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.


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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