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Taxation Determination

TD 93/116

Income tax: to what extent are dividends paid by a resident company to a non-resident individual subject to withholding tax?

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FOI status:

may be releasedFOI number: I 1215335

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. The payment of a fully franked dividend is not subject to withholding tax under paragraph 128B (3)(ga) of the Income Tax Assessment Act 1936.

2. If a partially franked dividend is paid, the unfranked portion will be subject to tax at the dividend withholding tax rate of 30%. However, this rate is generally reduced to 15% in the case of countries which have a double tax agreement with Australia.

3. If an unfranked dividend is paid, the whole dividend is subject to withholding tax.

Note:
In the case of the Philippines and Thailand, a different withholding tax rate applies.

Example:

John is a resident of a country in which Australia has a double tax agreement. He received a fully franked dividend of $200 from Aust. Co. This dividend is not subject to withholding tax.
He also received a dividend of $100 which was 75% franked, 25% unfranked. The unfranked portion of $25 is subject to withholding tax of $3.75 ($25 x 15%).

Commissioner of Taxation
24/6/93

Previously issued as Draft TD 93/D1

References

ATO references:
NO BAN TD 25

ISSN 1038 - 8982

Subject References:
franked dividends;
withholding tax

Legislative References:
ITAA 128B(1);
ITAA 128B(3)(ga);
ITAA 128B(4)

TD 93/116 history
  Date: Version: Change:
You are here 24 June 1993 Original ruling  
  19 January 1995 Withdrawn  

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