Question 1: Lithium stocks are quite volatile. I hear a lot about Pilbara Minerals (PLS) as the one to buy. What do the brokers say?
Answer: Overall, the brokers are bullish on Pilbara Minerals. The consensus target price is $5.00, about 22.5% higher than the last ASX price of $4.08. However, the range is wide. Bulls like Macquarie have a target of $7.30, while bears such as Morgan Stanley have a target of $3.45. It depends on their view on the underlying commodity (lithium carbonate) and the forces of supply and demand. One thing that is interesting for Pilbara is that it is a producer, making money and paying a dividend. Using forecast earnings (which are highly dependent on the commodity price), the brokers have it trading on a multiple of just 7.6 times forecast FY24 earnings and 6.9x forecast FY25 earnings.
Question 2: I bought Resmed (RMD) shares on the ASX recently in my SMSF. My wife and I are the beneficiaries. Does the W-8BEN form or similar apply?
Answer: Yes, one of the downsides of buying shares in Resmed (RMD), you will need to complete the W-8BEN form from the US Department of Inland Revenue. The registry, Computershare, will send you the form. If you don’t complete the W-8BEN, dividends will be subject to a withholding tax rate of 30% (Resmed pays quarterly dividends). One of the most complex forms in the world, Computershare has made a fairly good attempt of explaining what needs to be done. The instructions for a SMSF (which in your case is the beneficial owner) are set out – you just need to follow them.
Question 3: I have a SMSF and am around 70 years of age. My Transfer Balance Cap is around $1.575M. I am planning to make use of the bring forward non-concessional contribution and planning to go close $1.9M but not exceed. I also plan to downsize and make use of $300,000 downsizer contribution as I am eligible for that. What are the implications of this approach?
Answer: Firstly, your transfer balance cap has no relevance to whether you can make a super contribution. It only relates to how much can be transferred into the pension phase of super, where earnings are taxed at 0%. Your total superannuation balance (the sum of how much you have in accumulation plus how much you have in the pension phase) is, however, relevant. If your total superannuation balance (as at 30 June) was under $1.68m and you are under 75, then you can potentially access the bring-forward rule and make a contribution of $330,000. If it was between $1.68m and $1.79m, then the contribution can’t exceed $220,000. If it was between $1.79m and $1.9m, then the maximum is $110,000. If it was over $1.9m, then you can’t make any non-concessional contributions. Downsizer contributions are not governed by any of the above caps. However, they must be made within 90 days of the settlement of the property. They also increase your total superannuation balance, so if you were straddling financial years, you may want to make the non-concessional contribution before you do the downsizer.
Question 4: I own shares in BOQ and have elected to take part in their DRP (dividend re-investment plan). Can I change my mind? Is it too late to change ahead of the recently announced dividend?
Answer: Yes, it is easy to change. Contact BOQ’s registry, Link Market Services. With the next dividend of 21c, which will be paid on 16 November, you will need to update your preferences by COB Monday 30 October.
