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Junior Member
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 ASXCode |
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
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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:
Attachment 10636
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Originally Posted by Snow Leopard
5%. Should work well.
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Junior Member
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
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Member
I hope people don't mind dumb questions - but a rookie couple of questions on dividends as I learn more about the share market
1. I see that there are published ex-dividend dates which are after the dividend announcements - eg FBU is this Friday. So FBU have announced 18c per share dividend. Question: Why don't people go and buy a load of stock before Friday - get the dividend and then sell the shares next week ?
2. I have also read that sometimes a share price will drop after the ex-dividend date, by about the dividend amount ..... does that answer my question above (ie your shares are worth less) - OR is this typically a short term drop in price and the share price tends to recover the drop in price reasonably quickly ? Again using FBU - seems to be a strong company and I assume would recover quickly from a 18c share price dip ....
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Originally Posted by STr
I hope people don't mind dumb questions - but a rookie couple of questions on dividends as I learn more about the share market
1. I see that there are published ex-dividend dates which are after the dividend announcements - eg FBU is this Friday. So FBU have announced 18c per share dividend. Question: Why don't people go and buy a load of stock before Friday - get the dividend and then sell the shares next week ?
2. I have also read that sometimes a share price will drop after the ex-dividend date, by about the dividend amount ..... does that answer my question above (ie your shares are worth less) - OR is this typically a short term drop in price and the share price tends to recover the drop in price reasonably quickly ? Again using FBU - seems to be a strong company and I assume would recover quickly from a 18c share price dip ....
The published ex-dividend dates are typically hindsight dated so in order for the person trying to game the dividend system, they must also know what date the ex-dividend date will be declared. How does one know what previous date would that be?
If the ex-dividend date is post dated, then the share price (in theory) will reflect the dividends being paid which is a drop in the share price. When profits are paid out from the balance sheet, this drops the book value per share, and thus share price. A recovery in the share price would be determined on the future income of the company. Companies like The Warehouse Group have had a dividend payment policy for decades which reflect why their share price does not have much capital gain. Whereas companies like Warren Buffet's Berkshire Hathaway has never paid a dividend, by the share price has grown immensely over multidecades. This is an understanding I have not quite understood in NZ where you have investors wanting dividend payment, but the income tax laws in NZ do not have capital gains tax. One would certainly be better owning companies that have the tax free capital gain on their share price instead of the dividend (despite having some level of imputation credit).
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Member
Thanks for the response SBQ. Doesn't this link provide forward guidance to the ex-dividend dates ? https://www.nzx.com/markets/NZSX/dividends
Interesting your comments on TWG - it is a stock I have been watching (bought a few but chump change) - and wondered why despite all the hype the Share price hasn't moved much over the last 6 months.
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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.
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Junior Member
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
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Originally Posted by NADZAB
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.
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Last edited by Snoopy; 06-07-2019 at 09:52 AM.
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