Forum Archive Index - December 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Malcolm,

>
>Snoopy if you get in NZ an australian imputed dividend you don't get
>charged Australian non resident witholding tax so it works out the
>same just a different way of doing it
>  
> M H & M M Cameron
> Queensland
> 


It's not quite the same though is it?

For example here is my last TLS dividend statement

Dividend Rate     11c
Unfranked Amount   0c
Franked Amount    11c
Franking Credit    4.71c

On my income tax return here I have to declare my income on this 
transaction as 11c and pay full tax on that.  This is due to NZ not 
recognising the Australian franking credits system, just as 
Australia does not recognise the NZ imputation credit system.  Fair 
enough, and I guess you could 'tit for tat'.

By contrast if you were to own Telecom NZ shares your dividend 
statement would look something like

Dividend Rate                 5c
Unimputed dividend            0c
Imputed Dividend              5c
Imputation Credit             2.5c
Supplementary O/Seas dividend 0.8824c
Total O/Seas dividend         5.8824c

Now, I know that here in NZ we take off witholding tax before the 
dividend gets posted overseas, so your dividend cheque will be for 
5.8824c less 15% = 5c.  And you lose out on the imputation credit, 
just like I lost out on the franking credit.

BUT (and here is the difference).

When you fill out your tax return, you will be able to claim a gross 
payment of 5.8824c, not just 5c.  This amount 5.8824c includes some 
of the tax paid by Telecom already.   There is no equivalent claim 
that I can make for my TLS share dividend here in New Zealand.

So, in tax treatment terms you are better off.  Or have I got it 
wrong somewhere?

SNOOPY




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