Deeming rate reductions
Financial assets include bank accounts, shares and managed funds. A financial asset is deemed to earn a set rate of return, regardless of how much interest a financial asset actually earns. Deeming rates are set by the Minister for Social Services.
On 22 March, the Prime Minister Scott Morrison announced a second cut to deeming rates. This will mean that the deeming rate will decrease from 1.0% to 0.25% for financial investments up to $51,800 for singles and $86,200 for couples. It will be cut from 3.0% to 2.25% for investments over these amounts.
For example, if you have a bank account with a balance of $5,000, it is currently deemed to earn 1.0% interest. It will soon be deemed to earn 0.25% interest, reducing your assessed income and potentially increasing your pension amount.
The deeming rates reduction takes effect from 1 May 2020. You don’t need to do anything. If you have deemed income, DVA will automatically apply the new deeming rates.