Sold an IP... investing.... withholding tax

Ive recently sold an IP and was thinking of investing aud$100k in shares on Nasdaq
I dont understand withholding tax rules..


If Im a resident of oz and execute this trade via the bank this week for example...

- Invest aud$100k this week which based on current exchange rates gives me 892 shares @$83.62usd (per share)= total exposure usd74,589
- If in 1 years time the stock price rises to usd $140 for example...
usd140 x 892 shares = usd 124,880 and say for example that the exchange rate is the same and the money converts to aud $160,000 when selling the shares

How much withholding tax has to be paid and is it on the usd or the aud amount. Do I get a refund on the withholding tax?

Presumably I would be having to pay capital gains tax to the ATO as well?

Its all a lot of risk to take (market and exchange rate risk)
many thanks
 
The IRS will require withholding tax to be withheld from either interest or dividend income that has a US source. This may be creditable against the reporting of Australian income using the relevant ATO approved exchange rates that may apply.

No withholding applies to profits on share trading. You have no obligation to lodge a US tax return either PROVIDED you declare this in an Australian return. (This is part of the Double Tax Treaty). The US IRS reports tax information to the ATO that it obtains from broker accounts.

Bear in mind you will calculate and pay tax on the AUD value of the transactions. Your CGT profit may be a CGT loss when the actual AUD/USD rates are used.

Your record keeping will be complicated by the exchange rate issues. The prevailing rate at the time when you sell will determine if a profit or loss has been made.
 
You could always trade using CFD's, because they're not real shares it removes the issue completely.

But trading (or buying property, for that matter) in other countries does have the added risk of currency fluctuations - it pays to have some sort of risk management in place using the currency trends - for eg, I'll deleverage/liquidate in some way when the moving averages of the AUDUSD cross. It doesn't have to be complex.

At least then you have a strategy and are unlikely to get burned by a big rise in the AUD.
 
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