements rules in Division 230 in relation to the scheme outlined in paragraphs 15 to 38 of this Ruling. The Class Ruling confirms the availability of demerger tax relief for certain Wesfarmers shareholders. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. 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 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). You will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. ITAA 1997 855-15 It states that a person is provided with a capital benefit if: 52. 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). The Commissioner will not make a determination under either | August 8, 2022 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. If you did not make a capital gain on the return of capital, there is nothing you need to include on your 2003-04 tax return regarding this CGT event. Subsection 975-300(3) of the ITAA 1997 states that an account is not a share capital account if it is tainted. 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. 8. Under the return of capital, all shareholders were treated in the same manner. 58. If, after the Record Date but before the Payment Date, you ceased to own a Wesfarmers share in respect of which the return of capital was payable, the right to receive the return of capital in respect of that share is retained by you and is a separate CGT asset from the Wesfarmers share. No capital loss can be made from CGT event G1 (Note 1 to subsection 104- 135(3)). Division 230 does not apply to individuals unless they have made an election for it to apply. A Wesfarmers shareholder will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. 51. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. ITAA 1997 104-135(4) There was no share consolidation in relation to the capital return. Foreign-resident shareholders able to disregard capital gains tax. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. Income tax: Capital management distribution: Wesfarmers Limited . ITAA 1936 45B(3) 26. The only relevant category of taxable Australian property is table item 2 of section 855-15. 45. The capital return distribution was paid on Thursday, 2 December 2021. 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. 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). ITAA 1936 45A(2) 16. This will bring the total dividend for the year to $2.1 billion. capital reductions 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. Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. 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. 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 ). 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). 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. 36. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. Australian Taxation Office (ATO) Class Ruling . 9. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). 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. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. share capital, Legislative References: The following is a detailed contents list for this Ruling: Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. 29. Since 2009, Wesfarmers has reported the following retained earnings: 17. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. CGT event C2 happened when the return of capital was made. 8 December 2021. Payments made to credit unions may take longer. The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. 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. 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). 65. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 75. The Class Ruling and further details regarding the return of capital can be accessed via the Investor Centre section of the Wesfarmers website at www.wesfarmers.com.au. ITAA 1936 45C(1) 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). Recording the capital gain on the tax return. 39. 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 1997 Div 197 The Payment Date is anticipated to be in mid to late December 2014. What are the key dates for the capital return? 72. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. return of capital on shares 57. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. ITAA 1936 45A Accordingly, the principal asset test in section 855-30 will not be satisfied. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. 31. 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