Share Dividends

Posted by BauhiniaBoy (55 days ago)

Hi. I've been investing in the Australian stock market for a while and just noticed that my dividend on BHP has been taxed at around 30%.

BHP is also traded on the FTSE and I'm tempted to switch my investment and buy the stock on the UK exchange.

Does anyone know whether dividends are taxed in the UK; particularly for expats like me who have no connection to the old country?

Many thanks.

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Posted by xyz123 (54 days ago)

yes, divendends are taxed, depending on-see links below:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_4016453

http://www.thetaxguide.co.uk/TaxUKDividends.html

hope this helps!

Posted by BauhiniaBoy (53 days ago)

Many thanks for the links :)

Posted by spaceren (45 days ago)

BB - I think you might be mistaken, my understanding is 30% is corporate tax, and you get a franking credit which means no withholding tax (HK has no tax treaty with Oz) if you are nonresident for tax.

BHP has been fully franked since forever (essentially).

If not fully franked you are right that a 30% final withholding tax on dividends from Oz companies.

Posted by BauhiniaBoy (43 days ago)

Many thanks Spaceren. I've googled "fully franked stock" and I'm not much wiser!
They seem to benefit Aussies on low incomes - not sure about expat Brits who have nothing to do with that country except for buying stocks....

I'll need to find out more but thanks all the same.

Posted by spaceren (42 days ago)

My understanding is if fully franked you get 100% of the dividend (statement might gross up, but ignore that, it is Oz tax reporting rubbish). If unfranked, you pay 30% final withholding tax if resident in HK (final because no refund or other amount payable). Benefits all Oz taxpayers as get full credit for corporate tax (unlike any other jurisdiction that taxes dividends, Oz gives credit for corp tax to reduce the double tax on dividends - otherwise say US dividends taxed at corporate level then individual 100 x 30% (say) x 30% = 49 cents in the dollar in your pocket.

I doubt UK treatment would better that, though it might.

Posted by BauhiniaBoy (35 days ago)

Many thanks but not much clearer (my fault not yours!).
I'm going to buy some BHP on the NYSE - that way I'll get the full amount as I don't pay US tax.
Cheers again.