How Are Your US and International Shares Taxed in Australia?

You may have heard that non-residents pay no Australian capital gains tax on shares. If you’re an Australian resident holding US or international shares, do yourself a favour and forget that line completely, because for you the rules run in the opposite direction. As a resident, the tax net is wide, it’s worldwide, and your foreign shares are sitting right inside it.

That’s not the disaster it sounds like, and there are mechanisms that stop you being taxed twice on the same dollar. But it does mean foreign shares come with Australian tax consequences that catch a lot of people by surprise. Let’s walk through how it actually works: the dividends, the capital gains, the famous US tax form, the currency trap nobody mentions, and the one big exception that might mean none of this applies to you.

As always, the starting point is your residency status, because it changes everything. This article is written for Australian tax residents. If you’re a temporary resident, skip ahead to that section, because your position is very different. And if you’re a non-resident, this isn’t your article at all; see our companion guide on the tax treatment of Australian shares for non-residents instead.

The rule that drives everything: residents are taxed on worldwide income

Here’s the principle the whole article hangs on. An Australian tax resident is taxed on their worldwide income, not just income from Australian sources. So the dividends from your Apple shares, the gain on your S&P 500 ETF, and the assessable components of distributions from your global index fund all need to be considered in your Australian tax return. The money can land in New York, London, or a brokerage account you forgot existed. The ATO still expects an invite to the party.

That’s the big flip from the foreign-resident position. A foreign resident generally only pays Australian CGT on assets that are taxable Australian property: Australian real property, indirect interests in it, business assets of an Australian permanent establishment, and a few related categories. Ordinary foreign shares are usually well outside that net. A resident gets no such luck, because Australia taxes the lot. The trade-off, and it’s a fair one, is that Australia also gives you credit for tax you’ve already paid overseas, so you’re not slugged twice. More on that in a moment.

Foreign dividends, and why there are usually no franking credits

When you receive a dividend from a foreign company, the gross amount generally goes into your Australian assessable income and is taxed at your marginal rate. Note the word “gross.” For ordinary US and international shares there are usually no Australian franking credits to soften the blow, because franking is a uniquely Australian invention tied to Australian company tax. Apple is not sending you imputation credits. Neither is Microsoft. Rude, but legally unsurprising.

There are niche exceptions, the main one being where a New Zealand company has elected into Australia’s Trans-Tasman imputation system and attached Australian franking credits. For most foreign shares, though, the practical answer is simple: no franking credits, just foreign income and possibly foreign withholding tax.

What usually happens is that the foreign country takes a slice on the way out, as withholding tax, before the dividend even reaches you. The good news is you don’t then pay full Australian tax on top. Australia gives you a foreign income tax offset (FITO) for the foreign tax paid, which reduces your Australian tax on that same income, subject to the offset rules. If the offset you claim is $1,000 or less, the calculation is simple. Above that, you have to work out your offset limit, which is broadly the Australian tax attributable to that doubled-up foreign income. Any excess foreign tax above the limit is lost: it isn’t refunded, and it can’t be carried forward. The ATO is many things. A frequent-flyer points program is not one of them.

The US dividend trap, and the form that halves it

This one deserves its own section, because it’s the single most common foreign-share question we see, and getting it wrong is expensive.

By default, the United States can withhold 30% on US-source dividends paid to foreign investors. Under Article 10 of the Australia-US tax treaty, the US withholding rate for an Australian resident portfolio investor is generally capped at 15% of the gross dividend.

The way you claim that lower rate is the W-8BEN form. You give it to your broker or withholding agent, not to the IRS. It certifies that you’re a foreign beneficial owner and, where eligible, lets them apply the treaty rate. Without it, the default 30% haircut can apply. Same dividend, twice the withholding, a very expensive piece of admin to ignore. Most brokers walk you through it when you open an account and buy US shares, and a W-8BEN generally stays valid only until the last day of the third calendar year after signing, unless your circumstances change. So check the expiry date instead of assuming the form you did in 2021 is still heroically doing its job.

