Australian stocks - any dividend tax or capital gains tax?
"For non Australian residents: Dividends withholding tax rate is 30%.  Depending upon your country of residence where there is a tax treaty in place to avoid double taxation, then this can be reduced.  Note that only dividends that are unfranked are subject to this (in Australia, if tax has already been paid by the company then they can distribute dividends as ""franked"" dividends""). For example, if you owned shares in Commonwealth Bank of Australia (CBA), their most recent dividend from Feb 2015 (Paid 2 April 2015)  was $1.98 fully franked.  No withholding tax is applicable. There is no capital gains tax for non-residents on share transactions. There are other ""tax events"" that related to large shareholdings in a company (>10%) with property holdings but I'm guessing that is not an issue. https://www.ato.gov.au/Individuals/Tax-return/2014/In-detail/Publications/You-and-your-shares-2013-14/?page=14 https://www.ato.gov.au/Business/International-tax-for-business/Previous-years/Capital-gains-and-foreign-residents/ https://www.ato.gov.au/Business/International-tax-for-business/Previous-years/Capital-gains-and-foreign-residents/?page=13#Foreign_residents_holding_interests_in_Australian_fixed_trusts https://www.kpmg.com/Global/en/services/Tax/regional-tax-centers/asia-pacific-tax-centre/Documents/CountryProfiles/Australia.pdf"
"I'll try to answer using your original example.  First, let me restate your assumptions, slightly modified: The mutual fund has: Note that I say the ""mutual fund has"" those gains and losses. That's because they occur inside the mutual fund and not directly to you as a shareholder. I use ""realized"" gains and losses because the only gains and losses handled this way are those causes by actual asset (stock) sales within the fund (as directed by fund management).  Changes in the value of fund holdings that are not sold are not included in this. As a holder of the fund, you learn the values of X, Y, and Z after the end of the year when the fund management reports the values.  For gains, you will also typically see the values reported on your 1099-DIV under ""capital gains distributions"".  For example, your 1099-DIV for year 3 will have the value Z for capital gains (besides reporting any ordinary dividends in another box).   Your year 1 1099 will have $0 ""capital gains distributions"" shown because of the rule you highlighted in bold: net realized losses are not distributed.  This capital loss however can later be used to the mutual fund holder's tax advantage.  The fund's internal accounting carries forward the loss, and uses it to offset later realized gains.  Thus your year 2 1099 will have a capital gain distribution of (Y-X), not Y, thus recognizing the loss which occurred. Thus the loss is taken into account.  Note that for capital gains you, the holder, pay no tax in year 1, pay tax in year 2 on Y-X, and pay tax in year 3 on Z. All the above is the way it works whether or not you sell the shares immediately after the end of year 3 or you hold the shares for many more years.  Whenever you do sell the shares, you will have a gain or loss, but that is different from the fund's realized losses we have been talking about (X, Y, and Z)." Milliondollarjourney.com has a couple of articles on this topic. How Investing Taxes Work part 1 and part 2. The following is a summary of that article. Capital gains and dividends are taxed at a preferred rate, while interest tax is taxed at your regular rate. Interest is taxed at your marginal rate, but capital gains are taxed at only 50% of your marginal rate. That means that it makes sense to place the interest bearing account inside the RRSP but keep stocks outside. Additionally, you can claim your losses on your capital appreciating stocks against your gains if they are outside of your RRSP. Hopefully, your stocks will never go down but that's not very realistic. Dividends from Canadian companies are eligible for a dividend tax credit, but not dividends from foreign companies. [I actually understood that dividends from U.S. companies are treated as a special case] It's not clear to me from reading the article how much of this applies to mutual funds. The summary is as follows: "It depends.  