Beneficial owners recognised in Australia

22.02.2023

The following types of beneficial owner are recognised for tax purposes in Australia:

  • Non-residents of Australia;
  • Tax-exempt beneficial owners;
  • Residents of a DTT country;
  • Residents of an EOI country;
  • Residents of Australia.

Non-residents of Australia (not tax-exempt, not DTT resident)

Debt securities:

  • Withholding tax rates are applicable as follows:
    • Securities compliant with Section 128F of the Australian Income Tax Assessment Act 1936: 0% withholding tax is applied by default. No certification or tax instruction is required to obtain exemption.
    • Securities not compliant with Section 128F of the Australian Income Tax Assessment Act 1936: Clearstream Banking will apply 10% withholding tax by default on non-certified undisclosed holdings. No certification or tax instruction is required.

Equities:

Clearstream Banking will apply 30% withholding tax by default on non-certified undisclosed holdings. No certification or tax instruction is required.

Managed Investment Trusts (MITs):

  • Withholding tax rates are applicable as follows:
    • Fund components according to the Australian Income Tax Assessment Act 1936:
      Clearstream Banking will apply the following non-resident withholding tax rates:
      • 30% on unfranked dividend components;
      • 10% on interest components.
      • Other income / fund components according to the Australian Taxation Administration Act 1953: Fund payment taxation is only covered by Exchange of Information (EOI) agreements and not by the DTT arrangements that many countries hold with Australia. Under Section 12, Clearstream Banking Luxembourg is considered to be resident in an EOI country and therefore the EOI withholding tax rate is applied by default to fund distribution payments. No relief at source or refund is available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.
    • Any reclaim of MIT withholding tax should be addressed directly to the Australian Tax Authorities (ATO).

Tax-exempt beneficial owners

The following entities are recognised as tax-exempt in Australia:

Beneficial owners exempt by Law:

The following institutions are tax-exempt by Law:

  • Foreign Monetary Authorities (FMAs) investing official foreign reserves in a passive nature in a non-commercial operation or activity. Such FMAs belong to foreign governments and control less than 10% of the security of any company invested in. Such investment limits are not applicable to central banks
  • Foreign governments recognised as exempt by the Australian Tax Office (ATO).
  • Foreign provident, benefit, superannuation or retirement funds that throughout the year of income are foreign superannuation funds.
  • International organisations that are immune from Australian withholding tax under the International Organisations (Privileges and Immunities) Act (1963), listed in the ATO document TR 92/14A.

Note: Document TR 92/14A is supposed to be updated on a regular basis, but it should not be relied upon to determine definitely whether an organisation is or is not currently recognised as immune.

Beneficial owners exempt by DTT:

  • Financial institutions may be eligible for exemption from withholding tax on interest paid on Australian debt securities subject to withholding tax provided that they meet the criteria laid down in the respective Double Taxation Treaty (DTT) between their country of residence and Australia.
    The exact requirements for a foreign financial institution to obtain exemption at source may vary from treaty to treaty but, generally, the eligibility criteria include, without being limited to, the following:
    • ​​​​​​​The institution must be a bank or other enterprise substantially deriving its profits by raising debt finance in the financial market or by raising deposits at interest and using those funds in carrying on a business of providing finance.
    • The institution must be unrelated to, and dealing wholly independently with, the payer of the interest.

Note: It is the customer’s responsibility to determine any entitlement to exemption from tax. Neither Clearstream Banking nor its local depository has any direct or indirect liabilities towards the Australian Tax Authorities in this regard.

  • All securities:

In order to be exempt through Clearstream Banking, a Certificate of Exemption must, in all cases, be provided, along with the other required documentation, by the beneficial owners exempt by Law (only).

Upon request, a Certificate of Exemption shall be submitted to Clearstream Banking by beneficial owners exempt by DTT.

A reclaim of the relevant amount of withholding tax is available through Clearstream Banking if the beneficial owner has not obtained exemption at source.

  • Debt securities:

Exemption at source is available to beneficial owners who have been granted tax-exempt status, by law or by DTT, upon submission of the required documentation.

  • Equities:

Exemption at source is available to beneficial owners who have been granted tax-exempt status, by law, for unfranked dividend and interest components, upon submission of the required documentation.

  • Managed Investment Trusts (MITs):
    • Withholding tax rates are applicable as follows:
      • Fund components according to the Australian Income Tax Assessment Act 1936: Exemption at source is available to beneficial owners who have been granted tax-exempt status, by law, for unfranked dividend and interest components distributed by eligible Australian MITs.
      • Other income / fund components according to the Australian Taxation Administration Act 1953:Fund payment taxation is only covered by Exchange of Information (EOI) agreements and not by the DTT arrangements that many countries hold with Australia. Under Section 12, Clearstream Banking Luxembourg is considered to be resident in an EOI country and therefore the EOI withholding tax rate is applied by default to fund distribution payments.

No relief at source or refund is available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.

Any reclaim of MIT withholding tax should be addressed directly to the Australian Tax Authorities (ATO).

