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Meg on SMSFs: negative earnings and the $3 million tax

In a monthly column to assist trustees, specialist Meg Heffron explores major issues on managing your SMSF.

There’s not much good news when it comes to the draft legislation published earlier this month for ‘Division 296 tax’. This is the proposed new tax on members with more than $3 million in super – 15% tax on part of their super earnings each year.

Even the promise to allow these members to carry forward any losses (years when negative earnings cause their super balances to go backwards) has a few quirks.

Let's consider some realistic examples

To illustrate how this works, let’s use the example of Lesley with $5 million in super at 30 June 2025. Her super increases to $5.45 million during 2025/26 (the first year of the new tax) despite taking $100,000 in pension payments during the year. For the purposes of the new tax, Lesley’s ‘earnings’ will be $550,000 (her balance at the end of the year ($5.45 million) plus withdrawals during the year ($100,000) less the $5 million balance at the start of the year).

Starting balance $5,000,000 + Earnings $550,000 - Withdrawals $100,000 = Ending balance $5,450,000

At 30 June 2026, 44.95% of Lesley’s balance is over $3 million ($2.45 million out of $5.45 million). That means the tax for Lesley to pay for 2025/26 is 15% x 44.95% x $550,000, ie approximately $37,000.

$2,450,000 / $5,450,000 = 44.95%
Total earnings of $550,000 x 44.95% = $247,555 x 15% = $37,084

Imagine behind the scenes, one of the big drivers for the change in Lesley’s balance during 2025/26 was a property that started the year valued at $2 million and increased to $2.4 million. This made up $400,000 of the earnings figure, the rest came from growth in other assets and income from both the property and other assets.

Let’s say the property drops in value the following year, back to $2 million. In fact, Lesley’s whole super balance goes backwards. The fund’s income and growth in other assets wasn’t enough to compensate for the big drop in the property’s value. At 30 June 2027, Lesley’s super balance is only $5.11 million, again, after withdrawing $100,000 in pension payments.

The ATO will calculate that ‘earnings’ for the new tax are negative in 2026/27. The amount will be a ‘loss’ of $240,000 ($5.11 million plus $100,000 less $5.45 million = -$240,000).

This $240,000 will be carried forward and used to reduce Lesley’s super earnings in future.

Sounds good so far (ignoring Lesley's extra tax of $37,000 for 2025/26).

But then what might happen?

What if, the following year (2027/28), Lesley’s fund sold the property for $2 million (ie, the value never recovered). Lesley used this opportunity to withdraw a lot from super and at the end of the year, 30 June 2028, her super balance was less than $3 million. If Lesley’s super balance never rises above $3 million again, there will be no opportunity to use the ‘losses’ carried forward. They are specific to Lesley. There is no opportunity to pass them on to another member of the fund. They are also not refundable.

The net result for Lesley is that most of the earnings in 2025/26 ($550,000) came from the increase in value of the property ($400,000). But that increase disappeared the following year. Lesley has ended up paying tax on something that never actually materialised.

In fact, life could be even worse

Take Chris whose balance at 30 June 2027 was $2.9 million. In 2027/28, Chris inherited his spouse Kate’s superannuation ($2 million) which he used to commence a pension (no withdrawals were made in 2027/28). Catastrophic investment returns mean that Chris’s total super balance at 30 June 2028 is only $4 million and he has suffered a $900,000 loss.

Chris can see that he’ll be subject to Division 296 tax in the future now that he has inherited Kate’s super and it would be reasonable to assume he could at least carry forward this loss. Unfortunately not. Losses can only be carried forward by people who have more than $3 million in super at the start of the year.

In fact, look at what happens if Chris’s super recovers the following year. Let’s say it goes from $4 million to $4.8 million after taking out his $100,000 in pension payments in 2028/29. His ‘earnings’ for Division 296 tax will be $900,000 (ie, $4.8 million plus $100,000 less $4 million).

Since 37.5% of his new balance of $4.8 million is above $3 million (ie, $1.8 million out of $4.8 million), he’ll pay Division 296 tax on 37.5% of the $900,000 earnings amount, resulting in a tax bill of over $50,000.

From Chris’s perspective, all that’s happened is that his super balance has recovered to where it was when he first inherited Kate’s super, but he’ll be taxed on that recovery.

A flawed proposal

And finally, indulge me in one small rant.

