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  • Dividends paid or credited by non-resident companies

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If you were paid or credited a dividend from a non-resident company, it will not be called a franked or unfranked dividend but is likely to be referred to simply as a dividend. Non-resident companies are not subject to the imputation system and you will not be entitled to claim a franking rebate for any tax paid by the company. However you may find that foreign tax has been deducted from the dividend so that the amount paid or credited to you is reduced.

    In most circumstances you will be liable to pay Australian income tax on the dividend. You must include on your tax return the full amount of the dividend-that is, the amount you are paid or credited plus the amount of any foreign tax which has been deducted-and claim a credit for the foreign tax paid.

    There are special rules which need to be satisfied for you to claim a foreign tax credit. See question 16 in TaxPack 2000 supplement and the publication How to claim a foreign tax creditThis link will download a file. To find out how to get this publication, see the inside front cover.

    Example

    Emma Citizen had shares in a company resident in the United States. She was entitled to be paid a dividend of $400. Before she was paid the dividend the company deducted $60 in foreign tax, sending Emma the remaining $340.

    When she fills in her Australian tax return Emma would include $400 at M item 16 on her tax return and she may be able to claim a foreign tax credit of $60 at O, item 16.

    End of example
    Last modified: 23 Dec 2019QC 16138