BlackRock is to convert 14 of its ASX-listed iShares US-domiciled ETFs to Australian-domiciled ETFs, removing the need for Australian investors to complete the US IRS’s W8-BEN form.

BlackRock Australia is to convert 14 ASX-listed ETFs from a US to an Aussie domicile.

When an ETF is internationally domiciled and cross-listed, it means that that ETF is already established and running in another country (in this case the US). The fund remains a resident of its home country and is governed by that legal and tax system.

For non-residents, this means that US withholding tax on distributions is 30%. However, with a tax treaty with Australia, this rate can be reduced to 15%, but only when that Australian investor files a W8-BEN form. This form is an administrative burden and must be completed and filed every three years.

iShares is simplifying these products for Australian investors by converting them to locally domiciled funds. This means that they will now be able to offer dividend reinvestment, something that was unavailable on the cross-listed products.

There will be no change to index exposures or fees.

Currently, the iShares International ETFs are held as CHESS depositary interest (CDI) which gives investors an interest in the shares of a US-domiciled iShares ETF. The proposed changes will mean that an investor’s current investment will be converted into units of a new Australian domiciled iShares ETF on a 1 for 1 basis (1 CDI for 1 unit).

The new Australian-domiciled iShares ETF will be issued by BlackRock Investment Management (Australia), as responsible entity, and will invest in shares of the corresponding US domiciled iShares ETF.

This move affects the following funds:

iShares Asia 50 ETF (IAA)
iShares China Large-Cap ETF (IZZ)
iShares Europe ETF (IEU)
iShares Global 100 ETF (IOO)
iShares Global Consumer Staples ETF (IXI)
iShares Global Healthcare ETF (IXJ)
iShares MSCI EAFE ETF (IVE)
iShares S&P 500 ETF (IVV)
iShares S&P Mid-Cap ETF (IJH)
iShares S&P Small-Cap ETF (IJR)
iShares MSCI Emerging Markets ETF (IEM)
iShares MSCI Japan ETF (IJP)
iShares MSCI South Korea ETF (IKO)
iShares MSCI Taiwan ETF (ITW)

With the move to a local Australian domicile structure and the additional closure of some of the smaller ETFs cross-listings, only six internationally cross-listed ETFs will remain in Australia.