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If our super fund bought into an ETF which owns only US shares, I understand that US withholding tax of 30%, or, possibly 15%, would be deducted from distributions.
My fund is in pension phase and doesn’t pay Aussie tax so would I get a refund of the US withholding tax?
A: Thanks for the question.
Income earned on US investments will generally be subject to a withholding tax of 15%. In Australia, the tax you pay to the US Inland Revenue will be treated as a tax offset.
However, like most tax offsets – they are not refundable – so while they can be applied to reduce your tax payable, if they are not used, you don’t get the money.
So, if you are in pension mode and are not paying any tax, then then you won’t be able to use the tax offset. In other words, you lose the withholding tax.
The one form of tax offset that is of course refundable is Australian imputation credits.
