For those receiving income from Social Security or Veteran’s Affairs, a deeming rate assumes that financial investments are earning a certain rate of income, regardless of the amount you are actually earning. Should you earn more than the set rates, the extra income won’t be assessed.
So, what financial assets are assessed?
- Savings accounts and term deposits
- Managed investments, loans and debentures
- Listed shares and securities
- Account-based income streams from 1 January 2015, and
So, how is it calculated (from 1 July 2016)?
Single, receiving an income support payment – the first $49,200 of your financial investment is deemed to earn income at 1.75% p.a. and any amount over that is deemed to earn income at 3.25% p.a.
Member of a couple, where at least one of you receive a pension – the first $81,600 of you and your partner’s combined financial investments are deemed to earn income at 1.75% p.a. and any amount over that is deemed to earn income at 3.25% p.a.
Member of a couple and neither of you receive a pension – the first $40,800 for each of you and your share of jointly owned financial investments are deemed to earn income at 1.75% p.a. and any amount over that is deemed to earn income at 3.25% p.a.
If you earn investment return is higher than the deemed income calculated, the extra income will not count towards your assessable income for your income support payment.
So how do you get a return of 3.25% p.a. on your investments?
Paul recommends that you shop around. Firstly take a look at comparison sites like Canstar (http://www.canstar.com.au/) where you can check out savings accounts (including online accounts), and term deposits.
This allows you to compare all major products and consider your personal circumstances. Higher rates are being offered by other institutions that you may not usually consider. With the government deposits guarantee still in place for deposits up to $250,000 per person per institution, these institutions are not any riskier.
Talk to Paul if you have any questions about deeming.
Tags: deeming rate