LIC & LIT Listed Investment Companies (LICs) 2019

Discussion in 'Shares & Funds' started by Nodrog, 1st Jan, 2019.

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  1. geoffw

    geoffw Moderator Staff Member

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  2. Redwing

    Redwing Well-Known Member

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    Thanks @geoffw , it opens up for me and I don't pay for access?

    Essentially like the first link

    Retirees with self-managed super funds could dodge Bill Shorten’s franking credit crackdown by shifting Australian equities into bank-run retail or industry funds that are in a “net tax” position, potentially blowing a hole in Labor’s $56 billion revenue projections.

    “To minimise the impact of the policy change, one of the options available for an existing SMSF in a net refund position is to move its assets or at least the Australian shares portion of the SMSF to a retail or industry super fund in a net tax position”

    SMSF owners could also add their children into the trust structure to offset the low-tax position of retired members in the fund. More than 90 per cent of SMSFs have either one or two members. If retirees include their children in the trust, it could result in a tax liability, which would allow franking credit income to continue.
     
  3. geoffw

    geoffw Moderator Staff Member

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    Thanks @Redwing. That last paragraph especially definitely shows possibilities.
     
  4. SatayKing

    SatayKing Well-Known Member

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    Thread drift.

    No way do I prefer to add a person to the SMSF who may only have a couple of bucks involved but can have the possible opportunity to direct my funds which form the major, major portion of the fund.
     
  5. SatayKing

    SatayKing Well-Known Member

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    Back on the topic.

    WHF 10c ff, 100% LIC Capital Gain. Payable 12 June.
     
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  6. sfdoddsy

    sfdoddsy Well-Known Member

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    More accurately, I assume, they would have to move funds into a fund that allows member direct style investments.

    My curent Australian Super does, but for franking specific investments you are restricted to direct shares or basically VAS, STW and VHY.

    Hostplus allows you to choose LICs.
     
  7. ChrisP73

    ChrisP73 Well-Known Member

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    10c cash in bank account, 4.28c franking credit and 7.14c tax deduction. Have I got that right? Effectively a tax payed dividend with small tax credit/offset even for those on the top MTR by my calculations. :) Love those surprise LIC capital gains deductions.
     
    Last edited: 17th May, 2019
  8. sfdoddsy

    sfdoddsy Well-Known Member

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    How does the extra 7.14c tax deduction work?

    I get the 10c dividend and 4.28c franking credit.
     
  9. ChrisP73

    ChrisP73 Well-Known Member

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    I could have it wrong, but I'm assuming that 100% lic CG means 100% of assessable income which is the grossed up dividend. The deduction from assessable income for CG is then at 50%, so 14.28 minus 50% of 14.28c.

    CGT listed investment companies concession
     
    Last edited: 17th May, 2019
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  10. sfdoddsy

    sfdoddsy Well-Known Member

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    I’m assuming that the 100% LIC capital gain means that they are not classed as active traders so there is no capital gains tax payable on capital growth.

    I don’t think that affects your tax unless you sell, but I would keen to learn if I am wrong.
     
  11. ChrisP73

    ChrisP73 Well-Known Member

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    I might be confused. Maybe a tax agent could confirm @[email protected] @Terry_w

    From the asx dividend/distribution notice

    "The dividend is 100% attributed to LIC Discount Capital Gains and tax details will be provided on dividends statementssent to shareholders."
     
    Last edited: 17th May, 2019
  12. SatayKing

    SatayKing Well-Known Member

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    I believe you may be right @ChrisP73.

    I leave such arcane matters to the accountant now.

    Worked example:

    Dividend: $700
    Franking:$300 (700x3/7)*
    Total: $1,000
    Deduction: $500 ($333 for Super @ 33 1/3)

    * If I was into doing this stuff to the extent I was in the past I'd be highly annoyed at the additional mental strain and key strokes required with franking @ 27.5% ($700x27.5/72.5). Considering I've paid taxes all my life............
     
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  13. mvsim

    mvsim Member

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  14. mvsim

    mvsim Member

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    Thank you @Snowball for your reply. I have had a bit of analysis paralysis set in lately, lol, and I needed to be reminded to keep on buying when you have the cash :)
     
  15. oddshapes

    oddshapes Well-Known Member

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    I'll be looking to make some purchases next week.
    I've gone through my LICS of interest and have come up with the following discounts to NAV (assuming my calcs are correct):

    ARG - 5.01%
    MLT - 6.46%
    AUI - 9.70%
    WHF - 12.42%
    BKI - 11.11%
    AFI - 4.87%
    DUI - 10.60%
    MIR - 2.13%
    QVE - 9.86%
    PIC - 12.24%
    DJW - 1.88%

    I hadn't looked at it for a little while, one that surprised me was MIR which is now at a discount.
     
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  16. Barny

    Barny Well-Known Member

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    Now that liberal have won, are we thinking lic's will increase as of Monday?
     
  17. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    all the worry over labor's proposed changes a waste of time and energy!
     
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  18. Blueskies

    Blueskies Well-Known Member

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    Yes
     
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  19. Blueskies

    Blueskies Well-Known Member

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    Should have bought on Friday, hard to say by how much but I expect this discount to significantly evaporate by the open on Monday
     
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  20. Nodrog

    Nodrog Well-Known Member

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    Not totally. If it results in investors being more diversified to avoid future scares it’s not a bad thing.
     
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