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As a resident alien you are to report worldwide income. These franked dividends are reprotable on your US return for the 2010 tax year. You may use the foreign tax credit for the tax to Australia but not the company's portion of the tax paid.
If reported on the individual Autrailian tax return, then doesn't that constitute double taxation?
No because you will receive a credit to US on the tax paid to Australia.
The Form 1116 eliminates the double taxation
There is not tax paid to Australia because of the franking credit. They do this to avoid double taxation on corp. dividends.
That is for Australia, the US stand is that you received dividends and if you paid tax on those already in another country then you can use the Foreign Tax Credit to eliminate a double taxation of income to the US and another country. In the US the company is not paying for dividends and the stockholder paying on same dividend.
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