29. dividend income 21. 53. 1. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. 35. 65. The purpose which causes section 45B to apply may be the purpose of any party to the scheme. 60. ato class ruling wesfarmers return of capital. Will my shares be worth less after the capital return? 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. This Ruling applies from 1 July 2021 to 30 June 2022. Our diverse business operations cover: home improvement and outdoor living; apparel and general merchandise; office supplies;health, beauty and wellbeing; and an Industrials division with businesses in chemicals, energy and fertilisers, and industrial and safety products. The payment was entirely capital in nature with no dividend component. 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 return of capital would ordinarily be subject to the CGT provisions of the income tax law. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 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. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. ITAA 1936 45A The return of capital will be paid equally to each holder of a Wesfarmers share who is registered on the Wesfarmers share register on the Record Date. Wesfarmers raised the following equity to reduce debt and provide balance sheet flexibility: 12. 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 ruling, if In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. 54. 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. On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. Maria must reduce the cost base of her shares by $2,500 to $1,055.80. 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. 49. The capital return was $2.50 per share. 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. Having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme is proposed to be entered into for a more than incidental purpose of enabling a taxpayer to obtain a tax benefit. 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. A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. 15. 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. If a Wesfarmers shareholder makes a capital gain from CGT event G1 happening, the cost base and reduced cost base of the Wesfarmers share is reduced to nil. The Record Date for the return of capital is expected to be on 15 November 2013. Some of the information on this website applies to a specific financial year. 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. TAA 1953 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 arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. 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. 40. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. The high dividend payout policy is intended to be maintained following the return of capital to shareholders. 45. 54. 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. The summary in these documents and in this section is general in nature and should not be relied upon as advice. ITAA 1997 Div 230 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. 33. 62. Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. ITAA 1997 Div 197 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. 48. 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. 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. 68. How do I adjust the cost base and reduced cost base of my Wesfarmers shares? 42. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. For your other shares - reduce the cost base and reduced cost base by $2.50 each. ITAA 1997 855-15 There was no share consolidation in relation to the capital return. 23. The only relevant category of taxable Australian property is table item 2 of section 855-15. The Class Ruling confirms the availability of demerger tax relief for certain Wesfarmers shareholders. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . adjust the cost base and reduced cost base of your Wesfarmers shares. Specifically, the provision applies where: 48. 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). 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. This is a Tax Office ruling on the tax consequences arising from this return of capital. This payment was: 25. Therefore, a Wesfarmers shareholder who is a foreign resident or the trustee of a foreign-resident trust for CGT purposes, and who received the return of capital, can disregard any capital gain made if CGT event G1 happened or disregard any capital gain or capital loss if CGT event C2 happened, provided also that your Wesfarmers share or your right to receive the return of capital on the Wesfarmers shares: 67. Copyright Act 1968 Wesfarmers has advised the total market value of its assets that are not taxable Australian real property is greater than the market value of its taxable Australian real property assets. 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. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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 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). ITAA 1936 45A(3)(b) Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. At 30 June 2007, Wesfarmers' share capital was $2,256 million, with retained earnings of $1,131 million (effectively $588 million after the final 2007 dividend of $543 million). 32. 72. 65. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). 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. to make a short-term or 'one-off' commercial gain. This is clearly marked. This Ruling does not apply to anyone who is subject to the taxation of financial arrangements rules in Division 230 in relation to the scheme outlined in paragraphs 15 to 38 of this Ruling. The payment was entirely capital in nature with no dividend component a capital gain on - reduce their cost of! 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