New Deeming Rates

From 17 November 2008, the social security income test deeming rates have been lowered to take account of deceased returns on financial investments.

The new deeming rates are:

·      for a single person — 3% (previously 4%) for the first $41,000 of his or her total financial investments. For the balance of financial investments over this amount, the rate is 5% (previously 6%);

·      for a couple (both receiving a pension) — 3% for the first $68,200 of their total combined financial investments. For the balance of financial investments over this amount, the rate is 5%;

·      for a couple (one person receiving a pension and the other receiving an allowance) — 3% for the first $68,200 of their total combined financial investments. For the balance of financial investments over this amount, the rate is 5%; and

·      for a couple (both receiving an allowance) — 3% for the first $34,100 of their total combined financial investments. For the balance of financial investments over this amount, the rate is 5%.

The changes to the deeming rates mean that part-rate pensioners paid under the income test may receive an increase in their pension payments. However, pensioners already paid at the maximum rate will have no change to their pension payments.

Payments affected by the decrease to the deeming rates include:

·      age pension;

·      disability support pension;

·      carer payment;

·      parenting payment; and

·      Newstart allowances.

For the purposes of the deeming rates, the following financial investments are taken into account:

·      bank, building society and credit union accounts balances;

·      term deposits and debentures;

·      friendly society bonds;

·      managed investments;

·      listed shares and securities;

·      shares in unlisted public companies;

·      gold and other bullion;

·      certain income streams (e.g. short-term assets tested income streams);

·      approved deposit funds, deferred annuities and superannuation fund investments held by people over age pension age (i.e. 65 for males and 63.5 for females);

·      loans, including those to family trusts and companies; and

·      gifts of money or assets of either more than $10,000 in an income year or $30,000 over five income years.