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  1. #1
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    Default NZ company listed on NZX/ASX Dividends

    -With NZ company (MEL NZX) (MEZ ASX)
    -When a dividend is payed how does the dividend Tax work?
    -If your buy MEZ shares on the ASX and you are non a Tax resident of Australia and New Zealand (Non residents are required to pay 15% dividend Tax)

    -When the dividend is payed on the 17th what AUD would end up in your Australian bank account and what Tax would have been paid?
    -What currency conversion rate is used (Is it the mid market rate), or is it up to the company to negotiate a rate with an institution?

    I understand it is a NZ company and dividend originates in NZD (NZ company tax 28%) (Auz company tax 30%) after that I am getting lost.

    Thanks in advance



    -This is the NZX
    Code Ex Dividend Period Amount Supp. Imputation Payable Currency
    MEL 28 Mar 2019 Special 2.440c 0.000c 0.000c 17 Apr 2019 NZD
    MEL 28 Mar 2019 Interim 5.700c 0.865c 1.906c 17 Apr 2019 NZD

    -This is ASX
    Code Company Name Div Amount Ex Div Date Record Date Date Payable % Franked Type Further Information
    MEZ * MERIDIAN ENERGY 9.8941c 27/09/2018 28/09/2018 17/10/2018 0% Final NZ8.94C+2.44C SPEC+1 .3568CNR;15%WT

    This is the detailed link:
    http://nzx-prod-s7fsd7f98s.s3-websit...828/295290.pdf

  2. #2
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    A non New Zealand tax resident paid in AUD should have received 7.305 ozzie cents per share.

    In NZ terms the gross dividend is 9.005cps being the total sum of the interim (5.700) + it's supplement (0.865) + the special (2.440) + it's supplement (0.000).

    From this 15% non resident witholding tax is deducted giving a net NZ of 7.65425cps

    Converted to AUD at 0.9544 exchange rate gives the 7.305cps.

    I have no idea how that particular rate was chosen.

    Have a beer:

    IMG_20190621_192304.jpg
    om mani peme hum

  3. #3
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    Quote Originally Posted by Snow Leopard View Post
    5%. Should work well.

  4. #4
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    So.....

    1) An Australian bank account would receive 7.305cps AUD with 15% tax paid in NZ.

    -How is the imputation of 1.906c utilized?

    -Do the Australian ATO recognize you have paid 15% tax in NZ or are you liable to pay tax on the 7.305cps in Australia. ( Being a non tax resident of Australia you are liable to pay 15% dividend tax)?


    2) Would you receive in a NZD bank (NZX MEL SHARES) 7.65425 cps if your tax status was non resident?

    3) The reason for the questions is I am a New Zealander living in Asia, trying to work out if it is better to buy dual listed NZ companies on ASX/NZX

    4) How many cps would a NZ resident in the top tax bracket paying 33% receive in there account

  5. #5
    Reincarnated Panthera Snow Leopard's Avatar
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    Where in Asia?
    I live in Malaysia which is Asia and currently I am travelling through that bit of Turkey which is also in Asia.

    Big place Asia.

    Imputation credits are only for NZ tax residents so we ignore them.

    How a company decides to treat you as a resident of Asia if you buy on the ASX I can not predict. For some companies, such as MEL, there is no real difference. You get your AU 7.305 or you get your NZ 7.65425.

    Whichever way the company SHOULD make the correct deductions and there is no further tax to pay in NZ or AU. The ATO will not want any of your 7.305.
    om mani peme hum

  6. #6
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    I live in China, I go to KL semi often for work ��

    Still have trouble following tax trail.

    Using MEL/MEZ as example still:

    -Company makes a 500 million profit and pays dividends

    1) NZ domiciled company so tax obligations are with IRD only?

    2) When company makes profit its tax obligations are 28% in NZ, are dividends payed before or after the 500 million is taxed at 28%?

    3) I think dividends are payed after company tax is payed (28%)....yet as a non resident I am only liable to pay 15% am I loosing 13%?

    4) I assume there is a Trans Tasman agreement saying is tax obligations have been met in NZ by company they have been met in AUZ and no further tax is payable?

