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Can I claim a tax credit on American Depositary Receipts (ADRs)?
Can I claim a tax credit on American Depositary Receipts (ADRs)?

In most cases, yes. But there are some additional things to consider.

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Written by Support
Updated over a year ago

If you’ve received income (i.e dividends) from American Depositary Receipt (ADR) shares, then there are some extra things to consider when calculating your tax credit:

  • The rate your ADR dividends were taxed at - this depends on where the company is based, and may be different to what your US investments are taxed at. You’ll be able to see how much tax was paid in your end of year tax reports.

  • Whether New Zealand has a tax treaty (also called a Double Tax Agreement or DTA) with the country where the company is based. If there is a treaty, then the maximum tax claimable is the amount specified in the treaty (generally, it'll be limited to 15%).

E.g. Taiwan has a standard withholding tax rate of 21% on dividends for non-residents. If you own shares in a Taiwanese ADR, then your dividends will be taxed at the default rate of 21% before the money hits your Hatch account. However, NZ has a tax treaty with Taiwan which limits withholding tax for NZ tax residents to 15%, so you can only claim a 15% credit from IRD - if you wanted the other 6% back, you may be able to make a claim with the Taiwanese government.

You can find details of withholding tax rates & treaties in different countries using PWC’s Tax Summaries tool - e.g. various withholding tax rates for Taiwan can be found here.

Note: Your tax obligations are unique to you - if you're unsure, we recommend you seek professional tax advice. Your situation may change over time; it’s your responsibility to keep up to date with changes.

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