Understood. I’ll analyze how Trump's proposed 'Big Beautiful Tax' (Section 899) and similar U.S. tax reforms might affect Australian-domiciled ETFs like IVV that track U.S. indices, especially when held in superannuation accounts. This will include implications for dividend withholding taxes, fund structure, and broader market effects—helping you assess whether retaining or selling your IVV investment is more prudent.I’ll get back to you shortly with a detailed breakdown.

Impact of Proposed US ‘Big Beautiful Tax’ (Section 899) on Australian S&P 500 ETF (IVV)

Foreign investors and Wall Street are growing uneasy about new U.S. tax proposals targeting overseas investors.Overview: President Donald Trump’s proposed “Big Beautiful Tax” – embodied in Section 899 of a recent U.S. House bill – threatens to raise U.S. taxes on foreign investors, including Australianswww.sw-au.com. This could directly affect Australian-domiciled exchange-traded funds (ETFs) that invest in U.S. equities, such as iShares S&P 500 ETF (ASX: IVV), which many Australians hold in superannuation accounts. Below is a concise analysis of the potential impacts, from higher dividend withholding taxes to fund structural considerations and broader market implications:

• Higher U.S. Withholding Taxes: Section 899 would impose additional U.S. withholding tax on investment income (dividends, interest) received by Australians – rising by +5% per year on top of existing rateswww.sw-au.com. For example, the U.S. dividend tax on Australian investors could jump from the current 15% to ~20% in 2026, then keep rising annually (capped at a maximum of 50%)www.sw-au.com.
• Treaty Override: The Australia–US tax treaty’s preferential rates (15% on dividends) would not fully shield investors. Section 899 explicitly overrides treaty rates, using the treaty rate only as a baseline for the new tax – meaning Australians lose some treaty benefits under this proposalwww.sw-au.com.
• Impact on IVV (Australian S&P 500 ETF): An Australian-domiciled fund like IVV, which holds U.S. stocks, would receive lower net distributions from the U.S. The extra U.S. tax would reduce the income paid out to Australian super funds, shrinking yields and total returns for superannuation members. Over time, escalating withholding could make U.S. equity exposure via IVV significantly less attractive.
• Potential Fund Responses: ETF providers and super funds may explore structural adjustments – e.g. changing fund domicile, using derivative (synthetic) exposure, or lobbying for relief – to mitigate the tax drag. However, Section 899’s broad scope (covering trusts and funds with mainly Australian beneficiaries) means easy workarounds are limitedwww.sw-au.com. Investors might see funds shifting strategies or increasing focus on non-U.S. assets if this tax takes effect.
• Broader S&P 500 Implications: If foreign investors face higher taxes, some could pull back from U.S. markets. Non-Americans currently hold roughly $31 trillion in U.S. stocks and bondsfinimize.com – a partial retreat would reduce demand, potentially pressuring S&P 500 prices and even weakening the USDfinimize.com. That said, Trump’s agenda also includes business-friendly moves (like possible corporate tax cuts to 20% and lower capital gains tax) which could boost S&P 500 earningswww.bdo.comwww.kiplinger.com. The net effect is uncertain, pointing to greater volatility ahead.
• Investment Considerations: IVV’s recent gains present an opportunity to reassess. If Section 899 is likely to become law (effective Jan 2026 if passedwww.sw-au.com), investors may consider locking in profits now to avoid future tax erosion and market headwinds. On the other hand, long-term investors might hold if they believe U.S. growth and any corporate tax cuts will outweigh the tax costs. Monitoring the bill’s progress and any fund provider announcements is crucial before making a decision.

Background: Trump’s ‘Big Beautiful Tax’ (Section 899)

On May 22, 2025, the U.S. House of Representatives passed a sweeping budget and tax bill informally dubbed the “One Big Beautiful Bill.” Tucked inside was Section 899 – Enforcement of Remedies Against Unfair Foreign Taxeswww.sw-au.com. This provision is a retaliatory tax measure targeting countries that the U.S. deems to impose “discriminatory” or extraterritorial taxes on American companies and citizenswww.sw-au.com. In essence, it’s designed as a “revenge tax” against foreign tax policies that U.S. lawmakers find unfair.

