International Dividend Investors Living Abroad

[Sir Burr]

Yep - i have been doing an orderly sell down and switch to FF dividends over the last 14 months or so, this will continue for another 18 months.

Haha I've been doing the same switching to FF.

Here is another gotcha and I think if possible better leave 11 months into the tax year and claim all of the $18,200 threshold less one month:

https://www.ato.gov.au/Individuals/...tralia-with-the-intention-to-reside-overseas/

 

[Rc366]

10% on interest/dividends

Apologizes, what are you referring to here?
My understanding is that dividends have two tiers of tax, tier one, is commonly referred to as (company) withholding tax, and is set by the companies domicile location and its governing tax laws (ie; AU tax is a flat 30%) after this rate is applied you then may or may not be eligible for a reduced tax rate based on your residency status and/or the tax treaty in place (if you are an international investor)
The second tier is income tax

Tier one taxes can be viewed here
http://us.spindices.com/documents/additional-material/withholding-tax-index-values.pdf

AU tax treaties here
http://www.treasury.gov.au/Policy-Topics/Taxation/Tax-Treaties/HTML/Income-Tax-Treaties

 

[Rc366]

its self assessment

Interesting, i researched this earlier in the year and came to the conclusion it was no easy task. I notice the 'Work out your residency test' linked above, has been updated only 2 weeks ago. It wasn't that simplified last time I looked.
Have you spoken to an accountant or the ATO about this? Its common knowledge that AU non-residency is no easy thing.

 

[Rc366]

@Sir Burr

Hmmmm UBank is off the list:

Unfortunately it is not possible to either send or receive funds from overseas banks with a USaver. I apologise for any inconvenience.

The other account I have is a Credit Union so fingers are tightly crossed.

I'm thinking I might have to open another account just to withdraw money from IB. Didn't even think of this when I simply did a transfer to IB's Sydney CitiBank account.

Damn!

Cheers SB.

Going through the old IB discussions, can you shed any light on what banks you found allow you to receive international EFTs ?

 

[Sir Burr]

Going through the old IB discussions, can you shed any light on what banks you found allow you to receive international EFTs ?

I have a few IB accounts and can't remember what that was about but maybe when margin was stopped for Aussies and I pulled out of an individual account. If that was it, I can't remember what I did but at the moment I have a Westpac business account for IB.

 

[So_Cynical]

• Haha I've been doing the same switching to FF.

Here is another gotcha and I think if possible better leave 11 months into the tax year and claim all of the $18,200 threshold less one month:

https://www.ato.gov.au/Individuals/...tralia-with-the-intention-to-reside-overseas/

I plan to leave in late Jan 2019 ~ so 7 months into the fin year, i know technically its the date you leave but my plan is to simply say that i was testing the waters for that first 5 months and only made a decision on July 1st

(If you are leaving Australia with the intention to reside overseas) im leaving to try it out for 5 months then make a decision.

 

[Sir Burr]

Apologizes, what are you referring to here?

I wasn't sure about the tax on non franked dividends. Thanks for the AU treaties link which I think clears that up.

Do you know if the registry withholds the tax? It looks like it can vary a lot between countries!

 

[Sir Burr]

Online Exchange Brokers offer the best rates, transferwise gets a lot of attention but is ranks as the cheapest only when converting small amounts, which ironically is the most expensive way to exchange money, see here
https://www.monito.com/send-money/united-states/thailand/usd/thb/10000

Hi Rc366, no sure if relevant to you but as an example USD/THB transferring as USD through to a local bank, the exchange rate is not the top but better than many at monito and Citibank charges no fee.

Compare the TT rate here: http://www.scb.co.th/scb_api/index.jsp

This is more for people who are not nomadic and can open a local bank.

 

[Rc366]

Hi Rc366, no sure if relevant to you but as an example USD/THB transferring as USD through to a local bank, the exchange rate is not the top but better than many at monito and Citibank charges no fee.

Compare the TT rate here: http://www.scb.co.th/scb_api/index.jsp

This is more for people who are not nomadic and can open a local bank.

Hey thanks for the link. I checked with Citibank Brisbane, they will automatically convert all foreign income into the AUD and charge their own commission to do so.

N26 Bank is actively setting up international nomads so long as you can source a shipping address inside the EEA. They have Transferwise integrated at the point of sale and offer a zero fee global Mastercard debit card. However they impose a foreign currency conversion into the EUR. You need their Black account to avoid the exchange fee on Non-SEPA transfers and it cost about $9 p/month. They appear to be the best option for a budget globetrotter.

If your in a country for 12 months or more then I think your right, setting up a local bank account isn't too hard, gives free ATM access and you can still use exchange brokers for better rates

 

[Sir Burr]

Hey thanks for the link. I checked with Citibank Brisbane, they will automatically convert all foreign income into the AUD and charge their own commission to do so.

If your using IB, is there any reason you can't just convert the dividend returns to AUD through an IB forex trade. ie: select "convert to base currency" under Account in TWS. I'd think this would be far the cheapest way.

Then transfer the AUD to Citibank Plus and withdraw?

 

[Rc366]

@Sir Burr
Bare with me, as I'm just going through the process of setting up an IB account and I'm new to the stock markets, but wouldn't 'converting to base currency' just to withdraw and spend the money in a foreign currency be an unnecessary conversion?

If I receive a dividend in GBP , and wish to spend it in THB, why exchange it into AUD first?

 

[Sir Burr]

@Sir Burr
If I receive a dividend in GBP , and wish to spend it in THB, why exchange it into AUD first?