    5) Point 4 raises two thoughts (MEZ dividends on ASX are shown as 100% unfranked...meaning no tax has been paid) (What’s in the deal for the Aussies as they appear to be getting no tax revenue)

    Appreciate your time

  7. #7
    Reincarnated Panthera Snow Leopard's Avatar
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    Answering all that is going to take time and I have not finished this rather fine Georgian beer yet:

    IMG_20190705_201700.jpg

    https://flash.geobeer.ge/en
    om mani peme hum

  8. #8
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    Quote Originally Posted by NADZAB View Post
    I live in China, I go to KL semi often for work ��

    Still have trouble following tax trail.

    Using MEL/MEZ as example still:
    NADZAB, an individual's tax obligations are usually determined by their country of residence. For you that means China. i have no knowledge of Chinese citizen's tax obligations, Perhaps you would care to enlighten us?

    In this context, I do not understand your interest in the tax treatment of an MEL dividend paid in NZ and an MEZ dividend paid in Australia. I would have thought that whatever Meridian does as regards dividend payments in either Australia or New Zealand would be completely irrelevant to your own tax obligations in China.

    New Zealand has certain arrangements with some countries that are designed to reduce income being doubly taxed to some extent. As far as any such arrangements between NZ and China, I suggest you look here:

    http://taxpolicy.ird.govt.nz/tax-treaties/china

    Using MEL/MEZ as example still:

    -Company makes a 500 million profit and pays dividends

    1) NZ domiciled company so tax obligations are with IRD only?
    Meridian operates wind farms in Australia and this will probably be by way of an Australian subsidiary. So I would guess Meridian do have tax obligations in Australia. This should not concern Meridian shareholders though. The business entity that is Meridian that investors can buy shares in is domiciled in NZ. To all intents and purposes Meridian is an NZ company.

    2) When company makes profit its tax obligations are 28% in NZ, are dividends payed before or after the 500 million is taxed at 28%?

    3) I think dividends are payed after company tax is payed (28%)....yet as a non resident I am only liable to pay 15% am I loosing 13%?
    Dividends with imputation credits attached are paid after Meridian has paid their tax in New Zealand, you are correct. As a non resident your tax obligations are set by the country you reside in. NZ listed companies have a very tax friendly arrangement with foreign shareholders. Often they may make a supplementary dividend payment to overseas shareholders that is nevertheless immediately claimed back by NZ tax authorities as withholding tax. But the net result is that foreign shareholders can bank a full cash dividend payment that is exactly equivalent to the dividend banked by NZ shareholders. Nothing for you to complain about with this arrangement I would have thought!

    4) I assume there is a Trans Tasman agreement saying is tax obligations have been met in NZ by company they have been met in AUZ and no further tax is payable?

    5) Point 4 raises two thoughts (MEZ dividends on ASX are shown as 100% unfranked...meaning no tax has been paid) (What’s in the deal for the Aussies as they appear to be getting no tax revenue)
    There are dual tax arrangements between Australia and NZ, yes. Yet, despite this, the NZ tax authorities do not recognise Australian Franking Credits. Likewise the Australian tax authorities do not recognise the NZ equivalent imputation credits. This means that Australian Meridian shareholders are double taxed to an extent on their Meridian dividends. At the company level the Australians get no tax revenue from the Meridian you and I can invest in. But at an individual shareholder level Australian shareholders do pay Australian tax on their NZ dividends.

    SNOOPY
    Last edited by Snoopy; 06-07-2019 at 10:52 AM.
    To be free or not to be free. That is the cash-flow question....

  9. #9
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    Where do MEL think you live?

    If you have a foreign address usually a supplementary dividend is added to your payment due to imputation credit you miss out on. Not sure if this is in all cases. If you use a NZ address then they may assume you are a NZ resident.

    If you are going to invest then a couple of hundred dollars spent on professional advice would not go amiss.

  10. #10
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    SNOOPY,

    Thanks for taking time to reply.
    The question isnít relating to my own tax obligations really more what tax is being taken out before I get a to see a dollar 💵

    -Chinese tax residents are accessed on their worldwide income and there is a dual tax agreement with NZ & AUZ. The updated NZ China dual tax agreement was drafted 2 months ago and is yet to be in force.

