Fund Regulatory Update

LICAT unimpressed with proposed legislation changes to franked distributions

The Listed Investments Companies & Trusts Association (LICAT) has expressed its disappointment via a submission to Treasury regarding proposed legislative changes to franked distributions funded by capital raisings. The submission says the proposed legislation has conceptual problems, while also possibly permitting tax avoidance and dividend distributions, posing unintended consequences for normal business operations.

The LICAT submission says: "We seek to highlight that the proposed legislation as drafted would appear to inadvertently catch many thousands of situations of legitimate company operation and could accordingly delay or significantly discourage the normal processes of capital raising, investment and economic growth within Australia."