• What triggers Section 899? Under the proposal, any country implementing certain taxes – e.g. a Digital Services Tax (DST) on tech firms, an OECD Pillar 2 undertaxed profits rule (UTPR), a Diverted Profits Tax (DPT), or other taxes deemed to disproportionately hit U.S. multinationals – can be labeled a “Discriminatory Foreign Country” (DFC)www.sw-au.com. The U.S. Treasury will maintain a blacklist of DFCs. Australia is on that list, since it has had a DPT (targeting profit-shifting multinationals) and a form of digital services tax in place since 2018, and is adopting the Pillar 2 minimum tax rules in 2025www.sw-au.com. In other words, Australia squarely meets the “unfair foreign tax” criteria from the U.S. perspective.
• Who is affected? Section 899 casts a wide net over “applicable persons” in DFCswww.sw-au.com. This includes not only foreign companies and individuals who are tax residents of a targeted country, but also government entities and investment vehicles. Notably, it covers trusts (including complying superannuation funds) where Australian residents hold the majority of beneficial interestwww.sw-au.com. In practical terms, any Australian investor or fund investing into the U.S. would fall under this regime.
• Retaliatory tax mechanism: If enacted, Section 899 would amend the U.S. Internal Revenue Code to hike the tax rates on U.S.-source income for these foreign investors. Five categories of income are targeted: effectively connected business profits, portfolio investment income (like dividends/interest), branch profits, gains from U.S. real property, and certain foundation incomewww.sw-au.com. All would face graduated surcharges – an extra +5% tax in the first year, with an additional 5 percentage points each year thereafterwww.sw-au.com. The increases stop once an extra 20 percentage points have been added (i.e. a cap at 20% above the normal statutory rate). Importantly, this proposal is meant to override tax treaty provisionswww.sw-au.com. Normally, the Australia–U.S. tax treaty limits U.S. withholding on dividends to 15%, interest to 10%, etc. Section 899 would supersede those limits, starting from the treaty rate and then ramping up the tax. The U.S. has signaled it will not honor the lower treaty rates if it considers Australia’s own taxes “unfair” – a bold move that could strain the treaty relationship. (The bill frames it as lawful retaliation, though it effectively means the U.S. would unilaterally raise taxes on Australians despite the treaty.) The House-passed bill now heads to the Senate, where its fate is uncertain. If it passes and is signed into law, the provisions would kick in 90 days after enactment – likely impacting income from January 1, 2026 onward for Australian investorswww.sw-au.com.

Higher Withholding Taxes on Distributions to Australians

One immediate effect of Section 899 for Australian investors would be an increase in U.S. withholding tax (WHT) on investment income. Currently, thanks to the treaty, Australians pay a 15% WHT on U.S. stock dividends and 0–10% on interest (depending on the instrument). Under the new law, these rates would climb stepwise:

