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If I invest in dividend paying US shares, how do I receive the dividend payments?
Are there any other ramifications or possible hiccups involved in holding dividend paying US shares?
A: If the US company pays a dividend, it will be paid to you via the custodian of your shares (in most situations, your broker will have a custodian that holds the shares on your behalf). As a non-resident, withholding tax of up to 30% will be deducted.
You will be asked to complete a form from the US Dept of Treasury – a W-8BEN form – which you are legally required to provide. Once processed, this will reduce the withholding tax rate to 15%. Tax withheld by US authorities is effectively an offset to any tax you pay in Australia.
US shares typically pay much lower dividends than the case in Australia – the average dividend yield is around 1.5