To see how the pieces fit, picture an Australian resident receiving US$2,000 in US dividends. With a W-8BEN lodged, the US withholds 15%, so US$300. Back in Australia, the full US$2,000 (converted to Australian dollars) goes into your return and is taxed at your marginal rate. You then claim a foreign income tax offset for the US$300 already paid. The result is that you end up paying roughly your Australian marginal rate overall, not the Australian rate stacked on top of the US rate. The treaty and the offset working together stop the double tax; they don’t make the income tax-free.

Capital gains on your foreign shares

Sell a foreign share at a profit while you’re an Australian tax resident and the gain is generally assessed in Australia, just like a gain on an Australian share. The geography of the stock exchange doesn’t save you.

Under the current rules, Australian resident individuals can generally access the 50% CGT discount where they’ve owned the shares for at least 12 months before the CGT event, so only half the eligible gain is taxed after applying any capital losses. That’s the exact concession a non-resident generally can’t get, so being a resident isn’t all downside on the CGT front.

One important timing note, though. The 2026-27 Federal Budget announced that from 1 July 2027 the 50% CGT discount will be replaced with cost base indexation (so you’re taxed only on the real, above-inflation gain) plus a 30% minimum tax on capital gains, applying only to gains arising after that date, with investors in new builds able to choose between the systems. These measures were announced in the Budget but the legislation hasn’t been drafted or enacted yet, so the detail may shift, and the current 50% rule is still the rule for now. But it shouldn’t be treated as a permanent fixture. We’ve covered all of this, and what it means for expats specifically, in our 2026 Budget guide for expats; if you’re holding foreign shares with large gains, the post-1 July 2027 position is worth a separate look closer to the time.

Many countries don’t tax foreign investors on ordinary share gains, so there’s often no foreign CGT and the gain is simply taxed in Australia. Where a foreign country does tax the gain, the foreign income tax offset can help, but only to the extent the Australian rules allow. Double-tax relief is real. It isn’t bottomless.

The currency catch nobody warns you about

Here’s a trap that blindsides people. Your capital gain has to be worked out in Australian dollars, not in the foreign currency. Broadly, your cost base is translated at the exchange rate when the cost was incurred, and your proceeds at the exchange rate at the CGT event. So currency movements aren’t background music; they’re part of the tax calculation.

The consequence: a US stock can go nowhere in US dollars and still produce an Australian capital gain if the Aussie dollar fell between purchase and sale. It cuts both ways, of course, a rising Aussie dollar can shrink a gain or create a loss, but the point is that currency is part of your tax outcome whether you were thinking about it or not. Keep the exchange-rate records on both dates; your future tax agent will be less likely to mutter into their coffee.

One extra wrinkle worth knowing: foreign-currency cash sitting in a brokerage account can have its own tax consequences when it’s later converted or used. The share sale and the currency conversion aren’t always one neat event tied with a ribbon.

ETFs: where the fund is domiciled changes the picture

A lot of Australians get their international exposure through exchange-traded funds rather than buying foreign shares directly, and here the domicile of the fund matters more than most people realise.

An Australian-domiciled ETF that invests in global shares is generally an Australian trust or managed investment trust. You hold units in the trust, not the underlying foreign shares directly. The fund’s annual tax statement should break down the components for you: foreign income, foreign income tax offsets, capital gains, and any non-assessable amounts (which can affect your cost base rather than being taxed). Read the statement. It’s boring. It’s also the map.

A foreign-domiciled ETF, including many US-domiciled ones, is different. Foreign-owned ETFs generally don’t provide an Australian tax statement, so you need to rely on your own records and report the distributed income as foreign income, claiming a foreign income tax offset for any tax withheld. And for US-domiciled ETFs there’s the extra estate-tax issue covered next, because they’re a US-situated asset.

The sleeper trap: US estate tax on US assets

This is the one almost nobody tells you about, and it can be a genuinely serious problem for Australians with sizeable direct US holdings.

For US estate-tax purposes, the key question isn’t your income-tax residency. It’s whether you’re a US citizen or US-domiciled, and whether you own US-situated assets. The US Internal Revenue Service treats stock of corporations organised under US law as US-situated property, and a non-resident, non-citizen estate must file a US estate-tax return (Form 706-NA) where US-situated assets exceed US$60,000 at death. Above that low threshold, US estate tax can apply at substantial rates, a world away from the multi-million-dollar exemption a US person enjoys.

