Conduit Foreign Income

Conduit Foreign Income (CFI), is the component of dividends received from Australian corporate tax entities (i.e. Australian listed companies on the ASX: NAB, Rio etc.) that is exempt from withholding tax.

Generally, it is foreign income earned by/ through an Australian corporate tax entity (i.e. BHP Billiton Global Operations in Malaysia and Algeria) that is received by non-tax resident investors.    

Ordinarily, any foreign income paid to a non tax Australian resident, is exempt from any Australian tax.  CFI in its nature is non-assessable, non-exempt income (effectively tax free).  Therefore, any unfranked distribution with a portion of CFI is not subject to withholding tax.

However, for Australian resident investors, any amounts of CFI will be claimed a part of an ‘unfranked dividend’.  Therefore subject to any tax implications that come with unfranked dividends.