Am I correct in saying that we won't pay double tax on capital...

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gilded

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16/08/24

15:08

Post #: 75241146
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Originally posted by Big Dog: ↑

For those shareholders who have been as confused as I have regarding the structure of CDI’s and how they work, I have shared my research below for them. I sincerely hope it provides some clarity.

CHESS Depositary Interests (CDIs) are a way for investors to buy shares in foreign companies that are listed on the Australian Securities Exchange (ASX). Normally, shares in foreign companies would be difficult to trade directly in Australia, but CDIs make this process simpler.

Here’s a basic explanation of how CDIs work:
1. Ownership: When you buy a CDI, you don’t directly own the foreign shares. Instead, an Australian custodian holds the actual shares, and you own a “depositary interest” in them.

This gives you most of the same rights as if you owned the shares directly, such as the right to dividends and voting.

2. Dividends and Voting: If the foreign company pays a dividend, you receive the equivalent payment in Australian dollars. If there’s a vote, the custodian votes on your behalf according to your instructions.

TaxationAustralian Taxation: • Dividends: The dividends you receive from CDIs are treated as income and must be declared on your Australian tax return. These dividends may be subject to withholding tax by the foreign country before you receive them. You might be able to claim a foreign tax offset for this tax when you file your Australian taxes. •

Capital Gains: If you sell your CDIs for a profit, the gain is subject to capital gains tax (CGT) in Australia.

Foreign Taxation: • Withholding Tax: The foreign country where the original shares are held may tax your dividends at a certain rate. The rate can vary depending on the country and any tax treaty it has with Australia. •

Double Taxation: To avoid paying tax twice, you can usually claim a foreign tax credit in Australia for any tax paid overseas on your dividends.

Requirements • Australian Tax Return: You need to declare the income from CDIs on your Australian tax return and report any capital gains. •

Foreign Tax Credit: Keep records of any foreign tax paid so you can claim a credit on your Australian return.In summary, CDIs allow you to invest in foreign companies via the ASX while giving you rights similar to direct ownership, with specific taxation rules applying both in Australia and potentially in the foreign country.

Kind Regards

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Am I correct in saying that we won't pay double tax on capital gains in the USA ? Only dividends ?
CGT will only be with our ATO ?
There doesn't seem to be any reference to this in the article . It only makes reference to dividends being taxed from what I can see.
Thanks
AVR Price at posting: $15.20 Sentiment: Hold Disclosure: Held
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