    Effectively ( NZ & China) (AUZ & China) have the same arrangement as (NZ & AUZ)
    There is a host of other rabbit holes relating to China Tax liabilities which are greatly beneficial (Possibly why they are buying so many NZ assets)

    1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
    2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed
    3) 15 percent of the gross amount of the dividends in all other cases

    -Australia unlike New Zealand, which exempts only imputed non-cash dividends from NRWT (and has a separate FITC regime for imputed cash dividends), Australia exempts fully imputed (franked) dividends from non-resident withholding tax. This means a New Zealand investor receiving a dividend which has full imputation credits attached will not be subject to the 15% withholding tax (as provided in the double tax agreement).
    In addition, certain foreign-sourced dividends paid by an Australian company to a non-resident shareholder are also exempt from Australian withholding tax.


    I have a sound knowledge of the Tax requirements of buying shares as a Non Tax Resident off the ASX & NZX respectively.
    Where it is going fuzzy is buying shares on the ASX of NZ dual listed company company (MEZ)

    1) If I buy shares in BHP which are fully franked on the ASX as a non tax resident there is no Liability for NRWT as franking credit 30% offsets NRWT 15%
    2) If I buy MEL shares on NZX carrying imputation credit (28%) this does not offset NRWT 15%, however supplementary dividend payment can (How do you know if company does this?)
    3) There is no CGT tax as as Non Tax resident in AUZ, in NZ there most likely will be with my trading frequency.
    4) The dividend payment for MEZ on the ASX shows dividend 100% unfranked with 15% NRWT applied.

    5) So my interpretation as a non resident of AUZ & NZ is:

    -MEL on NZX makes a profit of $550 million NZD pays 28% tax on the profit to IRD then distributes the dividend to me subtracting an additional 15% NRWT to pay IRD
    -MEZ on ASX makes a profit of $550 million NZD pays 28% tax on the profit to IRD then subtracts (15% NRWT given to IRD then offset by supplementary dividend, cost neutral process) then converts to AUD and subtracts 15% NRWT and pays ATO
    -BHP on ASX makes a profit of $550 million AUD pays 30% tax on the profit to ATO then pays me dividend

    They reason for the questions is probably obvious but I am trying to see which method has the least tax overall the reason for complicating it with NZ dual listed companies is I really like the NZ power companies.
    I would have thought there might be a way of MEZ getting the same overall tax treatment as BHP?

    Thanks for your time.

  11. #11
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    777 soon to be 787

    -ASX/NZX have me listed as a Non Tax resident with China as my Tax residency setting my NRWT at 15% for both.
    -I spent several thousand getting take advice when I moved, didn’t cover comparative options thought ✈️

  12. #12
    Reincarnated Panthera Snow Leopard's Avatar
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    If you want to know if a NZ company pays a supplementary dividend then look it up on the NZX website: for example https://www.nzx.com/instruments/MCY/dividends

    If you buy the power companies on the NZX then you will almost certainly do no worse than buying on the ASX and may do better.
    om mani peme hum

  13. #13
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    Quote Originally Posted by NADZAB View Post
    SNOOPY,

    Thanks for taking time to reply.
    The question isn’t relating to my own tax obligations really more what tax is being taken out before I get a to see a dollar ��
    My question is, as a resident of China, do you get any tax relief on your dividend income in China from dividend withholding tax paid in Australia and New Zealand?

    If you do, then whether you pay your tax relating to these dividends in Australia, NZ or China should not matter. However the way you have phrased your question (separating tax paid out before you get your dividends paid to China as important) would suggest that you get no credit for any tax paid outside China. Is this correct?

    Quote Originally Posted by NADZAB View Post
    -Chinese tax residents are accessed on their worldwide income and there is a dual tax agreement with NZ & AUZ. The updated NZ China dual tax agreement was drafted 2 months ago and is yet to be in force.

    Effectively (NZ & China) (AUZ & China) have the same arrangement as (NZ & AUZ)
    There is a host of other rabbit holes relating to China Tax liabilities which are greatly beneficial (Possibly why they are buying so many NZ assets)
    I take your word on what you have said above.

    Quote Originally Posted by NADZAB View Post
    1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
    2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed
    3) 15 percent of the gross amount of the dividends in all other cases
    Where do the above three bullet points come from? Are these Chinese tax rules? or Australian tax rules? or NZ tax rules? Does the term state mean 'an international country' or are you referring to regional states within China or within Australia or is it all the above?