• In the first year of implementation, an extra 5% tax is added. For dividends, treaty-qualified Australian investors would go from 15% to 20% withholding on U.S. dividendswww.sw-au.com. (Investors without treaty benefits – e.g. those who failed to file the required forms – would go from 30% to 35%.)
• Each subsequent year, the withholding would rise by another 5 percentage pointswww.sw-au.com. So an Australian receiving U.S. dividends could face ~25% tax in the second year, ~30% in the third year, and so on. This annual escalation continues until the tax tops out at 20 points above the original statutory rate. For dividends, the U.S. statutory rate is 30%, so the maximum withholding could hit 50% by the final stepwww.sw-au.com. In practical terms, half of every U.S. dividend dollar could end up withheld as U.S. tax under the full force of Section 899.
• Interest and other income would follow a similar pattern. Many interest payments are treaty-reduced to 10% or 0% for Australian recipients; Section 899 would push those up incrementally (subject to the same 20-point cap, meaning interest could eventually be taxed up to 30% for Australians if untreated by a 0% clause). Gains on U.S. real property (currently taxed ~15% for foreigners under FIRPTA) would also see an extra 5% yearly, etc.www.sw-au.com. Crucially, the Australia–U.S. tax treaty would no longer fully protect against these increases. Section 899 explicitly “intends to override the reduced treaty rates”www.sw-au.com. The treaty rate is used as the baseline for the new tax calculation, but after that the U.S. would impose its escalating surcharge on topwww.sw-au.com. In other words, even though Australia’s treaty with the U.S. sets a 15% ceiling on dividend withholding, Section 899 would override it by U.S. law – something that could be contested diplomatically, but the bill as written takes precedence in U.S. courts. There is an upper limit: the law caps the combined rate at statutory + 20%www.sw-au.com, so the U.S. wouldn’t withhold more than 50% on dividends or more than 41% on effectively connected business profits (21% corporate tax + 20%)www.sw-au.com. But any increase at all directly eats into foreign investors’ returns.For Australian holders of U.S. equities, that means less net income from dividends and interest. A quick example: if an S&P 500 stock pays a $100 dividend, an Aussie investor today nets$n85 after U.S. withholding (15%). Under Section 899’s first step, they’d net only $80 (20$n70 or less. This direct reduction in cash yield is significant, especially for income-focused investors. Over time, losing an extra 5%, 10%, 20% of every distribution can materially lower the cumulative return on investment.It’s worth noting that Australian tax implications come into play here as well. Australian residents typically can claim a foreign tax credit for U.S. withholding tax paid, to avoid double taxation (up to the amount of Australian tax due on that income). Superannuation funds in the accumulation phase pay 15% tax on earnings. Under current 15% U.S. withholding, a super fund can often use the full credit (e.g. the U.S. tax covers the Australian tax liability on that foreign income). But if U.S. withholding jumps to 20% or more, there will be excess foreign tax that can’t be credited (since the Australian tax on that dividend is still only 15%). That excess becomes a real loss. In effect, Australian super funds and investors would be paying more tax overall – giving an extra cut to the IRS that the ATO won’t offset. This means lower after-tax returns inside the super account. In summary, Section 899 would raise the effective tax drag on U.S. investments for Australians, unless some workaround or relief is found.

Impact on IVV ETF Held in Superannuation

IVV (iShares S&P 500 ETF) is a popular vehicle for Australians to invest in U.S. equities via the ASX. Importantly, IVV was restructured in 2018 to be Australian-domiciled (eliminating the need for individuals to file U.S. tax forms like the W-8BEN) – essentially, it’s a local trust that either holds U.S. stocks directly or via a U.S. fund, on behalf of Aussie investors. From a U.S. standpoint, IVV is a foreign (Australian) entity receiving U.S.-source income on behalf of its unit holders. That means IVV’s distributions from U.S. stocks are subject to U.S. withholding tax, just as if each investor held the stocks themselves (the fund typically claims treaty benefits and withholds at 15% before passing income to investors).Under Section 899, IVV’s U.S. income stream would face the higher withholding rates described above. The ETF’s dividend payouts to investors would likely decline because the fund would be losing more to U.S. tax before it distributes cash. Investors holding IVV inside a superannuation account would experience this as lower income yields from their investment. For example, if the S&P 500 yields ~2% annually, currently IVV might deliver roughly that minus 15% withholding (so ~1.7% net). With withholding ratcheting up to 20% and beyond, the net yield could shrink (e.g. ~1.6% at 20% WHT, and progressively lower if the tax rises further). While those percentage differences seem small in one year, over a long horizon in super, they compound and erode wealth. Super funds rely on compounded returns, and a higher tax friction means less money compounding each year.There’s also a capital growth aspect to consider. If higher taxes make U.S. equities less attractive to international investors, that could, over time, dampen demand for the S&P 500 index. IVV, which tracks the S&P 500, could potentially see slower price appreciation (or even price declines) relative to a scenario without these taxes. In the near term, the anticipation of Section 899 could inject volatility – if large foreign investors start reallocating away from U.S. stocks, the selling pressure might negatively impact U.S. equity prices www.reddit.com. This means the market value of IVV units could be hit, not just the dividend component.From a superannuation tax perspective, as noted, Australian super funds can usually claim foreign tax credits for withholding paid. If IVV’s distributions come with higher U.S. withholding credits, a super fund (paying 15% tax) can use only part of that credit. Any unused credit is wasted. This makes IVV in super somewhat tax-inefficient under the new regime, compared to, say, an investment that only pays fully franked Australian dividends or one in a country with lower withholding.In summary, continuing to hold IVV in a super fund could yield lower income and potentially lower growth if Section 899 is enacted. The viability of holding IVV long-term might come into question if net returns are sufficiently hampered. Investors may start comparing IVV’s after-tax return against other options (like an Australian equities ETF, or international funds focusing on Europe/Asia, etc.) where the tax drag is less. That said, the S&P 500’s composition (with many high-growth tech companies, etc.) might still deliver strong capital gains that compensate for some tax loss – but investors will need to weigh that against the certainty of higher taxes on the income portion.

