Tax Credits on Dividends ANZ and Westpac on NZX

[ENP]

Does a New Zealand shareholder get tax/franking credits for ANZ and Westpac listed on the NZX?

Also, does a NZ shareholder get any franking credits on any ASX stocks at all?

If looked through the IRD website but it doesn't mention specific companies.

[macduffy]

I'm no tax expert so it would be wise to get advice from a tax adviser, but in my experience:

- Listing on the NZX isn't a prerequisite for a company to pay NZ imputation credits but obviously the two tend to go to hand in hand, given that a company needs to have a meaningful business in NZ to generate the profits to pay NZ tax to have imputation credits to distribute!

- Westpac pays NZ imputation credits on occasion, eg the final div paid last Dec. The amounts aren't large - I presume because they are obliged to pay equally on all shares, most of which are held by Aussies who can't utilise them. In the same way that NZ taxpayer shareholders can't utilise the 30% Aust franking credits that were attached to that dividend! ANZ hasn't paid any NZ imp credits recently, to my knowledge.

- NAB also pay imp credits on divs sometimes, but not on the latest.

- The only other Aust company that I have benefitted from in this way is AWE who paid a special div a couple of years ago with NZ imp credits attached. No doubt related to profits/tax paid re their 42.5% interest in the Tui oil field. Note that AWE isn't listed on the NZX.

[Snoopy]

Does a New Zealand shareholder get tax/franking credits for ANZ and Westpac listed on the NZX?


On Westpac -yes- at least for the last couple of dividends. On ANZ, no.

(discl: hold ANZ and WBC)



Also, does a NZ shareholder get any franking credits on any ASX stocks at all?


No. An NZ domiciled taxpayer cannot utilize Aussie franking credits.

Likewise an Oz resident cannot utilize NZ imputation credits.

SNOOPY

[ENP]

On Westpac -yes- at least for the last couple of dividends. On ANZ, no.



Where do I find more information on this thanks Snoopy?

[Bixbite]

No. An NZ domiciled taxpayer cannot utilize Aussie franking credits.

Likewise an Oz resident cannot utilize NZ imputation credits.

SNOOPY


It seems not 100% right, Snoopy. You forgot a term - "Double tax agreements" (DTAs or DTA).


Please note - I have no accounting knowledge.

Bixbite

[Corporate]

It seems not 100% right, Snoopy. You forgot a term - "Double tax agreements" (DTAs or DTA).


Please note - I have no accounting knowledge.

Bixbite

The DTA doesn't mean squat unfortunately for franking credits on Australian dividends received by a NZ tax resident.

[OldRider]

ENP:

I am not sure just what your query is, however this may be relevant, a few Australian companies with NZ operations, Westpac is one, do have usable NZ imputation credits. I recall on my Westpac dividend advice this amount being clearly stated, so have a look there.

A thought that does occur to me, is that I think my shares are registered in NZ and certainly have dividends paid in NZ dollars,
where this is not so, this imputation credit may not be shown in the same way.

[Dubdee]

Australian franking (imputation) extingish the obligation to pay Aussie non resident with holding tax. However the full cash dividend is then subject to NZ income tax with no credit given for any Australian with holding tax paid which is of course zero. So in effect the dividend is subject to NZ tax.

the NZ system is much better the ICs create a cash supplementary dividend which is then subject to NZ NRWT. Australian investors then pay tax at their rate releived by the NRWT paid in NZ. A much smarter system

[777]

NZ companies often pay a supplementary dividend, equal to the IC, to overseas shareholders. This attempts to equalise the return to all shareholders. Australian companies are not so generous.

[Snoopy]

It seems not 100% right, Snoopy. You forgot a term - "Double tax agreements" (DTAs or DTA).


The double tax agreement exists between Australia and NZ as you say Bixbite. It applies to withholding tax. I have an Australian bank account and can claim the tax deductions made in Australia from interest earned against my tax bill in New Zealand. Unfortunately the DTA agreement does not apply to Australian franking credits (from an NZ tax perspective) or to NZ imputation credits (from an Australian Tax perspective). The respective finance ministers have talked about recognizing tax payed by companies in Australia in NZ (and vica versa) in both countries. But so far there is no agreement on this point.

SNOOPY

[Snoopy]

Where do I find more information on this thanks Snoopy?

I was going to point to the the relevant page in the Westpac annual report ENP. However, I can find no mention of NZ imputation credits in there!

I have held WBC on the NZ register for some time. I was (pleasantly) surprised when those NZ imputation credits came through in the dividend statements of July last year. I don't recall any explanation over why WBC suddenly decided to start paying them. They are highly profitable in NZ so they certainly would have always had the capacity to pay imputation credits in NZ if the will was there. I should note that the dividend was not fully imputed on this side of the Tasman. My dividend payment details in cents per share, are as follows:

Date, Dividend (cps), Franking Credit (cps), $NZ1= $A?, Imputation Credit (cps)

02/07/2012, 82, 35.1, 0.7833, 6.3
10/12/2012, 84, 36.0, 0.7979, 6.3

6.3c (Australian, I made the conversion) does not compare well with 35.1c and 36c. Still it is better than nothing, which is what we get from most other Australian companies that operate in NZ!

SNOOPY