ATO confirms tax treatment for Euroz Hartleys capital return

Euroz Hartleys Group Limited (ASX: EZL) has confirmed that the Australian Tax Office (ATO) has issued Class Ruling CR 2025/59, outlining the Australian income tax consequences for its shareholders regarding the recent capital return. This capital return, approved by shareholders on 18 July 2025, saw cash payments made to eligible shareholders on 5 August 2025.

For Australian resident eligible shareholders, the Class Ruling clarifies that no part of the capital return proceeds will be treated as a dividend for income tax purposes. Instead, the capital gains tax (CGT) cost base of shares will be adjusted. A capital gain will arise if the CGT cost base is less than the capital return proceeds, reducing the cost base to nil. If the CGT cost base is equal to or more than the proceeds, the cost base will be reduced by the amount of the capital return.

Furthermore, an eligible shareholder may treat a resulting capital gain as a discount capital gain if their EZL share was acquired on or before 4 August 2024, provided other conditions in Subdivision 115-A are met. Shareholders are advised to consult their own advisers for individual circumstances.