Dividends and fees are usually unrelated. If the ETF holds a lot of stocks which pay significant dividends (e.g. an S&P500 index fund) these will probably cover the cost of the fees pretty readily. If the ETF holds a lot of stocks which do not pay significant dividends (e.g. growth stocks) there may not be any dividends - though hopefully there will be capital appreciation. Some ETFs don't contain stocks at all, but rather some other instruments (e.g. commodity-trust ETFs which hold precious metals like gold and silver, or daily-leveraged ETFs which hold options). In those cases there will never be any dividends. And depending on the performance of the market, the capital appreciation may or may not cover the expenses of the fund, either. If you look up QQQ's financials, you'll find it most recently paid out a dividend at an annualized rate of 0.71%. Its expense ratio is 0.20%. So the dividends more than cover its expense ratio.  You could also ask ""why would I care?"" because unless you're doing some pretty-darned-specific tax-related modeling, it doesn't matter much whether the ETF covers its expense ratio via dividends or whether it comes out of capital gains. You should probably be more concerned with overall returns (for QQQ in the most recent year, 8.50% - which easily eclipses the dividends.)" The dividend tax credit is not applicable to foreign dividend income, so you would be taxed fully on every dollar of that income. When you sell a stock, there will be a capital gain or capital loss depending on if it gained or lost value, after accounting for the Adjusted Cost Base. You only pay income tax on half of the amount earned through capital gains, and if you have losses, you can use them to offset other investments that had capital gains (or carry forward to offset gains in the future).  The dividends from US stocks are subject to a 15% withholding tax that gets paid to the IRS automatically when the dividends are issued. If the stocks are held in an RRSP, they are exempt from the withholding tax. If held in a non-registered account, you can be reimbursed for the tax by claiming the foreign tax credit that you linked to. If held in a TFSA or RESP, the withholding tax cannot be recovered. Also, if you are not directly holding the stocks, and instead buy a mutual fund or ETF that directly holds the stocks, then the RRSP exemption no longer applies, but the foreign tax credit is still claimable for a non-registered account. If the mutual fund or ETF does not directly hold stocks, and instead holds one or more ETFs, there is no way to recover the withholding tax in any type of account. "In the case of a specific fund, I'd be tempted to get get an annual report that would disclose distribution data going back up to 5 years.  The ""View prospectus and reports"" would be the link on the site to note and use that to get to the PDF of the report to get the data that was filed with the SEC as that is likely what matters more here.  Don't forget that mutual fund distributions can be a mix of dividends, bond interest, short-term and long-term capital gains and thus aren't quite as simple as stock dividends to consider here." "The way the post is worded, coca cola wouldn't count towards either, although it's not entirely clear. If the dividends are considered under capital gains (which isn't technically an appropriate term) he's earning only 500Million a year from his stake in coca cola. If he sold his shares, he'd receive capital gains of ~15Billion, which would probably outpace his operations business.   The best graph would probably be something like ""net worth of operations vs net worth of equity in other companies""" No. As a rule, the dividends you see in the distribution table are what you'll receive before paying any taxes. Tax rates differ between qualified and unqualified/ordinary dividends, so the distribution can't include taxes because tax rates may differ between investors. In my case I hold it in an Israeli account but the tax treaty between our countries still specifies 25% withheld tax This is another example of why tax rates differ between investors. If I hold SPY too, my tax rate will be very different because I don't hold it in an account like yours, so the listed dividend couldn't include taxes. You don't have to wait.  If you sell your shares now, your gain can be considered a capital gain for income tax purposes. Unlike in the United States, Canada does not distinguish between short-term vs. long-term gains where you'd pay different rates on each type of gain.  Whether you buy and sell a stock within minutes or buy and sell over years, any gain you make on a stock can generally be considered a capital gain. I said generally because there is an exception:  If you are deemed by CRA to be trading professionally -- that is, if you make a living buying and selling stocks frequently -- then you could be considered doing day trading as a business and have your gains instead taxed as regular income (but you'd also be able to claim additional deductions.)  Anyway, as long as your primary source of income isn't from trading, this isn't likely to be a problem. Here are some good articles on these subjects: