EXPLANATORY STATEMENT
Social Security (Deeming Threshold Rates) (DEEWR) Determination 2010 (No. 1)
Summary
The Social Security Act 1991 prescribes rules for calculating income from financial investments. Because these rules deem a person to have received a certain rate of return on their financial investments, the rules are generally known as deeming rules. Under these rules the value of a person’s financial assets are added together and the person is deemed to receive income on these assets using a “below threshold rate” and an “above threshold rate”. The first $42,000 of a single person’s financial assets ($70,000 for pensioner couples and $35,000 for allowee couples) is deemed to earn the below threshold rate, and the balance over this amount is deemed to earn the above threshold rate.
Background
Under section 1082 of the Social Security Act 1991 the Minister can determine the below threshold and above threshold rates. Until the end of 19 March 2010, the below threshold rate is 2 per cent and the above threshold rate is 3 per cent.
The Social Security (Deeming Threshold Rates) (DEEWR) Determination 2010 (No. 1) (the Determination) sets out the below and above threshold rates at 3 per cent and 4.5 per cent, respectively, from 20 March 2010.
As responsibility for payments under the Social Security Act 1991 is shared between the Education, Employment and Workplace Relations portfolio and the Families, Housing, Community Services and Indigenous Affairs portfolio, the Minister for Families, Housing, Community Services and Indigenous Affairs will also make a determination under section 1082 of the Act to apply to payments for which she is responsible.
Explanation of Provisions
Section 1 of the determination states that the name of the determination is the Social Security (Deeming Threshold Rates) (DEEWR) Determination 2010 (No. 1).
Section 2 provides for the determination to commence on 20 March 2010.
Section 3 revokes the Social Security (Deeming Threshold Rates) (DEEWR) Determination 2009 (No. 2).
Section 4 contains a definition of the term “Act”.
Section 5 sets out the below threshold rate of 3 per cent.
Section 6 sets out the above threshold rate of 4.5 per cent.
Consultation
The Department of Families, Housing, Community Services and Indigenous Affairs was consulted during the preparation of this determination. This was done to ensure a co-ordinated and consistent approach for calculating income from financial investments under the income test in the Social Security Act 1991.
Public consultation was seen as unnecessary as the determination is beneficial to customers.
Regulatory Impact Analysis and Business Cost Calculator
This instrument does not require a Regulatory Impact Statement (RIS) nor a Business Cost Calculator Figure. This determination is not regulatory in nature and will not have a direct impact on business activity.