ITAA 1997 855-15 A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. Section 45A - streaming of dividends and capital benefits. On 3 November 2021, Wesfarmers Limited (ASX Code: WES) announced the details of the $2.00 capital return. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. 56. 67. 59. 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. 57. For the purposes of paragraph 45B(2)(c), the Commissioner is required to consider the 'relevant circumstances' set out in subsection 45B(8) to determine whether any part of the scheme would be entered into for a purpose, other than an incidental purpose, of enabling a relevant taxpayer to obtain a tax benefit. 10. The retained earnings as a proportion of total equity has significantly reduced over the period from the 2005 financial year (16%) to the 2013 financial year (4%), due to the significant amount of share capital that had been raised. . 23. 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). 53. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. ITAA 1997 104-25 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: To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. However paragraph (d) of the definition of dividend specifically excludes a distribution from the meaning of 'dividend' if the amount of the distribution is debited against an amount standing to the credit of the company's share capital account. Collectively, shareholders received a total distribution of approximately $1,143 million. 38. 68. Collectively, shareholders received a total distribution of approximately $2,268million. Wesfarmers Limited (WES) - Demerger . 49. If the scheme is not carried out as described, this Ruling cannot be relied upon. Copyright Act 1968 However, the circumstances of the return of capital indicate that there was no streaming of capital benefits to some Wesfarmers' shareholders and dividends to other Wesfarmers' shareholders. Maria received a total of $2,500 (1,000 x $2.50) in the return of capital. For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. Income tax: Capital management distribution: Wesfarmers Limited . 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. Maria must reduce the cost base of her shares by $2,500 to $1,055.80. NO 1-PVCWOSF, Legislative References: 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. 1. The Payment Date is anticipated to be in mid to late December 2014. The total amount of the distribution was approximately $2,268 million and was paid on Thursday, 2December 2021. 61. Section 45B - schemes to provide capital benefits. Annual General Meeting, at which shareholders voted to approve the return of capital. ITAA 1936 47 20. 60. Accordingly, the Commissioner will not make a determination under subsection 45A(2) 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. CGT event C2 happened when the return of capital was made. The Record Date for the return of capital is expected to be on 15 November 2013. If there was any residual from the return of capital payment after the payment had been applied to your loan balance, the remaining balance was paid directly into your bank account on Thursday, 2 December 2021. 16. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. The purpose which causes section 45B to apply may be the purpose of any party to the scheme. 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. Please find below some information and frequently asked questions in relation to the 2021capital return. 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. 35. How can I calculate my return of capital payment and when will I receive this payment? 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. There was no dividend component as part of this capital management initiative. 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). 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. 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. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200 cents per share. 30. 47. ITAA 1936 45B(8) You made a capital gain when CGT event G1 happened if the return of capital of $2.00 per Wesfarmers share you received was more than the share's cost base (subsection 104-135(3)). Aussie supermarkets set to capitalise on high inflation, but softer demand ahead, WESFARMERS LIMITED : Ex-dividend day for interim dividend, Out of lockdown, Kmart pushes Australia's Wesfarmers to higher profit, Transcript : Wesfarmers Limited, H1 2023 Earnings Call, Feb 15, 2023, Wesfarmers Raises Dividend as Fiscal H1 Profit, Revenue Increase, Australian Stock Exchange - 12:10:24 2023-03-01 am EST. 73. The return of capital satisfies the first two conditions. As with dividend payments, payments of the distribution to shareholders with a registered address in Australia, New Zealand and the United Kingdom were made by way of direct credit to a financial institution in Australia, New Zealand or the United Kingdom, as applicable, (including a bank, building society or credit union account). ITAA 1997 975-300 Following the payment of the special dividends, Wesfarmers determined that $2.3 billion of the remaining balance of the proceeds from the asset disposals of approximately $2.925 billion was surplus to its capital requirements. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. 22. 16. according to an ATO ruling. 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. This will bring the total dividend for the year to $2.1 billion. 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. | August 8, 2022 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. 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. ITAA 1936 6(1) 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). (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. This Ruling applies from 1 July 2013 to 30 June 2014. The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. 34. Mark received a total of $500 (200 x $2.50) in the return of capital. For enquiries, please contact Computershare Investor Services Pty Limited on 1300 558 062 (within Australia) or (+61 3) 9415 4631. ITAA 1936 45C . As such, paragraph (d) of the definition of 'dividend' in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. 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. The return of capital constituted an equal reduction of Wesfarmers share capital for the purposes of Part2J.Iof the Corporations Act 2001 (Cth). This is clearly marked. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . ITAA 1936 45B(9) 10. CGT events G1-G3 - shares 31. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. Accordingly, the principal asset test in section 855-30 will not be satisfied. The test of purpose is an objective one. A Wesfarmers shareholder will make a capital gain if the amount of the return of capital ($0.50 per fully paid share) is more than the cost base of the Wesfarmers share (subsection 104-135(3) of the ITAA 1997). Therefore, if the full cost base or reduced cost base of a Wesfarmers share has been previously applied in working out a capital gain or capital loss made when a CGT event happened to that share, the right to receive the return of capital is likely to have a nil cost base. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. Wesfarmers shareholders received a $1.00 per share cash distribution. This represents a total return of approximately $579 million to Wesfarmers shareholders. 78. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. Commissioner of Taxation 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. No capital loss can be made from CGT event G1 (Note 1 to subsection 104- 135(3)). This amount represents your capital proceeds. Shareholders are sent return of capital payment advice. 44. 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. This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. In November 2007, Coles Group Ltd (Coles Group) was acquired pursuant to a scheme of arrangement. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. 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. 22. 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. ITAA 1997 975-300 How do I provide, update or check my bank account details? ITAA 1997 104-135(3) 5. This Ruling applies from 1 July 2021 to 30 June 2022. The principal asset test is passed in the case of shares in a company if the sum of the market values of the company's assets that are taxable Australian real property exceed the sum of the market values of the company's other assets. 59. For those employee shareholders who hold their shares within an Australian Wesfarmers employee share plan, are tax residents of Australia, only work in Australia and hold their shares on capital account at the time the return of capital was paid, the tax implications of the return of capital are as follows: Following the payment date, Wesfarmers provided Australian participants with a statement that set out the taxation implications of the return of capital payment and where applicable information in relation to any cost base adjustments. 58. ato class ruling wesfarmers return of capitalsiesta key luxury hotels on the beach ato class ruling wesfarmers return of capital. TR 2006/10 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. ITAA 1997 104-135 The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. 23. 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). ITAA 1997 855-10(1) Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 32. 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 return of capital was not eligible to participate in the DIP. The Record Date for the return of capital is expected to bein late November or early December 2014. 20. 33. 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