• Dividends paid by listed investment companies (LIC) that include a LIC capital gain

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If a LIC pays a dividend to you that includes a LIC capital gain amount, you may be entitled to an income tax deduction.

    You can claim a deduction if:

    • you are an individual
    • you were an Australian resident when a LIC paid you a dividend
    • the dividend was paid to you after 1 July 2001, and
    • the dividend included a LIC capital gain amount.

    The amount of the deduction is 50% of the LIC capital gain amount. The LIC capital gain amount will be shown separately on your dividend statement.

    You do not show the LIC capital gain amount at item 17 (or item 9 if you use the tax return for retirees).

    Example 20: LIC capital gains

    Ben, an Australian resident, was a shareholder in XYZ Ltd, a listed investment company. For the 2005-06 income year, Ben received a fully franked dividend from XYZ Ltd of $70,000 including a LIC capital gain amount of $50,000. Ben includes on his tax return the following amounts:

    Franked dividend
    (shown at T item 11 on his tax return)

    $70,000

    Franking credit
    (shown at U item 11 on his tax return)

    $30,000

    Amount included in total income

    $100,000

    less deduction for LIC capital gain
    (shown as deduction at item D7 on his tax return

    $25,000

    Net amount included in income

    $75,000

    Note

    If Ben uses the tax return for retirees, he shows the amounts as follows: franked dividend at T item 8; franking credit at U item 8; deduction for LIC capital gain at item 12.

    Last modified: 06 Oct 2009QC 27788