Author: admin

Tariff reprieves, trade deals brighten the economic horizon

.

Australia

Amid weaker global growth, expect a dovish central bank.

“Given the combination of weaker global growth and heightened uncertainty, we expect the Reserve Bank of Australia to adopt a dovish stance.” Grant Feng, Vanguard Senior Economist.

For Australia, the direct impact of U.S. tariffs should be limited. The country exports a relatively small volume of goods to the U.S., and the reciprocal U.S. tariff rate on Australian goods was set at 10%, the lowest among affected countries, in early April. However, the indirect effects are likely to be more significant, including slower economic growth in China and a negative impact on domestic consumption and business investment confidence. Overall, we expect the Australian economy to grow around 2% over 2025, with policy easing partly offsetting the impact of uncertainty.

We anticipate that inflation will stay within the 2%–3% band targeted by the Reserve Bank of Australia (RBA), though it is likely to be toward the upper half of that range. A tight labour market will continue to exert upward pressure on unit labour costs, prolonging the disinflation process. Additionally, supply-side weakness, stemming from lacklustre productivity growth, will remain a hindrance to faster disinflation in 2025.

Given the combination of weaker global growth and heightened uncertainty, we expect the RBA to adopt a dovish stance. The RBA cut its policy rate by 0.25 percentage points to 3.85% on May 20. We foresee two further quarter-point cuts this year.

 

Australia economic forecasts

Asset class	Return range	Median volatility
Australian equities	5.6% – 7.6%	20.1%
Global ex-Australia equities (unhedged)	5.3% – 7.3%	16.4%
US equities (unhedged)	4.6% – 6.6%	17.4%
Australian aggregate bonds	3.5% – 4.5%	6.3%
Global ex-Australia aggregate bonds (hedged)	3.9% – 4.9%	5.3%

^{Notes: Values are approximate. GDP growth is defined as the annual change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Trimmed mean inflation is the year-over-year change in the Consumer Price Index, excluding items at the extremes, as of the fourth-quarter 2025 reading. Monetary policy is the RBA’s year-end cash rate target.} 

^{Source: Vanguard.} 

 

Capital Markets Model® forecasts

 

Australia (Australian dollar)

	GDP growth	Unemployment rate	Trimmed mean inflation	Monetary policy
Year-end outlook	2%	4.2%	2.5%	3.35%

^{Source: Vanguard} 

 

United States

Tariff reprieve strengthens our 2025 outlook. 

“The recent tariff developments, if sustained, would mitigate the challenges to the Federal Reserve’s dual mandate of ensuring price stability and supporting maximum sustainable employment.” Josh Hirt, Vanguard Senior Economist. 

Positive trade developments with China have lowered our assessment of where the United States’ effective tariff rate on its trading partners will stand at year-end, to a range just above 10%. Although elevated compared with last year, it is significantly lower than our assessment of around 20% immediately after the broad U.S. tariff announcement on April 2.

A trade truce on May 12 with China specifically, which included the lowering of U.S. tariffs on Chinese goods to 30% for 90 days, informs our revised outlooks for the U.S. economy. We now expect GDP growth of around 1.5% this year, or double our previous estimate. Although we anticipate the unemployment rate increasing from current levels, we no longer see it rising as high as 5%.

We expect the pace of inflation to increase too, though not to the levels we had envisioned pre-truce. We anticipate that goods prices will spike into the U.S. summer as tariff-induced price increases take effect. Leading indicators suggest some modest relief for shelter inflation later in the year, though potential developments with lumber tariffs present an upside risk.

The recent tariff developments should mitigate the severity of the challenges to the Federal Reserve’s dual mandate of ensuring price stability and supporting maximum sustainable employment. We continue to expect two quarter-point Fed rate cuts in the second half of the year. The Fed will have room to be patient with rate cuts if the labour market remains resilient. 

 

United States economic forecasts

	GDP growth	Unemployment rate	Core inflation	Monetary policy
Year-end outlook	1.5%	4.7%	3%	4%

^{Notes: Values are approximate. GDP growth is defined as the fourth-quarter-over-fourth-quarter change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Core inflation is the year-over-year percentage change in the Personal Consumption Expenditures price index, excluding volatile food and energy prices, as of December 2025. Monetary policy is the upper end of the Federal Reserve’s target range for the federal funds rate at year-end.}

^{Source: Vanguard.} 

 

Canada

Trade uncertainty likely to weigh on investment.

