ato class ruling wesfarmers return of capitalato class ruling wesfarmers return of capital

ITAA 1936 45A(2) The test of purpose is an objective one. The Record Date for the return of capital is expected to bein late November or early December 2014. Accordingly, if the Wesfarmers share was acquired by the Wesfarmers shareholder at least 12 months before the return of capital was paid, a capital gain from CGT event C2 happening on the ending of the corresponding right may qualify as a discount capital gain under subsection 115-25(1) of the ITAA 1997, provided the other conditions in Division 115 of the ITAA 1997 are satisfied. This represents a total return of approximately $579 million to Wesfarmers shareholders. 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. 61. 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. ITAA 1997 104-135(4) For participants in the Australian tax exempt share plans or the loan plans the cost base for each share held on behalf of employees should be reduced by the return of capital amount. 59. ITAA 1997 109-5 Australian Taxation Office for the Commonwealth of Australia. 8. It is only to the extent (if any) that the distribution exceeds the cost base of the shares that a capital gain arises. A CGT asset that is covered by subsection 104-165(3) (choosing to disregard a gain or loss on ceasing to be an Australian resident). CGT events G1-G3 - shares Corporate Archer Materials Limited (ACN: 123 993 233) ATO Class Ruling Lot Fourteen, Frome Road, Adelaide SA 5000 ASX Announcement (ASX: AXE) 16 December 2021 Capital Return - ATO Class Ruling Published Archer Materials Limited ("Archer", the "Company", "ASX:AXE") advises that the Australian Taxation Office has published a Class Ruling (CR 2021/98) (the "Ruling") relating to the . The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. 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. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. If the scheme is not carried out as described, this Ruling cannot be relied upon. The return of capital was recorded as a debit to Wesfarmers untainted share capital account. She must use the indexed cost base method in all future events affecting these shares. 25. The converted shares will have the same date of acquisition as the original shares to which they relate. 63. 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. A capital benefit was provided to Wesfarmers' shareholders. sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. 42. 1. ITAA 1997 855-20 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. 3. 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). 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. 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? In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. 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). 18. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. The return of capital was not eligible to participate in the DIP. Accordingly, no part of the return of capital will be taken to be a dividend for income tax purposes. For the year ended 30 June 2013, Wesfarmers' retained earnings will be $2,375 million ($1,160 million post final dividend). 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. 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)). ITAA 1997 Div 230 What are the key dates for the capital return? 10. Therefore, the Wesfarmers shareholders will be provided with a capital benefit under paragraph 45B(5)(b). The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 30 of this Ruling. Maria's indexed cost base is $3,555.80 ($2,300 x 1.546). 7. 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. How did the capital return work and what was the effect on the company? 51. 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. ITAA 1997 975-300(3) 33. The capital return was completed on 18December 2003. TD 2000/10, Subject References: 3. What was the capital return?Wesfarmers made a cash payment to shareholders of 200cents per share (or approximately $2,268 million in total). 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). 14 December 2018 Demerger of Coles Group Limited - ATO Class Ruling The Australian Commissioner of Taxation has today issued Class Ruling CR 2018/59 (Class Ruling) covering the Australian income tax implications of the demerger of Coles Group Limited (Coles) for shareholders of Wesfarmers Limited (Wesfarmers).The Class Ruling confirms the availability of demerger tax relief for certain . Accordingly, section 45A has no application to the return of capital. 19. Non-resident shareholders should seek specific advice in relation to the tax consequences arising from the return of capital under the laws of their country of residence. 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). The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . ITAA 1997 855-10(1) 65. a capital payment (it was not classed as a dividend for any purpose and had no dividend component). Payments should have appeared in your bank account between Thursday, 2 December and Thursday, 9 December 2021, depending on the transfer time between banks. dividend income This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . ITAA 1997 104-135 58. any gain or loss you made on the shares is a capital gain or capital loss - this means that you held your shares as an investment asset. 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. Section 45B of the ITAA 1936 applies where certain capital payments are made to shareholders in substitution for dividends. 66. 12. CGT event G1 in section 104-135 of the ITAA 1997 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. 25. ITAA 1936 44 ITAA 1936 45A(2) 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. Wesfarmers is an Australian-resident company listed on the Australian Securities Exchange since 1984. Ruling Return of capital is not a dividend 7. 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. The discount factor for resident individuals is one-half. In broad terms, section 45B of the ITAA 1936 applies where: 49. Commissioner of Taxation 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. 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'. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 30. 37. 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. 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). Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). 10. Division 230 does not apply to individuals unless they have made an election for it to apply. 53. As announced on Friday, 27 August 2021, the Wesfarmers Board recommended a return of capital to Wesfarmers shareholders of 200cents per share. ITAA 1997 115-25(1) 1. All registered shareholders on the record date received the capital return there was not an opportunity for these shareholders to 'opt out' of the capital return. 45. 43. 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. 62. ITAA 1936 45A A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. ITAA 1997 104-25 64. adjust the cost base and reduced cost base of your Wesfarmers shares. 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). 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. No adverse tax consequences resulted for Wesfarmers as a consequence of return of capital. 36. 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. 69. The summary in these documents and in this section is general in nature and should not be relied upon as advice. 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. 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. 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. 50. The cost base of your right to receive each return of capital is worked out under Division 110 (modified by Division 112). 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. 4. CGT event C2 happened when the return of capital was made. 37. Section 45A - streaming of dividends and capital benefits. . The Payment Date is anticipated to be late November to early December 2013. Note: 34. 38. The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people, An indirect Australian real property interest not covered by item 5, A CGT asset used at any time in carrying on a business through a permanent establishment in Australia and which is not covered by items 1, 2, or 5, An option or right to acquire a CGT asset covered by items 1, 2 or 3. 20. 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