The BFG Report

Welcome to the 2019 Spring Edition of the BFG Report

Claiming a deduction on personal super contributions

Since 1 July 2017, employees, as well as the self-employed, can claim a tax deduction on personal super contributions.

If you are aged between 65 and 74 you can make a contribution to super but you need to meet a work test. To pass the work test, you need to have been ‘gainfully employed’1 for at least 40 hours over 30 consecutive days during the financial year in which you plan to make the contribution.

Also, if you’re aged between 65 and 74 and have a ‘total super balance’ under $300,000, you can make personal contributions to super in the first financial year in which you no longer meet the work test. This is likely to be the first year following your retirement.

Unfortunately, if you are 75 or over you are not eligible to make a personal contribution to super. Generally, the cap on concessional contributions is $25,000 each financial year.


What if you didn’t contribute last financial year — do you miss out?

For the first time this financial year, if you have a total super balance of under $500,000, you can contribute the unused portion of your concessional contributions cap, or ‘carry-forward’ amount, from last financial year. That is, if you didn’t contribute in the 2018/19 financial year, you may be able to carry forward $25,000 to this financial year and contribute up to $50,000.

Currently, only the unused concessional contribution cap amount in the 2018/19 financial year can be carried forward. Then, for future financial years, the unused concessional contribution cap amounts can be carried forward, on a rolling basis, for five years. This can be particularly beneficial for your tax bill if you’ve significantly increased your income, for example, if you’ve sold an asset with a large capital gain.


Tax offsets

The Government has introduced a temporary tax offset called the low and middle income tax offset (LMITO), of up to a maximum of $1,080 per person which phases out for those earning over $126,000 per annum.

This is in addition to the low income tax offset (LITO) for those earning under $66,666 per annum. The LMITO offsets will end after the 2021/22 financial year. However, from 1 July 2022, the Government will increase the LITO, from $445 to $700 to continue to support low income earners.

You don’t need to do anything to receive the tax offsets, the ATO will assess your eligibility when you complete your personal tax return.


Investment Market Review – Quarter Ended 30 June 2019

Asset Class – Australian Shares
1 year is    11.4% p.a.
5 year is     8.9% p.a.
10 year is   9.9% p.a.


The S&P/ASX 300 Accumulation Index outperformed global markets in the June quarter, rising 8%. At a sector level, the best performers were Communication Services (up 12.7%), Health Care (up 10.6%) and Materials/Mining (up 7.3%). Energy was the worst performing sector (down 0.4%), followed by Utilities (up 0.7%) and Property Trusts (up 2.4%). The energy sector performance was driven by global oil prices declining during the quarter due to concerns about global growth offsetting geopolitical fears in the Persian Gulf. The strong performance of Communication Services was driven by Telstra and real estate portals REA Group and Domain. Telstra benefited from a mix of its 5G rollout, new mobile plans and shareholders being attracted to its yield following Reserve Bank of Australia (RBA) rate cuts in June and July.

Asset Class – Listed Property Trusts
1 year is    19.4% p.a.
5 year is    13.8% p.a.
10 year is  14.0% p.a.


The Australian real estate investment trust (A-REIT) sector generated a strong return of 4.1% for the June quarter with the decline in bond yields providing a tailwind for the sector.   A-REITs are viewed as a proxy for bonds and often falling bond yields results in stronger performance for this asset class. The trigger for lower yields was weaker Australian economic data.

Asset Class – International Shares
1 year is    12.0% p.a.
5 year is    13.1% p.a.
10 year is  12.3% p.a.


Global markets had a strong quarter with the MSCI World Index in Australian dollar terms recording a gain of 5.3% for the quarter.   Globally, most markets rose during the quarter led by positive performance during April and June which offset some weakness in May. One factor in the gain was the resumption of a trade truce between the  US and China. Another driver was further stimulus by central banks, as a number cut cash rates over the quarter or indicated their intention to do so soon.

Asset Class – Fixed Interest
1 year is    9.6% p.a.
5 year is    5.1% p.a.
10 year is  6.0% p.a.


Australian and global bond yields fell further during the quarter with the AusBond Compositerising 3.1%. In Australia there has been a continuation of weak data for the domestic economy, including disappointing retail sales, an underlying measure for consumer demand, weaker jobs growth in cyclical parts of the economy and low inflation of 0% for the March quarter and only 1.3% for the previous 12 months. These factors suggest weaker growth for the June quarter (which will be reported in September). Lastly, the RBA determined that the target rate for unemployment could be lower than it had previously forecast without triggering excessive inflation. This target rate has fallen from 5% to 4.5% in its assessment. Given this  view it felt justified in cutting rates in both early June and July. Weaker economic news in the US and volatility on trade talk disruptions with China helped drive global yields lower.

Asset Class – Cash
1 year is    2.0% p.a.
5 year is    2.1% p.a.
10 year is  3.0% p.a.


The RBA cut interest rates by 0.25% in June, this was their first change of interest rates since August 2016. The RBA was motivated by concerns around a slowing economy and their assessment that unemployment could fall further to 4.5% (5.2% as of June) without triggering excessive inflation. This move was followed by another interest rate cut in early July to leave the cash rate at 1%.

High Yielding Internet Savings Accounts

Financial Institution and Interest Rate

RaboDirect Bank – Rate 2.75% p.a.

Citi Online Saver – Rate 2.40% p.a.

St George – Maxi Saver – Rate 2.25% p.a.

ME Bank Online Saver- Rate 2.35% p.a.

ING Savings Maximiser – Rate 2.30% p.a.

Rams Saver – Rate 2.55% p.a.

Rates are subject to conditions and change.

Rates are correct as at 20/8/2019.