Brand

Frequently Asked Questions

Contents:
The Board
Corporate Governance
Senior Executives
FAQs

What Is The Role Of The Board?

To access information regarding the role of the Board please click on the link below:

Role of the Board

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What Is The Role Of The Investment Committee?

To access information regarding the role of the Investment Committee please click on the link below:

Role of the Investment Committee

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How Does The Trading Account Differ From The Investment Account?

AFIC's primary objectives are to grow dividends at a faster rate than inflation and provide shareholders with capital growth over the medium to long term. The investments which it makes to try and meet these objectives are held in the Company's investment portfolio. However, we also have a small trading account to enable the Company to take advantage of short-term opportunities that may arise and particularly the ability to sell call options against positions with the intention of generating further income for our shareholders.

The Board's policy is that the trading account should be no more than 10% of the Company's total portfolio and depending on the market environment can be significantly lower than this.

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How Does AFIC Make Its Investment Decisions?

The Company's investment decisions are driven primarily by the decisions made by the Investment Committee, which usually meets weekly. An in house dealing team works in close consultation with our Chairman and Managing Director undertakes the day to day management of the Company's portfolio and associated research with all transactions subject to review and oversight by the Investment Committee.

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What Is The Tax Position When Investing In AFIC?

One of the Company’s key objectives is its intention to pay shareholders dividends which grow faster than inflation in the medium term. Since the introduction of the system of imputation all of AFIC’s dividends to date have been fully franked, potentially enabling shareholders to offset the franking credits received against their own income. Recent changes to the imputation system also allow refund of franking credits to shareholders whose marginal tax rate is less than the Company tax rate.

Further, since AFIC meets the definition of a Listed Investment Company for tax purposes, it is also able to pass through to shareholders tax benefits when available in respect of capital gains which the Company makes on securities held more than one year. The effect of these tax benefits is to potentially put the shareholder in the same position as if they had sold these assets personally so that half of the capital gain would be tax free.

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What Are Listed Investment Company Capital Gains?

AFIC does not tend to sell stocks in the portfolio other than for risk management purposes and/or because of takeovers. If we do make a capital gain and the stock has been held for more than 12 months a benefit may also be passed back to certain shareholders.

If part or all of the dividend is sourced from a LIC capital gain certain Australian shareholders such as individuals, trusts and super funds can claim the applicable capital gain discount as though they owned the stock themselves (this may be claimed as an income tax deduction depending on your tax circumstances).

If an LIC gain is distributed this information is provided on the dividend advice sent to shareholders. You should contact your tax adviser if you have any further questions.

The link below also provides further information from the ATO.

http://www.ato.gov.au/General/Capital-gains-tax/In-detail/Shares,-units-and-similar-investments/CGT-listed-investment-companies-concession/

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