$$$ KPO and CZM $$$: StashAway Withholding Tax Reimbursement FY 2017

Thursday, October 18, 2018

StashAway Withholding Tax Reimbursement FY 2017

2 weeks back, I received an email from StashAway titled "You've received a dividend withholding tax reimbursement" but have yet to look into it until a few days ago. Chances are you (StashAway users) would have received it as well.

This was a pleasant surprise because we had long accepted it as one of the cost to invest in the US and were not expecting to get the withholding tax back.

Interestingly, it was stated in one of the FAQs that the taxes can be claimed back and is done by the broker (in this case, StashAway's broker is Saxo). Not sure if this is unique to Saxo or is done by all the other brokers in Singapore. Do leave a comment if you have more information on this :)

Anyway, I realized that only 3 out of the 8 ETFs (TLT, TIP, and CWB) had withholding tax reimbursed so I dropped their support an email for more information. The response I got was roughly similar to what was stated on the above FAQs with slightly more details and a link to a PDF that states the ETFs that qualify for reimbursement:

For the withholding tax (WHT) reimbursement, we do not receive dividend reimbursement for all ETFs but only those that qualify under the QII (Qualified Interest Income) rule.

Only some of the dividend WHT from US domiciled funds (e.g. US government bonds) can be claimed back. As such, we did not receive any dividend reimbursement for XLK and XLY.

For further illustration, you may like to view the Dec 2017 iShares report on QII ETFs. Some examples of QII ETFs that StashAway invests in are 20+ Year Treasury Bond (TLT) and 10-20 Year Treasury Bond (TLH).

Our broker, Saxo, applies for the tax reimbursement on our behalf with the relevant tax authorities and we may not get all of the dividend WHT back. Just to share, the reclaiming of WHT will be done once a year, and we will notify you via email if you have any claimable WHT, which would be redistributed to your portfolio and automatically reinvested. 
- Kathleen

I also took this chance to compile the total dividends we received for the financial year 2017 including the withholding tax reimbursement which comes up to USD $14.64. On the other hand, the total fees charged by StashAway adds up to SGD $7.49 which seems pretty sustainable (dividends > fees). Ideally, the portfolio should grow in the future even without the injection of fresh funds and if the fees > dividends, that would mean that the fees would eventually eat into the capital.

A "Dividends" tab has been added to the spreadsheet - KPO & CZM StashAway Portfolio VS STI ETF but I have yet to update the numbers using the latest statement. Shall get it done over the weekend!

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