NEWS + VIEWS – 12/09/2025
MARKETS
US markets have rallied on growing confidence that weakening job figures and better-than-feared inflation data will prompt the Federal Reserve to lower interest rates. Nonfarm payrolls rose by only 22,000 in August - well below expectations – with previous months revised downward. This fuelled speculation that the Fed will cut rates in mid-September, potentially starting with a 0.25% cut or even a larger 0.50% move. However, since consumer prices rose 2.9% in the year to August, the Fed will remain cautious in the months ahead.
Meanwhile, Australia’s market is showing signs of fragility. The ASX 200 is trading at a forward Price Earnings (P/E) ratio of 19.5 (above historical averages), while underlying earnings are down around 18% from three years ago. Although economic growth is improving and rate cuts may follow, high valuations, weaker earnings as well as September being the weakest month historically, may mark the start of a volatile stretch.
GOVERNMENT UNDER PRESSURE TO RECONSIDER DIVISION 296
What is Division 296?
Division 296 would impose an additional 15% tax on the earnings (including unrealised capital gains) of an individual’s total superannuation balance exceeding $3 million. The proposed tax is assessed per person (not per fund) and complements existing fund-level taxation, potentially resulting in an effective rate of up to 30% on relevant earnings. Although the policy takes effect on 1 July 2025, the first assessments would occur for the 2025/26 financial year, and taxes would be due in 2026/27.
Implementation delay and design reconsideration
Originally planned to begin revenue collection in July 2026, industry leaders including the SMSF Association, are pushing for a 12-month deferral to reconsider elements like indexing, a hard balance cap, or deeming-based alternatives to taxing unrealised gains.
Complications for estates and franking credits
Unused Division 296 tax credits do not transfer to beneficiaries of estates. Combined with remaining capital gains tax obligations, beneficiaries may suffer a ‘double sting.’ Franking dividend refunds, which were initially thought to be excluded, will be counted as taxable earnings for Division 296, leading to potential double taxation of dividend income, especially for retirees and SMSFs.
Rising concerns over fairness and indexing
The static $3 million threshold means that, over time, more individuals – even those with modest investment growth – may be ensnared by the tax due to inflation and compounding returns. While most defined benefit schemes are initially below the threshold, some public office holders (e.g. politicians) could defer payments until retirement, raising equity and transparency concerns.
Growing pushback and revisions
The legislation is increasingly seen as unworkable, with widespread concerns that taxing unrealised gains – especially on illiquid assets – creates liquidity and unfairness issues. APRA-regulated super funds have reportedly cautioned the government that the tax would introduce expensive and complicated new reporting requirements.
Increasing media attention and discontent within the Labor Party are also reportedly putting pressure on the government to rethink Division 296, due to fears of political fallout and concerns that the tax could further weaken Australia’s already fragile productivity.
COMPANY NEWS
ANZ announces major restructuring
ANZ is laying off 3,500 staff and 1,000 contractors as part of a $560 million restructuring plan under new CEO Nuno Matos. The restructure aims to streamline operations following the Suncorp Bank acquisition and is projected to deliver nearly $700 million in cost savings.
BHP reaches settlement over Samarco disaster
BHP has agreed to $110 million settlement in a class action brought by shareholders over the 2015 Samarco dam disaster in Brazil. The settlement is conditional and comes with no admission of liability. BHP expects to recover much of the amount via insurance and still faces a separate multi-billion-dollar claim in the UK.
Brookfield exits Dalrymple Bay Infrastructure (DBI)
Private equity firm Brookfield has completed its full exit from DBI, which owns the world’s largest metallurgical coal export facility, by selling 130 million shares at $4.05 each, representing a 6.9% discount to Tuesday’s closing price. Brookfield retained a 49% stake in DBI when it listed on the ASX in 2020, then divested 23.2% in June this year.
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