Social Security (Deeming Threshold Rates) (DEEWR) Determination 2009 (No. 1)

Overview

The Social Security (Deeming Threshold Rates) (DEEWR) Determination 2009 (No. 1) was enacted to amend the rates used for deeming income from financial investments under the Social Security Act 1991. The problem it addresses is the need to periodically adjust the rates at which financial assets are deemed to earn income, to ensure they remain fair and reflective of current economic conditions. The determination was made by the Minister for Employment Participation, under the authority granted by section 1082 of the Social Security Act 1991, which allows for the setting of these rates. The policy objective is to provide a consistent and coordinated approach to calculating income from financial investments, thereby ensuring that the income test under the Social Security Act remains effective and equitable. The Department of Families, Housing, Community Services and Indigenous Affairs was consulted to ensure that the changes would be beneficial to customers, and public consultation was deemed unnecessary.

Scope and Application

The Social Security (Deeming Threshold Rates) (DEEWR) Determination 2009 (No. 1) applies to individuals who are subject to the deeming rules under the Social Security Act 1991, specifically concerning the calculation of income from financial investments. This legislation sets the rates at which income is deemed on financial assets, distinguishing between a below threshold rate and an above threshold rate for different categories of individuals. It applies nationally within Australia, under the Commonwealth jurisdiction, and is effective from 26 January 2009. The rates are set at 3 per cent for the first $41,000 of a single person’s financial assets and $68,200 for pensioner couples, with any balance over these amounts deemed to earn 4 per cent. The Determination revokes the previous rates set out in the 2008 Determination, ensuring a streamlined approach to income assessment for financial assets under the Social Security Act 1991.

Key Provisions

The Social Security (Deeming Threshold Rates) (DEEWR) Determination 2009 (No. 1) specifies the rates at which income is deemed to be earned on financial assets for the purposes of calculating social security benefits under the Social Security Act 1991. The determination sets the below threshold rate at 3% (section 5) and the above threshold rate at 4% (section 6). These rates apply to financial assets held by individuals, pensioner couples, and allowee couples. For single individuals, the first $41,000 of financial assets is deemed to earn the below threshold rate, while any amount over this threshold earns the above rate (section 1082 of the Social Security Act 1991). Similarly, for pensioner couples, the first $68,200 of financial assets earns the below threshold rate, and for allowee couples, the first $34,100 earns the below threshold rate. The parties governed by this determination, which includes individuals receiving social security benefits, are required to declare their financial assets as part of their income assessment for social security payments. The calculation of deemed income based on the specified rates is mandatory for these assessments. This requirement ensures that the financial assets of benefit recipients are appropriately considered when determining their eligibility and the amount of social security benefits they are entitled to receive. Failure to comply with the provisions of this determination, such as not accurately reporting financial assets or not applying the correct deemed income rates, could result in overpayments or underpayments of social security benefits. While the determination does not explicitly state specific offences or penalties, the Social Security Act 1991 does provide for various penalties for incorrect claims or misrepresentations, including financial penalties and, in severe cases, criminal charges. The Act allows for the recovery of any overpaid benefits, along with interest, and may also impose fines for fraudulent behaviour. These consequences underscore the importance of compliance with the deemed income rules.