# Us citizens and foreign share information **URL:** \ **Category:** Factual Questions\ **Created:** [October 26, 2010, 1:35pm UTC](https://boards.straightdope.com/t/us-citizens-and-foreign-share-information/558400 "2010-10-26T13:35:11Z")\ **Posts on this page:** 4\ **Page:** 1
**Author:** ![mrpayday](https://avatars.discourse-cdn.com/v4/letter/m/a88e57/32.png) [@mrpayday](https://boards.straightdope.com/u/mrpayday)\ **Post date:** [October 26, 2010, 1:35pm UTC](https://boards.straightdope.com/t/us-citizens-and-foreign-share-information/558400/1 "2010-10-26T13:35:11Z")
An Australian company announcement has this as the first line: NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS A dividend reinvestment document states that a shareholder with a US or Canadian address is not eligible to participate in their dividend reinvestment program. What are the restrictions of US citizens and foreign financial information and how did they come about? ---
**Author:** ![Giles](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giles/32/60_2.png) [@Giles](https://boards.straightdope.com/u/Giles)\ **Post date:** [October 26, 2010, 1:44pm UTC](https://boards.straightdope.com/t/us-citizens-and-foreign-share-information/558400/2 "2010-10-26T13:44:23Z")
Here’s my guess: If you are resident in the US, then dividends in companies anywhere in the world are taxable as income in the US, for federal income tax purposes. You don’t even get the benefit of the [franking credit system](http://en.wikipedia.org/wiki/Franking_credit) in Australia. (This affects me, as an Australian resident in the US, with a small holding of shares in an Australian company). It may be that dividend reinvestment in an Australian company causes problems in the federal income tax system in the US. ---
**Author:** ![Rhythmdvl](https://avatars.discourse-cdn.com/v4/letter/r/85f322/32.png) [@Rhythmdvl](https://boards.straightdope.com/u/Rhythmdvl)\ **Post date:** [October 26, 2010, 1:46pm UTC](https://boards.straightdope.com/t/us-citizens-and-foreign-share-information/558400/3 "2010-10-26T13:46:35Z")
> [@mrpayday](#): > > An Australian company announcement has this as the first line: > > NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS > > \*\*A dividend reinvestment document \*\*states that a shareholder with a US or Canadian address is not eligible to participate in their dividend reinvestment program. > > What are the restrictions of US citizens and foreign financial information and how did they come about? WAG: It could be that the US has very strict guidelines about soliciting certain investment documents. If you notice a lot of ads for investments end with some quick spoken disclaimer along the lines of “this is not an offer to buy or sell, this offer may cause four-hour erections, do not taunt Happy Fun Ball…” There are also myriad disclosure requirments and other items that must be included in a prospectus (and I assume similar marketing documents). Perhaps they don’t want to pay a US attorney to make their materials compliant (or can’t), and don’t want to run afoul of some SEC regulations. ---
**Author:** ![penultima\_thule](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/penultima_thule/32/3833_2.png) [@penultima\_thule](https://boards.straightdope.com/u/penultima_thule)\ **Post date:** [October 26, 2010, 8:26pm UTC](https://boards.straightdope.com/t/us-citizens-and-foreign-share-information/558400/4 "2010-10-26T20:26:28Z")
**Giles** is close, it’s the Australian tax implications of franking credits. > [@](#): > > From the [Australian Shareholders Association](http://australianshareholders.com.au/asa_site/index.php?option=com_content&view=article&id=126:dividends-and-franking-&catid=74:policy-statements&Itemid=74) website: > The franking system in Australia was established as a way of avoiding the double taxing of profits, once in the hands of the company and again when what was left of the profits were received as dividends by shareholders. > > Franking credits arising from tax paid on Australia-sourced profits are advance payments of tax that can be set by shareholders against their other tax liabilities, or be reimbursed to them. > > Failure to distribute taxed profits therefore has the effect of blocking the entitlement of shareholders to these tax credits, causing them to pay more tax, or to pay it sooner, than if the profits were distributed in full. US based investors, who are therefore not able to access the tax credit, cannot be distributed their entitlements and hence the company is able to hoard profits on which somebody else has paid the tax. Aren’t we nice, looking after the fiduciary interests to all you high-personal wealth investors in this little colonial backwater?