Class Ruling CR 2022/19

What this ruling is about: 1. This Ruling sets out the income tax consequences for shareholders of Boral Limited (Boral) who received the return of capital payment of $2.65 per ordinary share on 14 February 2022 (Payment Date). 2. Full details of this return of capital are set out in paragraphs 13 to 32 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 13 to 32 of this Ruling. Note: Division 230 does 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 2021 to 30 June 2022. Return of capital is not a dividend 7. No part of the return of capital paid to you by Boral on the Payment Date is a dividend as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. 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 $2.65 per Boral share you received on the Payment Date. Capital gains tax consequences CGT event G1 9. CGT event G1 happened to you on the Payment Date in respect of each Boral share you owned at the Record Date and continued to own at the Payment Date (section 104-135). CGT event C2 10. CGT event C2 happened to you on the Payment Date in respect of your right to receive the return of capital for each Boral share you owned at the Record Date where you ceased to own that Boral share before the Payment Date (section 104-25). Discount capital gain 11. 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 Boral 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 12. You disregard under section 855-10 any capital gain from CGT event G1, and any capital gain or capital loss from CGT event C2, if you are a foreign resident just before the event and your Boral share or your right to receive the return of capital on the Boral shares: 13. 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. Background 14. Boral is an Australian incorporated public company listed on the Australian Securities Exchange and the head company of an Australian income tax consolidated group. 15. Boral carries on a business of producing and supplying construction materials. 16. As at 30 June 2021, Boral had: 17. Boral has a single class of shares on issue, being ordinary shares. 18. Seven Group Holdings Limited owns approximately 69.6% of those ordinary shares. The remainder are owned by a range of retail and institutional investors in Australia and overseas. Disposal of assets 19. During the income year ending 30 June 2022, the Boral group disposed of, or entered into contracts to dispose of, interests in several businesses being its: 20. Overall, once completed, the Boral group received approximately $4.26 billion of sale proceeds in respect of the disposals of these investments. The disposal of these investments by Boral gave rise to an overall loss. 21. Boral determined that, after these disposals, $3 billion was surplus to its capital requirements. Return of capital payment and dividend 22. On 1 February 2022, Boral announced it will return $3 billion to its shareholders by way of: 23. The return of capital was debited to Boral's share capital account and the following accounting entry was recorded: 24. The return of capital was paid to each holder of a Boral share registered on the Boral share register on the Record Date. 25. The return of capital was funded by Boral's available cash balances. 26. The return of capital was an equal capital reduction under section 256B of the Corporations Act 2001. Boral had previously obtained shareholder approval for the return of capital by way of ordinary resolution under section 256C of the Corporations Act 2001 passed at its Annual General Meeting held on 28 October 2021. Other matters 27. Boral has paid regular dividends up to April 2020, either fully or partly franked. 28. Boral expects to recommence paying regular dividends to shareholders on the basis the trading environment normalises and improves and subject to circumstances and necessary board approvals at the time. 29. Boral's share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). 30. No shareholders in Boral held their Boral shares as pre-CGT assets. 31. Boral shareholders consist of both Australian residents and foreign residents. As at September 2021, approximately 7% of Boral shareholders were foreign residents. 32. No foreign-resident Boral shareholder held a non-portfolio interest (within the meaning of section 960-195) in Boral throughout a 12-month period in the 24 months immediately before and on the Payment Date. Commissioner of Taxation 2 March 2022 Return of capital is not a dividend 33. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its 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. 34. The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. 35. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. Boral has confirmed that its share capital account is not tainted within the meaning of Division 197. 36. The return of capital was recorded as a debit to Boral's untainted share capital account. As such, paragraph (d) of the definition of dividend in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 37. Sections 45A and 45B of the ITAA 1936 are anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C of the ITAA 1936 applies. The effect of such a determination is that all or part of a capital return received by shareholders is treated as an unfranked dividend paid out of profits of the company. 38. Section 45A of the ITAA 1936 generally applies where a company streams capital benefits to some shareholders who would benefit more from them than other shareholders, and dividends to those other shareholders. As the return of capital was paid to all Boral shareholders that held Boral shares on the Record Date, no such streaming occurred under the scheme. 39. Section 45B of the ITAA 1936 generally applies where, having regard to the relevant circumstances of the scheme as set out in subsection 45B(8) of the ITAA 1936, a company provided certain capital payments to its shareholders for a more than incidental purpose of enabling a taxpayer to obtain a demerger benefit or a tax benefit. Having had regard to the relevant circumstances of the scheme the Commissioner has not concluded that the scheme was entered into for a more than incidental purpose to enable a taxpayer to obtain a tax benefit. 40. Therefore, the Commissioner will not make a determination under either subsection 45A(2) or paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole or any part of the return of capital received by Boral shareholders. © 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). Not previously issued as a draft

