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I am a dual citizen of Australia and the US, and a resident of the US. I have some savings in Australia that I would like to use to purchase mutual funds in the US. If I make the purchases using Australian dollars, will I have to pay taxes in Australia on the dividends?

I could bring the money over here and convert it to US dollars, but as the Australian dollar is strong I would prefer not to. Taxes for a non-resident are substantially higher in Australia, which is why I want to invest in the US.

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If you are investing in the US with Australian dollars you would be affected by the FX affects anyway. When you buy the units in the mutual fund you $AUD would be converted to $US and when you receive dividends or sell the units it will be converted back into $AUD. And yes you will also have to pay non-resident tax in Australia for any dividends and capital gains.

You are thus better off converting the money to $US and using that to buy the units in the mutual fund.

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