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We’re interested in the iShares IVV ETF for our SMSF to increase our diversification & enter the US Market (for the first time) following the recent corrections to more attractive values. Currently, we only have Australian Shares, TDs & Cash accounts. Are there any onerous Australian or US tax implications if we invest in this S&P 500 ETF? Any other issues we need to be aware of?
A: Nothing too onerous, but you should fill out a W-8BEN form. This is a form from the US Department of Inland Revenue, and you must complete it exactly! It is one of the poorest designed forms you are ever likely to encounter, so follow the instructions that Blackrock/iShares (the manager of the ETF) provide you. Completing this means that a concessional rate of withholding tax of 15% will be applied to distributions.
Australia has a “double tax” treaty with the USA, meaning that any withholding tax deducted by the US Government will be recognized by the ATO as a foreign tax credit.
One other consideration. There is also a currency hedged version of IVV. A fraction more expensive and not as liquid, but worth considering when the aussie dollar is getting below what many might consider its long term value. Trades under the code IHVV.