“Significant U.S. tariffs are likely to weigh on Canadian business investment, consumer spending, and the labour market.” Adam Schickling, Vanguard Senior Economist.

The Canadian economy has been challenged by trade-related uncertainties and softening demand for services. Despite recent interest rate cuts, significant tariffs on Canada’s automobile sector and broader tariff measures from the U.S. are likely to weigh on Canadian business investment, consumer spending, and the labour market. We expect the Canadian economy to grow around 1.25% in 2025 and the unemployment rate to rise to about 7% by year-end, but both forecasts are sensitive to U.S.-Canada trade developments.

The Bank of Canada (BoC) opted to hold its policy overnight rate at 2.75% at its April 16 meeting, a pause in what had been seven consecutive rate cuts. Policymakers emphasised the need for caution amid substantial U.S.-Canada trade uncertainty and concerns about the inflationary implications of retaliatory tariffs on U.S. imports. Ultimately, we expect the economic impacts from tariffs and trade uncertainty to outweigh any inflationary risks, prompting the BoC to cut the overnight rate by half a percentage point by year-end, to 2.25%.

 

Canada economic forecasts

	GDP growth	Unemployment rate	Core inflation	Monetary policy
Year-end outlook	1.25%	7%	2.5%	2.25%

^{Notes: Values are approximate. GDP growth is defined as the annual change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Core inflation is the year-over-year change in the Consumer Price Index, excluding volatile food and energy prices, as of December 2025. Monetary policy is the BoC’s year-end target for the overnight rate.} 

^{Source: Vanguard.} 

 

Mexico

Challenges, opportunities for Mexico amid tariffs.

“The potential for U.S.-Mexico trade negotiations to occur relatively soon could mitigate some possible negative tariff impacts.” Adam Schickling, Vanguard Senior Economist.  

We recently revised our 2025 GDP growth forecast for Mexico to below 1% due to headwinds from trade developments and the uncertainty surrounding trade policy, which are affecting business investment and manufacturing employment. The Bank of Mexico (Banxico) cut the overnight interbank rate by 50 basis points to 8.5% on May 15, citing increased global risks amid escalating trade tensions and stable inflation. We expect the rate to end 2025 from 8% to 8.25%. 

The recent announcement of U.S. tariffs on the Mexican automobile sector is particularly significant, given that sector’s importance to the Mexican economy. The automotive industry accounts for about 4% of Mexico’s GDP and employs approximately 1 million workers. Despite these challenges, the potential for U.S.-Mexico trade negotiations to occur relatively soon could mitigate some of the adverse effects.

Additionally, Mexico may benefit from high U.S. tariffs on Chinese imports. This situation could create upside potential for growth as Mexico positions itself as an alternative manufacturing hub, leveraging its strategic location and skilled workforce. The evolving trade landscape offers both challenges and opportunities for Mexico’s economy in the coming year.

 

Mexico economic forecasts

	GDP growth	Unemployment rate	Core inflation	Monetary policy
Year-end outlook	<1%	3.2% – 3.6%	3.5%	8% – 8.25%

^{Notes: Values are approximate. GDP growth is defined as the annual change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Core inflation is the year-over-year change in the Consumer Price Index, excluding volatile food and energy prices, as of December 2025. Monetary policy is the Bank of Mexico’s year-end target for the overnight interbank rate.}

^{Source: Vanguard.} 

 

United Kingdom

Conditions are favorable for progress on inflation.

“Expectations of further fiscal tightening and long-term inflation expectations that remain well anchored are likely to give the Bank of England conviction that inflationary pressures will subside.” Shaan Raithatha, Vanguard Senior Economist.  

An improved global outlook and greater-than-expected growth in the first quarter have led us to raise our forecast for full-year GDP growth to just above 1% from around 0.5%. Progress in U.S.-U.K. and U.S.-China trade relations underpin the more optimistic global view. First-quarter growth of 0.7% was driven by net exports and business investment, suggesting frontloading ahead of U.S. tariffs. We expect materially softer growth in the second quarter as an aftereffect of the frontloading and amid continued trade uncertainty. 

