Standard refund - eligibility, documentation, deadlines – Australia debt securities not compliant with Section 128F
Standard refund - overview
Full standard refund of withholding tax on interest on Australian debt securities not compliant with Section 128F of the Australian Income Tax Assessment Act 1936 is available for eligible beneficial owners through Clearstream Banking.
Who can apply for a standard refund?
Beneficial owners can apply for a standard refund of withholding tax on interest from Australian Commonwealth Treasury bonds, semi-government Australian securities or corporate bonds as follows:
Eligible beneficial owners | Effective rate of tax after refund (a) | Tax refund available (a) (b) |
Residents of Australia | 0% | 10% / 47% |
Tax-exempt beneficial owners | 0% | 10% |
a. Expressed as a percentage of the gross interest amount.
b. Effective 1 July 2017, the TFN withholding tax rate applied at source on income payments made to Australian beneficial owners who did not disclose their TFNs/ABNs has been reduced from 49% to 47%.
Australian residents must provide their Tax File Number (TFN) or Australian Business Number (ABN) to Clearstream Banking in order to be eligible for the 0% rate. Undisclosed Australian residents may, upon request of the customer, be subject to the maximum withholding tax rate (47%). Australian residents can reclaim TFN withholding tax (47%) through Clearstream Banking.
Standard refund - documentation requirements
For a standard refund of withholding tax on interest from Australian Commonwealth treasury bonds, semi-government securities or corporate bonds not compliant with Section 128F of the relevant Tax Act, documents must be submitted as follows:
- Certificate of Exemption, if applicable;
- Power of Attorney;
- Letter of Request to Clearstream Banking for Reclaim of Australian Withholding Tax;
and, upon request:
- Certificate of Residence;
- Credit Advice.
Statutory deadline for reclaiming withholding tax
The statutory deadline for reclaiming withholding tax is six years after the relevant income event payment date.
In practice and according to Clearstream Banking’s local depository, the Australian Tax Office (ATO) will accept any reclaim for withholding tax up to four years after the relevant income event payment date.
Thereafter, reclaims of up to six years from the date of remittance will be considered for assessment. Consequently, a refund application submitted to the ATO between four and six years after the relevant payment date must be for a substantial amount and/or show good reason as to why it was not submitted earlier. Any reclaim for withholding tax paid more than six years ago will not be considered for assessment by the ATO.
Clearstream deadline for standard refund applications
The deadline by which Clearstream Banking must receive the documentation for a standard refund application is, at the latest, two months prior to the statutory deadline. All standard refund applications received after this deadline will be processed by Clearstream Banking on a "best efforts" basis. However, in such cases, Clearstream Banking will apply an extra charge and accepts no responsibility for forms that have not reached the ATO by the date considered as being the statute of limitations deadline.
When are refunds received?
The estimated times for receiving a standard refund is 45 days from the date on which The Australian Tax Office (ATO) receives the reclaim application, although this can vary depending on when the application is filed and on the complexity of the information supplied on the reclaim form.
Notes on tax reclaims
Customers warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the customer's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, customers are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country.