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). 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 the return of capital is approved by shareholders at the 2013 . 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. 11. Some of the information on this website applies to a specific financial year. 29. ITAA 1997 Div 110 The capital gain is equal to the amount of the excess. 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. You will make a capital gain under CGT event C2 if the capital proceeds from the ending of the right are more than the cost base of the right. 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. 35. 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. Make sure you have the information for the right year before making decisions based on that information. 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. 75. For your other shares - reduce the cost base and reduced cost base by $2.50 each. ITAA 1936 45A As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. 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. 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. TAA 1953 60. Maria must reduce the cost base of her shares by $2,500 to $1,055.80. The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. The return of capital was considered and approved by shareholders at the 2021 AGM. 25. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. The following description of the scheme is based on information provided by the applicant. ITAA 1936 44 The right to receive the payment (being an intangible CGT asset) will end by the right being discharged or satisfied when the payment is made. Did I have the choice to participate in the capital return? If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. 29. You received $2.50 for each share that you held on the record date. The summary in these documents and in this section is general in nature and should not be relied upon as advice. There was no share consolidation in relation to the capital return. The capital return on your shares is a capital gain tax event that may have resulted in a capital gain for you. It is anticipated that shareholder approval will be sought at the AGM scheduled for 7 November 2013. 81. ITAA 1936 45C(1) ITAA 1997 104-25(3) Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). 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. ITAA 1997 104-135(3) The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 2. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. CGT event G1 (section 104-135 of the ITAA 1997) happens when. What will happen to the number of shares I hold? 64. 64. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. 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. 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. The uplift factor is worked out by dividing 123.4 by the consumer price index for the December quarter of 1986 (79.8) and is 1.546 (rounded to three decimal places). Shareholders are sent return of capital payment advice. 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 distribution was entirely capital in nature. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. 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. ITAA 1997 104-135 In the event that the return of capital did represent a dividend rather than a capital benefit, it is likely that a Wesfarmers shareholder would incur a greater tax liability. ITAA 1997 115-25(1) Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. 57. 48. Under the return of capital, all shareholders were treated in the same manner. If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. Return of capital amount - $5.68 for each entitled WES share. 23. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. In working out the capital gain or capital loss made when CGT event C2 happens, the capital proceeds will be the amount of the return of capital ($0.50 per fully paid share) (subsection 116-20(1) of the ITAA 1997). ato class ruling wesfarmers return of capital. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. CGT event C2 happened when the return of capital was made. A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. ITAA 1997 855-15 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. The ATO has issued Class Ruling CR 2018/59 . 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 ). 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. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. NO 1-4UM8A44, Related Rulings/Determinations: ITAA 1997 104-135(3) All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 2. 36. 47. Wesfarmers Limited (WES) - Demerger . dividend income Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . 61. Wesfarmers shareholders received a 200 cents per share cash distribution. 25. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. By contrast, a dividend would generally be included in the assessable income of a resident shareholder or in the case of a foreign resident, be subject to dividend withholding tax under section 128B. Division 230 does not apply to individuals unless they have made an election for it to apply. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. ATO Class Ruling - return of capital to shareholders. 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. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. 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. 21. 20. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). 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. By . 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. 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. Also: No capital gain or capital loss should arise in respect to a share acquired on or before 19September 1985. 20. 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). 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. 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). 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 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). 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. Commissioner of Taxation 32. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 35. ITAA 1997 855-15 21. 17. 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). This Ruling applies from 1 July 2013 to 30 June 2014. to make a short-term or 'one-off' commercial gain. the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). Ruling Return of capital is not a dividend 7. 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. A return of capital would ordinarily be subject to the CGT provisions of the income tax law. Consequently, receipt of the capital benefit by the Wesfarmers shareholders will be a tax benefit. The capital return was completed on 18December 2003. 9. ITAA 1936 45B(2)(b) In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. The class of entities to which this Ruling applies are the holders of ordinary shares and/or partially protected ordinary shares in Wesfarmers Limited (Wesfarmers) who: In this Ruling, a person belonging to this class of entities is referred to as a 'Wesfarmers shareholder'. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. ITAA 1997 Div 110 Make sure you have the information for the right year before making decisions based on that information. ITAA 1997 975-300(3) It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. The discount factor for resident individuals is one-half. 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. 73. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. 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). Right are more than its cost base of your Wesfarmers shares must reduce the cost base is 3,555.80. Account is generally taken not to be a share acquired on or before 19September.. 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