US Tax Withholding in Australia, US Taxation for US Persons, and FATCA

I don’t know if anyone can help or not but I need to vent anyway. I have an online account with directshares which includes 3 US stocks that pay dividends. They dutifully send me receipts for each dividend with the amount of withholding tax for the US tax office (IRS). The withholding rate is 30% so not insignificant. BTW, I am a dual citizen so they really aren’t supposed to be withholding anything but getting them to stop is another story! In the ‘too hard’ basket for now.
Anyway, I have spent the last 2 years argueing with the IRS about money they say I owe and I say I don’t because I have my receipts that say they have withheld taxes. When I finally got through to a person at the IRS, all became clear. They have not been receiving that 30% tax that was withheld from my dividends! For TWO YEARS!! So…should be a simple call to directshares to tell them the problem so they can fix it, right? Not so fast, sister!
First, the only phone number they ever list is the general inquiry line which in my case is absolutely useless because they don’t know what I’m talking about. But they keep insisting that they CAN help just as soon as they ask someone else and will ring me back. HA! Never ring back. After my second call and no ring back, I get an email with a form attached that is vaguely related to dividends on International stocks. So I answer the email with the actual problem outlined but never get a reply. I ring again and talk to someone who can help (sigh). Amazingly, he can’t help either.
They won’t let me talk to someone who might know what I’m talking about because I guess they would have to kill me if they did. I can’t find any other phone numbers for anyone. They all go to the guard dogs on the front line defence.
In the meantime, I am paying double taxes on my dividends!
So…how do I find out who has pocketed my 30% tax? I did notice on the form they sent me that there is a company in Sydney that is listed as the withholding agent in Australia that has an address for snail mail but the US agent is Citibank with no address or phone number. My next punt is to try to get some information from the Sydney address. I did notice that my US tax number is not listed on the form. That would probably help but first I have to find somone that knows something.
Any suggestions or words of encouragement would be appreciated.


Good suggestions. Thanks. As far as the double tax comment, I meant that I have paid once when the money is withheld (as far as meaning I didn’t get all the money) and then I have to pay the IRS when I file my US taxes because they are short the money that isn’t being sent to them so they take the easiest route and demand it from me! I also had to pay interest and penalties on my 2015 taxes because I didn’t believe I owed the money so I didn’t pay.
Can I complain to someone about not being able to talk to someone that can actually help me at directshares?


I understand your pain as a similar dual national. You may be aware of some or all of the following, but I’ll publish the lot for the curious bystanders. Disclaimer: I am NOT a tax practitioner and everything below whould be taken as anecdotal rambling.

Q1 is the crux: Who is shown as the registry on your dividend advice and withholding statement?

Directshares cannot tell you anything because Directshares (or any other brokerage) is only a buy/sell agent. Registry companies handle everything else in Australia. If the registry/holding agent does not show a phone, you can find one from the ASIC corporate database.

As we know, in the US, shares are held by brokerages in ‘street name’ and those brokerages issue 1099 forms to us shareholders with all the reportable information. In Australia there will be an equivalent but it will not likely be Directshares, and it could be Citi from your post.

Go to the registry company or Citi as the case may be and make sure you have registered for FATCA. As a US citizen you should not normally be subject to withholding tax, although having a foreign address that will be the default.

And therein lies some of the problem. There is no way for anyone to connect the dots without your SSN. The agent does not worry about that since most non-US citizens just suck up the withholding since they do not file US taxes anyway, but they can generally claim them against Aussie taxes.

FWIW you have to register for FATCA with each registry, separately. Directshares is a ‘disinterested party’ in the process.

Each share registry does all the maintenance and regulatory issues for the companies that engage them. As for any of them having a clue? I think not since few deal with US citizen problems and many don’t know FATCA even after you explain it to them… I have a domestic holding that recently changed from Computershare to Link registry, and Computershare forwarded my original FATCA form to Link as part of that. For some reason the form went into Link’s estate group and they advised me they declined to act because 'they cannot file me as a non-resident for Australian tax without having a foreign address." I was already registered for FATCA on Link’s registry, confirmed it online, so isn’t life grand? I suggested to the gent helping me sort it that they seriously needed better training about FATCA, and he agreed.

If you trade US shares and have a US resident rellie or friend who will allow you to use their US address, open a US account next time you are there. If you do not, or do not want to, investigate a Charles Schwab International Account and their expat services. Trades are only $US4.95 and you can have a $US debit card.

If you are able to file your own US taxes, I use TaxAct. They added some features that once you know they are there they make your Australian Life easy to enter, as if it was a US Life, but the 8938 and FinCen119 won’t go away.


Withdrew my posts. Thank you Phil for the proper explanation :slight_smile: Much appreciated.