Core inflation remains elevated, with little progress made on services inflation or wage growth in recent months. That said, employment growth has softened materially, partly due to the government’s decision in October 2024 to raise taxes for employers. Surveys point to some labour-market deterioration ahead. Expectations of further fiscal tightening and long-term inflation expectations that remain well anchored are likely to give the Bank of England (BoE) conviction that inflationary pressures will subside.

We continue to expect the BoE to cut the bank rate by 25 basis points each in the third and fourth quarters. That would leave the policy rate at 3.75% at year-end, a touch above our assessment of the neutral rate, or the policy rate that would neither stimulate nor inhibit growth.

 

United Kingdom economic forecasts

	GDP growth	Unemployment rate	Core inflation	Monetary policy
Year-end outlook	1.1%	4.8%	2.9%	3.75%

^{Notes: Values are approximate. GDP growth is defined as the annual change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Core inflation is the year-over-year change in the Consumer Prices Index, excluding volatile energy, food, alcohol, and tobacco prices, as of December 2025. Monetary policy is the Bank of England’s bank rate at year-end.}

^{Source: Vanguard.} 

 

Euro area

Global trade developments brighten prospects for Europe.

“The improved growth prospects and reduced risk of Chinese exports being rerouted to Europe decrease the risk of a material undershoot of the 2% inflation target.” Shaan Raithatha, Vanguard Senior Economist.

Global trade developments have been positive for the euro area growth outlook. A U.S.-China tariff truce boosts global growth prospects and eases financial conditions, while initial U.S. agreements with the U.K. and China raise hopes for similar U.S.-euro area progress. We have increased our 2025 euro area growth outlook to just above 1%. 

The improved growth prospects and reduced risk of Chinese exports being rerouted to Europe decrease the risk of a material undershoot of the 2% inflation target set by the European Central Bank (ECB). Domestic inflationary pressures remain subdued, with target-consistent progress being made on the most stubborn parts of services inflation. 

Modest upgrades to our growth and inflation forecasts don’t change our view on the ECB policy rate. We continue to foresee two more quarter-point cuts this year, which would leave the deposit facility rate at 1.75% at year-end from its current 2.25%. That would be slightly below our estimate of the euro area’s neutral rate, or the interest rate level that would neither stimulate nor inhibit an economy. 

 

Euro area economic forecasts

	GDP growth	Unemployment rate	Core inflation	Monetary policy
Year-end outlook	1.1%	6.3%	2.1%	1.75%

^{Notes: Values are approximate. GDP growth is defined as the annual change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Core inflation is the year-over-year change in the Harmonised Indexes of Consumer Prices, excluding volatile energy, food, alcohol, and tobacco prices, as of December 2025. Monetary policy is the European Central Bank’s deposit facility rate at year-end.}

^{Source: Vanguard.} 

 

China

Progress on trade improves prospects for China’s growth.

“With progress on trade negotiations, we expect policymakers to adopt a more reactive stance to further stimulus. Such an approach is also reflected in our monetary policy view.” Grant Feng, Vanguard Senior Economist. 

Positive U.S.-China trade developments make us more optimistic about China’s growth prospects. After the U.S. and China agreed on May 12 to lower tariffs on each other’s goods for 90 days, we have increased our forecast for China’s 2025 economic growth to 4.6%. However, risks to the downside remain significant, given the disruption to China’s exports that has already occurred and an effective U.S. tariff rate on China that remains well above the rate before the April 2 U.S. tariff announcements. 

Although a renewal of heightened tensions can’t be ruled out, progress on trade negotiations to date reduces the urgency for additional policy support. We expect policymakers to adopt a more reactive stance to further stimulus. Such an approach is also reflected in our monetary policy view. We foresee China’s policy rate—the seven-day reverse repo rate—ending 2025 at 1.3%, higher than our previous forecast of 1.2%. The People’s Bank of China announced a 10-basis-point cut to its policy rate, to 1.4%, on May 7. (A basis point is one-hundredth of a percentage point.)

We have lowered our forecast for headline inflation at year-end to just above zero as progress in trade talks eases pressure on prices of imported food, most notably U.S. soybeans. Meanwhile, uncertainty continues to weigh on energy prices. Our outlook for core inflation remains unchanged at 0.5%. 