True!
I was thinking... Base Currencies are available in AUD, CAD, CHF, CNH, CZK, DKK, EUR, GBP, HKD, HUF, ILS, JPY, MXN, NOK, NZD, RUB, SEK, SGD or USD.

Although maybe you need an IB margin account to do it plus what happens when it's transferred into your bank account. I've never thought about this as I'm heading to one country and will open a bank account there.

That N26 bank looks interesting

 

[Rc366]

@So_Cynical
@Sir Burr

I thought I would mention this as i got around to discussing the topic with my accountant, when departing AU it is a fairly easy straight forward process and in fact is self asses able to become a non-resident for tax purposes, you can lodge a final tax statement declaring you are going oversees. The (residency) tests are applied to you, however they occur on the ATO end. My accountant deals with overseas clients regularly and has done this before, he did mention that anyone the ATO has a vested interest in will not allow this to happen. Such as those with Real Estate ownership, companies, etc etc. But for those who wind up and sell out and have no AU sourced income etc, the process is actually very simple.

In regards to the original topic of nomadic banking solutions for internationally diversified dividend income; my solution thus far is to use N26
one of the better reviews here - https://www.howitravel.co/n26-review/#
However if you are in a country for 3-6 months plus it is probably not that hard to open a local bank account. This avoids unnecessary currency conversions into the EUR (as is required with an N26 account)

As for currency conversions themselves, Interactive Brokers super low commissions and passing on the inter bank rate has proven cheaper than the cheapest online FOREX brokers. This may change when converting amounts under 15k

 

[Sir Burr]

But for those who wind up and sell out and have no AU sourced income etc, the process is actually very simple.

Thanks for following up Rc366.

We will sell our house due to the tax and effort to keep.
Have only AU super, share capital gains + dividend income outside of super plus savings so wonder if it's not so simple

Just read the thread again, about this:

I wonder whats the point of receiving a franked dividend, if all the above apply?

Means there will be no withholding tax for FF shares as tax is already paid.
ie: you get the dividend tax free.

Thanks for the link to the N26 review. I don't think ATM withdrawals are always totally free though. As in their example I know of a 200 baht (A$7.50) bank fee for all foreign cards stuck into ATM's there but is not mentioned. Understand they don't charge any fee which is good though

 

[Rc366]

Means there will be no withholding tax for FF shares as tax is already paid.
ie: you get the dividend tax free.

I didn't realize this, so on 100% FF shares there is no withholding tax, Nice!

I don't think ATM withdrawals are always totally free though.

Tell me about it, I started looking into these bank fees after looking in disbelief at my bank statement after getting back from overseers this year, about 10 atm visits ran me $250 in fees.
Our American cousins get the best deal in this space, Charles Schwab and few others reimburse you overseas transaction fees, but they won't sign up AU residents, I tried

 

[Sir Burr]

Capital gains zero but leaving is a CGT event, good news is that this can simply be deferred, however when you do decide to pocket the gain there is no discount or tax free threshold.

Hi So_Cynical, was just looking through this again and you mentioned "CGT event, good news is that this can simply be deferred".

How does that work? ie: deferring the CGT. Been looking at the ATO but couldn't see anything about that.
Thanks.

 

[So_Cynical]

Thanks for following up Rc366.

We will sell our house due to the tax and effort to keep.
Have only AU super, share capital gains + dividend income outside of super plus savings so wonder if it's not so simple

Just read the thread again, about this:


Means there will be no withholding tax for FF shares as tax is already paid.
ie: you get the dividend tax free.

Im in the same boat - share capital gains + dividend income outside of super plus savings.

Just revising all this and re-read the thread again.

I didn't realize this, so on 100% FF shares there is no withholding tax, Nice!

True and this is a great advantage - something im also looking into is foreign sourced income from listed trusts, as a non Aust resident no tax is payable on foreign sourced income even if its paid to you via trust distributions (dividends) by an Australian based company...anyway that's how it looks so far.

 

[So_Cynical]

Hi So_Cynical, was just looking through this again and you mentioned "CGT event, good news is that this can simply be deferred".

How does that work? ie: deferring the CGT. Been looking at the ATO but couldn't see anything about that.
Thanks.

Yeah, so becoming a NTR (non tax resident) happens on a particular day, and on that day a CGT event happens, its essentially the same as selling all your shares is a CGT event except that in the case of becoming a NTR you haven't sold, but its a CGT event anyway.

So you either pay the tax payable (with 50% discount) or defer and pay later, or never, im not sure how this plays out over 20 + years etc or after death ? anyway you still need to keep records and calculate a figure thats due as from that point forward you are a NTR and will not pay any CGT, and loose the 50% discount on the deferred CGT.

 

[SuperGlue]

Queensland property owners residing overseas please be aware that there is land tax to be paid & there is an "absentee surcharge" on top of that starting this year.

According to tax agent not only foreigner property owners but many Queensland residents (residing overseas) are caught up in this.

Don't know whether it apply to other states and territory.

https://www.propertylawtoday.com.au/property-law/absentee-land-tax-changes-july-2017/

 

[Sir Burr]

many Queensland residents (residing overseas) are caught up in this.

Non stop "them" finding ways :|

due as from that point forward you are a NTR and will not pay any CGT, and loose the 50% discount on the deferred CGT.

Thanks, if you don't report the CGT when you become a NTR, is the CGT when you bought the shares right up until you sell as a NTR?

I wonder what happens if you deferred and came back as a resident of Australia

At least it seems just reporting and don't actually sell them