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Deeming Rate Calculation - Service Pension Couple

Document
Last amended 
6 January 2015
Example of pensioner description/situation

John and Mary are both service pensioners with a combined total of $80,000 in financial investments. $35,000 is in a term deposit and they have $45,000 worth of managed investments.

Example of calculation of deemed income

The following table is an example showing the deemed income calculation.

Note: The threshold amount and the deeming interest rate used in this example were current at December 2014 and may have since changed.     

 

Step

Action

$

In this example the low deeming rate is 2.0% and the high rate is 3.5% and the threshold is $48,000.

1

Determine the value of the pensioner's total financial assets.

Financial investments

-Add managed investments

-Result: value of total financial assets

 

 

35,000

45,000

80,000

2

Is the value of total financial assets less than the threshold listed in Operation of Deeming?

-If yes, multiply the value by 2.0% to obtain the total deemed income.

-If no, go to step 3

 

3

Determine income from the below threshold amount.

-Threshold amount

-Multiply by 2.0%

-Result: income from the below threshold amount

 

48,000

 

   960

4

Determine the above threshold amount.

-Value of total financial assets

-Less threshold

-Result: above threshold amount

 

80,000

48,000

32,000

5

Determine income from the above threshold amount.

-Above threshold amount

-Multiply by 3.5%.

-Result: income from the above threshold amount

 

32,000

 

  1120

6

Determine the total deemed income.

-Income from below threshold amount

-Add income from above threshold amount

-Result: total deemed income

 

   960

  1120

2,080

     
How deemed income is used

In the example above, the total deemed income is added to any income John and Mary have from other sources to calculate how much they can be paid under the income test.    

 

 


 

 

A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.

According to section 5J of the VEA, a financial investment means:

     but does not include an investment in an FHSA (within the meaning of the First Home Saver Accounts Act 2008) or a designated NDIS amount.