Residents of a Double Taxation Treaty (DTT) country

  • All securities:
    • The maximum rate of withholding tax is defined in the relevant DTT.
      A reclaim of the relevant amount of withholding tax is available through Clearstream Banking if the beneficial owner has not obtained relief at source.
  • Debt securities:
    • Relief at source is available to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with a Double Taxation Treaty (DTT) between their country of residence and Australia.
      However, in most cases, the Australian non-resident tax rate for debt securities is lower than the DTT rate. Most beneficial owners will therefore prefer to apply for the non-resident rate instead of the DTT rate for debt securities.
  • Equities:
    • Relief at source on unfranked dividend and interest components is available to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with a Double Taxation Treaty (DTT) between their country of residence and Australia.
  • Managed Investment Trusts (MITs):
    • ​​​​​​​Withholding tax rates are applicable as follows:
      • Fund components according to the Australian Income Tax Assessment Act 1936:
        • Relief at source on unfranked dividend and interest components distributed by eligible Australian MITs is available to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with a DTT between their country of residence and Australia.
      • Other income / fund components according to the Australian Taxation Administration Act 1953:
        • Fund payment taxation is only covered by Exchange of Information (EOI) agreements and not by the DTT arrangements that many countries hold with Australia.
        • Under Section 12, Clearstream Banking Luxembourg is considered to be resident in an EOI country and therefore the EOI withholding tax rate is applied by default to fund distribution payments. No relief at source or refund is available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.

Any reclaim of MIT withholding tax should be addressed directly to the Australian Tax Authorities (ATO).

Residents of an Exchange of Information (EOI) country

  • Debt securities:​​​​​​​
    • Interest payment taxation is only covered by non-resident or DTT agreements and not by EOI arrangements.
      No relief at source or refund is therefore available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.​​​​​​​
  • Equities:
    • Dividend payment taxation is only covered by non-resident or DTT agreements and not by the EOI arrangements.
      No relief at source or refund is therefore available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.
  • Managed Investment Trusts (MITs):
    • Withholding tax rates are applicable as follows:
      • Interest and unfranked components (Tax Assesment Atc 1936):
        • Interest and dividend payment taxation is only covered by non-resident or DTT agreements and not by the Exchange of Information (EOI) arrangements.
          No relief at source or refund is therefore available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.
      • ​​​​​​​Other income / fund components according to the Australian Taxation Administration Act 1953:
        • Fund payment taxation is only covered by Exchange of Information (EOI) agreements and not by the DTT arrangements that many countries hold with Australia.
          Under Section 12, Clearstream Banking Luxembourg is considered to be resident in an EOI country and therefore the EOI withholding tax rate is applied by default to fund distribution payments.
          No relief at source or refund is available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.

Any reclaim of MIT withholding tax should be addressed directly to the Australian Tax Authorities (ATO).

Residents of Australia

  • Debt securities:
    • Exemption at source is available to beneficial owners who qualify as residents of Australia, in accordance with the Income Tax Assessment Act 1936. The 0% rate of withholding tax is applied on condition that his Tax File Number (TFN) or Australian Business Number (ABN) is provided to Clearstream Banking. 47.0% withholding tax may be applied, upon request from the customer, if the underlying final beneficial owner is an undisclosed Australian resident and no ABN/TFN is provided.
  • Equities:
    • Unfranked components:
      • Exemption at source is available to beneficial owners who qualify as residents of Australia, in accordance with the Income Tax Assessment Act 1936. The 0% rate of withholding tax is applied on condition that his Tax File Number (TFN) or Australian Business Number (ABN) is provided to Clearstream Banking. 47.0% withholding tax may be applied, upon request from the customer, if the underlying final beneficial owner is an undisclosed Australian resident and no ABN/TFN is provided
    • Franked components:
      • No certification is required to obtain exemption for franked components for Australian resident beneficial owners.
  • Managed Investment Trusts (MITs):
    • Interest and franked/unfranked components (Tax Assessment Act 1936):
      • Exemption at source is available to beneficial owners who qualify as residents of Australia, in accordance with the Income Tax Assessment Act 1936. The 0% rate of withholding tax is applied on condition that his Tax File Number (TFN) or Australian Business Number (ABN) is provided to Clearstream Banking.
      • 47.0% withholding tax may be applied, upon request from the customer, if the underlying final beneficial owner is an undisclosed Australian resident and no ABN/TFN is provided.
      • Important note: Franked dividend components paid from MITs are treated as MIT distributions for the purposes of resident withholding tax for which quotation of ABN/TFN is required in order to obtain the 0% resident tax.
    • Other income / fund components according to the Australian Taxation Administration Act 1953:
      • Under Section 12, Clearstream Banking Luxembourg is considered to be resident in an EOI country and therefore the EOI withholding tax rate is applied by default to fund distribution payments.
      • No relief at source or refund is available through Clearstream Banking to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with the EOI tax rates.

Any reclaim of MIT withholding tax should be addressed directly to the Australian Tax Authorities (ATO).

Undisclosed Australian residents

Residents of Australia who are not prepared to disclose their identity (by providing their ABN/TFN and other supporting documentation) are considered as "undisclosed Australian residents".

The maximum withholding tax rate of 47.0% is applied to such beneficial owners who are undisclosed residents of Australia upon request from the customer.

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