Class of entities or scheme: 13. 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. | Background: 14. Boral is an Australian incorporated public company listed on the Australian Securities Exchange and the head company of an Australian income tax consolidated group. 15. Boral carries on a business of producing and supplying construction materials. 16. As at 30 June 2021, Boral had: 17. Boral has a single class of shares on issue, being ordinary shares. 18. Seven Group Holdings Limited owns approximately 69.6% of those ordinary shares. The remainder are owned by a range of retail and institutional investors in Australia and overseas. | Disposal of assets: 19. During the income year ending 30 June 2022, the Boral group disposed of, or entered into contracts to dispose of, interests in several businesses being its: 20. Overall, once completed, the Boral group received approximately $4.26 billion of sale proceeds in respect of the disposals of these investments. The disposal of these investments by Boral gave rise to an overall loss. 21. Boral determined that, after these disposals, $3 billion was surplus to its capital requirements. | Return of capital payment and dividend: 22. On 1 February 2022, Boral announced it will return $3 billion to its shareholders by way of: 23. The return of capital was debited to Boral's share capital account and the following accounting entry was recorded: 24. The return of capital was paid to each holder of a Boral share registered on the Boral share register on the Record Date. 25. The return of capital was funded by Boral's available cash balances. 26. The return of capital was an equal capital reduction under section 256B of the Corporations Act 2001. Boral had previously obtained shareholder approval for the return of capital by way of ordinary resolution under section 256C of the Corporations Act 2001 passed at its Annual General Meeting held on 28 October 2021. | Other matters: 27. Boral has paid regular dividends up to April 2020, either fully or partly franked. 28. Boral expects to recommence paying regular dividends to shareholders on the basis the trading environment normalises and improves and subject to circumstances and necessary board approvals at the time. 29. Boral's share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). 30. No shareholders in Boral held their Boral shares as pre-CGT assets. 31. Boral shareholders consist of both Australian residents and foreign residents. As at September 2021, approximately 7% of Boral shareholders were foreign residents. 32. No foreign-resident Boral shareholder held a non-portfolio interest (within the meaning of section 960-195) in Boral throughout a 12-month period in the 24 months immediately before and on the Payment Date. Commissioner of Taxation 2 March 2022

