Question 1: Appen (APX) has a 1 for 6 entitlement issue at $1.85 per share, which is well below the current share price of around $2.25. Should I take them up?
Answer: I wrote about this on Monday (see https://switzerreport.com.au/nextdc-appen-should-you-take-part-in-their-capital-raisings/).
My summary was: “I am a bit “each way” on Appen. On the one hand, I would like to think it has bottomed and $1.85 looks like a “screaming buy”. On the other, while the refreshed strategy appears to make sense, pivoting to service the generative AI market while at the same time cutting costs could be challenging. I have been burnt by Appen in the past, so my recommendation for those who aren’t big risk takers would be to sell on the ASX now about 1/6th of your shares and replace those shares in the entitlement offer. Thrill seekers can follow the market (institutional investors) and take up their entitlements.
Question 2: If I have stopped working and am over 67, can I still make a personal super contribution under my concessional cap and claim a tax deduction?
Answer: Persons aged 67 to 74 can make most super contributions without regard to working status. However, in regard to a concessional contribution for which a personal tax deduction is claimed, they must still satisfy the ‘work test’. To quote from the ATO’s website: “From 1 July 2022 if you are under 75 years old, you will no longer need to meet the work test to make or receive non-concessional super contributions and salary sacrifice contributions. If you are 67 to 74 years old, you will however be required to meet the work test in order to claim a personal superannuation contribution deduction.
To meet the work test, you must be gainfully employed for at least 40 hours during a consecutive 30-day period in the financial year in which the contributions are made.
This is an annual test. This means once you meet this test you can make contributions for the entire financial year.”
Question 3: With all the talk about the taxing of an SMSF if over $3 million, nothing has been said whether the taxing of a fund under the $3 million will continue as now. Are they going to dream up some other taxing arrangement for these funds?
Answer: There are no proposed changes for the under $3 million category. And remember, it is not the size of the Fund, but rather, the size of a member’s balance that the current proposal relates to. The proposal is that for members who have balances in excess of $3 million, investment earnings on the excess amount (both realised and unrealised) will be taxed at 30%. This will apply from 1 July 2025.
Question 4: Are there any ETFs that track the S&P/ASX 200 Accumulation index? If so, do they pay the full dividend received with associated imputation credits?
Answer: Effectively, yes. IOZ from iShares or STW from State Street. They don’t track the S&P/ASX 200 Accumulation Index per se, but they do track the S&P/ASX 200 index. Because they own and hold the underlying stocks in the index, they receive as income all the dividends paid. These are then distributed to unitholders in their quarterly distributions.
Typically, you will only “receive” the franking credits when you get the ETF’s Annual Tax Statement. Over the year however, the total return – capital growth (price), income via distributions and franking credits will be virtually identical to the return from the S&P/ASX 200 Accumulation Index with franking.
