So, this LIC versus LIT thing has not been spelled out anywhere...

So, this LIC versus LIT thing has not been spelled out anywhere I can find.

My understanding is that a LIT will be able to pass on any capital gains to shareholders so they can arrange their own tax treatment.  At the moment a LIC pays 30% tax so if that will not happen in a LIT then the dividends will be larger.  People who used to get a tax refund of the imputation credit due to capital gains will now get the cash with the LIT distribution.

However, any franked dividends that used to be received by a LIC would be passed on with franking in tact by a LIT.  That means these franking credits would be lost to someone who no longer gets the franking refund.  Those of us who pay tax would still be able to claim the now smaller franking credit.

Is there any expert out there that can confirm my ramblings?

As an additional wrinkle, I am amused at AFI, AMH, MIR, etc who are selling shares to generate franking credits to distribute.  These guys usually trade at a large after tax NTA premium by promising never to sell shares.  Lucky there is a franking dodge with the BHP and Rio buybacks that prevents them making a capital gain and therefore avoid tax.

Interesting times.  There will be gyrations in WAX and similar LICs coming up to the election.  I look forward to the fun and hopefully I can buy back in at a decent price.