Question 1: What is the target price for A2 Milk (A2 Milk). Do the major brokers see upside?
Answer: Most brokers reduced their target price following A2M’s FY23 financial results. Guidance for FY24 was lower than expected.
However, the consensus target price is still well above the current ASX price. Consensus is at $5.32, about 15% higher than the last ASX price of $4.62. The range is from a low of $4.40 (from Macquarie) through to a high of $7.20 (from Ord Minnett). There are 3 “buy” recommendations and 3 “neutral” recommendations 0 “sell” recommendations.
Question 2: I have a SMSF with a balance of approximately $2.6 million. I am proposing to commence a pension shortly with those funds. Having commenced the pension, and should the investments increase in value, to say $3.2 million, under the proposed changes, will I pay the new tax?
Answer: Firstly, the balances are assessed per member, not by fund. So, if the balance of $2.6m is just yours, then potentially, if it rises to $3.2m, you could be liable for the new tax.
If on the other hand, you and your partner are both members of the fund and have a balance (say) of $1.3m each, it is very unlikely that you will be in a position where your total superannuation balance exceeds the $3m threshold and have to pay the new tax.
In your balance is currently $2.6m, you will pay the tax when your balance exceeds $3.0m. You will only pay tax on the proportion of your total super balance in excess of $3.0m.
It is a new tax (and different from other super taxes) and will apply to super balances both in pension phase and accumulation phase. It is calculated on investment earnings, which are deemed to represent the movement in your total super balance over the course of the year, adjusted for contributions and pension payments. The tax rate will be 15%.
Take an example. Assume your total super balance was $3,000,000 at the start of the year, and $3,200,000 at the end of the year. During the year, you withdrew $100,000 in pension payments. Your assessed investment earnings would be $300,000 (($3,200,000 – $3,000,000) + $100,000 = $300,000).
Tax at 15% will apply to this, but only on the portion by which the balance exceeds $3,000,000. The proportion will be ($3.2m – $3.0m / $3.2m) or $0.2m/$3.2m = 6.25% or 0.0625. Tax is therefore 15% of ($300,000 x 0.0625) = $2,812.50.
You will be able to pay the tax by withdrawing the money from your super account.
A couple of points to note. Firstly, it is not yet LAW. The Government must legislate. Secondly, it won’t start until FY26 – for the $3.0m threshold, it will be your total superannuation balance on 30/6/26 that becomes important.
Question 3: What is the code for the “top 20” shares? How can I find out the composition?
Answer: The ASX code for the “top 20” stocks is XTL. If you type this into most broker/trading websites, you should be able to see the current value of the index and the stocks that make it up.
Alternatively, go to one of the ETFs that track the “top 20”, such as iShares S&P/ASX 20 ETF (ASX: ILC), and review their website (
https://www.blackrock.com/au/individual/products/251921/ishares-ishares-s-and-p-asx-20-etf).
Question 4: BHP is paying a final dividend of 80 US cents. What is the last day to get this? Does it offer a DRP?
Answer: BHP is paying a fully franked final dividend of US$0.80, or approximately A$1.24 per share. Payment will be made on 28 September.
BHP will trade ‘ex’ the dividend on 7 September, so the last day to buy BHP shares and receive this dividend is 6 September. Dividends can be taken as shares through the DRP plan. The last date to nominate for this is 11 September.