    Quote Originally Posted by NADZAB View Post
    -Australia unlike New Zealand, which exempts only imputed non-cash dividends from NRWT (and has a separate FITC regime for imputed cash dividends), Australia exempts fully imputed (franked) dividends from non-resident withholding tax. This means a New Zealand investor receiving a dividend which has full imputation credits attached will not be subject to the 15% withholding tax (as provided in the double tax agreement).
    I presume in the above paragraph when you say 'New Zealand Investor' what you mean is a 'Chinese Investor, making an investment in New Zealand'. I say this because a New Zealand investor, investing in a New Zealand company, that pays dividends in NZ, will never be subject to a 15% withholding tax.
    Sorry if I seem pedantic. But when talking in terms of tax policy in technical detail, the precision of language really matters.

    Quote Originally Posted by NADZAB View Post
    pay

    In addition, certain foreign-sourced dividends paid by an Australian company to a non-resident shareholder are also exempt from Australian withholding tax.
    I take your word for the above.

    Quote Originally Posted by NADZAB View Post
    I have a sound knowledge of the Tax requirements of buying shares as a Non Tax Resident off the ASX & NZX respectively.
    Where it is going fuzzy is buying shares on the ASX of NZ dual listed company company (MEZ)

    1) If I buy shares in BHP which are fully franked on the ASX as a non tax resident there is no Liability for NRWT as franking credit 30% offsets NRWT 15%
    2) If I buy MEL shares on NZX carrying imputation credit (28%) this does not offset NRWT 15%, however supplementary dividend payment can (How do you know if company does this?)
    For Meridian the information on supplementary dividends is here:

    https://www.nzx.com/instruments/MEL/dividends

    Quote Originally Posted by NADZAB View Post
    3) There is no CGT tax as as Non Tax resident in AUZ, in NZ there most likely will be with my trading frequency.
    If you are an NZ Tax resident and trade shares with the aim of making a profit then, yes, you will be subject to income tax on your trading gains. Technically this is not a capital gains tax. As a Chinese taxpayer I have no idea what the rules are as regards capital gains. Please tell us if you know! It seems very odd that you would not be subject to a CGT in Australia, yet you expect that some of your capital profits will be withheld in NZ when you do similar trades in NZ? How would the broker or IRD in New Zealand know how much to withhold? It all seems very unlikely someone in NZ would take tax deductions from you during the share trading process.

    Quote Originally Posted by NADZAB View Post
    4) The dividend payment for MEZ on the ASX shows dividend 100% unfranked with 15% NRWT applied.

    5) So my interpretation as a non resident of AUZ & NZ is:

    -MEL on NZX makes a profit of $550 million NZD pays 28% tax on the profit to IRD then distributes the dividend to me subtracting an additional 15% NRWT to pay IRD
    No I don't think that is right. The after tax paid dividend is added to by a supplementary dividend (if any) and a 15% NRWT is deducted from that new total before the dividend is paid to you


    Quote Originally Posted by NADZAB View Post
    -MEZ on ASX makes a profit of $550 million NZD pays 28% tax on the profit to IRD then subtracts (15% NRWT given to IRD then offset by supplementary dividend, cost neutral process) then converts to AUD and subtracts 15% NRWT and pays ATO
    That doesn't sound quite right either. MEZ has no tax obligations to the ATO. It is an NZ company operating in NZ and pays all its tax to the IRD in New Zealand. If 15% is subtracted off your MEZ dividend before you get it, then this is 'you' paying tax, not MEZ! If MEZ is deducting tax then they are paying it on your behalf as MEZ themselves have no tax obligation in Australia.

    Quote Originally Posted by NADZAB View Post
    -BHP on ASX makes a profit of $550 million AUD pays 30% tax on the profit to ATO then pays me dividend

    They reason for the questions is probably obvious but I am trying to see which method has the least tax overall the reason for complicating it with NZ dual listed companies is I really like the NZ power companies.
    I would have thought there might be a way of MEZ getting the same overall tax treatment as BHP?
    MEZ is a New Zealand company operating in New Zealand and BHP is an Australian company operating in Australia. You really expect them to have the same tax treatment?

    I suggest you qualify what you mean by 'least tax overall'. You seem to use this phrase interchangeably both referring to 'the tax you have to pay' and 'the tax the company has to pay'. They are not the same thing.

    SNOOPY
    Last edited by Snoopy; 07-07-2019 at 10:01 AM.
    To be free or not to be free. That is the cash-flow question....

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