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ATO Interpretative Decision

ATO ID 2002/312 (Withdrawn)

Income Tax
Assessability of New Zealand dividends

Attention This ATO ID is withdrawn. Guidance on the issue contained in this ATO ID can be found at Interests in foreign entities (QC 17031).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 23 February 2018.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Is a dividend received from shares held in a New Zealand (NZ) company included in the taxpayer's assessable income under subsection 6-10(4) of the Income Tax Assessment Act 1997 (ITAA 1997)?


Yes. A dividend received from shares held in a NZ company is included in the taxpayer's assessable income under subsection 6-10(4) of the ITAA 1997.


The taxpayer is a resident of Australia for taxation purposes.

They own shares in a NZ company.

The taxpayer received a dividend from these shares from which NZ withholding tax was deducted at the rate of 15%.

Reasons for Decision

Section 6-10 of the ITAA 1997 provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included in assessable income by another provision. The assessable income of an Australian resident includes statutory income from all sources, whether in or out of Australia (subsection 6-10(4) of the ITAA 1997).

Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is subsection 44(1) of the Income Tax Assessment Act 1936 (ITAA 1936) which deals with dividends. Subsection 44(1) of the ITAA 1936 provides that the assessable income of a resident shareholder of a company (whether the company is a resident or a non resident) shall include dividends paid by the company out of profits derived by it from any source.

In determining liability to Australian tax on foreign source income it is necessary to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act).

Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions).

Schedule 4 to the Agreements Act contains the double tax convention between Australia and New Zealand (the NZ Convention Agreement). The NZ Convention operates to avoid the double taxation of income received by Australian and NZ residents.

Article 10 of the NZ Convention deals with dividends. Paragraph (1) of Article 10 provides that dividends paid by a NZ company to a resident of Australia may be taxed in Australia.

Paragraph (2) of Article 10 of the NZ Convention provides that NZ dividends may also be taxed in NZ but that the rate of tax is not to exceed 15%.

Paragraph (1) of Article 23 of the NZ Convention provides that, subject to the provisions of the law of Australia, a credit for any tax paid in NZ will be allowed against Australian tax paid on income from NZ sources.

The NZ dividends received by the taxpayer form part of their assessable income under subsection 6-10(4) of the ITAA 1997. As foreign tax has been paid in relation to this income a foreign income tax offset will be allowed..

Date of decision: 21 June 2001

Year of income:Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1936
   subsection 44(1)

Income Tax Assessment Act 1997
   section 6-10
   subsection 6-10(4)
   section 10-5
   Division 770

International Tax Agreements Act 1953
   section 4
   Schedule 4, Article 10
   Schedule 4, Article 10(1)
   Schedule 4, Article 10(2)
   Schedule 4, Article 23
   Schedule 4, Article 23(1)

Foreign income tax offsets
Foreign income
Dividend income
Double tax agreements

Business Line: Small Business/Individual Taxpayers

Date of publication: 28 March 2002

ISSN: 1445-2782

ATO ID 2002/312 (Withdrawn) history   Top  
   Date   Version 
   21 June 2001   Original statement   
 You are here ®  23 February 2018   Withdrawn   


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