The BFG Report

Welcome to the 2017 Summer Edition of the BFG Report

Self-Service Super Contributions

The 1 July 2017 super reforms have opened up a fantastic new opportunity to build wealth in super and reduce your tax bill at the same time. That is, it’s now easier to claim a tax deduction on your personal super contributions than ever before.

Before 1 July 2017, the only way most people could take advantage of the concessional (before-tax) contributions tax benefits was by salary sacrificing through their employer. Some people, such as the self-employed, could make voluntary personal contributions to super and claim a tax deduction but, most people were simply ineligible. Now, anyone1, not just the self-employed, can make voluntary personal contributions to super and claim a tax deduction.

This gives you more flexibility if your employer isn’t in a position to arrange salary sacrifice for you such as small business owner who doesn’t have the time to provide this service to their employees.

As an employee, you rarely have control on the timing of the salary sacrifice contributions made by your employer. This gives you that control so, for instance, you can time your final contributions leading up to 30 June each year and make the most of your contribution limits and the resulting tax benefits.

Remember, concessional contributions are contributions you can make to super either with your before-tax salary or by claiming a deduction on after-tax contributions. Either way, for most people, concessional contributions are taxed at just 15 per cent – not your marginal tax rate which could be as high as 47 per cent.

To claim a tax deduction on your super contributions make sure you:

  • Check the age restrictions to make sure you are eligible.                                                                   There is a work test if you are age 65 to 75.
  • Lodge a “ Notice of Intent to Claim a Deduction “ to your super fund within the timeframes.

Super Opportunity For Downsizers

After 1 July 2018, if you are over 65 and sell a property, there may be a new opportunity to contribute more to super. If passed by parliament, you will be able to use some of the money from the sale to make a “downsizer contribution” to super.

The property does not need to be your current home. It can be you or your partner’s home as long as you or your partner have owned the home for more than 10 years and lived in it at some point in your life.

  1. Note: Fund and Age Restrictions apply.


Investment Market Review – Quarter Ended 30 September 2017

Asset Class – Australian Shares
1 year is 9.0% p.a.
5 year is 9.9% p.a.
10 year is 2.9% p.a.


The S&P/ASX 300 Accumulation Index underperformed  most global markets in the September quarter. The index was up 0.8% driven by mixed economic indicators and a marginally disappointing reporting season. The key themes to come out of the reporting season were moves towards capital expenditure at the expense of dividends and capital returns, disappointing cost guidance and earnings growth skewed to resources. On a sector level, the best performers were energy up 5.9%, materials up 5.0% and consumer staples up 2.1%. The worst performing sectors were telecommunications down 18.3%, utilities down 7.1% and health care down 6.1%.

Asset Class – Listed Property Trusts
1 year is – 2.0% p.a.
5 year is 13.1% p.a.
10 year is – 0.3% p.a.


The A-REIT sector generated a positive return of 1.9% for the September quarter despite a rise in bond yields that would normally see a move away from bond proxies such as A-REIT’s. A-REIT’s performance was in line with guidance during reporting season but it was evident that many were impacted by softer retail conditions. As a result, retail underperformed office and asset managers.

Asset Class – International Shares
1 year is 16.1% p.a.
5 year is 18.0% p.a.
10 year is 6.1% p.a.


Global markets had a strong quarter with the MSCI World Index in Australian dollar terms recording a gain of 2.8%. The strength can be attributed to improving corporate earnings, economic fundamentals and forward looking indicators such as purchasing manager indices. The synchronicity of these improving factors across the globe is something that hasn’t been seen in a number of years and it is providing a lot of support for risk assets. US shares continued to hit all-time highs with buying appetite fuelled by Donald Trump’s plan to overhaul the US tax code. Investors weren’t deterred by a further escalation in geopolitical tensions between the US and North Korea. North Korea remains a tail risk for financial markets but risk assets are unlikely to be deterred unless the situation evolves into armed conflict. The S&P 500 gained 4.0%, the FTSE 100 was up 0.8%, the German DAX 30 was up 4.1% and the Nikkei 225 was up 1.6%. The US Federal Reserve announced that balance sheet normalisation will begin in October in a gradual and predictable manner. There is no precedent for a quantitative easing unwind like this which makes it difficult to gauge how markets will react.

Asset Class – Fixed Interest
1 year is – 0.8% p.a.
5 year is 3.9% p.a.
10 year is 6.1% p.a.


The Australian 3-year bond yield was 24bps higher at 2.15% and the 10-year rose 24bps to 2.84%. The US yield curve flattened with the 3-year bond yield rising 8bps to 1.62% and the 10-year rising 3bps to 2.33%. Yields rose as President Donald Trump and Congressional Republicans unveiled a plan to overhaul the US tax code and reduce both corporate and individual tax rates. A moderately hawkish US Fed statement including a confirmation that the Fed will begin shrinking its $4.5 trillion balance sheet in October, also helped yields move higher.

Asset Class – Cash
1 year is 1.8% p.a.
5 year is 2.4% p.a.
10 year is 3.8% p.a.


The RBA left the cash rate unchanged at a historical low of 1.50% in the September quarter, maintaining their concern over low wage growth, high levels of household debt and Australian dollar appreciation going into the early September meeting, stating it could result in a “slower pick-up in economic activity and inflation”.

High Yielding Internet Savings Accounts

Financial Institution and Interest Rate

RaboDirect Bank – Rate 3.05% p.a.

ME Bank Online Saver- Rate 2.95% p.a.

Citi Online Saver – Rate 2.85% p.a.

Rams Saver – Rate 2.80% p.a.

ING Savings Maximiser – Rate 2.80% p.a.

St George – Maxi Saver – Rate 2.70% p.a.

Rates are subject to conditions and change.

Rates are correct as at 8/12/2017.