Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. 24. Accordingly, section 45A has no application to the return of capital. The Ruling continues to apply after 30 June 2014 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. The amount of the capital gain is equal to that excess. 4:00pm (Perth time) Friday, 19 November 2021. 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 1936 45C(2) Since 2009, Wesfarmers has reported the following retained earnings: 17. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). 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. The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. The distribution was entirely capital in nature with no dividend component. 9. The Class The Commissioner will not make a determination under either 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). 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 1936 45C(1) 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. 76. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. ITAA 1936 45A 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. 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. This Ruling applies from 1 July 2021 to 30 June 2022. 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. 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 ATO has issued Class Ruling CR 2018/59 . 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. 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 following description of the scheme is based on information provided by the applicant. 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. ITAA 1997 104-135(4) The Payment Date is anticipated to be late November to early December 2013. 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. ITAA 1936 47 ITAA 1936 45B(2)(b) 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? TAA 1953 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. 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. Did I have the choice to participate in the capital return? Who this Ruling applies to 4. 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). It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. 58. Australian Taxation Office for the Commonwealth of Australia. 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. A Wesfarmers share is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. 34. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. The phrase 'provided with a capital benefit' is defined in subsection 45B(5). 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. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. 43. 39. ITAA 1997 109-5 NO 1-4UM8A44, Related Rulings/Determinations: As a result, you will, in those circumstances, make a capital gain equal to the capital proceeds, being $2.00 per Wesfarmers share owned at the Record Date. 67. 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. ITAA 1997 855-30 ITAA 1997 Div 197 Wesfarmers primary objective is to deliver satisfactory returns to shareholders through financial discipline and strong management of a diversified portfolio of businesses. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). As Wesfarmers has a high dividend payout ratio and distributes, where possible, available franking credits, a return of capital was seen as the most efficient distribution of capital to shareholders. 15. 11. 49. 20. This Ruling applies from 1 July 2013 to 30 June 2014. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. 22. Corporations Act 2001. 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. Foreign-resident shareholders able to disregard capital gains tax. 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). ITAA 1936 45B(5) The discount factor for resident individuals and trusts is one-half and for complying superannuation funds is one-third. 47. 7. 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. 29. How much did I receive and how was the payment made? Australian Taxation Office (ATO) Class Ruling . This is clearly marked. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). ITAA 1936 45B(2)(a) 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. Section 45A of the ITAA 1936 generally applies where: 45. 42. 20. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). 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. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). ITAA 1997 975-300(3) 51. 61. ITAA 1997 855-20 The following is a detailed contents list for this Ruling: This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . 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. 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 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. 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. 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