The Government consistently refers to this measure as increasing the tax rate on earnings from 15% to 30% on super balances over $3 million. It implies that the existing super fund rate (15%) can be added to the new 15% but this is is completely disingenuous. They are applied to entirely different income amounts (only one includes unrealised capital gains, for example). It’s a bit like adding a player’s 100 runs in a cricket game to their 2 home runs in a game of baseball and saying they scored 102 runs in total. They’re both runs but no-one would ever consider adding them together because it’s meaningless.

The Government is absolutely within its rights to increase the taxes paid by the wealthiest superannuants. But it’s a shame the method that’s been chosen is fundamentally flawed.


Meg Heffron is the Managing Director of Heffron SMSF Solutions, a sponsor of Firstlinks. This is general information only and it does not constitute any recommendation or advice. It does not consider any personal circumstances and is based on an understanding of relevant rules and legislation at the time of writing.

For more articles and papers from Heffron, please click here.


November 01, 2023

I found this on the ATO website.

ATO Reference is QC46861 If you enter this in the search bar the Conditions for early release comes up.

This is under Special Conditions

Terminating gainful employment

Subject to the governing rules of your fund, where a member (who has not met another condition of release) has ceased employment with an employer who had contributed to the member's fund, on termination:

all preserved benefits may be paid, but they must be taken as a lifetime pension or annuity, which can't be commuted into a lump sum (unless the preserved benefits are less than $200, in which case the member can cash the benefits without restriction)
all unrestricted non-preserved benefits can be cashed out on request from the member (no cashing restrictions).

So my query is, could one set up an SMSF with these governing rules in place to access their Superannuation in as a Pension? I rang the ATO and queried the clause and they said yes if your fund allows it you can do it.
When I asked if I could set up an SMSF and do it, they said this falls under financial advice and they are not permitted to give financial advice.

Stephen Langford
November 16, 2023

Meg, can you confirm that the additional 15% tax is effective double taxation? The unrealized gains in a fund are taken from the increase in value of the fund between the beginning and end of the financial year. This value includes dividends received during the year as income, which in the accumulation component are already taxed. So the government lobs another 15% onto this income, as well as on any gains in the capital value of investments themselves?

Meg Heffron
December 08, 2023

Hi Stephen, it's correct to say that there would be two different taxes effectively hitting that same dividend. But to be fair we have this in other contexts already - Div 293 tax, for example, is a tax levied on high earning individuals where the amount on which the tax is based is their concessional contributions (which have already been taxed in the fund). Similarly, when a benefit is taxed (say because someone under 60 withdraws some of their own super or an adult child inherits a parent's super), the "taxable component" of that benefit is taxed. Even though it was already taxed as a contribution or investment earnings.
So yes, it's taxing dividends etc twice, and it's deliberate. The Government even talks about it as a measure that will increase the tax rate paid on part of the member's super growth from 15% to 30%. (Which itself is misleading - as per my final rant.)

Meg Heffron
December 08, 2023

Hi Disgruntled - unfortunately the type of pension you'd need to set up to take advantage of that rule is one that's not allowed in an SMSF. It's classified as a "defined benefit" and those can't be set up in SMSFs any more (although some people have them from pre-2005)

Jon Kalkman
October 24, 2023

This new proposed tax raises an interesting question.  In super, the legal entity for tax purposes is the super fund. A super fund is structured as a trust and is under the control a trustee. The trustee is the legal owner of the trust property and is responsible for administering the trust's property and income on behalf of, and for the benefit of, the trust's beneficiaries. Member of a super fund are beneficiaries, not owners. The fact is, the super fund and the member have separate tax file numbers and are each responsible for their own tax liabilities.

This new tax is a major deviation from the principle that a taxpayer is not responsible for the tax liabilities of another taxpayer. This proposal applies a new tax of 15% on the growth in the Total Super Balance (TSB) of a member from one financial year to the next. The TSB aggregates the increase in income, realised capital gains and paper profits in accumulation and pension accounts across multiple super funds over an unindexed cap of $3million. 

The new tax liability for this growth in super is then applied to individual members, not the super fund. The individual is responsible for the tax, but the super fund(s) own the assets that give rise to the tax liability. It seems fertile ground for a legal challenge.

October 27, 2023

This new Division 296 Tax is an utterly illogical concoction.

