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LIC premium and discount: what you're actually buying

A Listed Investment Company holds a portfolio of assets — usually Australian or global shares. Every month, the LIC announces its Net Tangible Assets (NTA) per share, which is the value of its portfolio divided by shares on issue. When you buy the LIC on the ASX, you pay the market price — which may be above or below that NTA.

Why gross vs net NAV changes the picture

Most LICs publish two NTA figures: pre-tax (gross) and post-tax (net). The gross figure ignores the tax consequences of the portfolio. The net figure deducts a corporate-level estimate of tax payable on unrealised gains. Neither figure adjusts for yourpersonal tax situation — which is where this calculator adds value.

Franking credits are the most impactful personal tax variable. If you are in pension phase (0% tax), fully franked dividends are worth 30c extra per 70c received — a genuine 43% uplift. If you are on the top marginal rate (47%), you pay additional top-up tax on those same dividends, making them worth less than their face value.

Embedded capital gains: the hidden liability

The difference between a LIC's pre-tax and post-tax NTA represents unrealised capital gains sitting inside the portfolio. When those gains are eventually realised — when the LIC sells holdings — tax becomes payable, reducing the cash that flows out to you. A LIC trading at a 5% discount to pre-tax NAV might actually be at a slight premium once you adjust for this embedded tax liability.

How to find a LIC's NTA

Australian LICs are required to publish monthly NTA (Net Tangible Assets) announcements to the ASX. Search the ASX announcements page for the LIC's code, filter by "NTA Announcement", and you will find both pre-tax and post-tax NTA per share, plus the unrealised gains figure.