Deeming provisions 108-05050000

Deeming is used to determine the assessable income a customer receives from their financial assets which are subject to deeming.

Rather than use the actual dividends or interest earned by individual assets:

• all of the customer's financial investments, and the value of any gifts above the allowed limit (deprived assets), are added together
• the deeming percentage rate(s) are then applied to the total value, however a threshold amount exists:
• the portion of the total value of all assets below the threshold amount is multiplied by the lower deeming percentage, and
• the portion of the total value above the deeming threshold is multiplied by the higher deeming percentage
• the result is called the deemed income

The deemed income is added to the customer's assessable income from all other sources for income test purposes. Deemed income from financial assets is not employment income. Working Credit or Work Bonus cannot be used to offset deemed income.

The deeming thresholds are indexed by the Consumer Price Index (CPI) each July.

For more information, the Resources page includes:

• a list of financial assets
• a table of the current deeming rates and thresholds, and
• examples of calculating assessable income

For the Commonwealth Seniors Health Card (CSHC), deeming is only applied to account based income streams. The deeming thresholds for couples are the same as a pensioner couple.

Deeming only applies to 2 types of income streams. They are:

• Product Category 3 (Assets Tested (Short Term)), and
• Product Category 9 (Asset Tested (Long Term))

Income from other Income Streams is assessed in a different way.

A mortgage saver or loan offset account is a savings account linked to a mortgage. It is not a loan or liability against an asset.

Under the deeming provisions, the balance of an offset account is a financial investment and is included in the deemed income calculation.

Superannuation investments held by customers under Age Pension age are not subject to the income or assets tests. They are therefore not included in deeming.

NDIS funds received from the National Disability Insurance Agency (NDIA) which are deposited into an account specifically for the purpose of managing the customer's NDIS plan are exempt from the income and assets test.

Funds held in a NDIS account, including any interest earned, are not included in deeming.

NDIS funds:

• can be received periodically or as a lump sum. This has no impact on the assessment
• are not required to be reported, and if reported should not be taken into account in the income and assets test assessment

An exemption from deeming can be granted where special circumstances exist. Exemptions are not granted because of poor investment performance, such as shares producing negative returns, or because a low return loan was made in order to help another person.

If an investment is granted a deeming exemption:

• its value is not included in the calculation of the customer's deemed income
• the actual income a customer receives from a financial investment is used in assessing their income

The Deeming Exemption Register:

• has information about the income and asset tests treatment of investments with companies and financial institutions which are in financial difficulty
• assists with the assessment of the person's income and financial assets

When applying the Non-farm Assets Test for Farm Household Allowance (FHA):

• A loan made by a person to a trust or private company may be treated as a farm asset rather than a financial asset of the customer in certain circumstances
• If it is treated as a farm asset, it is exempt from deeming rules