What is deeming?
Deeming is the term which describes the method used by Centrelink and Veteran’s Affairs to calculate your Income Test assessable income from certain investments when determining the level of entitlement to be paid. Deeming means that you are assumed to earn a certain return on ‘financial’ investments, irrespective of the actual rate of interest or capital growth you earn.
If you earn more than the deemed rate on your financial investments, the excess will not be included in the income test and will not affect your Centrelink payment. However, if the investment earns less than the deemed rate, you will still be assessed as earning income at the deemed rate.
The income test then combines the deemed income with income earned from other sources, such as employment, rent, business income and pension and annuity income to determine the level of pension, allowance or benefit payable under the income test.
The Government changes the deeming rate from time to time to reflect market conditions and most financial institutions offer special accounts that pay interest at the deeming rate. To check the rates applicable at the relevant time, the Deeming page on the government’s Human Services website is kept up-to-date.
How does deeming work?
To calculate the amount of deemed income you have, all that is required is to apply the relevant ‘deeming rate’ to the amount you hold in financial investments.
Currently – as at June 2016, the deeming rates are:
| Deeming Rates | Singles | Pensioner Couples | Non-pensioners couples |
| 1.75% | First $48,600 | First $80,600 | First $40,300 |
| 3.25% | Balance above $48,600 | Balance above $80,600 | Balance above $40,300 |
For current information, values and methods of calculation refer to Centrelink’s pages: Changes to the Deeming rates; and Deeeming – how it’s calculated.
For pensioner couples (where at least one partner is receiving a pension), the financial assets are combined, for non-pensioner couples (where neither partner is receiving a pension) financial assets are assessed individually.
Which assets are assessed using deeming?
Deeming applies to financial investments, which include:
- Cash
- Bank, building society, credit union accounts and term deposits
- Most friendly society bonds and insurance bonds
- Managed investments and shares in public companies
- Account-based income streams from 1 January 2015
- Bonds, debentures and loans, including private loans
- Gifts above the allowed amount
- Gold and other bullion
Financial investments do not include:
- Your home and its contents, cars, boats and caravans
- Antiques, stamp or coin collections
- Superannuation under age pension age
- Standard life insurance policies
- Funeral bonds
- Real property
- Shares in private companies, discretionary trusts
- Superannuation pensions, allocated pensions, term allocated pensions, allocated annuities or immediate annuities
The assessment of income for Social Security purposes can be complex. You should seek professional advice from a financial adviser if you are not clear as to how your situation may be assessed.
How can a Continuum Financial Planners adviser help me with this?
Deeming can catch you out with your planning for Centrelink/ DVA support: with careful attention to structure and strategy – before parting with lump sums of your money (no matter how large – or small; nor to whom you are giving it) – optimum wealth management benefits can be obtained. If you would like to analyse your situation during a meeting with one of our experienced advisers, either phone us on 07-34213456, or use the website contact us facility for prompt attention to arrange an appointment.
We acknowledge the resources of Securitor Financial Group Limited in drafting the majority of the detail in the above article: it has been extracted from the Support Information to advice documents. This post was originally published in January 2010: it has been updated and re-posted most recently in August 2019.
