tax on dpr dividends on etf

 Author: NikkiATO(Community Moderator)Community Moderator

28 Aug 2025

Hi @Gianluca14809,

If you’re an Australian resident living in Australia, your American tax responsibilities are usually limited to the withholding tax already deducted by the US under the Australia-US tax treaty. For Australian residents, this withholding tax is typically 15% and is automatically applied to dividends paid by US-based ETFs.

Here’s what you need to know:

Australian Tax Obligation

All foreign-sourced income (including dividends from US-based ETFs) must be declared in your Australian tax return. This applies even if the dividends are automatically reinvested rather than paid out as cash. The income must be reported in Australian dollars.

Foreign Income Tax Offset

To prevent double taxation, you can claim a foreign income tax offset in your Australian tax return for the US withholding tax that has already been deducted. The offset is capped at the amount of Australian tax payable on the foreign income. This means you won’t be taxed twice on the same income, but you may still owe additional tax if your Australian tax rate on your income is higher than the 15% withheld in the US.

Exchange Rate Conversion

When declaring your foreign income and the withholding tax, you need to convert the amounts from USD to AUD. The conversion should be done using the appropriate exchange rate, typically the rate on the date the income was received.

To ensure compliance, it’s important to:

• keep accurate records of all transactions, including dividend statements and withholding tax details
• use the correct exchange rates when converting amounts to AUD
• seek advice from a tax professional if you’re unsure about your reporting obligations.

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