October 23, 2023

If this gets through and Labor dont lose the next election, there will not be a great amount of time left to sell lumpy assets or move them to less egregious tax vehicles. And if the Liberal party get in, can they repeal the legislation in time? Can one take the risk? Trusts etc are less egregious because there will be no tax concession on super fund earnings if this gets through as the final tax rate can be well in excess of a doubling of the tax in dollar terms by the fund.
Also, it may be a dreadful time economy-wise to sell. And you need to be retired of course.
Anyone watching property prices in Sydney knows that $3m is not going too far anymore either. And good fortune can mean it is not too much of a stretch for a member balance to reach over $3m for a Sydney property portfolio. Better have a lot of savings outside of super to be able to pay this tax. Otherwise withdrawals from super to pay the tax get added back as earnings for the next year's calculations too. Ouch!
Thanks Meg!

October 23, 2023

One thing I have noticed is that no one has mentioned is the outcome of trying to limit the total balance for accumulative account which is then in the future transferred to a pension stage. By limiting the balance in both funds with the present rule will limit the individual’s potential weekly income

October 23, 2023

There is no talk from the government at this stage about putting a limit on a Superannuation Balance.

There is street talk about limiting Superannuation balances, that doesn't stop people from being wealthy though. Just that the rest of your money is invested outside of the Super System.

Supposed cap of $3M cold be $6M for a couple, on a 4% draw down it's $240k per year, 5% is $300k per year.
1/2 those amounts for a single person. More than enough to retire on. Any amount over that can reasonably argued as using Super as a wealth creation tool, nor for providing retirement benefits as originally intended.

October 23, 2023

why panic the bill has not passed yet and he's taking it to the2025 election and no way they will get in again

October 23, 2023

It's not panic, just discussion and some of us are hoping that if there is enough discussion and noise about the proposal, some of the more negative aspects of change can be avoided.

Tax on unrealised gains and not allowing access to amounts over $3M if you're under preservation age are my main gripes about the proposal.

October 22, 2023

I share concerns about any tax on unrealised gains.
We are already subject to a tax on unrealised property gains when we pay council/local govt rates that are calculated by formula on the land value of our property. These rates take no account of income only rising land values, which are based on recent property sales in the area.
So as property sales rise, rates on our (unrealised) home value goes up. Similarly, as SMSF asset values go up, a proposed tax on the unrealised asset values over $3m goes up. Both are bad taxes because they are regressive, taxing an asset value rather than income or capacity to pay.
Sure you could sell some shares to cover a tax bill on share values, but harder to sell part of a house to cover a rates bill on property value.

October 22, 2023

A much better policy would have been to limit super to $3 million with any excess to be withdrawn. Anything more than $3 million in super is just using super to save tax. $3 million is more than enough to provide a comfortable retirement.

October 22, 2023

I agree, and would go one step further and say the $1.9 TBC for tax free earnings and withdrawals for those over 60 is too.

Both are lines in the sand drawn by governments to say we think this is a suitable amount for retirement, which it is.

If you want or have more money saved/invested have it outside Superannuation. It was never meant to be a wealth creation tool.

If you are fortunate enough to have more than $3M in Superannuation and are under preservation age you should be able to access that extra.

For the record, I don't.

October 22, 2023

I am needing s reminder or 2.
What percentage of current fund balances will this effect?
Does it include those not eligible to withdraw? Technically they may not have free assets to pay the tax outside super (practically they sold have advice and at least be prepared).

I wonder how those effected may change the way they utilise money. Early intergenerational transfer, bigger homes, boats cars n planes, fashion spending, perhaps we will see more donations and charitable trusts. What will the flow on inflation impact if this be if people decide there is less point accumulating wealth

October 22, 2023

Immediate impact would be on around 11000 Superannuation accounts but due to the non indexing there are another 80000 or so accounts with more than $2M so as their balances grow they too will be impacted.

Then more again with over $1M, more so at the higher end of $1M+ balances.

So in time more and more people will be affected.

Yes, those under preservation age who can't move their money out of the Superannuation system are affected by the changes. I'd argue more so as they are trapped.

October 22, 2023

How will they utilse the money ? Simple , they'll pass it through to their kids/grandkids as super contributions - retaining the same tax concessions for their families. Two kids can have $2.2M in contributions made over a 7 year period , then they can pass on to their kids.

