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Hello Entrust Member,
In this month’s addition, we gain insight into an organisation supported by the Euroz Charitable Foundation, called “The Fathering Project”. Bill Shorten’s threat to abolish the refund of excess franking credits for Self-Managed Super Fund members is reviewed, and our Tech team give a rundown on the eligibility to make non-concessional contributions (NCCs). The month of August is reviewed in Morningstar’s Australian Economic Update and three topics of interest are discussed in this months “Frankly Speaking” section.
Advisor
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The Fathering Project
Entrust is working hard to ensure it is a solid corporate citizen as well as being a successful enterprise. One way we achieve this is through our involvement with The Euroz Charitable Foundation (“ECF”). The ECF supports a number of Western Australian charities in their work in the local community. One organisation that we feel much aligned with (and support accordingly) is “The Fathering Project”. The Fathering Project is a Not-for-Profit organisation that aims to spread through the community the message emphasising the importance of fathers and father figures.
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Franking Credits
The number one question we are getting from our self-funded retiree clients is: ‘What are we going to do if we lose our franking credits?’ The reason for their concern is twofold. Firstly, refunded franking credits are a very important source of income for retirees. And secondly, for some self-funded retirees Bill Shorten has threatened to abolish the refund of excess franking credits for Self-Managed Superannuation Fund (SMSF) members. Under the current system, if your franking credits aren’t needed to offset any tax payable they are refunded back to you in cash. For many retirees this refund, no matter how big or small, is crucial. By abolishing these refunds Mr Shorten is effectively promising self-funded retirees a pay cut. In some cases the cut will be as high as 30%. No wonder some have dubbed the change the “retiree tax”.
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Morningstar’s Australian Economic Update for August 2018
While the long post-global financial crisis global expansion is still intact and is providing fundamental economic support for risk assets, it is increasingly being challenged by downside risks, with trade wars and emerging-markets economies the latest worries. Risk asset classes have also become over-dependent on the U.S. economy. All going well, the global and U.S. economies will continue growing through 2019, but the recent pattern of volatility looks set to become an established feature of what are now “late in the cycle” markets. In Australia, the economic data continue to blow hot and cold, though some forecasters, notably the central bank, believe a pickup in growth is not far away. The equity market has picked up, despite the drag of the financials, suggesting that it too may be feeling a bit more positive about the outlook for profitability, although various risks
(notably falling commodity and house prices) could derail the prospect of faster growth.
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Index / Indicator |
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AUSTRALIAN EQUITIES |
Jul-17 |
Jul-18 |
Change 1 Month |
Change 12 Months |
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ASX200 Accum |
55,753.35 |
63,889.60 |
1.39% |
14.59% |
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ASX200 Resources Accum |
20,539.20 |
27,553.64 |
0.13% |
34.15% |
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ASX200 Industrials Accum |
51,911.65 |
59,378.63 |
3.48% |
14.38% |
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INTERNATIONAL EQUITIES |
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MSCI World Index |
1,961.10 |
2,153.10 |
3.05% |
9.79% |
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S&P500 (USA) |
2,470.30 |
2,816.29 |
3.60% |
14.01% |
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FTSE 100 (UK) |
7,372.00 |
7,748.76 |
1.46% |
5.11% |
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Nikkei 225 (Japan) |
19,925.18 |
22,553.72 |
1.12% |
13.19% |
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Shanghai Composite (China) |
3,273.03 |
2,876.40 |
1.02% |
-12.12% |
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CURRENCY |
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A-Dollar / US-Dollar |
$0.80 |
$0.74 |
0.30% |
-7.17% |
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Trade Weighted Index |
67.3 |
63.5 |
1.44% |
-5.65% |
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FIXED INTEREST |
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Aust 90 Day Bank Bills |
169.00% |
196.45% |
-1460 bps |
2745 bps |
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Aust 10 Year Govt Bonds |
267.75% |
264.84% |
114 bps |
-291 bps |
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US 10 Year Govt Bonds |
229.54% |
296.21% |
971 bps |
6667 bps |
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Non-concessional Contributions (NCCs)
From the 1st July 2017 the Government has limited the amount an individual can transfer to the retirement phase of superannuation, where it is subject to the earnings tax exemption. This is known as the Transfer Balance Cap (TBC). An individual’s capacity to make non-concessional contributions is also subject to restrictions, based on the Total Superannuation Balance (TSB).
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Frankly Speaking
Buybacks, Enduring Power of Guardianship, Probate.
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ENTRUST PRIVATE WEALTH MANAGEMENT
Level 18 Alluvion 58 Mounts Bay Road
Perth Western Australia 6000
PO Box Z5034 Perth Western Australia 6831
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Telephone (08) 9476 3900
Facsimile (08) 9321 6333
info@entrustpwm.com.au
www.entrustpwm.com.au
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This publication has been compiled by Entrust Private Wealth Management ABN 80 100 088 168 AFSL 222152 (Entrust). This publication is current as at time of preparation. Past performance is not a reliable indicator of future performance. Any outlooks in this publication are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the outlooks given in this publication are based are reasonable, the outlooks may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The results ultimately achieved may differ materially from our outlooks. Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The information and any advice in this publication do not take into account your
personal
objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This publication may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. Entrust is not responsible for such material. To the maximum extent permitted by law: (a) no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up-to-date or fit for any purpose; and (b) neither Entrust, nor any member of the Entrust group of companies or its authorised representatives, is in any way liable to you (including for negligence) in respect of any reliance upon such information or advice. It is important that your personal circumstances are taken into account
before making
any financial decision and we recommend you seek detailed and specific advice from your adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances. More information? For further information on any issue discussed in this publication, or on any financial matter, please contact your financial adviser.
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