 

China economic forecasts

	GDP growth	Unemployment rate	Core inflation	Monetary policy
Year-end outlook	4.6%	5%	0.5%	1.3%

^{Notes: Values are approximate. GDP growth is defined as the annual change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Core inflation is the year-over-year change in the Consumer Price Index, excluding volatile food and energy prices, as of December 2025. Monetary policy is the People’s Bank of China’s seven-day reverse repo rate at year-end.} 

^{Source: Vanguard.} 

 

Japan

Tariff challenges give BoJ a reason to be cautious.

“The Bank of Japan will continue to assess the downside risk to growth and inflation, given recent developments in U.S. tariff policy and their potential impact.” Grant Feng, Vanguard Senior Economist.  

The persistence of tariff challenges is likely to have a significant impact on Japanese exporters. While the direct effects of tariffs may be limited, the uncertainty they create can dampen business confidence and investment, leading to a more cautious approach by the Bank of Japan (BoJ) as it considers rate hikes. 

Still, a virtuous cycle of wages and inflation is likely to support the economy. Nationwide wage negotiations for unionised workers are tracking above last year’s increases, which were the largest in 33 years. Prices continue to rise, and a structural labour shortage has buoyed capital expenditures as firms seek to enhance productivity. The cycle is likely to strengthen, keeping core inflation above the BoJ’s 2% target throughout 2025.

However, the uncertainty surrounding U.S. tariff policy poses a notable hurdle for the BoJ in assessing its conviction about growth and inflation sentiment in the near term. As a result, we expect the BoJ to pause any rate hikes until the tariff situation stabilises. That said, the BoJ is likely to stick to its policy-normalisation cycle, given that domestic inflation momentum remains above target and wage-price dynamics are strengthening. The BoJ left its policy rate unchanged at 0.5% on May 1.

 

Japan economic forecasts

	GDP growth	Unemployment rate	Core inflation	Monetary policy
Year-end outlook	0.7%	2.4%	2.4%	1%

^{Notes: Values are approximate. GDP growth is defined as the annual change in real (inflation-adjusted) GDP in the forecast year compared with the previous year. Unemployment rate is as of December 2025. Core inflation is the year-over-year change in the Consumer Price Index, excluding volatile fresh food prices, as of December 2025. Monetary policy is the BoJ’s year-end target for the overnight rate.} 

^{Source: Vanguard.} 

 

^{Note: All investing is subject to risk, including the possible loss of the money you invest.}

^{About the Vanguard Capital Markets Model}

^{The asset-return distributions shown here are in nominal terms—meaning they do not account for inflation, taxes, or investment expenses—and represent Vanguard’s views of likely total returns, in U.S. dollar terms, over the next 10 years; such forecasts are not intended to be extrapolated into short-term outlooks. Vanguard’s forecasts are generated by the VCMM and reflect the collective perspective of our Investment Strategy Group. Expected returns and median volatility or risk levels—and the uncertainty surrounding them—are among a number of qualitative and quantitative inputs used in Vanguard’s investment methodology and portfolio construction process. Volatility is represented by the standard deviation of returns.} 

^{IMPORTANT: The projections and other information generated by the Vanguard Capital Markets Model (VCMM) regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. VCMM results will vary with each use and over time.}

^{The VCMM projections are based on a statistical analysis of historical data. Future returns may behave differently from the historical patterns captured in the VCMM. More importantly, the VCMM may be underestimating extreme negative scenarios unobserved in the historical period on which the model estimation is based.}

^{The Vanguard Capital Markets Model® is a proprietary financial simulation tool developed and maintained by Vanguard's primary investment research and advice teams. The model forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include U.S. and international equity markets, several maturities of the U.S. Treasury and corporate fixed income markets, international fixed income markets, U.S. money markets, U.S. municipal bonds, commodities, and certain alternative investment strategies. The theoretical and empirical foundation for the Vanguard Capital Markets Model is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk (beta). At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over time. Forecasts represent the distribution of geometric returns over different time horizons. Results produced by the tool will vary with each use and over time.}

^{The VCMM’s primary value is its utility in analysing potential investor portfolios. VCMM asset-class forecasts—comprising distributions of expected returns, volatilities, and correlations—are key to the evaluation of potential downside risks, risk-return trade-offs, and the diversification benefits of various asset classes. Although central tendencies are generated in any return distribution, Vanguard stresses that focusing on the full range of potential outcomes for the assets considered is the most effective way to use VCMM output.}

