No update. The ATO's decision to not extent the traditional LICs' ability to pay LIC Capital Gains dividends seems final. MMA have stated that they will only be able to pay ordinary fully franked dividends, regardless of whether their profits derive from dividends or capital gains. They will not be able to pass on an 'attributable capital gain amount' which becomes an additional tax deduction in the hands of the shareholder in lieu of the Capital Gain Discount (as ARG, AUI, AFI etc do) The ATO has clearly signalled that it holds certain views as to what an 'investor' is. It is not sufficient to buy shares and hold them for >12 to establish yourself as a long-term investor. For instance, if I had bought CCL shares last year for $6 because I thought they were oversold, and sold them 13 months later for $9 ... I am not an investor. I am a trader. Therefore it is up to a LIC to establish a pattern of investment which over time will convince the ATO that they are 'investment companies'.
"One question: whats the rationale with your buy into mbl? Held for a while, say when they were trading at 22 in 2001 I think?"
For the same reason you would buy shares in any investment back around the world eg UBS, JP Morgan etc. It will not always be one-way traffic with MBL, but they can be relied upon to innovate and discover the sorts of deals which make money. Sure, ultimately others will imitate (eg B&B) but there is enough money to go round in investment banking and MBL rate to stay ahead of the pack
CHO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
