3. You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. ato class ruling wesfarmers return of capital. 6. 11. 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. The Payment Date is anticipated to be in mid to late December 2014. The ATO ruling, if 6. . Sections 45A and 45B are anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C applies to treat all or part of the return of capital to be received by Wesfarmers shareholders as an unfranked dividend. ITAA 1997 104-135 18. 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. 21. Continued strong cash flow generation and robust credit metrics enabled the return of capital to be undertaken without reducing balance sheet flexibility. 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. 74. 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). Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. Accordingly, the principal asset test in section 855-30 will not be satisfied. The following is a detailed contents list for this Ruling: NO 1-4UM8A44, Related Rulings/Determinations: 48. Foreign-resident shareholders able to disregard capital gains tax. . Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. 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). CGT event C2 happened when the return of capital was made. Components of the capital return The capital return was $2.50 per share. 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. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). 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. The Commissioner will not make a determination under either 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 . CGT event C2 (section 104-25 of the ITAA 1997) will happen when the return of capital is paid. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. Make sure you have the information for the right year before making decisions based on that information. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). 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. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. Subsection 44(1) includes in a shareholder's assessable income any dividends, as defined in subsection 6(1), paid to the shareholder out of profits derived by the company from any source (if the shareholder is a resident of Australia) and from an Australian source (if the shareholder is a non-resident of Australia). 13. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 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. 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. 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. The capital return was $2.50 per share. Section 45A of the ITAA 1936 generally applies where: 45. 62. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. TD 2000/10, Subject References: ITAA 1936 45B(8) 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). Accordingly, section 45A has no application to the return of capital. ITAA 1936 45B(2)(b) (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. 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. 4. 38. TAA 1953 Section 45A - streaming of dividends and capital benefits. ITAA 1936 45A(3)(b) Did the Dividend Investment Plan (DIP) apply? CGT events G1-G3 - shares capital reductions A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. 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. 37. 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, the Commissioner will not make a determination under subsection 45A(2) 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. 65. 21. Make sure you have the information for the right year before making decisions based on that information. 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. 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. 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 1997 855-30 14. This Ruling applies from 1 July 2013 to 30 June 2014. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). ITAA 1997 995-1(1) The return of capital will be affected by way of an equal reduction of capital under section 256B of the Corporations Act 2001 (Corporations Act), and requires shareholder approval by ordinary resolution under section 256C of the Corporations Act. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. 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. 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 ). TR 2006/10 The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. The return of capital satisfies the first two conditions. 56. 43. 16. ITAA 1997 104-135 Corporations Act 2001 256C. The Class Ruling does not apply to Wesfarmers shareholders who hold their shares on revenue account or as trading stock. Collectively, shareholders received a total distribution of approximately $1,143 million. Return of capital is not a dividend for income tax purposes. 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. The ATO has issued Class Ruling CR 2018/59 . 41. 5. A Wesfarmers shareholder's right to the payment of the return of capital is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. 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. 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. 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. Section 45B - scheme to provide capital benefits. This amount represents your capital proceeds. The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. 10. 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. 5. 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). 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. Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. Section 45A - streaming of dividends and capital benefits. 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 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. 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. 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. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. 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. 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. 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. 61. ITAA 1997 855-10 He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). 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. 75. 51. 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. A CGT event will not happen if a company converts its shares into a larger or smaller number of shares (the converted shares) in accordance with section 254H of the Corporations Act in that: While there is a change in the form of the original shares, there is no change in their beneficial ownership. The term 'taxable Australian property' is defined in the table in section 855-15 of the ITAA 1997. Under with section 112-25 of the ITAA 1997, the consolidation of Wesfarmers shares will not result in a CGT event happening where the company converts its shares in accordance with section 254H of the Corporations Act. 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. Will my shares be worth less after the capital return? 33. Maria purchased 1,000 Wesfarmers shares in December 1986. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 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. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. 58. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. The distribution was entirely capital in nature. For participants in the Australian tax exempt share plans or the loan plans the cost base for each share held on behalf of employees should be reduced by the return of capital amount. 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). 32. The new cost base for his share parcel is $2,550 ($3,050 - $500), or $12.75 per share. ITAA 1997 975-300(3) What will happen to the number of shares I hold? Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. 46. 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 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). 2. The share consolidation will occur after the return of capital to Wesfarmers shareholders, and will be applied to both the fully paid ordinary shares and the partially protected ordinary shares. ITAA 1997 Div 115 71. 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. There was no dividend component as part of this capital management initiative. ITAA 1936 45C(1) Commissioner of Taxation This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. The capital return has been approved by the shareholders. If the return of capital is approved by shareholders at the 2013 . WES Indicative Capital Return Timetable Effective Date All trading in WES ETO contracts will be on an adjusted basis effective on the ex-date, Thursday, 18 November 2021. 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). 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. 8 December 2021. Since 2009, Wesfarmers has reported the following retained earnings: 17. 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. 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. In broad terms, section 45B of the ITAA 1936 applies where: 49. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. A Wesfarmers shareholder who is a foreign resident just before CGT event C2 happens, disregards any capital gain or capital loss made when CGT event C2 happens if their right to the return of capital is not 'taxable Australian property' (section 855-10 of the ITAA 1997). Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. Some of the information on this website applies to a specific financial year. 49. ITAA 1997 Div 112 Mark received a total of $500 (200 x $2.50) in the return of capital. The return of capital was announ Corporations Act 2001 256B ITAA 1997 115-25(1) 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. Wesfarmers Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. Corporations Act 2001. 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. 13. In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. The following description of the scheme is based on information provided by the applicant. How do I provide, update or check my bank account details? Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). 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)). 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. The payment was entirely capital in nature with no dividend component. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. ITAA 1997 116-20(1) ITAA 1936 45A(2) 17. ITAA 1997 Div 197 Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 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. 20. ITAA 1997 855-20 The return of capital will be paid equally to each holder of a Wesfarmers share (being ordinary shares and partially protected ordinary shares) who is registered on the Wesfarmers share register on the Record Date. A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. ITAA 1997 Subdiv 115-A 31. 18. However, having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme was entered into or carried out for a more than incidental purpose of enabling Wesfarmers shareholders to obtain a tax benefit. ITAA 1997 104-135(3) 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. As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. 23. 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. No capital loss can be made from CGT event G1 (Note 1 to subsection 104- 135(3)). 2. Note: 76. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 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