October 24, 2023

Providing they don't change the rules again, & again

October 21, 2023

Now that as a nation those who have been persuaded to vote ‘No’ to the Voice referendum if they don’t know how that would work, can we extrapolate this sage advice to the division 296 abomination and disclaim any liability?
‘No taxation without understanding’ is our campaign slogan….

MK Adelaide
October 20, 2023

This is a typical Treasury attack on some concept it does not like - franking credits being another favourite target.
The tax is worked out this way because big super cannot differentiate easily between the earnings (in the usual sense) for folk with under or over $3M. It can for pension and accumulation but nor within accumulation.
The ATO could aggregate earnings across an individual’s various funds but that would require the competent execution of a programme to introduce that electronically. Imagine another Robodebt computer fiasco.
SMSFs of course can do the differentiation easily, but Labor’s mates in Big Super were not prepared to do the work for it, so the little folk suffer (again).

Geoff Booth
October 20, 2023

My personal concern is that this tax on unrealized capital gains within SMSF’s is an “experiment” leading towards the same principle (of taxing unrealized capital gains) for personal & company taxation in the future.
Perhaps, as Frank Zappa once so eloquently mused: “it can’t happen here”. Maybe it will! Maybe it won’t!
However, I’m surprised that the outcry against the principle of a Tax on unrealized gains is not more widely condemned (and hasn’t been even from the beginning).

October 20, 2023

Someone please correct me if I'm wrong, but haven't all other (non-SMSF) super fund members been taxed on unrealised capital gains since 1988? I thought unit prices are set each day based on market valuations which include unrealised gains/losses and the notional tax thereon - to do otherwise would create inequities between members.

Jon Kalkman
October 21, 2023

In super the tax entity is the super fund, not the individual - at least since the Costello changes of 2007. Individuals have never been taxed on their super income or capital gains. Before 2007, they paid minimal tax on withdrawals from super. This new tax is on individuals and it taxes the total super balance, counting both income and unrealised capital gains in accumulation and pension accounts across multiple super funds.

The tax on super funds in accumulation phase is relatively straightforward. Both concessional contributions and fund income are taxed at 15% (capital gains are taxed at 10%), so it is a simple matter to calculate the cash inflow to the fund for the financial year for tax purposes. Super funds that pay pensions pay no tax on income or capital gains.

Unrealised capital gains are indeed reflected in unit prices and those unit prices also reflect the the difference in tax rates between accumulation and pension accounts in the same investment option, but unrealised gains are not taxed.

Until now, only income has been taxed - capital gains become income and are taxed as income in the year the asset is sold.

SMSF Trustee
October 21, 2023

Putting it another way, Bruce. The change in u it prices calculates the total return of an investment in trusts and for the # of units an investor buys or sells when they contribute or withdraw or switch. But the income is calculated based on actual earnings of interest, dividends, rent and realised capital gains. It's a separate calculation.

October 22, 2023

Thanks for your replies Jon and SMSF Trustee. I see now there are two issues in my question:

1. Tax should be paid by the fund not the individual: agreed. I thought the additional new tax would be charged against an individual's fund balance but not realised until funds are withdrawn. If it's to be paid by the individual each year in their personal tax return I agree that's just wrong, particularly if you're in accumulation phase and your super is still sitting in your fund.

2. My real question was about unit pricing. I understand funds don't _pay_ CGT until they sell an asset and realise the gain but I'm still not convinced they don't _accrue_ the notional CGT on unrealised gains in daily unit prices.
For instance, let's say: Our workplace's super fund invests in a pool which has owned a particular share parcel for 20 years and is sitting on a large unrealised gain; I withdraw or switch my investment out of that pool; a week later the fund sells that share parcel and triggers the CGT liability; another week later my workmate withdraws or switches their investment in that same pool. Are you saying that the unit price my workmate gets is lower than mine by the tax on the whole 20 years of capital gains?
I find that hard to believe. Surely the trustee is obliged to accrue the notional CGT on unrealised gains so this kind of inequity doesn't occur. In which case unit prices, and therefore members' super balances, are in effect always net of CGT on both the realised and unrealised gains.

October 22, 2023

Daily unit prices are set using Net Asset Values. They may include a notional tax assumption between 10-15% based on income and capital income. If the fund has carried forward losses it will reduce tax assumptions to take account of the future tax benefits.

