Collectively, shareholders received a total distribution of approximately $2,268million. Please find below some information and frequently asked questions in relation to the 2021capital return. 74. 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. The Record Date for the return of capital is expected to be on 15 November 2013. 8 December 2021. ITAA 1997 Div 110 16. 5. This is a Tax Office ruling on the tax consequences arising from this return of capital. The capital return was $2.50 per share. ITAA 1936 45B(2)(a) 22. The following tables sets out what method you can use. In particular: 26. The return of capital was considered and approved by shareholders at the 2021 AGM. 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. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . ITAA 1936 45B(8) ITAA 1997 104-165(3) ITAA 1997 Subdiv 115-A Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. The return of capital was announ 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). The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. Having regard to Wesfarmers strong balance sheet and cash flow generation, together with its wellestablished funding sources and robust credit metrics, the Board was of the opinion that, consistent with Wesfarmers growth strategy, Wesfarmers was able to undertake the return of capital without materially prejudicing its ability to fund new investments, or to take advantage of value accretive opportunities, if they arise. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. ITAA 1997 104-25 Some of the information on this website applies to a specific financial year. 57. 34. If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. This method was seen as the most equitable way of returning a portion of surplus capital in cash to all shareholders. The Record Date for the return of capital is expected to bein late November or early December 2014. Although a 'capital benefit' (as defined in paragraph 45A(3)(b)) will be provided to participating Wesfarmers shareholders under the return of capital, the circumstances of the return of capital indicate that there will be no streaming of capital benefits to some shareholders and dividends to other shareholders. If the scheme is not carried out as described, this Ruling cannot be relied upon. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 9. 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. ITAA 1936 45A(2) ITAA 1997 104-135(4) The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 4. This payment was: 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. The assets disposed of were Wesfarmers' interests in Wesfarmers Bengalla Pty Ltd, Wesfarmers Curragh Pty Ltd, Tyre & Auto Pty Ltd and Quadrant Energy Holdings Pty Ltd, as well as 10.1% of Wesfarmers' 15% shareholding in Coles Group Limited. 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. The Payment Date is anticipated to be in mid to late December 2014. The Commissioner will not make a determination under either subsection 45A(2) of the ITAA 1936 or paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to any part of the return of capital of $2.00 per Wesfarmers share you received on the Payment Date. 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. ITAA 1997 855-15 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 . Mark received a total of $500 (200 x $2.50) in the return of capital. The Payment Date is anticipated to be late November to early December 2013. 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. 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. 82. 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. Wesfarmers shareholders received a 200 cents per share cash distribution. ITAA 1997 104-135 The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. Shareholders are sent return of capital payment advice. ITAA 1936 47 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 term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its shareholders. Commissioner of Taxation Last date for trading in cum return of capital for shares. 44. 45. 20. 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. 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. If you made a capital gain on this CGT event, you must include it in your calculations when completing item 17 on your 2003-04 tax return (supplementary section). ITAA 1997 Div 197 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. There was no share consolidation as part of this capital management initiative and the number of Wesfarmers shares held by shareholders was not affected by the return of capital. How did the capital return work and what was the effect on the company? What are the shareholder tax implications of the capital return? 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. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). The high dividend payout policy is intended to be maintained following the return of capital to shareholders. She must use the indexed cost base method in all future events affecting these shares. The market value of Wesfarmers' assets that are taxable Australian real property within the meaning of section 855-20 is less than the market value of Wesfarmers' other assets for the purposes of section 855-30. Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. 66. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . Eligible shareholders received 1 COL share for each WES share owned. 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. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. 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. The table sets out these five categories of CGT assets: 77. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). 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 39. 19. The return of capital . The return of capital was recorded as a debit to Wesfarmers untainted share capital account. 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). 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. 14. ITAA 1997 109-5 Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. 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. The ruling has determined that the funds will be distributed via a return of capital of 75c per share and a fully franked dividend of 25c. 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). Wesfarmers' retained earnings (on a stand-alone basis) for the year ended 30 June 2021 was $697 million post-payment of the final dividend for the year. ITAA 1936 318 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). 59. 73. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. Maria purchased 1,000 Wesfarmers shares in December 1986. CGT event G1 (section 104-135 of the ITAA 1997) happens when. 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. capital gains tax ITAA 1997 116-20(1) 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. 25. : Yes. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 37. 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). 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. 2. ITAA 1936 45B(5)(b) If the return of capital is approved by shareholders at the 2013 . 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 995-1(1) 81. 11. Foreign-resident shareholders able to disregard capital gains tax. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. The following description of the scheme is based on information provided by the applicant. 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. 2. This represents a total return of approximately $579 million to Wesfarmers shareholders. 56. dividend income 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. The amount of the capital gain is equal to that excess. 21. Wesfarmers shareholders received a $1.00 per share cash distribution. Accordingly, the principal asset test in section 855-30 will not be satisfied. It is anticipated that the share consolidation will have no effect on the value of each shareholder's shares relative to the total market value of Wesfarmers. 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. Section 45A of the ITAA 1936 generally applies where: 45. 50. 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. The discount factor for resident individuals is one-half. 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. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. 20. The capital return was completed on 18 December 2003. Using this method, Maria has made no capital gain on the return of capital, so she does not have to put anything on her 2003-04 tax return to reflect this event. 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. The capital return has been approved by the shareholders. Collectively, shareholders received a total distribution of approximately $1,143 million. ITAA 1997 Div 112 How much did I receive and how was the payment made? Details of this re turn of capital are set out in paragraphs 14 to 46 of this Ruling. CGT event C2 happened when the return of capital was made. if the cost base (after any adjustment, as may be relevant, for any indexation, any previous return of capital or as a result of the Coles demerger) of a share acquired after 19 September 1985 is less than the return of capital amount (on a cents per share basis), then an immediate capital gain will arise for the difference. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. 22. ITAA 1997 104-25 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. 46. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. 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 1997 975-300(3) 10. As with dividend payments, payments of the distribution to shareholders with a registered address in Australia, New Zealand and the United Kingdom were made by way of direct credit to a financial institution in Australia, New Zealand or the United Kingdom, as applicable, (including a bank, building society or credit union account). 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). How can I calculate my return of capital payment and when will I receive this payment? Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. Expand Company Description ATO Class Ruling - return of capital to shareholders StockBot 357,511 posts about a year ago WES released this announcement to the ASX on 8 December 2021, 17:19. 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 47 As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). This Ruling applies from 1 July 2013 to 30 June 2014. 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. 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 ). Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. 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. 29. How do I provide, update or check my bank account details? 23. 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 summary in these documents and in this section is general in nature and should not be relied upon as advice. . ITAA 1997 104-135(3) 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. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. Some of the information on this website applies to a specific financial year. Income tax: Capital management distribution: Wesfarmers Limited . The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. Therefore, Wesfarmers shareholders will obtain a tax benefit from the return of capital. Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. Payments made to credit unions may take longer. 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. 20. ITAA 1997 104-135(3) 3. Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. Return of capital is not a dividend for income tax purposes. Taxation Administration Act 1953. CGT events C1-C3 - end of a CGT asset 24. Under the return of capital, all shareholders were treated in the same manner. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. The capital gain is equal to the amount of the excess. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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. The capital loss is equal to the amount of the difference (subsection 104-25(3) of the ITAA 1997). 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 you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. 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. 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. 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). 30. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 55. The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. 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. 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. ITAA 1997 104-135(4) Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. 47. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). Commissioner of Taxation 68. 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. 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