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Thanks @grahroll. I’ll keep watching this thread as anyone who is a US citizen is an anomaly when they don’t live in the US or a US possession. I tell my mates to never allow their children to marry a US citizen unless they intend to live or work in the US or have masochistic desires re filing US taxes. The international horror stories are of legend.

The long arm of US taxation and our legal requirements with the IRS and Treasury are yuge, bigly, awesomely hard to believe, and they get more rather than less complex as they have bullied the rest of the world to adhere. My US tax return for a fairly modest life run from 40-50 pages because I live here, but would be a max of 5 if I lived in the US, to make the point.

But I digress, as @kristyandru1 has a simple problem that should work itself out when she makes her citizenship and social security number known to the registry/holding agent.


At the risk of overlapping posts, as I posted, Directshares is not involved in anything except the buy/sell, and the registry/holding agent is where the problem lies. The most you could reasonably ask from them are contact details for the appropriate registry/holding agent, and you will probably have to tell the DirectShares agent who that is. When you make contact with that registry/agent you need to tell them you are a US national and have to register for FATCA, and only after that is done should you delve into recouping your back withholding or the issue could get more confused. They should be able to report all of it to your SSN and you could then file 1040X’s for the ‘missing years’, assuming it is enough money to be worthwhile for the trouble.


Completely agree! I am SO sick of doing taxes. Not only is the US tax office enough to make you swallow poison, the tax year is different! So every six months I’m doing taxes. And generally have two countries chasing me for money!


Thanks for all the info, Phil. My other problem is, as I mentioned before, I tried to take care of the whole US citizen, withholding thing with Computershare US. But they don’t know who I am! Even with my SSN and every account number, address, etc I’ve ever had. I find it really hard to believe they just blindly send several hundred dollars every quarter to some mystery woman in Australia which magically finds my bank account! There HAS to be a link and SOMEONE knows it. It’s just not me.
I think I’m registered for FATCA but I’m really not sure. there is so much CRAP involved with the US taxes!
I’ll start with the Sydney agent and see how I go from there. Really appreciate your help! Also nice to have someone share my pain.
As far as the US share trading, etc. I only have one US company left and that one is going, too! Just waiting for the damn exchange rate to improve!


BTW, Phil. Love your comment about my ‘simple problem’. Nothing is simple with government agencies across 2 countries!


I suspect it is a different entity than Computershare AU, reinforced by the requirement to select the appropriate web site. Each country has different financial regulations, and thus differenty reporting and regulatory requirements, excepting when there are ‘US persons’. :expressionless:

If you buy US shares through an AU source ‘the link’ initially assumes you are not a US citizen unless shown otherwise so there is no US reporting. Therefore nobody cares. The IRS gets its witholding, the AU tax filer deducts it, and all are happy. Unless of course you need to also file US taxes which exceeds the tax treaty and offsets so you owe the US. So no, there is no explicit link and no, nobody will by default know it is required. However, if you open a new financial account in the past few years there will be a question whether you are a US citizen! [quote=“kristyandru1, post:11, topic:14557”]
I think I’m registered for FATCA but I’m really not sure. there is so much CRAP involved with the US taxes!

Computershare is abysmal re FATCA visibility. To comply you would have filled out and posted a self certification FATCA form. I had to ring them to find out the form titled Tax Residency Self Certification! The only way to be sure is to ring them. OTOH Link shows it on their account web site.

A two edged sword. When the $AUD is high we get less and pay less AU tax, but when the $AUD is weak we get more and pay more AU tax. I gave up trying to manage it and feel for what corporate accountants have to go through. FWIW I believe one can do the daily, monthly, or annual xrate for tax liability as long as it is consistent. I continue to be amazed how stubbornly high the $AUD remains, but with the US as it is I can guess why.[quote=“kristyandru1, post:12, topic:14557”]
Nothing is simple with government agencies across 2 countries!

The truism is that it is not always simple just dealing with the ATO, or IRS, each in isolation, let alone in the pair, but the problem is that the agent seems to not have your SSN or that you are a US person, so at that level it is simple :wink:

Please post a followup on how you go and I know it could be a long time between ‘milestones’, and I’ll be happy to add anything I can along the way, for what it might be worth as incoherent anecdotal rambling.



I have one thing that will improve your communications (a constant frustration in dealing with the U.S.!).

It’s called a Magic Jack and allows you to appear as if you have a ‘local’ U.S. number.

With this in place, they will a) answer your call because they can identify your number and b) they will call you back, because as far as they’re concerned, you now ‘exist’ because you are part of the U.S.

It’s dirt cheap (<$100 to sign up), the call quality is peerless and it is just a dongle that hooks up to your computer. I can’t recommend it highly enough. (Just remember to disconnect it overnight, as they can and will call!).

