August 16, 2019
Eligibility to income support payments and government concession cards are affected when the income you receive is above the allowable income limit. Some assets, called ‘financial investments’, are deemed to earn income regardless of the income they are actually earning.
On 14 July 2019, the Government issued a media release about changes to deeming rates. The lower deeming rate will decrease from 1.75 per cent to 1 per cent for financial investments up to $51,800 for single individuals and $86,200 for pensioner couples. The upper deeming rate will reduce from 3.25 per cent to 3 per cent for balances over these amounts. This is summarised in the table below.
Deeming Rates and Thresholds
|Family Situation||Threshold||Old Rate||New Rate|
|Single Pensioner/ Allowee||Up to $51,800||1.75%||1.00%|
|Pensioner Couple (combined)||Up to $86,200||1.75%||1.00%|
The reduced rates are effective from 1 July 2019. However, any extra income will not be received until after the regular indexation of pensions and allowances from 20 September 2019. Eligible pensioners and allowees will therefore also receive a lump sum payment at that time as a ‘catch up’ on payment increases from 1 July 2019.
Changes to deeming rates may benefit the following people:
(1) Recipients of various income support payments, including the Age Pension, Disability Support Pension, Carer Payment, Newstart Allowance and Parenting Payment.
(2) These changes may allow certain individuals, who did not qualify for government concession cards in the past because of excessive income, to access the card. This may include the Low Income Health Care Card or the Commonwealth Seniors Health Card.
(3) The changes will also provide some relief to aged care residents as the Means Tested Fee will slightly reduce for those residents.
This is a positive change, as the last time the deeming rates were revised downwards was in March 2015. Considering that interest rates have recently reduced by 0.5% since June 2019, the reduced deeming rates reflect the reduced income social security recipients may earn on their financial investments.