Aberdeen Australia Equity Fund, Inc. (NYSE AMEX: IAF) (the “Fund”), a closed-end equity fund, today announced that it paid on January 14, 2011, a quarterly distribution of US 28 cents per share to all shareholders of record as of December 30, 2010.

Under U.S. tax rules applicable to the Fund, the amount and character of distributable income for each fiscal year can be finally determined only as of the end of the Fund’s fiscal year. However, under Section 19 of the Investment Company Act of 1940, as amended (the “1940 Act”) and related Rules, the Fund may be required to indicate to shareholders the source of certain distributions to shareholders.

The following table sets forth the estimated amounts of the sources of the distribution for purposes of Section 19 of the 1940 Act and the Rules adopted thereunder. The table includes estimated amounts and percentages for this distribution and for the cumulative distributions paid year to date, from the following sources: net investment income; net realized short-term capital gains; net realized long-term capital gains; and return of capital. The estimated composition of the distributions may vary from quarter to quarter because the estimated composition may be impacted by future income, expenses and realized gains and losses on securities.

Estimated Amountsof CurrentQuarterlyDistribution pershare ($)

Estimated Amountsof CurrentQuarterlyDistribution pershare (%)

Estimated Amountsof Fiscal Year toDate CumulativeDistributions pershare ($)

Estimated Amountsof Fiscal Year toDate CumulativeDistributions pershare (%)
Net Investment Income   $0.0180   6%   $0.0180   6%
Net Realized Short-Term Capital Gains   -   -   -   -
Net Realized Long-Term Capital Gains   $0.0820   30%   $0.0820   30%
Return of Capital   $0.1800   64%   $0.1800   64%
Total (per common share)   $0.2800   100%   $0.2800   100%

The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield,” “income” or “profit.”