Overview

The Social Security (Deeming Threshold Rates) (DEEWR) Determination 2013 (No. 1) was enacted to address discrepancies in the deeming rates used to calculate income from financial investments for social security and Veterans' Affairs pension and allowance purposes. The Act was introduced by the Minister for Employment and Workplace Relations, the Minister for Families, Community Services and Indigenous Affairs, and the Minister for Tertiary Education, Skills, Science and Research under section 1082 of the Social Security Act 1991. The policy objective was to revise the deeming rates from 3 per cent and 4.5 per cent for lower and upper rates respectively, to 2.5 per cent and 4 per cent. This change was intended to ensure a consistent approach in calculating income from financial investments under the income test. The Determination revokes the Social Security (Deeming Threshold Rates) (DEEWR) Determination 2010 (No. 1) and sets out the new rates, effective from 20 March 2013. The amendment is minor and technical, and as such, public consultation was not undertaken. The legislative instrument is not regulatory in nature and will not impact business activity or have significant compliance costs or competition impact. Additionally, the instrument is compatible with human rights, as it does not engage any applicable rights or freedoms.

Scope and Application

The Social Security (Deeming Threshold Rates) (DEEWR) Determination 2013 (No. 1) pertains to the application of deeming rates for the calculation of income from financial investments under the Social Security Act 1991. These rates are instrumental in assessing the eligibility and amount of social security benefits for individuals, including those receiving pensions and allowances. The Act applies to individuals who hold financial assets and are subject to the deeming rules, which include single persons, pensioner couples, and allowee couples, with specific thresholds for deeming rates. The Determination sets a below threshold rate of 2.5 per cent for the first $45,400 of a single person’s financial assets, and an above threshold rate of 4 per cent for any amount exceeding this threshold. This applies across the Commonwealth of Australia and affects individuals who are recipients of social security benefits and Veterans’ Affairs pensions and allowances. The rates are determined by the relevant Ministers under section 1082 of the Act and are applicable from 20 March 2013, replacing the previous rates of 3 per cent and 4.5 per cent. The Determination is a minor technical amendment, and no public consultation was undertaken due to its nature. The instrument does not require a Regulatory Impact Statement nor a Business Cost Calculator Figure, as it is not regulatory in nature and will have no, or minimal, compliance costs or competition impact.

Key Provisions

The Social Security (Deeming Threshold Rates) (DEEWR) Determination 2013 (No. 1) outlines the rates at which financial assets are deemed to earn income for the purposes of calculating social security benefits. Section 5 of the Determination sets the below threshold rate at 2.5 per cent, while Section 6 sets the above threshold rate at 4 per cent. These rates apply to the calculation of income from financial investments under the Social Security Act 1991. Under the Act, the total value of a customer's financial assets is calculated and income is then deemed on these assets using the specified rates. For single individuals, the first $45,400 of financial assets is deemed to earn the below threshold rate, and any amount over this is deemed to earn the above threshold rate. For pensioner couples, the first $75,600 is deemed to earn the below threshold rate, and for allowee couples, the first $37,800 is deemed to earn this rate. The Determination imposes specific obligations on the parties it governs. Primarily, it requires that financial assets be valued and income from these assets be calculated in accordance with the set rates. This calculation is essential for determining the eligibility and amount of social security benefits under the Act. The obligation to comply with these deeming rates is a fundamental requirement for those involved in the administration and receipt of social security benefits. Breaching the requirements set out in the Determination can result in penalties. While the Determination itself does not specify the exact nature of the penalties, the Social Security Act 1991 provides for various sanctions in cases of non-compliance. These can include fines, imprisonment, or other civil or criminal consequences, depending on the severity and intent of the breach. The Act stipulates that the maximum penalties for fraudulent conduct or serious breaches can be significant, reflecting the importance of accurate income assessments for social security payments. Overall, the Determination serves to adjust the deeming rates, thereby impacting the calculation of social security and Veterans’ Affairs pensions and allowances. Compliance with these rates is crucial for the accurate assessment of income and the appropriate distribution of benefits. The regulatory framework ensures that financial investments are fairly and consistently evaluated to support the social security system.