I have a question about a dividend that is declared to be foreign conduit income. The situation is for an individual that is an Australian citizen. Say that the total dividend was AUD1000 and what was paid to the individual was an unfranked dividend of AUD700, with AUD300 paid as US withholding tax. Do I declare AUD1000 as the unfranked amount and nothing for TFN amounts withheld? Or do I declare AUD1000 as the unfranked amount and AUD300 for TFN amount withheld. Or is the AUD300 an allowable deduction? Or something else? The reason for the question is that if I declare AUD1000 for the unfranked amount and nothing for TFN amount withheld, then I will have double taxation. That is, 30% tax paid out of this dividend to the US tax dept and then a further 32.5% paid to the ATO, and I thought there was general understanding that the ATO tries to avoid double taxation. Thanks for your help.
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Do I declare AUD1000 as the unfranked amount and nothing for TFN amounts withheld? Or do I declare AUD1000 as the unfranked amount and AUD300 for TFN amount withheld. Or is the AUD300 an allowable deduction? Or something else?
Something else - show $ 1000 as foreign income, and $ 300 as foreign tax credit.
Even if dividend is prefilled as an unfranked dividend.
TFN tax is only for AUS tax deducted from AUS dividends and interest.
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Do I declare AUD1000 as the unfranked amount and nothing for TFN amounts withheld? Or do I declare AUD1000 as the unfranked amount and AUD300 for TFN amount withheld. Or is the AUD300 an allowable deduction? Or something else?
Something else - show $ 1000 as foreign income, and $ 300 as foreign tax credit.
Even if dividend is prefilled as an unfranked dividend.
TFN tax is only for AUS tax deducted from AUS dividends and interest.
@Bruce4Tax Thank you for your reply. It's very clear and makes sense to me in terms of avoiding double taxation. Much appreciated.
Hey @LRS,
You'll still need to report the full amount of capital gains on your tax return under the capital gains section. You may be eligible to claim the tax back that you've already paid in the foreign income section of your tax return.
We've had a similar question to this asked before you may like to take a look at our response.
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