Tracking foreign withholding tax refunds

Reporting & tax
1

I’ve just discovered an unusual quirk of certain US-based ETFs. If an ETF distributes only qualified interest (e.g. from government bonds) then distributions are not subject to withholding tax. However, this qualification is only made annually, and retrospectively. This results in a withholding tax refund.

For example, say I hold NASDAQ:SHV and received a US$100 every month for a calendar year. As an Australian with W-8BEN on file, I would have US$15 withheld from each payment. The following January or February, this would all be deemed qualified interest income and I would receive a lump sum refund of US$180 (the entirety of the withholding).

Is there a way to correctly track this refund in Sharesight?

I could set the ETF holding to 0% withholding rate, but then the exchange rate calculations will be wrong. The rate when I receive the actual payment is different to each of the preceding 12 monthly payment dates.

If I record the refund as a distribution on the day it is paid, the gross income and tax withholding amounts will be incorrect on the taxable income report.

The way that seems most correct to me would be to enter a gross distribution of US$0 with a negative amount of tax withheld, but Sharesight does not let me enter a negative amount in this field.

2

Hi @Rodos there is no dedicated field to record this in Sharesight unfortunately, but I have added this in our feature suggestions board for further evaluation by our product team.

However, we can suggest some workarounds to record this in Sharesight. If you are looking to record these refunds for your own record purposes, you can record them in a cash account. However, if you are looking to reflect these in your tax reports, the current option available is to edit the payouts to remove/change the withholding tax amount recorded.