Income tax: to what extent are dividends paid by a resident company to a non-resident individual subject to withholding tax ?

The payment of a fully franked dividend is not subject to withholding tax under paragraph 128B (3)(ga) of the Income Tax Assessment Act 1936.

If a partially franked dividend is paid, the unfranked portion will be subject to tax at the dividend withholding tax rate of 30%. However, this rate is generally reduced to 15% in the case of countries which have a double tax agreement with Australia.

If an unfranked dividend is paid, the whole dividend is subject to withholding tax. Note: In the case of the Philippines and Thailand, the withholding tax rate varies and is dependant on the type of dividend received. Example: John, is a resident of a country in which Australia has a double tax agreement. He received a fully franked dividend of $200 from Aust. Co. This dividend is not subject to withholding tax. He also received a dividend of $100 which was 75% franked, 25% unfranked. The unfranked portion of $25 is subject to withholding tax of $3.75 ($25 x 15%).