^{The VCMM seeks to represent the uncertainty inherent in forecasting by generating a wide range of potential outcomes. The VCMM does not impose “normality” on expected return distributions but rather is influenced by the so-called fat tails and skewness of modelled asset-class returns. Within the range of outcomes, individual experiences can be quite different, underscoring the varied nature of potential investment outcomes. Indeed, this is a key reason why we approach asset-return outlooks in a distributional framework.}

^{Indexes for VCMM simulations}

^{The long-term returns of our hypothetical portfolios are based on data for the appropriate market indexes as of April 30, 2025. We chose these benchmarks to provide the most complete history possible, and we apportioned the global allocations to align with Vanguard’s guidance in constructing diversified portfolios.}

^{Asset classes and their representative forecast indexes are as follows:}

^{Australia (Australian dollar)}

^Equities

• ^{Australian equities: MSCI Australia Total Return Index}
• ^{Global ex-Australia equities (unhedged): MSCI All Country World ex Australia Total Return Index}
• ^{US equities (unhedged): MSCI US Broad Market Index} 
• ^{Fixed income}
• ^{Australian aggregate bonds: Bloomberg Australian Aggregate Index}
• ^{Global ex-Australia aggregate bonds (hedged): Bloomberg Global Aggregate ex AUD Index AUD Hedged} 

^{This article contains certain 'forward looking' statements. Forward looking statements, opinions and estimates provided in this article are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from these statements. To the full extent permitted by law, Vanguard Investments Australia Ltd (ABN 72 072 881 086 AFSL 227263) and its directors, officers, employees, advisers, agents and intermediaries disclaim any obligation or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions.}

^{© 2025 Vanguard Investments Australia Ltd. All rights reserved.} 

 

 

 

 

By Vanguard
28 May 2025
vanguard.com.au

The corporate regulator has said it will review an increased number of audit files in the upcoming financial year.

.

n a statement regarding its focus areas for 2025–26, the regulator said it will review an increased number of audit files and, as part of its integrated approach, will continue to select audit files where a change has been made to financial information or the financial report, or where it has concerns that a financial report may have a risk of material misstatement.

ASIC will also select audit files based on other internal or externally available data and review a random selection of audit files from its regulated population.

Financial report preparers are also under scrutiny, and ASIC said it would continue to focus on areas where significant judgment from preparers of financial reports is required.

These include revenue recognition, asset valuation, and estimation of provisions.

ASIC commissioner Kate O’Rourke said financial report preparers should take extra care when making such judgments, especially considering recent capital market volatility.

Furthermore, the regulator said it would also be progressing its proactive, large-scale surveillance focused on auditors’ compliance with their independence and conflicts of interest obligations under the Corporations Act 2001.

“We encourage auditors to self-identify and self-report non-compliance with their independence and conflicts of interest obligations through our regulatory portal,” O’Rourke said.

“Based on our data model, we considered potential independence issues in relation to over 100 audit engagements before targeting nearly 50 auditors for a more detailed review. We intend to publish the outcomes of this surveillance later this year.”

ASIC will also continue its surveillance of registerable superannuation entities (RSEs).

RSEs were required to lodge audited financial reports with ASIC for the first time in 2024, and ASIC has been finalising its review of around half of all lodged RSE financial reports and five RSE audit files.

It said that as part of its 2025-26 program, it would review the other half of the RSE financial reports as well as a selection of RSE audit files focusing on the measurement and disclosure of investment portfolios, and disclosure of marketing and advertising expenses.

 

 

 

Keeli Cambourne
May 20 2025
smsfadviser.com

The ATO has issued guidance on what SMSF members need to understand about compliance regarding responsibilities when appointing trustees or directors of a corporate trustee.

.

The regulator has outlined the eligibility of directors and trustees, saying that all members of an SMSF must be individual trustees or directors of the corporate trustee.

It said that members are eligible to be a trustee if they are:

• Not under a legal disability such as mental incapacity

• Not a disqualified person. A disqualified person includes a person who has been convicted of dishonest offences, is bankrupt or insolvent, or may be a future risk to retirement savings.

“It is an offence to knowingly act as a trustee while being a disqualified person. A legal personal representative (LPR) cannot act as trustee on behalf of a disqualified person either,” the Tax Office said.

