ATO Confirms Wellard’s 15c Return of Capital Is Not a Dividend
Wellard Limited has received a final Australian Taxation Office ruling confirming its recent 15 cents-per-share return of capital is not taxable as a dividend, clarifying the tax implications for shareholders following the sale of its last revenue-generating asset.
- ATO class ruling confirms return of capital is not a dividend
- 15 cents per share returned following sale of MV Ocean Drover
- Capital return reduces share cost base or triggers capital gains tax
- Return funded from available cash with no change to shareholdings
- Reflects Wellard’s strategic shift to livestock logistics services
Background and Strategic Shift
Wellard Limited, an ASX-listed company specialising in livestock logistics services, has recently completed a significant return of capital to its shareholders. This move follows the company’s strategic transition away from livestock trading towards a more focused logistics services model, culminating in the sale of its final revenue-generating asset, the MV Ocean Drover, in August 2025.
The sale generated net proceeds of approximately $79.7 million, prompting the Wellard board to return the majority of this excess capital to shareholders. This decision aligns with the company’s strategy to optimise its capital structure by reducing surplus funds while maintaining sufficient liquidity for ongoing operations.
ATO Class Ruling Clarifies Tax Treatment
On 9 October 2025, the Australian Taxation Office (ATO) issued a final Class Ruling (CR 2025/70) confirming that Wellard’s 15 cents-per-share return of capital, completed on 28 August 2025, is not to be treated as a dividend for tax purposes. This ruling provides certainty to shareholders that the payment will not be included in their assessable income as a dividend, as the amount was debited against Wellard’s share capital account.
The ruling further outlines the capital gains tax (CGT) implications. Shareholders may experience a reduction in the cost base of their shares or, if the return exceeds the cost base, a capital gain. The ruling also clarifies that no part of the return is subject to anti-avoidance provisions under sections 45A, 45B, or 45C of the Income Tax Assessment Act 1936.
Implications for Shareholders
Shareholders who held Wellard shares on the record date of 13 August 2025 and received the return on 28 August 2025 are affected by this ruling. The tax consequences vary depending on individual circumstances, including how long shares have been held and their cost base. Notably, foreign resident shareholders may disregard any capital gains arising from this return under certain conditions.
Importantly, the return of capital did not involve any cancellation of shares or alteration in shareholders’ proportional interests, preserving the ownership structure. This return follows a previous capital return of 2 cents per share in December 2024, indicating a consistent approach by Wellard to capital management amid its business transformation.
Looking Ahead
Wellard’s move to return excess capital after divesting its core assets signals a new phase focused on operational efficiency within its logistics services niche. The ATO’s ruling removes a layer of uncertainty for investors regarding tax treatment, potentially influencing shareholder sentiment and future capital management decisions.
Bottom Line?
Wellard’s clarified tax position on its capital return sets the stage for focused growth in livestock logistics with streamlined capital.
Questions in the middle?
- How will Wellard deploy its remaining capital to support its logistics services growth?
- Will shareholders expect further returns of capital or a shift towards dividend payments?
- How might the market react to the tax clarity and Wellard’s strategic repositioning?
