NO.033

Capital Gains Tax Relief for Shareholders of Listed Investment Companies

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