You seem to be missing the point here though in that SMSF members are not realising (ie selling or withdrawing) before they are required to pay this punitive tax. Makes it very difficult to hold certain long term growth oriented assets.

Members in public offer funds on the other hand are in withdrawing so are requesting their fund sell their share of the underlying assets

October 23, 2023

Totally agree, I believe this tax within super over $3 mil is the Trojan horse.
The next issue the government needs to deal with is the housing crisis, I jest, but as Kerrie stated previously in her view $ 3 mil is more than enough to provide a comfortable retirement. Perhaps then a $1 million home is more than enough to provide shelter for your family, the government can then use this extra revenue to increase housing supply, if this super tax relating to tax on unrealised gains gets through as proposed how long will it then be for this to be applied to the family home or other assets?, any higher bidders on 1million for your home? Peeps need to think more longer term, I’m also surprised there is no outcry.

October 20, 2023

Thanks, Meg. Is there any update on the proposed tax changes for non residents?

October 20, 2023

apologies. misunderstood the issue. withdraw the first comment

October 20, 2023

If a SMSF is providing a pension for two members of the SMSF, the total of the superfund could go to $6 million before such taxes kicked in. Is that a correct interpretation?

October 20, 2023


October 20, 2023

Sorry - correct if it was 2*$3m. One $4m and one $2m would not work

October 20, 2023

actually 1.9 M each to be precise. LOL

October 20, 2023

Thank you to Meg for her analysis. I would appreciate comparison of results of this proposal on superannuation and tax liabilities of Federal and State Members and government employees.

October 20, 2023

Beware that "Unrealised CGT" if passed may follow to other Investments .

October 19, 2023

The proposed tax should make anyone considering buying into high risk, growth stocks (exploration,biotech,technology) tread carefully,maybe reconsider.A biotech our SMF holds has gone from 1.6c (2019) to 60.5c (2021) to 4.1c (today).A disaster if the new tax had been applied.

October 20, 2023

Suspect I know its name and own it but you are absolutely correct - that would be a disaster. Under the new rule [stupidity!] on unrealised gains, highly volatile speccys have no place in my view. Hope they fly pre July 2025, cash them out or do an off market transfer somewhere outside Super if you want to hold - that's my plan!

October 20, 2023

Knowing that you are going to have to pay tax due to a speculative unrealized gain could be a strong prompt to realize at least some of that gain in the last week of June. In Tasman's case that would have been a wise and profitable thing to do with his biotech stock in 2021.

October 20, 2023

Tim,I did exactly that,sold enough so that my current "cost " is zero and I can sleep easy.I am not complaining,just an illustration of how ridiculous the new tax is.

October 19, 2023

I think where a person has either a starting or ending TSB of $3m+, they are on the hook for Div 296. In the example where the start TSB was $2.9m but the ending was $4m, the way this formula will work is to uplift the start TSB to $3m. However, this example involves a death benefit which won't go to the recipient's Adjusted TSB in the year of receipt, so they would only have their own super balances in the end TSB in year 1. If the close TSB was at least $3m, the Div 296 would be in play. There is way too much complexity in this and unless the systems are changed, we will have to trust the ATO systems to work it all through correctly. The formula is useful to determine who is on the hook for Div 296 but as to the calculation of the earnings, that should be simply the taxable income proportioned for the member. Thereafter the proportion of the TSB over $3m is used to calculate the Division 296 tax

October 19, 2023

A question please. If an SMSF has carry forward capital losses--let's say $1 million at June 2026 and one member of the fund is subject to Division 296 Tax--if that member's share of the SMSF is 50%, are they able to use 50% [$500K] of the carry forward losses against the Division 296 Tax?

October 19, 2023

No Paul, Division 296 is completely detached from accounting and tax rules. The tax losses of the fund are at fund level whereas, any Div 296 losses are quarantined, not only to the member, but to application against (future) Div 296 earnings of that member. The draft legislation does not provide for a refund of losses, they can only be deployed against (future) Div 296 earnings of that member. The concepts of income and capital do not apply to Div 296, it introduces a new concept - "superannuation earnings" which we know includes unrealised capital gains and after-tax fund income but ignores statutory income such as franking credits and specifically doesn't allow capital gains discount. The 'theory" was all those tax adjustments we use in calculating ordinary taxable income are compensated by the formula that applies only the proportion of the made-up earnings above $3m to the additional 15% tax. This proportionality is the compensation.

