You may have seen the viral headline about a new US tax bill called the One Big Beautiful Bill, but what does it mean for Australian investors, especially super funds and small businesses with US exposure? It turns out that it nearly meant a hit to investment returns.
Current Situation
Australian superannuation funds currently have around $400 billion invested in the US, benefiting from tax concessions under existing tax treaties. However, this arrangement could soon change.
A new bill, supported by the Trump administration and recently passed by the US House of Representatives, proposed higher taxes on countries perceived to be disadvantaging US businesses, including Australia.
This legislation could have resulted in higher taxes on US investments held by Australian super funds, potentially reducing long-term returns for members.
We were pleased to see that Section 899 of the Big Beautiful Bill, which would have imposed additional taxes on Australian Investments in the US, was removed from the bill, as these US taxes could not be credited and would have directly and immediately impacted investment returns.
The potential implications
Even if you don’t have direct investments in the US, this matters. If your business is tied to superannuation funds or if you rely on consistent super returns for your retirement planning, changes like these add pressure. It also adds a layer of uncertainty for Aussie businesses operating globally. As trade tensions escalate and tax regulations evolve, conducting business internationally becomes increasingly complex and potentially more costly. Tax experts say changes like these could override existing treaties between the US and Australia. And they’re not just aimed at big corporations; any individual or entity with US exposure could potentially be affected in some way.
What happened?
Industry groups, including the Financial Services Council, urged the Australian Government to intervene and safeguard Australian investors through diplomatic and trade channels. Major super funds met with US lawmakers, reminding them that Australia is a significant source of capital for US markets and that strong partnerships go both ways.
What should you do?
If you’re managing a business, planning your retirement, or investing overseas, this is a reminder of how global politics can impact your bottom line.
Here’s what we recommend:
- Stay informed. Tax rules can change quickly
- Ensure your retirement planning is flexible enough to adjust if needed, or talk to us to help you
- Contact us if you’ve exposure to US investments, as you may need input from a US tax specialist.
There’s undoubtedly a lot to consider in the world of tax and finance at the moment, as the environment is changing at a rapid pace. You’re not alone in this, though. Please don’t hesitate to reach out to us if you have any questions or concerns. We’re here to help.
