NO.033

From 1 July 2001, more than 100,000 shareholders in Listed Investment

Companies (LICs), many of whom are self-funded retirees, will benefit from the

50 per cent discount. Under the measure, shareholders of LICs, which operate

like managed funds, will receive comparable tax treatment to investors in

managed funds for distributions sourced from eligible capital gains. This cut in

capital gains tax (CGT) is estimated to provide a benefit of $5m in 2001-02 and

$20m pa thereafter.

LICs will continue to be assessed for income tax as an entity separate from

their shareholders. Dividend statements provided by LICs will separately

identify income sourced from the disposal of eligible CGT assets. LIC

shareholders will effectively be assessed on only 50 per cent of the gross

distribution from an eligible capital gain.

Legislation to implement the measure will be introduced into Parliament as

soon as practicable.

CANBERRA

22 May 2001

Contact: Mike Buckley, 6263 4413