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).
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 |
$70,000 |
Franking credit |
$30,000 |
Amount included in total income |
$100,000 |
less deduction for LIC capital gain |
$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.
End of exampleMore information
For more information about the issues covered in this chapter, including demergers, see Guide to capital gains tax 2005–06 and You and your shares 2005–06 (NAT 2632-6.2006).
See appendix 1 for a list of some major transactions involving issues covered in this chapter.