There are many easy and cheap ways to get a US number and most do not need any hardware just a computer or smartphone. I’ll not make recommendations since experiences are different depending on expectations, but google is a friend. Some of them have spotty caller-ID broadcasting so they are not necessarily a silver bullet to ‘being seen’ as in the US system.

FWIW the IRS has a (supposedly) international services call centre. My expectation is it will be the same mob as those answering the US 800 number, but. I have also found there is a taxpayer advocate. Although it is located in Puerto Rico it serves all international.

However, this is not a problem at or with the IRS, excepting non-return of calls. In my experience and when a problem can be adequately penned, a fax can be more effective than ringing and with our ‘generously high’ postal rates is usually far cheaper than the post for a few pages plus you don’t need to go to the post box or buy stamps.

I don’t know the nuances of being a dual citizen, but as a US tax payer I know it is pretty important for me that I have a current W8-BEN form lodged with the company providing the benefit (DirectShare?) That form asks for taxpayer ID which should provide a link between the IRS and the dividends

Exactly the point, but here is some more anecdotal rambling, noting the following is taken from the form(s) referenced.

The W8-BEN is not for use if you are a US citizen. The W9 is for US citizens but foreign agents are rarely familiar with or trained on the intricacies since they do not routinely deal with American ex-pat investors buying US shares. These forms do not go to the IRS, the go to the agent/registry that withholds tax and physically distributes dividends. In Australia this is not Directshares or any other trading platform, it is the relevant share registry or holding agent. Most staff at the agents (but not all) are familiar with their own tax self certification forms that list one as a US person and collect the SSN. If they want a W-9 they would normally send it to the shareholder.

One of the anomalies is the W8-BEN assumes you are not a ‘US person’ for taxation and has all the spaces for a non-US address, while the W9 is 100% US centric in the address spaces, but references FATCA that only applies to foreign (non-US) source income.

I doubt whether a ‘foreign’ agent would care what you filled out as long as it served the purpose.

It is no wonder ‘we’ get confused!

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As a general rule of thumb, I find it useful when given the runaround from contact centre staff, to ask to speak to their manager. I just escalate it up the ladder until I find someone capable of solving my problem. Mind you this doesn’t always work - some of the staff are obviously trained not to allow this.

Phone connection might seem quick but for CYA purposes I would use snail mail and keep a copy.
A phone conversation usually leaves no record.
I might duplicate what others have said here–hopefully not.
The 30% is the default tax rate the US applies—make sure your SS# is registered with the company else there will be no account into which the withholding accrues and that seems to be your problem here. Also as an Australian resident and I assume tax payer you can adjust the withholding down to 10% in my case. You’ll have to look up the appropriate forms and from memory there might be some tax treaty clause to invoke—cant remember. As for double taxes—doesn’t happen. You will end up paying the higher of Australian or US federal taxes. Usually its the Australian taxes that are the highest. So if You’re on the 50% ATO tax rate and the US has already taken 30% you are charged the extra 20% by the ATO. No double tax.
You can inform the IRS that you will no longer file a tax return if you want to avoid that hassle—I filed returns for 20 years—had no significant US income any more other than my IRA pension. Pensions come under a tax treaty that allows me to ask for no more than 10% witholding that is claimed as foreign taxes paid when I file the ATO forms.

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I have dual national mates who do not file US taxes, who also have zero US sourced assets that makes it seem reasonable, but US law is clear.

While not a US government site, it states it well.


You might be surprised at how the ATO sees some if not all IRAs, that is different from the IRS. There is a determination on one particular IRA here that is long and boring, but the crux are clause 33 and 34. I will leave you to decide where in the tax treaty Australia sees your IRA and its distributions, but it could well be ‘other income’ not a pension, and you still need to file in the US. FWIW social security is untaxed per the tax treaty but benefits must be declared (it took going through 5 ATO specialists to tell me where/how to enter it so I could tell my accountant!

And a finale, some things nightmares can be made of!


I’ve been through all this recently, too! I got a private ruling from the ATO re: tax on my IRA that I transferred to my Australian Super. The ruling was that the ATO doesn’t consider an IRA as comparable to Super because you can withdraw your money at any time prior to your retirement. They claim that the US encourages you to take early withdrawal which is BS. The may let you withdraw it but you not only pay full taxes on it but a 10% penalty as well! Doesn’t seem to encouraging to me!
BTW, grizzlyowl,
‘You can inform the IRS that you will no longer file a tax return’ ??

It would be a brave American to try to get away with that! Good luck!

PS: I should have started this conversation a long time ago! It’s just so nice to share my pain with others that understand. :joy:

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Oh so glad I gave up my green card now

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