Australian Investors: US Investment Guide
Tax treaty benefits, no capital controls, and unique E-3 visa access for Australian professionals
Australia Investment Overview
Tax Treaty
Dividend Rate
Unique Visa
Capital Controls
Australia maintains a comprehensive tax treaty with the United States and has no capital controls on outbound investment. Australian nationals have unique advantages including the E-3 specialty occupation visa, strong bilateral economic ties, and familiar common law legal systems. The AUD/USD exchange rate is the primary consideration for timing investments.
Australia-US Tax Treaty
Withholding Rate Reductions
The Australia-US Income Tax Treaty provides reduced withholding:
| Income Type | Standard Rate | Treaty Rate | Notes |
|---|---|---|---|
| Dividends (portfolio) | 30% | 15% | Under 10% ownership |
| Dividends (direct) | 30% | 5% | 10%+ corporate owner |
| Interest | 30% | 10% | Reduced rate |
| Royalties | 30% | 5% | Significant reduction |
Avoiding Double Taxation
Australia uses the foreign income tax offset (FITO) system:
FITO Mechanism
- Credit for US taxes paid
- Applied against Australian tax
- Prevents double taxation
- Excess credits may carry forward
Considerations
- Australian rates often higher
- Top marginal rate 45%+Medicare
- US tax provides partial credit
- Effective rate optimization possible
Estate Tax Treaty
The Australia-US Estate Tax Protocol provides important protections:
Treaty Benefits
- Pro-rata unified credit
- Marital deduction available
- Avoids double death taxation
- Coordinates with AU CGT on death
Australian Considerations
- No Australian inheritance tax
- But CGT applies on death (mostly)
- Superannuation death benefits taxed
- Coordination planning important
Capital Controls
No Restrictions on Australian Capital
Australia imposes no capital controls on outbound investment:
Permitted Freely
- Unlimited foreign investment
- No approval requirements
- No currency restrictions
- Full repatriation rights
Reporting Requirements
- AUSTRAC for large movements
- Over AUD $10,000 reported by bank
- No approval, just reporting
- Tax return disclosure of foreign assets
Entity Formation
Recommended Structures
Australian investors should consider these options:
US LLC (Single Member)
- Disregarded for US tax
- Australia treats as company (typically)
- CFC rules may apply
- Good for real estate
- Check-the-box considerations
US C-Corporation
- 21% US corporate rate
- 5-15% dividend withholding
- Clear Australian CFC treatment
- Best for active business
- Attracts US investors
Australian Pty Ltd + US Sub
- Australian holding company
- US subsidiary (LLC or Corp)
- 5% dividend rate available
- Familiar Australian structure
- CFC rules consideration
Family Trust + US LLC
- Australian discretionary trust
- Owns US LLC
- Distribution flexibility
- Complex tax implications
- Specialist advice required
US Real Estate Investment
Tax Treatment
| Tax Type | US Treatment | Australian Treatment |
|---|---|---|
| Rental income | Up to 37% (elect ECI) | FITO credit for US tax |
| Capital gains | FIRPTA 15% withholding | Taxed in Australia with FITO |
| Depreciation | 27.5 years residential | Different AU depreciation rules |
| Negative gearing | Passive loss rules apply | May differ from AU treatment |
Popular Markets for Australian Buyers
California
- Similar lifestyle to Australia
- Strong tech connections
- High prices but familiar
- Direct Qantas flights
Hawaii
- Closest US to Australia
- Vacation property potential
- High property prices
- Familiar culture
Texas
- No state income tax
- Lower entry prices
- Growing markets
- Strong rental yields
Florida
- No state income tax
- Vacation rental market
- Diverse price points
- Strong foreign buyer infrastructure
E-3 Specialty Occupation Visa
Unique Australian E-3 Visa
The E-3 visa is exclusive to Australian nationals:
E-3 Requirements
- Australian citizenship
- Specialty occupation (degree required)
- Job offer from US employer
- Labor Condition Application (LCA)
- 10,500 annual quota
E-3 Benefits
- 2-year term, renewable indefinitely
- Spouse can work (E-3D)
- Children can attend school
- Easier than H-1B process
- Apply at consulate or border
E-2 Investor Visa Alternative
Australians are also eligible for E-2 treaty investor visas:
E-2 Requirements
- Substantial investment ($100K+ typical)
- Active business operation
- Majority ownership (50%+)
- More than marginal enterprise
E-2 vs E-3
- E-3: Employment-based, no investment
- E-2: Investment-based, own business
- Both allow spouse work authorization
- Can hold both in sequence
Australian Tax Considerations
Reporting US Investments
Australian tax residents must report worldwide income:
Tax Return Reporting
- Foreign income section
- US rental income in AUD
- Capital gains on US assets
- FITO claim for US taxes paid
CFC Considerations
- Controlled foreign company rules
- Attribution of passive income
- Active income exemption may apply
- Complex anti-avoidance rules
Currency Considerations
AUD/USD fluctuations affect returns:
FX Impact
- Investment in USD terms
- Returns converted to AUD for tax
- FX gains/losses may be taxable
- Consider hedging for large investments
Timing Strategies
- Favorable AUD rate = cheaper entry
- Lock in rates for large transfers
- Consider forex specialists
- Not financial advice - do research
Frequently Asked Questions
Can I use my superannuation to invest in the US?
Generally, no. Superannuation funds can invest in US assets through the fund, but you cannot directly access super for personal US investment before meeting release conditions. SMSFs have more flexibility but must follow strict investment rules and trustee duties.
How does the US treat my Australian LLC?
There is no Australian LLC. Australian companies (Pty Ltd) are treated as corporations by the US, which works well for treaty purposes. If you have a US LLC, Australia may treat it as a company (not transparent), which can create mismatches. Professional advice is essential.
What about the 50% CGT discount on US property?
Australian residents can claim the 50% CGT discount on US property held for over 12 months when calculating Australian tax. However, you first apply FITO credits for US taxes paid (FIRPTA). The interaction is complex and the discount applies after the credit mechanism.
Can I get a US mortgage as an Australian?
Yes, several US lenders work with Australian borrowers. Typical requirements include 30-40% down payment, higher interest rates than US residents, and documentation of Australian income. Some Australian banks also lend on US property.