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Implications of MIT withholding for foreign residents

Last updated 21 February 2023

Withholding tax on MIT fund payments and dividend, interest or royalty (DIR) payments (including deemed payments) received from Australian MITs (and AMITs) is a final tax imposed on foreign residents. Payments (including deemed payments) received by a foreign resident that are subject to withholding tax are non-assessable non-exempt income for income tax purposes.

If you are a foreign resident, your liability for withholding tax will generally be met by the amount being withheld by the trustee of an Australian MIT, custodian or other entity. If your only Australian income is a fund payment or DIR payment from a MIT, you are not required to lodge an Australian tax return, as long as tax has been correctly withheld from your payment.

However, mismatches in withholding amounts can occur in certain situations, such as where the address of the recipient of the payment (such as a global custodian) is different from the address of the ultimate foreign investor. As a result, the withholding tax paid to us could be greater (or less) than the foreign investor's actual withholding tax liability.

If the amount of withholding tax paid to us by the MIT is greater than your liability, you can apply for a refund of the overpaid amount. You will need to make a top-up payment of withholding tax if the amount paid to us is less than your liability.

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