Possible Changes to ETF Structure or Domicile in Response

If Section 899 moves forward, we could see strategic responses by fund managers and institutional investors to mitigate its impact. Some potential adjustments include:

• Re-domiciling or restructuring funds: ETF issuers might consider shifting the domicile of their U.S. equity funds or routing investments through an intermediary jurisdiction that isn’t subject to the retaliatory tax. For instance, could an Australian fund invest via a third country that is not on the U.S. blacklist? In theory, if an ETF based in, say, Ireland or another neutral jurisdiction holds U.S. stocks, and Australian investors buy units of that ETF, the immediate recipient of U.S. dividends is the Irish fund. If Ireland were not considered a DFC, the additional tax might not apply (only the normal 15% U.S. withholding under the U.S.–Ireland treaty). However, this approach has complications: many Western countries (including Ireland, the UK, Canada, France, etc.) are likely to be tagged as DFCs due to adopting digital taxes or global minimum tax rulesfinimize.com. The law is broad enough that finding a truly “untainted” jurisdiction could be hard. Moreover, Section 899 would also capture any trust or partnership majority-owned by Australianswww.sw-au.com, so simply interposing a foreign vehicle might not escape the net if Australians are the ultimate owners. Fund managers will have to carefully analyze whether a different fund structure can lawfully avoid the extra U.S. tax.
• Synthetic or derivative-based exposure: Another route could be using synthetic ETFs or derivatives to get U.S. market exposure without directly holding U.S. securities. For example, an ETF could use equity swaps or futures contracts on the S&P 500. In that case, the fund wouldn’t directly receive U.S. dividends (the total return swap counterparty might handle the stocks and pay the fund the index return). If structured cleverly, the counterparty could be a U.S. bank or a non-DFC entity that isn’t subject to the extra withholding – passing on essentially gross or less-taxed returns to the Australian fund. Synthetic structures are already used in some markets to maximize tax efficiency. The downside is added counterparty risk and complexity, and possibly higher costs or tracking error. Fund issuers will weigh whether this is feasible and palatable to investors.
• Fund payout policies or domicile shifts for investors: It’s conceivable that U.S. funds might adjust how they return value to shareholders to reduce withholding impact. For instance, more share buybacks instead of dividends (buybacks aren’t directly taxed to foreigners like dividends are). However, an ETF tracking an index can’t force the index’s companies to do buybacks. Alternatively, Australian investors might be steered toward U.S.-domiciled ETFs or C-Corporation feeders that have different tax profiles (though a U.S.-domiciled ETF held by an Aussie is still a foreign investor situation – likely still subject to withholding on fund distributions). There’s also a possibility of creating Australia-domiciled “accumulating” funds that reinvest dividends internally (common in Europe) – this doesn’t avoid withholding, but it could defer some tax or eliminate the need for investors to get small taxed dividends regularly. None of these are quick fixes, and each involves trade-offs. In Australia, the financial industry and regulators will surely take note if Section 899 passes. We might see lobbying at the government level – for example, Australia could negotiate with the U.S. for an exemption for complying superannuation funds, which are long-term retirement savings vehicles. Some U.S. treaties (with Canada, UK) already exempt pension funds from dividend withholding. The current U.S.–Australia treaty does not have a full exemption for super funds, but policymakers might push for one in response to this punitive tax. Whether the U.S. would agree is uncertain, especially since Section 899’s ethos is punitive until the “offending” foreign taxes are removed. In the short term, without a diplomatic solution, Australian funds may simply start to reduce allocations to U.S. assets. In fact, there is already a trend of major Australian pension funds looking to increase investments in Europe, Canada, and domestic projects as they seek opportunities outside the U.S.finimize.com. The new tax threat could accelerate that shift.For individual investors, one indirect response might be considering alternative ETFs. For example, some may choose Vanguard’s VTS (which is a U.S.-domiciled Total U.S. Stock ETF) or others – but note, a U.S.-domiciled fund doesn’t escape Section 899 either; the Australian investor would directly face the higher withholding on any distributions from that fund. Others might look at ASX-listed international funds that focus on regions not targeted by Section 899 (for now) or that have inherently lower payout ratios. It’s a developing situation: fund providers like BlackRock (iShares) and Vanguard will likely communicate any strategy changes to investors if the law progresses.