Ruling: 1. This Ruling sets out the income tax consequences for shareholders of Boral Limited (Boral) who received the return of capital payment of $2.65 per ordinary share on 14 February 2022 (Payment Date). 2. Full details of this return of capital are set out in paragraphs 13 to 32 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 13 to 32 of this Ruling. Note: Division 230 does 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 2021 to 30 June 2022. | Return of capital is not a dividend: 7. No part of the return of capital paid to you by Boral on the Payment Date is a dividend as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). | Sections 45A, 45B and 45C of the ITAA 1936 do not apply: 8. 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 $2.65 per Boral share you received on the Payment Date. | CGT event G1: 9. CGT event G1 happened to you on the Payment Date in respect of each Boral share you owned at the Record Date and continued to own at the Payment Date (section 104-135). | CGT event C2: 10. CGT event C2 happened to you on the Payment Date in respect of your right to receive the return of capital for each Boral share you owned at the Record Date where you ceased to own that Boral share before the Payment Date (section 104-25). | Discount capital gain: 11. 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 Boral 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: 12. You disregard under section 855-10 any capital gain from CGT event G1, and any capital gain or capital loss from CGT event C2, if you are a foreign resident just before the event and your Boral share or your right to receive the return of capital on the Boral shares: 13. 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. | Background: 14. Boral is an Australian incorporated public company listed on the Australian Securities Exchange and the head company of an Australian income tax consolidated group. 15. Boral carries on a business of producing and supplying construction materials. 16. As at 30 June 2021, Boral had: 17. Boral has a single class of shares on issue, being ordinary shares. 18. Seven Group Holdings Limited owns approximately 69.6% of those ordinary shares. The remainder are owned by a range of retail and institutional investors in Australia and overseas. | Disposal of assets: 19. During the income year ending 30 June 2022, the Boral group disposed of, or entered into contracts to dispose of, interests in several businesses being its: 20. Overall, once completed, the Boral group received approximately $4.26 billion of sale proceeds in respect of the disposals of these investments. The disposal of these investments by Boral gave rise to an overall loss. 21. Boral determined that, after these disposals, $3 billion was surplus to its capital requirements. | Return of capital payment and dividend: 22. On 1 February 2022, Boral announced it will return $3 billion to its shareholders by way of: 23. The return of capital was debited to Boral's share capital account and the following accounting entry was recorded: 24. The return of capital was paid to each holder of a Boral share registered on the Boral share register on the Record Date. 25. The return of capital was funded by Boral's available cash balances. 26. The return of capital was an equal capital reduction under section 256B of the Corporations Act 2001. Boral had previously obtained shareholder approval for the return of capital by way of ordinary resolution under section 256C of the Corporations Act 2001 passed at its Annual General Meeting held on 28 October 2021. | Other matters: 27. Boral has paid regular dividends up to April 2020, either fully or partly franked. 28. Boral expects to recommence paying regular dividends to shareholders on the basis the trading environment normalises and improves and subject to circumstances and necessary board approvals at the time. 29. Boral's share capital account (as defined in section 975-300) is not tainted (within the meaning of Division 197). 30. No shareholders in Boral held their Boral shares as pre-CGT assets. 31. Boral shareholders consist of both Australian residents and foreign residents. As at September 2021, approximately 7% of Boral shareholders were foreign residents. 32. No foreign-resident Boral shareholder held a non-portfolio interest (within the meaning of section 960-195) in Boral throughout a 12-month period in the 24 months immediately before and on the Payment Date. Commissioner of Taxation 2 March 2022 | Return of capital is not a dividend: 33. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its 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. 34. The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. 35. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. Boral has confirmed that its share capital account is not tainted within the meaning of Division 197. 36. The return of capital was recorded as a debit to Boral's untainted share capital account. As such, paragraph (d) of the definition of dividend in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. | Sections 45A, 45B and 45C of the ITAA 1936 do not apply: 37. Sections 45A and 45B of the ITAA 1936 are anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C of the ITAA 1936 applies. The effect of such a determination is that all or part of a capital return received by shareholders is treated as an unfranked dividend paid out of profits of the company. 38. Section 45A of the ITAA 1936 generally applies where a company streams capital benefits to some shareholders who would benefit more from them than other shareholders, and dividends to those other shareholders. As the return of capital was paid to all Boral shareholders that held Boral shares on the Record Date, no such streaming occurred under the scheme. 39. Section 45B of the ITAA 1936 generally applies where, having regard to the relevant circumstances of the scheme as set out in subsection 45B(8) of the ITAA 1936, a company provided certain capital payments to its shareholders for a more than incidental purpose of enabling a taxpayer to obtain a demerger benefit or a tax benefit. Having had regard to the relevant circumstances of the scheme the Commissioner has not concluded that the scheme was entered into for a more than incidental purpose to enable a taxpayer to obtain a tax benefit. 40. Therefore, the Commissioner will not make a determination under either subsection 45A(2) or paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole or any part of the return of capital received by Boral shareholders. © 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). Not previously issued as a draft


Appendix: Return of capital is not a dividend: 33. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its 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. 34. The term 'share capital account' is defined in section 975-300 as an account which the company keeps of its share capital, or any other account created on or after 1 July 1998 where the first amount credited to the account was an amount of share capital. 35. Subsection 975-300(3) provides that an account is generally taken not to be a share capital account if it is tainted. Boral has confirmed that its share capital account is not tainted within the meaning of Division 197. 36. The return of capital was recorded as a debit to Boral's untainted share capital account. As such, paragraph (d) of the definition of dividend in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. | Sections 45A, 45B and 45C of the ITAA 1936 do not apply: 37. Sections 45A and 45B of the ITAA 1936 are anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C of the ITAA 1936 applies. The effect of such a determination is that all or part of a capital return received by shareholders is treated as an unfranked dividend paid out of profits of the company. 38. Section 45A of the ITAA 1936 generally applies where a company streams capital benefits to some shareholders who would benefit more from them than other shareholders, and dividends to those other shareholders. As the return of capital was paid to all Boral shareholders that held Boral shares on the Record Date, no such streaming occurred under the scheme. 39. Section 45B of the ITAA 1936 generally applies where, having regard to the relevant circumstances of the scheme as set out in subsection 45B(8) of the ITAA 1936, a company provided certain capital payments to its shareholders for a more than incidental purpose of enabling a taxpayer to obtain a demerger benefit or a tax benefit. Having had regard to the relevant circumstances of the scheme the Commissioner has not concluded that the scheme was entered into for a more than incidental purpose to enable a taxpayer to obtain a tax benefit. 40. Therefore, the Commissioner will not make a determination under either subsection 45A(2) or paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole or any part of the return of capital received by Boral shareholders. © 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). Not previously issued as a draft


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 45A ITAA 1936 45A(2) ITAA 1936 45B ITAA 1936 45B(3)(b) ITAA 1936 45B(8) ITAA 1936 45C ITAA 1997 104-25 ITAA 1997 104-135 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 855-10 ITAA 1997 855-15 ITAA 1997 960-195 ITAA 1997 975-300 ITAA 1997 975-300(3) ITAA 1997 995-1(1) TAA 1953 Corporations Act 2001 256B Corporations Act 2001 256C