The Australia-US estate tax treaty can improve the position for Australians, but it doesn’t make the issue vanish. This is US law, well outside the Australian rules and outside our lane, so we won’t pretend to give you the US answer here. The practical takeaways: large direct holdings of US shares or US-domiciled ETFs deserve proper US estate-tax advice, and holding international exposure through an Australian-domiciled ETF is one common way investors sidestep the direct US-situs problem. Not glamorous. Often sensible. And far better to know now than for your executor to discover it later.

Temporary residents: you might be exempt from most of this

If you’re in Australia on a temporary visa, pause before panicking, because there’s a strong chance most of this article doesn’t apply to you. This is one of the most misunderstood corners of the system, so it’s worth getting right.

A temporary resident isn’t just anyone who feels temporary. Broadly, you must hold a temporary visa, not be an Australian resident within the meaning of the Social Security Act 1991, and not have a spouse who is such an Australian resident. That’s a proper test, not a vibe.

Where you qualify, section 768-910 of the Income Tax Assessment Act 1997 can make most of your foreign-source income (such as dividends from foreign shares) non-assessable non-exempt, meaning Australia generally doesn’t tax it. And section 768-915 can disregard capital gains and losses on assets that aren’t taxable Australian property, which generally includes ordinary foreign shares. So as a temporary resident, your US and international shares can largely sit outside the Australian net, despite you living here.

A few important edges. There are exceptions, notably for employment-related income and gains on shares or rights acquired under an employee share scheme. And if you stop being a temporary resident but remain an Australian tax resident, section 768-955 generally resets the cost base of your non-taxable Australian property assets, including foreign shares, to their market value at that time. That reset is valuable, and missing it is like finding the spare key after you’ve already changed the locks. So if you’re on a temporary visa heading towards permanent residency, the tax treatment of your foreign portfolio is going to change, and that change is worth planning for before it happens.

Reporting and record-keeping

Foreign income doesn’t reliably pre-fill in your tax return the way Australian bank interest or wages might, so the responsibility to get it right sits with you. That means keeping records of what you bought and sold, the dates, the Australian dollar value at each point, and any foreign tax withheld, so you can declare your foreign dividends and gains correctly and claim the foreign income tax offset you’re entitled to. If your records are a shoebox of foreign-currency statements, this is exactly the sort of thing worth handing to someone who does it for a living.

The bottom line

As an Australian tax resident, your US and international shares are usually in the Australian tax net: dividends taxed here, capital gains taxed here, on a worldwide basis. The treaty and the foreign income tax offset stop you being taxed twice, but they don’t make the income tax-free. Lodge your W-8BEN to halve US dividend withholding, and remember the humble form has an expiry date.

Under the current rules the 50% CGT discount can still apply to eligible shares held over a year, but the 2026-27 Budget changes mean the post-1 July 2027 position needs a separate look. Add in the currency effect on your gains, ETF domicile, the US estate-tax exposure on directly-held US assets, and the temporary resident concession, and suddenly “I bought a few US shares” has grown legs and started opening browser tabs.

None of it is unmanageable once you know the rules, and most of the traps are avoidable with a bit of planning, preferably before tax time rather than during the annual July panic.

Not sure how your overseas shares are taxed back home?

Foreign portfolios are where Australian tax gets fiddly fast: worldwide income, treaty rates, foreign tax offsets, the currency calculations, and the residency questions that decide which regime you’re even in. Getting it right means you claim every offset you’re owed and avoid the traps that cost real money.

Our specialist expatriate tax team handles exactly this, for Australians at home and abroad, working remotely with clients all over the world.

Book an appointment with our expat tax specialists today and get your overseas investments sorted before tax time, not after. Worth the half hour, trust me.

General information only. This article doesn’t consider your personal circumstances and isn’t tax, financial or investment advice. The Australian tax treatment described depends on your residency status and specific circumstances, the 2026-27 Budget CGT measures are announced but not yet law, foreign and US tax rules are outside our scope and require advice from a qualified adviser in the relevant country, and shares carry risk including the risk of loss. Speak to our specialist expatriate tax team today, or with another registered tax agent and a licensed financial adviser, before acting.