Broader U.S. Tax Changes and Market Implications for the S&P 500

The Section 899 proposal is one piece of a larger U.S. tax policy puzzle emerging in Trump’s (hypothetical) second term. While our focus is on how it affects Australians in IVV, it’s important to consider the wider economic and market context.From a foreign investor’s viewpoint, Section 899 sends a troubling signal. The U.S. has historically been seen as a “safe haven” market, attracting capital from around the globe thanks to its stable rule of law and investor-friendly policies. By imposing new punitive taxes on foreign capital, the U.S. risks undermining that safe-haven statusfinimize.com. Foreign institutions have been significant holders of U.S. equities and debt – indeed, overseas investors currently hold about $31 trillion in U.S. assetsfinimize.com. If a chunk of that capital decides to exit or avoid U.S. markets due to higher tax or political friction, there could be tangible market effects:

• Equity Market Pressure: Reduced demand for U.S. stocks from abroad could weigh on valuations. All else equal, if international pension funds, sovereign wealth funds, and individuals scale back U.S. equity purchases, the S&P 500 could see lower liquidity and higher risk premia. Some analysts warn that Section 899 “could scare away foreign investors”, pushing them toward Europe or elsewherefinimize.com. This divestment risk comes at a time when U.S. stock indices are near highs (IVV being “up” as the user noted), so even a partial pullback can trigger a correction.
• Currency and Rates: Foreign inflows have also supported the U.S. dollar and Treasury bond market. If Section 899 turns some investors off U.S. bonds, we could see upward pressure on U.S. interest rates (to attract replacement buyers) and a weaker USD as capital flows outfinimize.com. A weaker dollar can actually boost S&P 500 multinationals’ earnings (when overseas profits are translated back), but it may also signal reduced confidence in the U.S. economy. Higher long-term interest rates, meanwhile, tend to be a negative for equities (raising the discount rate on future earnings and making bonds relatively more attractive than stocks). So this tax policy might inadvertently lead to tighter financial conditions.
• Reciprocal Actions: One cannot rule out that affected countries (like Australia, Canada, UK, EU nations) might respond in kind or take other measures. This could lead to a more fragmented global investment environment – not directly a tax on the S&P 500, but potentially political spillover that increases uncertainty or affects U.S. companies operating abroad. Markets generally dislike such uncertainty, which could add to volatility. On the flip side, Trump-era tax policies aren’t uniformly bad for markets. In fact, the original 2017 Tax Cuts and Jobs Act (Trump’s first term) was a substantial boost to corporate earnings via a large corporate tax cut (35% down to 21%). In a second term, Trump and Congressional Republicans appear inclined to further extend or deepen those tax cuts. Key proposals and their potential market influence include:
• Corporate Tax Rate Cuts: There’s discussion of trimming the corporate tax rate slightly to 20% (from 21%) and even offering a 15% rate for U.S. manufacturerswww.bdo.com. Any reduction in corporate taxes directly increases after-tax profits for S&P 500 companies, which could lift earnings-per-share. All else equal, higher earnings support higher stock valuations, so this would be a positive for the S&P 500’s fundamentals. Certain sectors (manufacturing, industrials) might benefit disproportionately if they get a special lower rate.
• Investor Tax Breaks: Proposals like cutting the top capital gains tax to 15%www.kiplinger.com (from the current 20%+3.8% NIIT) could encourage more investment activity by U.S. investors. While this doesn’t directly help foreign holders, it could spur domestic demand for stocks and increase market liquidity. Additionally, making individual income tax cuts permanent and raising deductions (as mentioned in the House bill’s provisionswww.bankrate.com) might boost U.S. consumer spending, indirectly supporting corporate revenues.
• Repatriation and Buybacks: Past Trump policies included incentives for U.S. companies to repatriate overseas cash, which in 2018 led to a wave of stock buybacks. New tax legislation could potentially include similar incentives or maintain a friendly stance toward buybacks (contrasting with some Democrats who propose buyback taxes). If companies ramp up buybacks, it supports stock prices by reducing share count and returning capital to shareholders – again a potential tailwind for indices like the S&P 500. In summary, the broader picture is nuanced. Section 899 represents a protectionist turn in tax policy, which could deter foreign investment and slightly handicap the S&P 500 by reducing its investor base and liquidityfinimize.com. However, other elements of Trump’s tax agenda aim to bolster economic growth and corporate profitability, which could counteract some negatives. The outcome for the market will depend on how much each factor weighs in. If foreign capital flight is modest and corporate tax cuts are significant, the S&P might still do well. If, conversely, the retaliatory tax sparks a larger global pullback, it could overshadow the benefits of lower corporate taxes. Investors should brace for a period of elevated uncertainty as these policies are debated and implemented.

