What is a U.S. Publicly Traded Partnership (PTP) and how are these securities taxed?
A U.S. publicly traded partnership (PTP) is a business organisation owned by two or more co-owners whose shares are regularly traded on an established securities market.
Section 1446(f) of the U.S. Internal Revenue Code imposes new withholding and reporting requirements on sales of a partnership interest. Generally, the securities affected are classified as partnerships for U.S. tax withholding purposes. Such securities include Master Limited Partnerships, Publicly Traded Partnerships, and Exchange Traded Funds.
All non-U.S. tax resident or citizen accounts holding securities that are in the scope of section 1446(f) will be subject to additional withholding requirements.
Current section 1446 regulations already extend to include withholding on partnership distributions. Additional requirements include a new withholding rate on distributions as high as 37%, and a 10% withholding tax on proceeds of sale for partnership securities, regardless of whether a gain or loss has occurred.
Please review Section 1446 regulations with your tax professional to determine whether you will be subject to the new/increased U.S. withholding tax and additional reporting requirements.
What reports does Superhero provide?
Superhero does not provide taxation advice, but does provide a number of reports free of charge when you sign up for a trading account that may assist with tax reporting. These reports can be found in the Reports tab of your Superhero account via your web browser or mobile app and include:
- Realised Gains Report: Shows your realised (traded) gains between the dates selected.
- Income Report: Shows your dividends between the dates selected.
- Attribution Managed Investment Trust Member Annual Statements: detailed information regarding dividends for exchange-traded funds (ETFs).
For more information relating to the tax requirements of owning shares, visit the ATO website.
Can I add my TFN after completing the tax questionnaire?
You sure can. If you would like to add or change the tax file number you initially provided Superhero during our tax questionnaire, please contact us via chat.
How do I provide my tax details?
If you need to provide your tax details, or if you have made a mistake when completing our tax questionnaire, please contact us on chat.
What is a W-8BEN?
A W-8BEN is a form relevant to you if you’re not a US citizen or tax resident and you trade US shares or ETFs on your Superhero account.Superhero can rely on a validly completed W-8BEN form to determine:
(a) your status as a foreign person (i.e. not a US citizen or tax resident), and
(b) the withholding tax rate applicable to US source income.
There are 2 variations of a W-8BEN form, one for individual account holders and another for Companies and Trusts.
Individual account holders will complete a digital W-8BEN during Superhero’s onboarding process. Companies and Trusts can complete a separate W-8BEN-E form post onboarding.
US citizens or US tax residents that trade US shares or ETFs on the Superhero platform will not complete a W-8BEN. At onboarding you will complete a digital W-9 form.
How do I provide my TFN to Superhero?
You will be asked to provide your TFN to Superhero when creating your account. In accordance with existing legislation you are not obliged to provide your TFN to Superhero, however if you do not, we are required to withhold tax on your Australian investment income at the highest marginal tax rate. If you need to update your tax details or if you have made a mistake when completing our tax questionnaire, please contact us on chat.
Why do I need to complete a tax questionnaire?
In order to meet both Australian and International tax reporting and withholding obligations, we need to ask you for some information regarding your tax residency status. You will be prompted to complete this when you make your first deposit with Superhero.
To complete the Superhero tax questionnaire:
- Select country of birth;
- Then your country of citizenship (can be more than one);
- Choose your country of tax residency (typically the country you reside and pay tax in);
- If you are a foreign tax resident, provide your International Tax Identification Number (ITIN);
- If you are a resident for U.S. tax purposes, you will need to provide us with your Individual Taxpayer Identification Number (ITIN)
- Complete the W8-BEN Tax Certification declaration. More information on W8-BENs can be found here.
Why does Superhero need my tax information?
For us to meet our Australian and International tax reporting and withholding obligations, we need more information from you when you make your first deposit with Superhero.
By collecting information on your citizenship, tax residency status and tax identification numbers, we will be able to fulfil our tax reporting obligations and if applicable, you might benefit from lower concessional withholding tax rates and/or franking credits.
In certain circumstances, we must ask for and you are required to provide additional information, whereas some information we ask for is optional – we will provide further information where necessary.
When investing in US securities, the additional information (including a declaration) you provide will constitute a W8-BEN or W9 form in relation to withholding tax under a tax treaty between your country of tax residence and the US Government (if applicable).
Do I need to complete any U.S. Tax Forms (e.g. W8-BEN form)?
A W8-BEN form is a legal U.S. Treasury document that is required by the Internal Revenue Service (IRS). The form allows foreign investors to claim concessional tax treaty benefits, including a reduced rate of withholding tax.
Superhero is authorised to collect your W-8BEN information, certification and declaration electronically. We capture this information during the account setup process.
The information we capture will include your personal information, citizenship, country of tax residency, tax file number, or international equivalent.
Will I be subject to withholding tax for U.S. trading?
In some cases, tax may be withheld on your account. Tax is typically only withheld on dividends, income and interest.
The rate of withholding is dependent on information you provide relating to your citizenship, country of tax residency, tax file number, or international equivalent, and if there is a tax treaty between the country you are a resident of and the country that is the source of your investment income.