Tax position for a New Zealander investing in an Australian compay
What is the tax position for a New Zealand investor in an Australian company? Can the New Zealand investors use any imputation (franking) credits attached to the dividends? ANSWER
- Answer
- No, not under the law as it currently stands. However, 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.
Note: the New Zealand Government is in discussion with Australian tax officials over trans-Tasman tax issues. In August 2000 the Treasurers of both countries announced that they were going to examine the issue of "triangular taxation". This concerns the situation where New Zealand shareholders in an Australian company operating in New Zealand are unable to access franking credits, and vice versa. The idea is to be able to recognise certain franking credits for New Zealand tax purposes.
Therefore, in your situation there may be relief to the extent the Australian company operates in New Zealand and the dividends arise from that operation.
Income Tax Act 1994, ss CF 6,
LC 6, NG 1(2)(a).
2001 New Zealand Master Tax Guide, 26-185.
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