Withholding tax on dividends

[drew]

Hi all

Im new to sharetrader and love the site and the discussions.

I have a question about withholding taxes on dividends. I own shares in the US personally and through a company with ASB Securities.

I noticed on my latest dividend statements tax has been withheld at 30% and i was under the impression that the NZ/US double tax treaty limited this to 15%. Has anyone encountered this issue with ASB or their own brokers?

Appreciate any comments on this.

Drew

[shasta]

Hi all

Im new to sharetrader and love the site and the discussions.

I have a question about withholding taxes on dividends. I own shares in the US personally and through a company with ASB Securities.

I noticed on my latest dividend statements tax has been withheld at 30% and i was under the impression that the NZ/US double tax treaty limited this to 15%. Has anyone encountered this issue with ASB or their own brokers?

Appreciate any comments on this.

Drew

Under the rules for double tax treaty countries, you will be limited to claiming the maximum amount allowable under the country you reside in.

So US dividends having with-holding credits are claimable to the same extent as if you were taxed in NZ.

You may well be "overtaxed" in this instance & may be due a refund in your tax return.

This may help you

http://taxpolicy.ird.govt.nz/interna...DTA/index.html

[drew]

Hi Shasta thanks for the quick response!

Agree in my personal account I can claim the taxes as a foreign tax credits.

The company however will be paying NZ tax under the FDR method and since the dividends are exempt the taxes withheld on the dividends can not be claimed as foreign tax credits.

I thought that perhaps the US companies dont have my shareholder details therefore they are withholding at 30% but ASB Securities holds the shares as nominee therefore it is likely to be their mistake. But surely this is not just me having this problem? Others must have encountered this also

[shasta]

Hi Shasta thanks for the quick response!

Agree in my personal account I can claim the taxes as a foreign tax credits.

The company however will be paying NZ tax under the FDR method and since the dividends are exempt the taxes withheld on the dividends can not be claimed as foreign tax credits.

I thought that perhaps the US companies dont have my shareholder details therefore they are withholding at 30% but ASB Securities holds the shares as nominee therefore it is likely to be their mistake. But surely this is not just me having this problem? Others must have encountered this also

I'm with ASB Sec also, they should have passed on all relevent details.

Give them a call in the morning, they are very accessible.

Deriving income from overseas in a company, complicates things a bit.

Check the FIF thread in the newbies section, i posted more material in there

[777]

Drew I claim any tax paid on foreign income under the FDR regime. This year however I have not had any income to declare as using the CV method produces a loss. In this case I believe as there is no income then no claim of tax paid can be made. What was deducted is not a large amount so am not too concerned.

This is through my trust though which works as though you were an individual, except for the $50,000 minimus. Companies I am sure are different.

This is an old thread which may be of some help.

http://www.sharetrader.co.nz/showthr...&highlight=fdr

[Ish]

Hi Shasta thanks for the quick response!

Agree in my personal account I can claim the taxes as a foreign tax credits.

The company however will be paying NZ tax under the FDR method and since the dividends are exempt the taxes withheld on the dividends can not be claimed as foreign tax credits.

I thought that perhaps the US companies dont have my shareholder details therefore they are withholding at 30% but ASB Securities holds the shares as nominee therefore it is likely to be their mistake. But surely this is not just me having this problem? Others must have encountered this also

It is late and its been a long day so im a little fuzzy on this right now, but I believe your company can offset the US tax paid against its FDR income regardless of the dividends being exempt. Which for a company (that cant use CV) is bound to have tax to pay.

If you were an individual using the CV method and made a loss the answer may be different

I can check with more clarity in the light of day if you would like but I am pretty sure my above response is correct.

Cheers

[Jay]

Sorry if this has beem mentioned re FDR
I have a trust whom has shares - All Australian in the Top 500 on the ASX

Any one holding is less than $50K total holding over $50K.

My understanding is this:

As all shares are in the Top 500 Index normal tax on Dividends apply, ie FDR rules do not apply

Secondly please clarify - if I held XYZ Ltd $30K and ZYX LTD $35K which are outside the ASX 500 personally (as there is no threshold limit for trusts?) Does this come under the FDR rules .
Not sure whether it is your total portfolio or a singular holding that counts as the $50K, I'm thinking the former.

[shasta]

Sorry if this has beem mentioned re FDR
I have a trust whom has shares - All Australian in the Top 500 on the ASX

Any one holding is less than $50K total holding over $50K.

My understanding is this:

As all shares are in the Top 500 Index normal tax on Dividends apply, ie FDR rules do not apply

Secondly please clarify - if I held XYZ Ltd $30K and ZYX LTD $35K which are outside the ASX 500 personally (as there is no threshold limit for trusts?) Does this come under the FDR rules .
Not sure whether it is your total portfolio or a singular holding that counts as the $50K, I'm thinking the former.

Your total portfolio cost price must be under $50k.

Should the market value double to $100k, so long as you havent added to the cost price, you are ok.

I'm assuming DRP's add to the total cost price, but would need to look into this further

Non individuals have other considerations however, so please ensure you receive proper tax advise before setting up any structures!

[Jay]

Thanks Shasta.

Appreciate your thoughts

[impacman]

Hi Jay. Not sure you were just using ASX company's as an example but my understanding is that ASX listed company's are exempt from FDR entirely i.e. can hold whatever value you like.

Cheers.

Have reread your post and see you were onto that one!