October 19, 2023

The clear target is tax all Super over $3m. The simple approach would be to largely reverse Costello's largess of 2007 but why do something simple when the opportunity arises to create ridiculous bureaucracy and complexity?

If you are retired you can pull money out and redeploy it elsewhere - keep balance under $3m and the after tax impact may be minimal. Trusts, Primary Residence, Kids etc

If you are still in accumulation mode, much tougher particularly if you have volatile assets in the fund that potentially can "pop and drop" so your asset mix may have to change. Taxing of unrealised gains is immoral - full stop.

Critically you need to model, or have modelled, the possible outcomes for your specific fund. By understanding your exposure you have half a chance to formulate a plan in a timely manner.

October 19, 2023

I think this proposed new legislation may significantly impact the value of the property, especially since property investments are often viewed as opportunities for long-term higher returns. Taxing unrealized gains is a new concept, and this will require sellers to make important choices regarding holding onto the property, renting it out, or selling it.

Analysing the implications of such legislation, specifically regarding taxing unrealized gains and reaching a conclusion, may not be appropriate. It is essential to consider it from an overall economic standpoint. The key question that must be answered is whether this proposed legislation would benefit society at large at the expense of a few. If the answer is yes, then we should welcome it rather than oppose it without analysing its actual impact on the economy or society. Additionally, if laws are not serving their purpose, they can be changed in the future as well.

October 19, 2023

Very open to manipulation RE: unlisted asset valuations - how will the ATO ensure the values are at least accurate & able to stand up when challenged? Like most “wealth taxes” I suspect the costs of administration will far outstrip the tax take

Fund Board member
October 20, 2023

Well of it's directly held in an SMSF then the ATO will probably be all over the audit process. If it's in an APRA-regulated fund (eg industry fund) then they're being forced to adopt new valuation policies as we speak.

October 23, 2023

That’s my point: the ATO is not in a position to value every piece of art held within every super fund every year & not have it challenged in the courts …

October 19, 2023

Oh Meg, if only we could get someone who "matters", ie in Government to sit up and take notice of just how stupid this proposal on taxing unrealised gains actually is. For many of the reasons stated above. Thank you for this article. It may well be that we personally are not affected by the changes, but without indexation going forward, more and more people who are just saving for a "dignified" retirement will be caught.......remember when $1,000,000 was a LOT of money, not any more!

October 19, 2023

fully agree ,tks

J Perks
October 23, 2023

Currently federal Labour is licking it's wounds over the massive loss of the Voice referendum, and may well continue with policies that lead to the Coalition winning the next federal election.
In which case , this new tax on unrealised capital gains will not go ahead.

October 23, 2023

Chalmers is set on getting legislation through before next election with a start date occurring after the election.

No guarantees the Coalition get in and if they do, no guarantee they repeal the legislation if they do.

October 26, 2023

The Coalition did not cover themselves in glory during the referendum. I'd seriously doubt the ALP could throw anything at their base before the next election that would flip their vote.

99% of people simply won't care about this issue just like 61% didn't care to consider the upside from greater self-accountability from an advisory (only) Voice or the enduring cultural legacy of Colonialisation.

Ironically, those typically objecting the most have the least to loss but in this particular case of unrealised CG it may be the exception. Love the fact that Govt never mentions the NPV cost of an Age Pension. Makes the average Self-Funded Retiree look like they've accumulated a modest pot.

October 19, 2023

Very open to manipulation RE: unlisted asset valuations - how will the ATO ensure the values are at least accurate & able to stand up when challenged?

Like most “wealth taxes” I suspect the cost of administration will far outstrip the tax take

Peter Pann
December 16, 2023

Most likely the Government will invoke "DEEMING" rules to work out income from your financial assets. Typical Government tax office tactics- they make the accusation- you are guilty unless you spend time and money to refute it. All the Government need to do is identify the net rental from each investment property and then apply a capitalization rate to it or compile or access an existing third party data base of sold comparative properties to then apply a value. They do it now each year with every property in the form of land valuations which then various other government departments base their calculation of rates land tax tax. etc.


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The rise of passive investing is unlikely to derail the value of quantitative strategies. Passive investing hasn’t eradicated the irrationality of crowds, leaving pockets of opportunity to outperform indices.



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