ResMed Inc. has updated the foreign exchange rate impacting its upcoming dividend payment to Australian CDI holders, reflecting currency volatility and tax treaty benefits.
- Dividend updated with new AUD/USD exchange rate of 0.6318
- Dividend payment set at AUD 0.0839 per CDI for quarter ending December 2024
- US withholding tax default at 30%, reducible to 15% with proper documentation
- Dividend payable on March 20, 2025, with record date February 13, 2025
- No franking credits attached; dividend fully unfranked
Dividend Update Reflects Currency Sensitivities
ResMed Inc. (ASX: RMD) has issued an update to its previously announced dividend distribution for holders of its Chess Depositary Instruments (CDIs) on the Australian Securities Exchange. The revision centers on the foreign exchange rate applied to convert the dividend from US dollars to Australian dollars, a critical factor given the cross-border nature of the security.
The updated exchange rate stands at 0.6318 US dollars per Australian dollar, slightly adjusting the dividend payout to AUD 0.0839 per CDI. This reflects the 10:1 ratio between CDIs and the underlying NYSE-listed shares, ensuring Australian investors receive an accurate currency-adjusted return for the quarter ending December 31, 2024.
Tax Implications and Investor Considerations
Investors should note the withholding tax implications tied to this dividend. While the default US withholding tax rate on dividends paid to Australian residents is 30%, ResMed highlights that this rate can be halved to 15% under the existing US-Australia tax treaty. To benefit from the reduced rate, beneficial owners must submit the appropriate IRS forms, such as Form W-8BEN or W-8BEN-E, to the Australian share registry, Computershare Investor Services Pty Limited.
Importantly, the dividend is fully unfranked, meaning no Australian franking credits are attached. This is consistent with ResMed’s status as a foreign entity and the nature of the dividend payment.
Timeline and Market Impact
The dividend record date is set for February 13, 2025, with an ex-dividend date of February 12, 2025. Payment to CDI holders will occur on March 20, 2025. The update does not require any additional approvals, signaling a smooth process for investors expecting their dividend payments.
From a market perspective, the adjustment in the exchange rate underscores the sensitivity of cross-listed securities to currency fluctuations. Investors in ResMed’s CDIs should remain attentive to currency movements and tax documentation requirements to optimise their dividend returns.
Overall, this update provides clarity and transparency, reinforcing ResMed’s commitment to keeping its Australian investor base well-informed amid the complexities of international dividend payments.
Bottom Line?
As currency dynamics evolve, ResMed’s dividend update serves as a reminder of the nuanced interplay between exchange rates and cross-border investor returns.
Questions in the middle?
- How might future currency volatility impact ResMed’s dividend payouts to Australian CDI holders?
- What proportion of Australian investors have submitted the necessary tax forms to benefit from the reduced withholding tax rate?
- Could ResMed consider a securities plan or franking arrangements to enhance dividend attractiveness for Australian investors?