US Withholding Tax on Non-Residents (Particularly Australians)

O

OneFatCat

I searched the forums and read that if you have filed a W8-BEN form you are exempt from capital gains taxes in the US. Some of those posters were Australians who stated that they pay no withholding tax for capital gains in the US.

But I did a bit research and found this Tax Treaty document from the IRS which details the tax considerations for all treaty countries. If you flip to page 33 you can see that Australia has a 30% capital gains tax...?

http://www.irs.gov/pub/irs-pdf/p901.pdf

Can anyone shed some light on this issue for me? Does that mean that your broker (say, IB) will withhold 30% of all Capital Gains and send that to the US treasury? Or am I understanding something wrong?

Thanks for your help.
 
good luck with that. i live in Costa rica and the only thing we need to pay (for non-us citizens) is taxes on dividends. other thatn that if oyu make any moeny you are suppsed to report it as income in your home country.

Luckily for me our tax collection system is in the dark ages. havent paid in years.
 
Tax authorities in various countries can and will deem your capital gains as income and claw them back into your annual return.

It is then encumberent on you to prove otherwise, which can be difficult to do without trapping yourself.
 
I just got of the phone with IB, and they are not withholding any of my capital gains.

But there still is the disparity with that tax document I linked above that lists Australia as 30% Capital Gains taxed. So I still don't understand what that 30% is implying...
 
Quote from OneFatCat:

I just got of the phone with IB, and they are not withholding any of my capital gains.

But there still is the disparity with that tax document I linked above that lists Australia as 30% Capital Gains taxed. So I still don't understand what that 30% is implying...
More...
That's 30% IF you fail to fill out a W8 form.

Once you fill out the correct W8 form...
Everything reverts to the Tax Treaty AU has with USA.

Your only tax withholding...
Will likely be 15% on all dividends paid.
 
Quote from OneFatCat:

I just got of the phone with IB, and they are not withholding any of my capital gains.

But there still is the disparity with that tax document I linked above that lists Australia as 30% Capital Gains taxed. So I still don't understand what that 30% is implying...
More...

You need to follow this through from the aussie end.
 
Quote from HoundDogOne:

That's 30% IF you fail to fill out a W8 form.

Once you fill out the correct W8 form...
Everything reverts to the Tax Treaty AU has with USA.

Your only tax withholding...
Will likely be 15% on all dividends paid.
More...

So are you saying that in the case of say, Germany -- which has 0% capital gains according to that IRS doc -- if a W8 form is not submitted there will be no withholding?

Because why are most countries listed as 0% and few such as Australia and the UK listed as 30%?
 
Quote from OneFatCat:

So are you saying that in the case of say, Germany -- which has 0% capital gains according to that IRS doc -- if a W8 form is not submitted there will be no withholding?

Because why are most countries listed as 0% and few such as Australia and the UK listed as 30%?
More...

No withhold on capital gain.
Withhold for foreign persosn who fill a W8-BEN is applied on interest or dividends.
 
irslogo.gif



U.S. Tax Guide for Aliens - Publication 519



International Income Taxes (including "the Aussie end")
 
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