Payments affected by deeming provisions
The following payments are affected by deeming:
Financial assets to which deeming applies
Deeming applies to financial assets, which consist of:
Examples of financial investments affected by deeming
Financial investments to which deeming applies include:
- bank, building society and credit union cheque and savings accounts,
- cash,
- term deposits,
- cash management accounts,
- money voluntarily held in solicitors' trust accounts,
- managed investments,
- listed shares and securities,
- bonds, debentures, unsecured notes, bank bills,
- loans made to individuals, private companies and trusts,
- shares in unlisted public companies,
- gold and other bullion,
- investments in superannuation and roll-over funds held by pensioners who are pension age,
- asset-tested income streams (long term deemed),
- asset-tested income streams (short term), or
asset-tested lifetime income streams purchased on or after 1 July 2019 with
non‑superannuation money, prior to assessment day.
Note that the ex-gratia compensation payment to prisoners of war of the Japanese and Koreans is deemed if invested as above. This applies to both Australian payments and Commonwealth and Allied countries payments.
Assets excluded from deeming
Deeming provisions do not apply to the following assets: More →
- a person's principal home,
- an entry contribution to a retirement village,
- other real estate investments, such as:
- vacant land,
- holiday homes, and
- farms,
- personal effects and household contents
- vehicles, boats, and caravans,
- collectibles, such as antiques, stamp or coin collections,
- conventional life insurance policies,
- shares in private companies,
- investments in superannuation held by pensioners who are under pension age, and
- income streams other than asset-tested income streams (short-term or long-term deemed).
Deeming income on exempt assets
Sometimes an asset may be considered exempt for a specified period and income may or may not be generated by this asset, such as when a pensioner sells their home, intending to buy or build another. More →
Sale of the Principal Home and Deemed Income from Sale of Principal Home
9.5.4/Deemed Income from Savings Investments
For income test purposes the proceeds, whether deposited into an account or kept as cash in hand, are included in the total value of cash on hand and accounts, and assessed under the deeming provisions.
Treatment of income from financial investments for deeming purposes
If a financial investment is exempted from deeming by the Minister, any return generated by that investment is assessable, even if the return is greater than the current applicable deeming rates. A return can be in the form of valuable consideration by way of indirect benefits, or actual income received. If the investment is not declared as exempt from deeming, the return generated by the investment is disregarded and deeming rules are applicable. More →
Treatment of investment costs for deeming purposes
Deeming applies to the gross current value of a financial investment and excludes any amount that is charged in order to make the investment.
Example of treatment of investment costs
If a pensioner advised that they have purchased an investment for $10,500, of which $300.00 was an entry fee payment, the value of the investment is $10,200 ($10,500 minus $300) and this is the amount to which the deeming rules apply.
Treatment of encumbrances on income and assets for deeming purposes
For income test purposes, the deemed rates of interest will be applied to the current gross market value of financial assets (i.e. the value of a financial asset should not be reduced by exit fees, charges or encumbrances).
For assets test purposes, the value of a pensioner's asset is reduced by the value of a charge or encumbrance over that asset, such as a mortgage secured against an investment property. This means that the assets test value is the pensioner's equity in the asset.