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.
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:
End of example
- 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).
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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.