ato class ruling wesfarmers return of capital

All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. 45. capital gains tax 68. . 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. 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. 60. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. Note: 37. 23. 1. dividend income That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. 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. Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. 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. 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. 44. Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. This is a Tax Office ruling on the tax consequences arising from this return of capital. 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). 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). 41. ITAA 1997 104-135(4) ITAA 1997 Div 230 What will happen to the number of shares I hold? All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 82. Will my shares be worth less after the capital return? What are the capital gains tax consequences for me? 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). 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). 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). according to an ATO ruling. If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. On 3 November 2003 Wesfarmers Limited announced a return of capital ('capital return'). The return of capital was recorded as a debit to Wesfarmers untainted share capital account. This Ruling applies from 1 July 2021 to 30 June 2022. CGT event G1 happened on the Payment Date when Wesfarmers paid you the return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and continued to own at the Payment Date (section 104-135). 9. 74. 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. 11. 22. 20. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. ITAA 1997 995-1(1) The Commissioner will not make a determination under either A fact sheet on the tax consequences for Australian resident shareholders who received a return of capital on their Wesfarmers' shares. Section 45A of the ITAA 1936 generally applies where: 45. Accordingly, the principal asset test in section 855-30 will not be satisfied. Taxation Administration Act 1953. 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? This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. 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 table sets out these five categories of CGT assets: 77. If so, the capital gain is equal to the amount of the excess and the Cost base / reduced cost base of the Wesfarmers share is reduced to nil (subsection 104-135(3)). 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 capital return has been approved by the shareholders. 56. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). 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). If you have a New Zealand bank account, the exchange rate that was used to convert the Australian dollar payment into New Zealand dollars was set on the record date. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 32. Section 45A - streaming of dividends and capital benefits. 14. . If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. The return of capital will be debited to Wesfarmers share capital account. In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. 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 paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . If you provided your direct credit payment instructions by 4:00pm (Perth time) on Friday, 19November2021, the return of capital payment was made on Thursday, 2 December 2021 by direct credit to your financial institution if your registered address is in Australia, New Zealand or the UK. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. 8. This is clearly marked. Ruling Return of capital is not a dividend 7. 31. This is clearly marked. 81. 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. 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). any gain or loss you made on the shares is a capital gain or capital loss - this means that you held your shares as an investment asset. 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. ITAA 1936 45B(9) 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? 19. This payment was: The return of capital was funded by a combination of Wesfarmers' available cash balances and existing debt facilities. The return of capital was considered and approved by shareholders at the 2021 AGM. As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. The return of capital satisfies the first two conditions. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. CGT event G1 (section 104-135 of the ITAA 1997) happens when. | August 8, 2022 For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax. The return of capital was not eligible to participate in the DIP. to make a short-term or 'one-off' commercial gain. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. 64. Specifically, the provision applies where: 48. 57. share capital, Legislative References: This is due to the outflow of funds to shareholders. 53. 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