Accordingly, the Commissioner will not make a determination under subsection 45B(3) 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. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). 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). ITAA 1936 47 As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. ITAA 1997 855-30 Copyright Act 1968 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 104-135(3) 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. You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). 20. The following description of the scheme is based on information provided by the applicant. 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. Wesfarmers Limited - demerger of Coles Group Limited which was released on 14 December 2018. The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. 48. 22. 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 ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . As a result of the return of capital, you must adjust the cost base of your Wesfarmers shares. 2. 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). capital gains tax As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 49. Make sure you have the information for the right year before making decisions based on that information. You have made a capital gain if your cost base per share on the record date (15December 2003) was less than the amount you received for each share ($2.50). 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. 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. 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. ITAA 1997 116-20(1) 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. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. 8. For those shareholders who are tax residents of Australia and hold their shares on capital account at the time the return of capital is paid, no part of the return of capital should be treated as a dividend for income tax purposes. Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. Corporations Act 2001 256B 45. Some of the information on this website applies to a specific financial year. 12. 71. How can I calculate my return of capital payment and when will I receive this payment? You received $2.50 for each share that you held on the record date. If the scheme is not carried out as described, this Ruling cannot be relied upon. You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). share capital, Legislative References: 34. 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. 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. This announcement was authorised to be given to the ASX by the Wesfarmers Company Secretary. CGT event C2 happened when the return of capital was made. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). How do I provide, update or check my bank account details? ITAA 1997 104-25(3) A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. 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. 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. 36. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. Make sure you have the information for the right year before making decisions based on that information. dividend income Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. The following description of the scheme is based on information provided by the applicant. Collectively, shareholders received a total distribution of approximately $1,143 million. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. 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. A Wesfarmers shareholder cannot make a capital loss from CGT event G1 happening (subsection 104-135(3) of the ITAA 1997). It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. 60. Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. 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 1936 45B(3) 46. 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). 31. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. 60. * If you choose to index the cost base of shares you acquired before 21September 1999, you cannot apply the CGT discount when you dispose of them. Maria's capital gain is $200 ($2,500 - $2,300). ATO references: 53. 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 1997 Div 112 return of capital on shares (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. 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. How do I adjust the cost base and reduced cost base of my Wesfarmers shares? Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. This amount represents your capital proceeds. 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. 37. The cost base of a Wesfarmers shareholder's right to receive the return of capital is worked out under Division 110 of the ITAA 1997 (modified by Division 112 of the ITAA 1997). 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. Please find below some information and frequently asked questions in relation to the 2021capital return. ITAA 1997 109-5 42. 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. Division 230 does not apply to individuals unless they have made an election for it to apply. ITAA 1936 45A The converted shares will have the same date of acquisition as the original shares to which they relate. The summary in these documents and in this section is general in nature and should not be relied upon as advice. On 3 November 2003 Wesfarmers Limited announced a return of capital ('capital return'). 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. Australian Taxation Office (ATO) Class Ruling . Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . 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. The new cost base for his share parcel is $2,550 ($3,050 - $500), or $12.75 per share. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. ITAA 1936 45B(9) The capital gain is equal to the amount of the excess. ITAA 1936 318 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 payment was entirely capital in nature with no dividend component. 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