Where there is a double tax agreement, you can claim up to $1000...

Originallypostedbydincher

AsanewURWholder,IwouldappreciateanycommentbywiserheadsonmyURWdividendcalculations(allfiguresapproximate).

Firstly,although2A.2ofthedividendannouncementsaysthis.27Eurodividendrelatesto12months,itisinfactfora6monthperiod.Weshouldthereforereasonablyexpectasimilardividendin6monthstime.

AtthecurrentexchangeratethisconvertstoanAustraliandollardividendof.27/.59=46centsAustralian(veryapproximatelyandsubjecttoexchangeratefluctuations).

This46centdividendissubjecttoawithholdingtaxof28%,asnotedin2A.13ofthedividendannouncement.Thisleavesapproximately33centsAustralianwhichwillbedistributedon9April.

Furthermoretheopportunityexistsforindividualstoreducethe30%Frenchcomponentofthewithholdingtaxto12.8%.Thiswouldaddanadditional7.5centsplustothedividend(46ctimes17.2%taxreduction).Inotethatthereductionisdifferentfor'entities'anda$114feeapplies,sothisopportunityisnotforeveryone.

Thereforeonmycalculations,theURWannualdistributionisapproximately66centsAustralianrisingtoapproximately81cents(ifyoucanavailyourselfofthetaxreductionopportunity).

Iwouldbegratefulforanycomments,especiallyanyexperienceswithapplicationstoreducetheFrenchWithholdingtax.

Where there is a double tax agreement, you can claim up to $1000 of the foreign tax paid as a foreign income tax offset against your Australian tax. I do not have a lot of div income attracting foreign tax so I did this and effectively got back all of the foreign tax on URW divs (and a few others) back. Even over $1000 there is a benefit but the calculation is complicated.

Won't work if you are a big holder of shares paying foreign tax (except NZ shares where you get an extra div to compensate generally). Then you have to use the claim back method as you outlined.

ATO website has info and examples.