How can I calculate my return of capital payment and when will I receive this payment? 14. 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. 81. Shares commence trading on an ex return of capital basis. For more information about this return of capital, see Class Ruling CR 2003/105W: Return of capital: Wesfarmers Limited. 2. The purpose which causes section 45B to apply may be the purpose of any party to the scheme. In the event that the return of capital did represent a dividend rather than a capital benefit, it is likely that a Wesfarmers shareholder would incur a greater tax liability. ITAA 1936 44(1) 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. Maria must also adjust the cost base and the reduced cost base of her Wesfarmers shares to nil. 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. The capital return was completed on 18December 2003. AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA. 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. 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. 70. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). ITAA 1997 975-300 25. 55. 60. 69. If Maria chooses the indexed cost base, she calculates her cost base by multiplying her original cost base by an uplift factor. ITAA 1997 855-15 Wesfarmers will reduce its share capital by returning $0.50 per fully paid share (being ordinary shares and partially protected ordinary shares). Eligible shareholders received 1 COL share for each WES share owned. Wesfarmers has confirmed that its share capital account is not tainted within the meaning of Division 197. At Wesfarmers we believe sustainability is about understanding and managing the ways we impact the communities and environments in which we operate, to ensure that we continue to create value in the future. 56. 60. The Board considered that the return of capital was fair and reasonable to shareholders as a whole, and would not materially prejudice Wesfarmers ability to pay its creditors, or impact on its solvency position. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 42. 7. If the amount of the return of capital of $2.00 per Wesfarmers share is not more than the cost base of your Wesfarmers share, the Cost base / reduced cost base of the share are reduced (but not below nil) by the amount of the return of capital (subsection 104-135(4)). a capital payment (it was not classed as a dividend for any purpose and had no dividend component). ITAA 1997 Div 230 For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. 43. The distribution was entirely capital in nature. The term 'dividend' in subsection 6(1) includes any distribution made by a company to any of its shareholders. 10. 11. 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. according to an ATO ruling. 19. 82. ITAA 1936 45B(5)(b) TAA 1953 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). 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). 20. 35. Section 45A of the ITAA 1936 generally applies where: 45. 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. 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 Div 112 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. 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. The return of capital was considered and approved by shareholders at the 2021 AGM. ITAA 1997 Div 197 This payment was: You received $2.50 for each share that you held on the record date. 31. Return of capital amount - $5.68 for each entitled WES share. 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. 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. 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. 2. 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? The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. 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. It is anticipated that shareholder approval will be sought at Wesfarmers' Annual General Meeting (AGM) which is scheduled for 7 November 2013. 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). In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. The Payment Date is anticipated to be late November to early December 2013. 42. The ruling applies from 1 July 2021 to 30 June 2022. 74. The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). ITAA 1997 104-135(3) Payments made to credit unions may take longer. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 73. What was the capital return?Wesfarmers made a cash payment to shareholders of 200cents per share (or approximately $2,268 million in total). What will happen to the number of shares I hold? 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. The Class Ruling and further details regarding the return of capital can be accessed via the Investor Centre section of the Wesfarmers website at www.wesfarmers.com.au. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. ITAA 1997 855-10(1) 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). This is clearly marked. Part 5 - Further information 5.1 Has the +entity applied for an ATO class ruling relating to this cash return of . The record date for the return of capital was 4:00pm (Perth time) on Friday, 19 November 2021. The last date to purchase shares that were eligible to receive the return of capital was Wednesday, 17 November 2021. return of capital on shares 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. Where the original shares were acquired on or after 20 September 1985, subsection 112-25(4) of the ITAA 1997 provides that each element of the cost base and reduced cost base of the converted shares is the sum of the corresponding elements of each original share. ITAA 1936 45A(2) The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 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. Accordingly, CGT event G1 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date and continue to own at the Payment Date. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. ITAA 1997 855-15 ITAA 1997 115-25(1) 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. CGT events G1-G3 - shares 36. For shares that had reached a taxing point (i.e. If Maria uses the indexed cost base for this event, she cannot use the discount method if she sells her Wesfarmers shares later. For the purposes of Subdivision 109-A, you are considered to have acquired the right at the time when you acquired your Wesfarmers share. Wesfarmers shareholders received a $1.00 per share cash distribution. 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. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. In addition to the return of capital, Wesfarmers proposes to undertake a share consolidation of approximately 1 to 0.9876. A maximum of approximately 9.57% of Wesfarmers shares are pre-CGT assets. 1. 76. 54. Unless the amount of the distribution exceeds the cost base of the shares, there will only be a cost base reduction under CGT event G1 (section 104-135 of the ITAA 1997). The following description of the scheme is based on information provided by the applicant. ITAA 1936 45A(3)(b) Ruling Return of capital is not a dividend 7. 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). If any of your shares had a cost base of exactly $2.50, their new cost base and reduced cost base will be nil. 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. What are the key dates for the capital return? Components of the capital return The capital return was $2.50 per share. By . On 3November 2003 Wesfarmers Limited announced a return of capital ('capital return'). Shareholders were sent the payment advice for the return on capital payment by email or in hard copy on Thursday, 2 December 2021. 41. 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. The summary in these documents and in this section is general in nature and should not be relied upon as advice. Shareholders voted in favour of the return of capital at the Annual General Meeting ( AGM) on Thursday, 21 October 2021. The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. Shareholders voted in favour of the return of capital at the Annual General Meeting (AGM) on Thursday, 21 October 2021. The capital return was $2.50 per share. 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. Wesfarmers Limited (WES) completed the demerger of Coles Group Limited (COL) on 28 November 2018. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. 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. 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. 4 September 2013. Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. ITAA 1997 104-165(3) The payment was entirely capital in nature with no dividend component. This is due to the outflow of funds to shareholders. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. How do I adjust the cost base and reduced cost base of my Wesfarmers shares? This is clearly marked. ITAA 1997 855-30 The return of capital will be paid equally to each holder of a Wesfarmers share (being ordinary shares and partially protected ordinary shares) who is registered on the Wesfarmers share register on the Record Date. After the share consolidation, Wesfarmers shareholders will own fewer shares that are proportionately higher priced. 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. ITAA 1997 Div 112 A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. CGT event G1 (section 104-135 of the ITAA 1997) happens when. ITAA 1936 45C(1) 79. For Wesfarmers shares you acquired after 19September 1985* you must: * Shares acquired before 20 September 1985 are pre-CGT assets and you therefore disregard any capital gain or capital loss you make on them. The return of capital was in addition to the interim dividend of 88 cents per Wesfarmers share paid on 31 March 2021 and a final dividend of 90 cents per share for the year ended 30 June 2021 paid by Wesfarmers on 7 October 2021. 39. 17. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). Please refer to the Wesfarmers Limited 2021 Shareholder Tax Information Guide or the ATO class ruling. The following description of the scheme is based on information provided by the applicant. 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). The effect of such a determination is that all or part of the return of capital received by Wesfarmers shareholders is treated as an unfranked dividend paid by Wesfarmers out of profits. The share consolidation will be undertaken in accordance with section 254H of the Corporations Act such that: 27. 18. 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. 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. 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