Changes to Non-Resident Withholding Tax
As of June 2015, IRESS have made changes to the Non-Resident Withholding Tax Component of Income transactions generated by Corporate Actions.
This change has been implemented in line with both ATO guidance, and to ensure correct compliance of GIPS (Global Investment Performance Standards).
What is the change?
For any income which contains the component of Non-Resident Withholding Tax, Xplan will now build Income templates with the Price per Unit being NET rather than the existing method of GROSS. The following table provides guidance of which figures are now used when recording Foreign Income:
|
Income Component |
Figure Used |
|
Price per unit |
NET income figure |
|
Foreign dividend |
GROSS income figure |
|
Withholding tax |
Calculated percentage of the GROSS income figure |
Why the change?
By reflecting NET income, this change ensures accurate reporting of Performance. Performance figures must correctly reflect Income that the account/portfolio is entitled to. As Non-Resident Withholding Tax cannot be reclaimed by the eligible holder, it is inaccurate to reflect the GROSS amount in the Performance reports (i.e. Performance will be overstated).
Example of Income Transactions Before Change (GROSS withholding tax)
Income paid (non-resident WHT). GROSS price per unit + 15% WHT:
Example of Income Transaction After Change (NET withholding tax)
Income paid (non-resident WHT). NET price per unit + 15% WHT
This accurately reflects the Income that the client is expected to receive, as they cannot reclaim the Withholding tax paid.
If you would like more information, please book a Free Phone Consultation and let us assist you with your Xplan system.
