Asked on 11 Apr 2019
Thank you for this question! The short answer is yes.
In fact, all dividends of US-listed securities are subject to 30% dividend withholding tax (WHT). These taxes are applicable as long as you own US listed assets, regardless of whether the assets were bought through StashAway, or via your own broker. The WHT is held at source and the rest of the dividends are redistributed back to your portfolio(s) and reinvested automatically.
The dividends you see in the "Transactions" tab of your StashAway app would be the amount after deducting the WHT.
Under the QII (Qualified Interest Income) rule, some of the dividend WHT from US domiciled funds (e.g. US government bonds) can be claimed back. Our broker will do this on your behalf and there is no involvement on the customer's part. We will do this once a year, and will notify you via email if you have any claimable WHT, which would be redistributed to your portfolio and automatically reinvested.
For further illustration, you may like to view the iShares 2020 report on the QII percentages for their funds. Some examples of QII ETFs that StashAway invests in are 20+ Year Treasury Bond (TLT) and 10-20 Year Treasury Bond (TLH).
Our investment team has given serious consideration to the 30% WHT and have considered other exchanges that have lower or no withholding tax. However, at the end of the day, we have decided to stay with US-listed securities despite the tax implications due to the its deep liquidity, reputable fund management and most importantly, the lower tracking error. If you're interested to see a comparison between US-listed securities and foreign securities, here is an article that presents its case.
I know that AutoWealth has been seeking reimbursement of withholding tax for their clients, as I have an account with them.
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