Class Ruling CR 2024/5

What this ruling is about: 1. This Ruling sets out the income tax consequences for shareholders of Shriro Holdings Limited (Shriro) who received the return of share capital of $0.185 per Shriro share (Capital Return) on 4 January 2024 (Payment Date). 2. Details of this scheme are set out in paragraphs 16 to 33 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. Who this Ruling applies to 4. This Ruling applies to you if you: 5. 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 16 to 33 of this Ruling. Note: Division 230 will not apply to individuals unless they have made an election for it to apply. When this Ruling applies 6. This Ruling applies from 1 July 2023 to 30 June 2024. Return of capital is not a dividend 7. No part of the Capital Return you received from Shriro on the Payment Date is a dividend as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). This is because the entire amount of the Capital Return has been debited against an amount standing to the credit of Shriro's share capital account. Therefore, no part of the Capital Return is included in your assessable income as a dividend under subsection 44(1) of the ITAA 1936. Anti-avoidance provisions 8. The Commissioner will not make a determination that section 45C of the ITAA 1936 applies to any part of the Capital Return you received on the Payment Date, under either: Capital gains tax consequences CGT event G1 9. CGT event G1 happened on the Payment Date when Shriro paid you the Capital Return in respect of each Shriro share you owned on 27 December 2023 (Record Date) and continued to own on the Payment Date (section 104-135). 10. You made a capital gain when CGT event G1 happened if the Capital Return you received was more than your Shriro share's cost base (subsection 104-135(3)). 11. If the Capital Return you received was not more than the cost base of your Shriro share, the cost base or reduced cost base of your Shriro share is reduced by the amount of the Capital Return (subsection 104-135(4)). CGT event C2 12. CGT event C2 happened to your right to receive the Capital Return on the Payment Date when Shriro paid you the Capital Return in respect of each Shriro share you owned on the Record Date but ceased to own before the Payment Date (section 104-25). 13. You made a capital gain under CGT event C2 if the capital proceeds from the ending of the right (being the Capital Return amount) were more than the cost base of the right. You made a capital loss if the capital proceeds from the ending of the right were less than the reduced cost base of the right (subsection 104-25(3)). Discounted capital gain 14. You treat a capital gain made when CGT event G1 or CGT event C2 happened as a discount capital gain if you acquired your Shriro shares at least 12 months before the Payment Date (subsection 115-25(1)), provided the other conditions in Subdivision 115-A are satisfied. Foreign-resident shareholders 15. If you were a foreign resident or the trustee of a foreign trust for CGT purposes as defined in subsection 995-1(1) on the Payment Date, you disregard any capital gain made from CGT event G1 or any capital gain or capital loss from CGT event C2 happening to your Shriro shares, pursuant to subsection 855-10(1), unless you: 16. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. Shriro Holdings Limited 17. Shriro is a public company incorporated in Australia on 14 April 2015. It has been listed on the Australian Securities Exchange since 23 June 2015. 18. Shriro is a consumer products marketing and distribution business which operates in Australia and New Zealand. It is the head company of an income tax consolidated group under Part 3-90. 19. As at 30 June 2023, Shriro had approximately: 20. At 30 June 2023, Shriro had 96,415,670 ordinary shares on issue. Approximately 46% of the Shriro shares on issue were held by non-resident shareholders. 21. Shriro has a target dividend payout ratio of approximately 60% to 70% of its net profit after tax. Since listing on the Australian Securities Exchange, Shriro has paid fully franked dividends to its shareholders every year, and its average dividend payout ratio is approximately 68%. 22. For the income year ended 30 June 2023, Shriro paid approximately $7,199,000 in fully franked dividends. 23. Shriro has not previously returned any share capital to its shareholders. Disposal of the appliance businesses 24. On 1 May 2022 and 31 March 2023, respectively, Shriro exited its appliance businesses, consisting of its Blanco distribution business and the Omega business. 25. The proceeds from the disposal of the appliance businesses were in excess of Shriro's business requirements. As a result, the directors of Shriro decided to return the surplus funds back to Shriro shareholders. Return of capital 26. On 22 September 2023, Shriro announced that it would distribute approximately $17.8 million by way of an equal reduction of share capital under sections 256B and 256C of the Corporations Act 2001. 27. The Capital Return was approved by the shareholders of Shriro on 26 October 2023. 28. On the Payment Date, Shriro shareholders received the Capital Return (being $0.185 per share) in respect of each Shriro share they held on the Record Date. 29. The Capital Return was paid from Shriro's available cash balance. 30. The total Capital Return amount of $17,836,898.95 was debited to Shriro's share capital account. 31. There was no change to the proportionate interest of each shareholder in Shriro following the Capital Return. Other matters 32. The share capital account (as defined in section 975-300) of Shriro is not tainted within the meaning of Division 197. 33. Less than 50% of the market value of Shriro's assets were 'taxable Australian real property' (as defined in section 855-20). Commissioner of Taxation 31 January 2024 © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA 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).

Class of entities or scheme: 16. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. | Shriro Holdings Limited: 17. Shriro is a public company incorporated in Australia on 14 April 2015. It has been listed on the Australian Securities Exchange since 23 June 2015. 18. Shriro is a consumer products marketing and distribution business which operates in Australia and New Zealand. It is the head company of an income tax consolidated group under Part 3-90. 19. As at 30 June 2023, Shriro had approximately: 20. At 30 June 2023, Shriro had 96,415,670 ordinary shares on issue. Approximately 46% of the Shriro shares on issue were held by non-resident shareholders. 21. Shriro has a target dividend payout ratio of approximately 60% to 70% of its net profit after tax. Since listing on the Australian Securities Exchange, Shriro has paid fully franked dividends to its shareholders every year, and its average dividend payout ratio is approximately 68%. 22. For the income year ended 30 June 2023, Shriro paid approximately $7,199,000 in fully franked dividends. 23. Shriro has not previously returned any share capital to its shareholders. | Disposal of the appliance businesses: 24. On 1 May 2022 and 31 March 2023, respectively, Shriro exited its appliance businesses, consisting of its Blanco distribution business and the Omega business. 25. The proceeds from the disposal of the appliance businesses were in excess of Shriro's business requirements. As a result, the directors of Shriro decided to return the surplus funds back to Shriro shareholders. | Return of capital: 26. On 22 September 2023, Shriro announced that it would distribute approximately $17.8 million by way of an equal reduction of share capital under sections 256B and 256C of the Corporations Act 2001. 27. The Capital Return was approved by the shareholders of Shriro on 26 October 2023. 28. On the Payment Date, Shriro shareholders received the Capital Return (being $0.185 per share) in respect of each Shriro share they held on the Record Date. 29. The Capital Return was paid from Shriro's available cash balance. 30. The total Capital Return amount of $17,836,898.95 was debited to Shriro's share capital account. 31. There was no change to the proportionate interest of each shareholder in Shriro following the Capital Return. | Other matters: 32. The share capital account (as defined in section 975-300) of Shriro is not tainted within the meaning of Division 197. 33. Less than 50% of the market value of Shriro's assets were 'taxable Australian real property' (as defined in section 855-20). Commissioner of Taxation 31 January 2024 © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA 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).

Ruling: 1. This Ruling sets out the income tax consequences for shareholders of Shriro Holdings Limited (Shriro) who received the return of share capital of $0.185 per Shriro share (Capital Return) on 4 January 2024 (Payment Date). 2. Details of this scheme are set out in paragraphs 16 to 33 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. | Who this Ruling applies to: 4. This Ruling applies to you if you: 5. 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 16 to 33 of this Ruling. Note: Division 230 will not apply to individuals unless they have made an election for it to apply. | When this Ruling applies: 6. This Ruling applies from 1 July 2023 to 30 June 2024. | Return of capital is not a dividend: 7. No part of the Capital Return you received from Shriro on the Payment Date is a dividend as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). This is because the entire amount of the Capital Return has been debited against an amount standing to the credit of Shriro's share capital account. Therefore, no part of the Capital Return is included in your assessable income as a dividend under subsection 44(1) of the ITAA 1936. | Anti-avoidance provisions: 8. The Commissioner will not make a determination that section 45C of the ITAA 1936 applies to any part of the Capital Return you received on the Payment Date, under either: | CGT event G1: 9. CGT event G1 happened on the Payment Date when Shriro paid you the Capital Return in respect of each Shriro share you owned on 27 December 2023 (Record Date) and continued to own on the Payment Date (section 104-135). 10. You made a capital gain when CGT event G1 happened if the Capital Return you received was more than your Shriro share's cost base (subsection 104-135(3)). 11. If the Capital Return you received was not more than the cost base of your Shriro share, the cost base or reduced cost base of your Shriro share is reduced by the amount of the Capital Return (subsection 104-135(4)). | CGT event C2: 12. CGT event C2 happened to your right to receive the Capital Return on the Payment Date when Shriro paid you the Capital Return in respect of each Shriro share you owned on the Record Date but ceased to own before the Payment Date (section 104-25). 13. You made a capital gain under CGT event C2 if the capital proceeds from the ending of the right (being the Capital Return amount) were more than the cost base of the right. You made a capital loss if the capital proceeds from the ending of the right were less than the reduced cost base of the right (subsection 104-25(3)). | Discounted capital gain: 14. You treat a capital gain made when CGT event G1 or CGT event C2 happened as a discount capital gain if you acquired your Shriro shares at least 12 months before the Payment Date (subsection 115-25(1)), provided the other conditions in Subdivision 115-A are satisfied. | Foreign-resident shareholders: 15. If you were a foreign resident or the trustee of a foreign trust for CGT purposes as defined in subsection 995-1(1) on the Payment Date, you disregard any capital gain made from CGT event G1 or any capital gain or capital loss from CGT event C2 happening to your Shriro shares, pursuant to subsection 855-10(1), unless you: 16. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. | Shriro Holdings Limited: 17. Shriro is a public company incorporated in Australia on 14 April 2015. It has been listed on the Australian Securities Exchange since 23 June 2015. 18. Shriro is a consumer products marketing and distribution business which operates in Australia and New Zealand. It is the head company of an income tax consolidated group under Part 3-90. 19. As at 30 June 2023, Shriro had approximately: 20. At 30 June 2023, Shriro had 96,415,670 ordinary shares on issue. Approximately 46% of the Shriro shares on issue were held by non-resident shareholders. 21. Shriro has a target dividend payout ratio of approximately 60% to 70% of its net profit after tax. Since listing on the Australian Securities Exchange, Shriro has paid fully franked dividends to its shareholders every year, and its average dividend payout ratio is approximately 68%. 22. For the income year ended 30 June 2023, Shriro paid approximately $7,199,000 in fully franked dividends. 23. Shriro has not previously returned any share capital to its shareholders. | Disposal of the appliance businesses: 24. On 1 May 2022 and 31 March 2023, respectively, Shriro exited its appliance businesses, consisting of its Blanco distribution business and the Omega business. 25. The proceeds from the disposal of the appliance businesses were in excess of Shriro's business requirements. As a result, the directors of Shriro decided to return the surplus funds back to Shriro shareholders. | Return of capital: 26. On 22 September 2023, Shriro announced that it would distribute approximately $17.8 million by way of an equal reduction of share capital under sections 256B and 256C of the Corporations Act 2001. 27. The Capital Return was approved by the shareholders of Shriro on 26 October 2023. 28. On the Payment Date, Shriro shareholders received the Capital Return (being $0.185 per share) in respect of each Shriro share they held on the Record Date. 29. The Capital Return was paid from Shriro's available cash balance. 30. The total Capital Return amount of $17,836,898.95 was debited to Shriro's share capital account. 31. There was no change to the proportionate interest of each shareholder in Shriro following the Capital Return. | Other matters: 32. The share capital account (as defined in section 975-300) of Shriro is not tainted within the meaning of Division 197. 33. Less than 50% of the market value of Shriro's assets were 'taxable Australian real property' (as defined in section 855-20). Commissioner of Taxation 31 January 2024 © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA 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).




What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling.


Legislative references: ITAA 1936 6(1) ITAA 1936 44(1) ITAA 1936 45A(1) ITAA 1936 45A(2) ITAA 1936 45B(2) ITAA 1936 45B(3)(b) ITAA 1936 45C ITAA 1997 104-25 ITAA 1997 104-25(3) ITAA 1997 104-135 ITAA 1997 104-135(3) ITAA 1997 104-135(4) ITAA 1997 104-165(3) ITAA 1997 Subdiv 115-A ITAA 1997 115-25(1) ITAA 1997 Div 197 ITAA 1997 Div 230 ITAA 1997 Pt 3-90 ITAA 1997 855-10(1) ITAA 1997 855-15 ITAA 1997 855-20 ITAA 1997 975-300 ITAA 1997 977-50 ITAA 1997 995-1(1) Corporations Act 2001 256B Corporations Act 2001 256C