Euroz Hartleys’ Capital Return Tax Ruling Raises Questions on Shareholder Gains
Euroz Hartleys has obtained an Australian Taxation Office Class Ruling confirming the tax treatment of its recent capital return, providing clarity for shareholders on how proceeds will be taxed.
- ATO issues Class Ruling CR 2025/59 on Euroz Hartleys’ capital return
- Capital return proceeds not treated as dividend income for Australian residents
- Adjustments to share cost base for capital gains tax purposes clarified
- Eligible shareholders may access capital gains discount if holding shares 12+ months
- Shareholders advised to consult tax advisers due to individual circumstances
Background and Announcement
Euroz Hartleys Group Limited (ASX – EZL) has confirmed receipt of a Class Ruling from the Australian Taxation Office (ATO) that clarifies the income tax consequences for shareholders following its recently completed capital return. This ruling, formally designated CR 2025/59, addresses the tax treatment of the capital return approved by shareholders at the July 18, 2025 meeting and paid out on August 5, 2025.
Key Tax Implications for Shareholders
The ruling provides important guidance for Australian resident shareholders, confirming that the capital return proceeds will not be treated as dividend income for tax purposes. Instead, the ruling outlines how the capital return affects the cost base of shares for capital gains tax (CGT) calculations. Specifically, the cost base of shares will be reduced by the amount of the capital return proceeds, which may result in a capital gain or loss when shares are eventually sold.
For shareholders whose cost base exceeds the capital return amount, the cost base is simply reduced by the return amount. If the capital return proceeds exceed the cost base, a capital gain arises equal to the difference. Additionally, shareholders who have held their shares for at least 12 months prior to the capital return payment date may be eligible for the CGT discount, potentially reducing their tax liability on any capital gains.
Advisory and Next Steps
Euroz Hartleys has advised shareholders to consult their own tax advisers to understand the specific implications based on their individual circumstances. The company has made the full Class Ruling available on both the ATO and Euroz Hartleys websites for transparency and further reference.
This ruling brings welcome clarity to shareholders who participated in the capital return, enabling more informed tax planning. It also underscores the company’s commitment to clear communication and regulatory compliance in managing shareholder returns.
Bottom Line?
With tax treatment clarified, shareholder focus now shifts to how this capital return influences future investment decisions and company strategy.
Questions in the middle?
- How will the capital return impact Euroz Hartleys’ share price performance in the near term?
- What proportion of shareholders qualify as eligible for the CGT discount under the ruling?
- Could this Class Ruling set a precedent for future capital returns by similar financial services companies?