Should You Sell IVV Now? – Evaluating the Investment Decision

Finally, for an Australian investor holding IVV (S&P 500 ETF) in a superannuation account, the practical question is: does it make sense to sell now while the fund is up, given these looming tax changes? The answer will depend on several considerations:1. Likelihood and Timing of the Tax Change: Section 899 is not law yet. It has cleared the House, but faces the Senate and possible amendmentswww.sw-au.com. There’s uncertainty about if and when it will be enacted. If it fails to pass, the concern becomes moot and selling out of fear could prove premature. Even if it does pass, the effective date would be in 2026www.sw-au.com, with only a 5% increment initially. That means there’s some runway for planning. However, markets are forward-looking – if investors widely expect it to pass, asset prices can adjust before 2026. Keep an eye on U.S. political developments in the coming months. A prudent approach might be to monitor Senate deliberations and be ready to act if it’s likely to become reality.2. Impact on Returns if Enacted: If Section 899 does come into force, we’ve established it would trim IVV’s future returns for Australian holders (via higher withholding and possibly softer price growth). For a long-term holder, this is effectively an increase in the “fee” or friction on the investment. You should ask: Does the investment still meet your return objectives under a higher tax drag? If you were expecting, say, ~7-8% annual returns from U.S. equities, and this tax knocks that down by some percentage (maybe turning 2% dividend yield into 1.5% net, which over time could lower total returns by ~0.5% annually, compounded), are you comfortable with that? If not, it might favor reducing exposure.3. Market Valuation and Alternatives: IVV (and the S&P 500) has performed well recently, meaning you might be sitting on decent gains. Selling now would crystallize those gains and avoid potential downside if foreign investor sentiment turns negative. Moreover, if you believe the broader market could react poorly to Trump-era policies or to foreign capital withdrawing (some analysts caution that foreign selling could lead to equity losseswww.reddit.com), then taking profit off the table is a defensible move. You could then rotate into other assets – for example, Australian equities, other international markets, or different asset classes – that might have a better post-tax outlook. On the other hand, consider the opportunity cost: the U.S. market could continue to rise (especially if domestic tax cuts boost growth) and by selling you might miss further upside. Also, alternative investments have their own risks and tax considerations.4. Superannuation Context: Within super, remember that realized capital gains are taxed (generally at 10% if the asset was held >12 months, due to the one-third CGT discount for super funds). If you sell IVV now, your super may incur a capital gains tax on the profits. That’s a one-time hit versus the ongoing drag of withholding taxes if you keep holding. It might still be worth it if you expect IVV’s future after-tax returns to significantly lag. But if the position is large, plan the tax implications of selling – in some cases, spacing sales over two financial years or other strategies could minimize tax impact. If you do nothing, and Section 899 hits, the “tax cost” is spread over many years as higher withholding – as opposed to an immediate CGT hit on sale.5. Personal Investment Horizon and Strategy: If you are a long-term investor with a high risk tolerance, you might opt to continue holding IVV despite the tax headwind. The rationale could be that over decades, the compounding growth of the S&P 500 (driven by innovation, earnings growth of companies like Apple, Microsoft, etc.) will outshine a few percentage points of extra tax. Additionally, U.S. tax policy can change – a future administration could roll back Section 899 or Australia might negotiate relief. Selling now could be premature if you believe these taxes might never fully materialize or last. Conversely, if you are nearer to retirement or were considering trimming U.S. exposure anyway, this news might tilt the balance towards selling. It provides a fundamental reason (higher future tax, possible market re-pricing) to reduce risk.6. Diversification and Rebalancing: Good portfolio practice is to not let one holding dominate and to rebalance as needed. If IVV has grown to be a large chunk of your super portfolio due to recent gains, taking some profit aligns with rebalancing principles. You could reallocate that capital to underweighted areas. Also consider whether you have other avenues of U.S. exposure (e.g. through managed funds or direct stocks) that collectively might be too high under the new tax regime. Reducing IVV is one way to trim U.S. exposure and the associated withholding drag.In helping you evaluate, here’s a balanced view:

