• CGT listed investment companies concession

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    Claiming a deduction

    If a listed investment company (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 were an Australian resident when a LIC paid you a dividend
    • the dividend included a LIC capital gain amount.

    A LIC paying a dividend will advise its shareholders how much of the dividend is attributable to a LIC capital gain (the attributable part).

    If you are an individual

    As an individual, you can deduct 50% of the attributable part advised by the LIC.

    Example: Resident individual

    Ben, an Australian resident, was a shareholder in XYZ Ltd, which is a LIC. For the 2015-16 income year, Ben received a fully franked dividend from XYZ Ltd of $70, with an eligible capital gain amount (attributable part) of $50. Ben includes on his tax return the following amounts:

    Franked dividend $70
    plus franking credit $30
    Assessable income $100
    less 50% deduction for LIC capital gain $25
    Taxable income $75

    Note: Ben may be entitled to a franking tax offset equal to his franking credit.

    End of example

    If you are a trust or partnership

    As a trust or partnership, you can deduct 50% of the attributable part advised by the LIC. However, if a shareholder in a LIC is a trust or partnership, a beneficiary of that trust or a partner in the partnership has no share of the attributable part.

    If you are a complying superannuation entity or life insurance company

    As a complying superannuation entity or life insurance company, you can deduct 33 1/3% of the attributable part advised by the LIC.

    Declaring assessable income

    If you are a beneficiary of a trust or a partner in partnership

    If a shareholder in a LIC is a trust or partnership, a beneficiary of that trust or a partner in the partnership has no share of the attributable part.

    As a beneficiary of a trust or partner in a partnership, you include an amount in your assessable income in the income year in which a LIC capital gain dividend is paid if you meet all of the following:

    • You are not an individual.
    • The trust or partnership is allowed a deduction and their income is reduced by an amount because of that deduction.
    • A part of the deduction (the reduction amount) is reflected in your share of the net income of the trust or partnership.

    If you are a beneficiary or partner and a complying superannuation entity or life insurance company trust, you must include in your assessable income one-third of that part of a deduction allowed to the trust, company or partnership that is reflected in the share of the net income.

    Example

    The Robbie Partnership received a $210 fully franked dividend from a LIC that also contained an attributable part of $180. The partnership has three equal partners – Joe Robbie, Robbie Limited, and the Robbie Superannuation Fund (a complying superannuation entity).

    The partnership claimed a deduction of $90 in respect of the attributable part in working out its net income of $12,000 (including the $210 dividend). Each partner's share of the net income is $4,000 and their reduction amount is $30 (one-third of $90).

    Each partner includes $4,000 in their assessable income. The partners must also include the following additional amounts in their assessable income:

    • Joe Robbie, $0 (Joe is an individual partner in the partnership)
    • Robbie Limited, $30 (the reduction amount)
    • Robbie Superannuation Fund, $10 (one-third of the reduction amount).
    End of example

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      Last modified: 19 Aug 2016QC 16369