An LPR may need to be appointed as a member or trustee or director where a member is over the age of 18 with a legal disability, is under the age of 18, requires a person to hold enduring power of attorney to act on their behalf (see SMSF Ruling SMSFR 2010/2) or is deceased, until the death benefit becomes payable.

Members under the age of 18 can also have a parent appointed as a trustee or director on their behalf.

“If prospective trustees have any outstanding tax or superannuation affairs, such as any unlodged tax returns or unpaid tax debts, this could prevent their SMSF registration from proceeding,” it added.

The guidance continued that a disqualified person is anyone who has ever been convicted of a dishonest offence in Australia or overseas. These include offences of dishonest conduct, including fraud, theft, and illegal activity or dealings.

“These convictions are for offences that occurred at any time, including convictions that have been ‘spent’ and those that the court has not recorded, due to age or first offender,” it said.

A disqualified person also includes anyone who has ever been issued with a civil penalty order, which are orders that are imposed when an individual contravenes a civil penalty provision and can be an order to pay a fine or serve jail time.

If a member is currently bankrupt or insolvent under administration, they will also be disqualified. A member cannot remain a trustee if they become bankrupt or insolvent after they are appointed.

A member will be disqualified if they have been previously disqualified by the ATO, ASIC or APRA.

“The ATO can disqualify trustees of an SMSF. This is permanent and is not just specific to the SMSF they were a trustee of at the time,” the guidance said.

Members can apply to waive disqualified status if the offence leading to the disqualification was not an offence involving serious dishonest conduct. This means that the penalty imposed for the offence was not either a term of imprisonment for more than two years or a fine of more than 120 penalty units.

An application for waiver must be in writing and include details of the offence, court documents about the offence and consent for the ATO to inquire about the offence to any law enforcement agencies or courts that the regulator believes are relevant.

“The application should be made within 14 days of the conviction. We may accept applications after this time if you explain the circumstances of your late application,” the ATO said.

“You cannot become a trustee until we notify you of our acceptance to waive the disqualified status.”

It is also important to check that a company can act as a corporate trustee.

A company cannot act as a corporate trustee of an SMSF if the company is aware or has reason to suspect that a director of the company is a disqualified person.

Furthermore, it cannot act as a corporate trustee if an administrator has been appointed in respect of the company, or a receiver has been appointed in respect of property beneficially owned by the company.

“Whether you're an individual trustee or director of a corporate trustee, you are responsible for running the fund and making decisions that affect the retirement interests of each fund member.”

“Before you consent to being a trustee, ensure you understand your obligations as an SMSF trustee under the law. You need to have the knowledge, time and skills to manage your fund successfully. We recommend you complete a free online trustee training course.

“All trustees or directors must formally consent in writing to being appointed. This can be recorded in meeting minutes and must be kept on file for the life of the SMSF and 10 years after the SMSF winds up.”

 

 

 

Keeli Cambourne
May 28 2025
smsfadviser.com

Check out the largest freshwater resources by Country in the World

.

.

.

.

.

.

.

.

.

.

.

.

Bipartisan support now exists to prevent perpetrators of financial abuse and domestic violence from accessing the victim’s superannuation benefits upon their death after the Coalition pledged to take this action should it win power at the federal election in May.

.

Chartered Accountants Australia and New Zealand (CAANZ) has applauded the announcement as it did with last week’s identical commitment by the Albanese government.

“Today’s announcement by the Coalition shows the Australian community that tackling financial abuse is important to both sides of politics and we’ll work with whoever is in government to ensure that any changes that are rolled out deliver the promises being made to victim-survivors and their families,” CAANZ chief executive Ainslie van Onselen said.

“We’ve been educating our members to identify signs of financial abuse because they’re in a unique position to recognise when people are being targeted by their intimate partner,” she added.

“But we can see that more needs to be done to prevent this abuse before it can even start.

“We welcome the Coalition’s announcement that part of its $90 million domestic and family violence package would include measures to strengthen Commonwealth taxation, welfare and superannuation systems to eradicate financial abuse, coercive control and unfair outcomes.

“As we said following the ALP’s announcement earlier this week, a proposal to close loopholes in relation to debts incurred through no fault of the victim-survivor and preventing access to a victim’s superannuation payout by their perpetrator, would be important steps forward to ending such exploitation,” she reiterated.

