Taxation for US ETF, ASX Global ETF, and Australian ETF

i’m not a qualified accountant so treat the below with caution, if you need professional advice, then you really should speak to one.

my understanding is that there are a couple of considerations – where the ETF is domiciled and where the ETFs income is sourced from. these are not necessarily the same thing!

for example IVV is domiciled in Aust, but it’s an ETF over the S&P 500, so its income is sourced from the US. even though it’s not necessary to fill out a W-8 BEN form for it thanks to the Aust domicile, 15% of the dividends are automatically withheld and every year the fund will send a statement saying how much they actually paid you and how much they withheld. you need to declare the sum of the two as foreign sourced income, and the withheld amount in the foreign income tax offset box when you do your tax return, and the latter then gets lopped off the tax you would otherwise have to pay. you do not get double taxed.

if i was to sell IVV units (i have never sold any to date so i can’t confirm this) then since it is domiciled in Aust, that would get treated as Aust capital gains (or losses), just like it was an ASX stock.

whereas with VEU (domiciled in the US), i do have to fill out a W-8 BEN form every year or two (or in my case W-8 BEN-E since i invest thru a corporate trust), and both the dividends and capital gains (upon disposal of units) would be subject to US withholding tax. there is still no double taxation as Aust and the US have a tax treaty preventing this.

again, if you’re unsure about any of this, do yourself a favour and talk to an accountant about it. there’s no point scrimping on accountancy fees only to get mercilessly hounded by the ATO and fined if you don’t declare things correctly.


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