Hi there, We have a client who operates a non resident company in Australia with an ARBN and pays Australian tax on the profits. When paying a dividend from this company, (a shareholder is an australian resident):
Any help or guidance most welcome.
Hi @AndrewAN,
A dividend paid by a non‑resident company generally can’t be franked. Only Australian‑resident companies (and New Zealand companies that have formally elected to join the Australian imputation system) can be franking entities and attach Australian franking credits to a dividend.
Because of this, dividends paid by a foreign‑resident company won’t carry Australian franking credits, even if the company pays Australian tax on its Australian‑source profits.
For an Australian‑resident shareholder, the dividend is treated as foreign income. If foreign withholding tax is deducted overseas, the shareholder may be able to claim a foreign income tax offset for that tax, subject to the usual rules.
If the company happens to be a New Zealand company, and you think the Trans‑Tasman imputation rules might apply, that has its own special eligibility requirements. Otherwise, the dividend will be unfrankable.
Hi @AndrewAN,
A dividend paid by a non‑resident company generally can’t be franked. Only Australian‑resident companies (and New Zealand companies that have formally elected to join the Australian imputation system) can be franking entities and attach Australian franking credits to a dividend.
Because of this, dividends paid by a foreign‑resident company won’t carry Australian franking credits, even if the company pays Australian tax on its Australian‑source profits.
For an Australian‑resident shareholder, the dividend is treated as foreign income. If foreign withholding tax is deducted overseas, the shareholder may be able to claim a foreign income tax offset for that tax, subject to the usual rules.
If the company happens to be a New Zealand company, and you think the Trans‑Tasman imputation rules might apply, that has its own special eligibility requirements. Otherwise, the dividend will be unfrankable.
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