Van Onselen confirmed CAANZ is committed to working with the next government to implement the legal changes pertaining to this issue.

Earlier in the week both CAANZ and CPA Australia recognised the critical role accountants can play in preventing financial abuse as they have the ability to detect instances of it during the servicing of their clients.

 

 

 

 

April 24, 2025
Darin Tyson-Chan
smsmagazine.com.au

 

The inheritance wave is building but most people are unprepared for the ride

.

Transfers of accumulated wealth from one generation to the next are part and parcel of everyday life.

But the next 20 to 30 years will see the biggest intergenerational wealth handover in history.

According to estimates made by the Productivity Commission in a 2021 report, around $3.5 trillion of assets is likely to be transferred in Australia by 2050.

The largest part of this great wealth transfer will be between members of the “Baby Boomer” generation (people born just after the end of World War II through to 1964) and their children and other heirs.

It will include family homes, investment properties, superannuation money, direct shares and a wide range of other financial and non-financial assets.

The value of inheritances is not only likely to grow dramatically as wealth levels increase but it will be an increasingly important source of income and assets for younger generations.

 

Great expectations

Vanguard’s 2024 How Australia Retires research found that around one in two Australians have received or expect to inherit money or property, either from their parents or others.

The conversation around inheritances interweaves with Australian government research that many Australians are not exhausting their superannuation savings before they die.

The 2023 Intergenerational Report found that most retirees draw down at the legislated minimum drawdown rates.

“This results in many retirees leaving a significant proportion of their balance unspent, for example, a single retiree drawing down at the minimum rates would be expected to still have a quarter of their retirement assets at death,” the report noted.

Additionally, the 2020 Retirement Income Review included projections from Treasury that outstanding superannuation death benefits could increase from around $17 billion in 2019 to just under $130 billion in 2059, assuming there’s no change in how retirees draw down their superannuation balances.

 

“There is significant opportunity for advisers to connect with a younger cohort of inheritors.”

 

A touchy subject

Inheritance planning, unlike succession planning within a business, is an area that’s rarely discussed at the family level.

Most families regard subjects such as death and the future division of wealth as unpleasant, and potentially sensitive when multiple heirs are involved.

But there’s a lot to be said for having open discussions within your family about the intended treatment of assets and future inheritances.

Creating a valid will, and specifically documenting how you want your assets to be managed and divided after your death, should be a key step in the inheritance planning process.

Residential real estate and superannuation, which combined make up more than three quarters of total household assets, are the largest components of most inheritances.

Ensuring that any superannuation you have left over at the time of your death is distributed according to your wishes requires you to complete a binding death benefit nomination provided by your super fund.

 

Seek professional advice

It’s important to be aware of any potential tax implications. For example, while superannuation distributed to a surviving spouse or dependent children is generally tax free, non-dependents (including adult children) may be required to pay tax on amounts they receive.

That comes down to how much of your super is made up from pre-tax and after-tax contributions.

Capital gains tax does not apply if someone inherits direct shares or other financial securities, but tax may apply if they later dispose of them. 

Any unapplied capital losses that could be used to offset capital gains tax cannot be transferred to beneficiaries.

CoreData research published this month has found that more than half of inheritors do not have an ongoing advice relationship to manage their incoming wealth.

“There is significant opportunity for advisers to connect with a younger cohort of inheritors. It’s a win-win situation: those who can support a smooth and meaningful wealth transition will not only build strong client relationships but also help shape lasting financial legacies,” CoreData found.

Estate planning can be complex. Consulting a licensed financial adviser to help you and your intended beneficiaries map out an inheritance framework that also identifies issues such as potential tax liabilities is a prudent step.

 

 

By Vanguard
16 APRIL 2025
vanguard.com.au

Here's how topping up your super can help reduce your tax bill

.

One of the best ways to grow your super balance is to make additional concessional (pre-tax) contributions while you’re in the workforce.

Thanks to the power of compound interest, paying a little bit extra to your super can make a big difference by the time you retire.

Importantly, if you make concessional contributions — either by salary sacrificing or making an eligible personal super contribution — you could also reduce your tax bill.

Here’s how it works.

