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Beginner · Lesson 4 of 4Investing internationally: tax and practical points
US shares usually withhold tax from dividends. Australians who lodge a W-8BEN form generally have 15% withheld under the Australia-US tax treaty instead of 30%. You declare the gross foreign income in Australia and can usually claim a foreign income tax offset.
Foreign dividends carry no franking credits, so compare after-tax yields carefully. Currency movements change your returns and your capital gains, which are calculated in Australian dollars.
Australian-domiciled ETFs that hold global shares handle much of this paperwork for you, which is one reason many investors prefer them.
Key takeaways
- Lodge a W-8BEN to reduce US dividend withholding to 15%.
- Claim a foreign income tax offset; no franking on foreign dividends.
- CGT is calculated in AUD, so currency moves matter.
Check your understanding
1. With a W-8BEN, US dividend withholding for Australians is usually...
- 0%
- 15%
- 30%
- 45%
Show the answer
15%. The treaty rate is 15%.
2. Do US dividends carry Australian franking credits?
- Yes
- No
- Only for ETFs
- Only in super
Show the answer
No. Franking only applies to Australian company tax.
Go deeper
- Wikipedia: W-8BEN
- YouTube videos: W-8BEN australian investors US shares tax
- Investopedia: foreign tax credit
- ATO: foreign income tax offset
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