• Reasons to Consider Selling Now: IVV is up, so you lock in gains at a high. You avoid the risk of a future where your U.S. equity returns are skimmed by rising taxes and possibly lower market performance due to foreign outflows. If Section 899 is enacted, foreign investors might start to exit U.S. assets, potentially putting downward pressure on the S&P 500www.reddit.com – selling before that wave could be advantageous. You can reinvest proceeds into assets with no such looming tax penalty. Essentially, you’d be de-risking against a policy shock.
• Reasons to Hold onto IVV: The law isn’t final – it could fail or be delayed, in which case the fear was for nothing and U.S. markets could keep climbing. Even if it passes, the initial impact (5% extra withholding) is not catastrophic; it shaves a small amount off returns, which might be outweighed if the S&P 500 rallies or if the companies in the index increase their payouts/growth. Also, the S&P 500 provides diversification and exposure to sectors and companies hard to replicate elsewhere. If you sell, you might lose that beneficial exposure. Trump’s other tax cuts could actually bolster U.S. stocks (e.g. higher earnings from a corporate tax cut could raise stock prices or dividends, offsetting some of the withholding loss). And if your investment horizon is very long, short-term policy-related volatility might be worth riding out. There’s also the factor of superannuation being a long-term vehicle – frequent trading isn’t usually necessary unless fundamentals change. Given these points, a middle path some investors choose is to trim rather than exit completely. For instance, selling a portion of IVV holdings to secure some gains and reduce exposure, while still keeping a stake in the U.S. market in case things go well. This way you’re partially hedged: you’ve realized some profit and lowered risk, but you haven’t completely abandoned an asset that could continue performing.Bottom Line: Section 899 introduces a new risk for Australian investors in U.S. assets. It tilts the calculus more in favor of diversifying away from U.S. holdings, but it doesn’t automatically mean one must sell everything immediately. Consider your confidence in the U.S. market, your tax position, and alternatives available. It’s wise to stay informed – if the bill officially becomes law, reassess promptly how much U.S. exposure you want under the new tax regime. If it fails, the pressure is off (at least until any similar bills arise). Given the complexity, consulting a financial adviser or tax professional could help tailor the decision to your situation.In summary, exercise caution but don’t panic. IVV and U.S. equities have been robust performers, yet the proposed “big, beautiful” tax changes are a legitimate concern for foreign investors. Weigh the trade-offs of selling versus holding: the answer may ultimately lie in your time horizon and risk tolerance. By staying vigilant and adaptable, you can make a well-informed choice that aligns with your retirement goals and the evolving tax landscapefinimize.com.Sources: Connected resources and analysis have informed this report, including Australian tax advisor insights on Section 899www.sw-au.comwww.sw-au.com, market commentary on the potential foreign investor reactionfinimize.comfinimize.com, and details of Trump’s broader tax proposalswww.bdo.comwww.kiplinger.com. These provide a basis for understanding how U.S. policy changes may ripple through to Australian investors in ETFs like IVV.