Tax implication of trading US stocks for an Aussie

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gregmorris

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Post Number: 1
Registered: 06-2007

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Monday, June 25, 2007 - 08:07 pm:

hi

the brokerage firms like Zecco are asking me to send in W8BEN form and i am told that they can deduct 15% from the earnings of Non US resident.
is that true?

if iam a tax payer in Australia do i have to have any such tax cut imposed when trading overseas stocks or futures?

ohkoolnutz

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Post Number: 608
Registered: 10-2005

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Wednesday, June 27, 2007 - 07:30 pm:

Greg,

do not trade until you have filled in the W-8BEN form and called them personally that they received it. It's worth the overseas call to confirm all paperwork is in order.

The US law states something as follows:

"Any non-resident who hasn't completed a W-8BEN form will attract 35% tax on the sale of the stock."

The tax is applied to the sale value and not to the profit.

Without W-8BEN completed:
If you buy $1000 of stock and sell it for $1100 you will only get credited $715. (35% tax on sale value)

With W-8BEN completed:
If you buy $1000 of stock and sell it for $1100 you will get credited with $1100.
(15% tax on earnings (dividends/interest payments) only)

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ohk

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