At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. Some of the information on this website applies to a specific financial year. 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). 54. The capital return was completed on 18 December 2003. For those employee shareholders who hold their shares within a New Zealand Wesfarmers employee share plan, are tax residents of New Zealand and only work in New Zealand, it is expected the return of capital payment will be treated as dividend income. Therefore, if the cost base or reduced cost base of the share previously owned by you has been fully applied in working out a capital gain or capital loss on the share, the right to receive the return of capital will have a nil cost base. ITAA 1936 45B(3)(b) 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. 56. The cost base of your right to receive each return of capital is worked out under Division 110 (modified by Division 112). Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. 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. 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)). What are the shareholder tax implications of the capital return? 67. In particular: 26. ITAA 1997 855-10(1) ITAA 1936 45B(2)(c) Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. CGT events C1-C3 - end of a CGT asset The distribution was entirely capital in nature with no dividend component. ITAA 1936 45A 62. Wesfarmers' share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). This Ruling applies from 1 July 2013 to 30 June 2014. 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. Ruling Return of capital is not a dividend 7. 51. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. You will make a capital gain under CGT event C2 if the capital proceeds from the ending of the right are more than the cost base of the right. capital reductions The Commissioner will not make a determination under either Section 45A - streaming of dividends and capital benefits. 25. Corporations Act 2001 256B 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)). The converted shares will have the same date of acquisition as the original shares to which they relate. 25. The capital gain will be a discounted capital gain for shares allocated at least 12 months before the payment date of Thursday, 2 December 2021. 9. To be eligible to receive the return of capital, you needed to be a registered shareholder on the record date for determining entitlements, which was 4.00pm (Perth time) on Friday, 19 November 2021. 39. The following is a detailed contents list for this Ruling: ITAA 1997 104-165(3) 6. 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. 80. 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. What was the capital return?Wesfarmers made a cash payment to shareholders of 200cents per share (or approximately $2,268 million in total). Wesfarmers shareholders received a 200 cents per share cash distribution. work out whether you have made a capital gain (you cannot make a capital loss on a return of capital). After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. ITAA 1997 Div 230 25. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers shareholders. 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. 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). 16. 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. 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. 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. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. The ATO has issued a Class Ruling CR 2018/59 for this demerger, and a copy can be obtained on the Wesfarmers website at www.wesfarmers.com.au. 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. 4:00pm (Perth time) Friday, 19 November 2021. Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. 8. The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). 50. Wesfarmers expects that dividends will continue to be paid in the future on a regular and sustainable basis in line with its dividend policy. 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. Specifically, the provision applies where: 48. Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. 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. 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). The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. 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. 20. ITAA 1997 Div 197 ITAA 1936 6(1) The summary in these documents and in this section is general in nature and should not be relied upon as advice. Under with section 112-25 of the ITAA 1997, the consolidation of Wesfarmers shares will not result in a CGT event happening where the company converts its shares in accordance with section 254H of the Corporations Act. There was no share consolidation as part of this capital management initiative and the number of Wesfarmers shares held by shareholders was not affected by the return of capital. Ruling Return of capital is not a dividend 7. The Commissioner will not make a determination under section 45A or 45B that section 45C applies to the return of capital. 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. The right to receive the return of capital, being an intangible asset, ended by the right being discharged or satisfied when the return of capital was made (section 104-25). sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. ITAA 1997 995-1(1) 78. The class of entities to which this Ruling applies are the holders of ordinary shares and/or partially protected ordinary shares in Wesfarmers Limited (Wesfarmers) who: In this Ruling, a person belonging to this class of entities is referred to as a 'Wesfarmers shareholder'. There was no share consolidation in relation to the capital return. Return of Capital = $750 Fully Franked Dividend = $250 Units on hand after consolidation: 983 (1000 x 0.9827 - rounded to the next whole number of shares - See Point 25 in the ATO Class Ruling 2014/76 ). 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). Depending on the outcome, you may have to include some details on your 2003-04 tax return. Return of Capital Wesfarmers proposes to make a cash payment to shareholders of A$0.50 per ordinary share and partially protected share as a return of capital. 20. 10. 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). Please find below some information and frequently asked questions in relation to the 2021capital return. Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited, Personal investors guide to capital gains tax, Aboriginal and Torres Strait Islander people, you are an Australian resident for tax purposes, you held shares in Wesfarmers and received the return of capital in December2003, you did not acquire your shares under an employee share scheme, and. ITAA 1997 Div 112 7. capital gains tax As at 30 June 2021, Wesfarmers' share capital was $15.818 billion. 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. 65. 72. Corporations Act 2001 256C. ITAA 1997 104-25(3) Shares commence trading on an ex return of capital basis. If you participated in the Loan Plans the payment for these shares was applied to each outstanding loan balance. The right to receive the payment of the return of capital is one of the rights inherent in a Wesfarmers share at the Record Date. ITAA 1936 44(1) the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). 3. 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. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). Wesfarmers has paid franked dividends to its shareholders to the maximum extent available based on its franking account balance. ITAA 1936 45B(9) 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. However, paragraph (d) of the definition of dividend 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. 16. 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. You 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. 69. 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. 43. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. 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. By . Bunnings Limited shareholders offered $11.20 for each Bunnings share or $25.80 plus 2 Wesfarmers shares plus 1 Wesfarmers option ($12.50) for every 4 Bunnings shares 6 Nov 1989 Renounceable rights offer - 1 for 7 at a price of $4.25 per share 13 Jan 1989 Share split - each $1.00 share split into 2 x 50 cent shares 22 Apr 1987 The return of capital demonstrated Wesfarmers' commitment to efficient capital management and its focus on providing a satisfactory return to all shareholders. Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. 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. 21. 35. 3. 44. ITAA 1936 45C(1) ATO references: 53. On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). Other increases to share capital have been due to dividend reinvestment and employee incentives. 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. The table sets out these five categories of CGT assets: 77. ITAA 1997 855-30 43. Since 2009, Wesfarmers has reported the following retained earnings: 17. The ATO ruling, if Shareholders who did not provide the share registry with their bank account details, may complete a paper Direct Credit Payment Form, which is available from Wesfarmers share registry, Computershare Investor Services Pty Limited, or provide their details online to Computershare at www.computershare.com.au/easyupdate/wes. Div 112 7. capital gains tax as at 30 June 2021, Wesfarmers shareholders own... 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