 

The potential tax benefits you could be missing out on

Let’s assume you are an employee earning $90,000 before tax, excluding any mandatory super contributions from your employer, and don’t have any additional income from investments or other sources.

If you redirected $5,000 of your annual pay into salary sacrifice super contributions, you would save $1,600 in income tax over the course of a financial year.

That means your annual take-home (net) pay would fall by $3,400, but your super balance would be boosted by $4,250, after factoring in taxes on your extra contributions. In other words, this strategy will result in the total combined take home pay and super contributions increasing by $850.

Pay ($ pa)	With contributions	No contributions
Gross salary	$90,000	$90,000
Less salary sacrifice	$5,000	$50
Less income tax + medicare levy	$17,988	$19,588
Take-home (net) pay	$67,012	$70,412
Change in net pay	-$3,400

 

Super ($ pa)	With contributions	No contributions
Employer contributions	$10,350	$10,350
Salary sacrifice	$5,000	$0
Less contributions tax	-$2,303	-$1,553
Net contributions	$13,047	$8,797
Additional super contributed	$4,250

 

Source: ASIC MoneySmart Notes: Tax rates current as of the 2025 financial year. Assumes 11.5% superannuation guarantee. From 1 July 2025, the superannuation guarantee is increasing to 12%.

The potential tax benefit will depend on your income and marginal tax rate. The higher your income, the higher the potential tax savings from making additional contributions.

ASIC MoneySmart’s calculator is a simple way to check the impact of making additional contributions based on your own income.

 

Don’t want to salary sacrifice? You can make a lump sum contribution before June 30

If you want to set up a salary sacrificing arrangement, you’ll need to talk to your employer or payroll provider, and some employers may not offer it.

The good news is you can still boost your super balance and save on tax by making a personal super contribution before June 30 and claiming a tax deduction.

You’ll end up with the same tax benefits as you would with salary sacrificing; you’ll just have to wait until you’ve finalised your tax return.

If you’d like to make a personal concessional contribution to your Vanguard Super account, here’s the process:

• Make a personal after-tax contribution from your bank account, using BPAY. You can do this by logging into Vanguard Online.
• You can find your BPAY details in Account activity > Make a contribution > Learn more. Make sure that your tax file number (TFN) is linked to your account.
• To claim a tax deduction, you must complete a Notice of intent form. Once you have filled it out, you can upload it in Vanguard Online via secure message or return it to us via mail using the address on the form.
• You need to notify your super fund that you intend to claim a tax deduction by the earlier of these two dates:        
  • The day you lodge your tax return for the financial year you made the contributions.
  • The last day of the financial year following the year you made the contributions. That would be 30 June 2026 for contributions made this financial year.
  • If the notification is not made by the earlier of these two dates, you may not be able to claim the tax deduction.
  • For more information, visit the ATO’s website.
• To ensure your contributions and tax deductions are counted in this financial year, we recommend you complete these steps at least a week prior to June 30.

 

What to know about the concessional contributions cap

You can contribute up to $30,000 to your super this financial year at the favourable tax rate of 15%. These are known as concessional contributions, and the cap includes any mandatory contributions from your employer.

However, if your total super balance is less than $500,000, you can carry forward any unused portion of the concessional contribution cap up to five previous financial years. This means you may be able to contribute more than the cap without paying more tax.

You can keep track of your concessional contributions using the ATO’s online service in myGov. You can select Super, then Information, then Concessional contributions.

If you have a Vanguard Super account, you can check how much you’ve contributed to your account in Vanguard Online under Account activity.

If you go over the cap, excess contributions will be included as part of your assessable income and taxed at your marginal tax rate (with a 15% tax offset), plus an excess contribution charge.

 

Why your age matters when topping up your super

Finally, keep in mind there are some restrictions around claiming tax deductions for super contributions.

For example, if you're between 67 and 74 years old, you must meet the work test or work test exemption to claim a tax deduction for personal super contributions.

If you're over 75, your super fund can still accept compulsory employer contributions, but it can only accept personal contributions within 28 days after the end of the month you turn 75.

For a full list of eligibility criteria, visit the ATO’s website.

Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee of Vanguard Super (ABN 27923449966) and the issuer of Vanguard Super products. The Trustee has contracted Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) to provide some services to members of Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc. (collectively, “Vanguard”). 

 

 

 

By Vanguard
23 APRIL 2025
vanguard.com.au