2. Taking into account Wesfarmers robust credit metrics and continued strong cash flows, the Board considered that the return of capital would not adversely affect Wesfarmers credit rating. This is clearly marked. 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. A capital benefit was provided to Wesfarmers' shareholders. In particular: 26. ITAA 1936 45A(2) Will my shares be worth less after the capital return? 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. In broad terms, section 45B of the ITAA 1936 applies where: 49. ITAA 1997 855-15 Distributed by Public, unedited and unaltered, on 08 December 2021 06:41:05 UTC. ITAA 1936 45C This payment was: A CGT event happened on 18 December 2003, when Wesfarmers made a capital return on the shares that you held in the company. The return of capital will be debited against an amount standing to the credit of Wesfarmers' share capital account. Paragraph 45A(3)(b) of the ITAA 1936 provides that capital benefits include the distribution of share capital. Accordingly, the Commissioner will not make a determination under subsection 45B(3) that section 45C applies to the return of capital. 25. CGT event C2 in section 104-25 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 but which they cease to own before the Payment Date. Corporations Act 2001 256B In determining whether to recommend to shareholders the approval of the return of capital, the Board reviewed Wesfarmers' assets, liabilities and expected cash flows. 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. 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. The proportion of funding from each source was determined having regard to the most cost-effective source of funding available as at the date of payment. 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. How much did I receive and how was the payment made? 15. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. 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. Maria can choose to apply either the indexation method or the discount method to calculate any capital gain. The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. CGT events C1-C3 - end of a CGT asset 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. Therefore, you can treat a capital gain made when CGT event C2 happened to your right to the payment of the return of capital as a discount capital gain under Subdivision 115-A if you acquired your Wesfarmers share at least 12 months before the Payment Date (subsection 115-25(1)) provided the other conditions in Subdivision 115-A are satisfied. 82. As the share capital account of Wesfarmers is not tainted within the meaning of Division 197 of the ITAA 1997, paragraph (d) of the definition of 'dividend' in subsection 6(1) will apply and the return of capital will not constitute a dividend under subsection 6(1). 57. Wesfarmers shareholders received a $1.00 per share cash distribution. Some of the information on this website applies to a specific financial year. Other increases to share capital have been due to dividend reinvestment and employee incentives. Mark purchased 200 Wesfarmers shares in December 2000. The return of capital was considered and approved by shareholders at the 2021 AGM. ITAA 1997 115-25(1) 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). purchased their shares after the shares started trading on an ex return of capital basis (i.e., from Thursday, 18 November 2021 onwards), the cost base for each share acquired after 19 September 1985 should be reduced by the return of capital amount (on a cents per share basis) for the purpose of calculating any capital gain or capital loss on the ultimate disposal of that share; and. 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 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. The return of capital was paid to each holder of a Wesfarmers share registered on the Wesfarmers share register on the Record Date. ITAA 1997 855-10(1) A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. 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. 60. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. Note: 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. 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. 56. 28. dividend income If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). . You can treat a capital gain made when CGT event G1 or CGT event C2 happened as a discount capital gain if you acquired your Wesfarmers shares at least 12 months before the Payment Date (subsection 115-25(1)), provided the other conditions in Subdivision 115-A are satisfied. Wesfarmers credited $12,733 million to its share capital account on the issue of Wesfarmers ordinary shares and partially protected ordinary shares to Coles Group shareholders in part payment for the acquisition of all the issued shares in Coles Group. 10. ITAA 1997 116-20(1) Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. Shares in Wesfarmers will be 'an indirect Australian real property interest' if (among other things) they pass the principal asset test in section 855-30. 10. 44. 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). The Wesfarmers Dividend Investment Plandid not apply to the return of capital payment. ITAA 1997 109-5 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. 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. To calculate your payment, multiply the number of shares held on the record date by $2.00 per share. The only relevant category of taxable Australian property is table item 2 of section 855-15. The share consolidation is conditional upon the approval by shareholders of an ordinary resolution. ITAA 1997 104-165(3) 18. The Commissioner will not make a determination under either 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). 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. A return of capital would ordinarily be subject to the CGT provisions of the income tax law. In addition, the tax implications for each shareholder will depend on the circumstances of the particular shareholder. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). 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. 40. 5. Each of these conditions is considered in this Ruling. . 22. Wesfarmers share capital has increased from $2.2 billion in July 2007, to $23 billion in June 2012. Without the capital return or some other capital management initiative, we estimate that the ratio would be around 44 per cent at the end of the current financial year." Mr Chaney said the tax office had provided a written draft class ruling at the end of last week, enabling the Board to consider the issue at today's meeting. (iii) Employee shareholders who hold their shares within a Wesfarmers employee share plan. For the shares you made a capital gain on - reduce their cost base and reduced cost base to nil. return of capital on shares ITAA 1936 45B(8) The return of capital was funded by a combination of Wesfarmers available cash balances and existing debt facilities. Sections 45A, 45B and 45C of the ITAA 1936 do not apply. The amount of the capital gain is equal to that excess. 53. Wesfarmers announced a proposed return of capital on 15 August 2013 with Wesfarmers returning to each shareholder $0.50 per fully paid share. 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. ITAA 1997 855-10(1) All Wesfarmers shareholders on 15 December 2003 (the record date) received the capital return. 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. This represents a total return of approximately $579 million to Wesfarmers shareholders. 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)). 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. Would ordinarily be subject to the return of capital on 15 December 2003 ( the record date by $ per. Calculations depends on when you acquired the shares you made a capital was. 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