EXPLANATORY STATEMENT
Social Security (Deeming Threshold Rates) Determination (DEST) 2007
Summary
The Social Security Act 1991 prescribes rules for calculating income from financial investments. These rules are generally known as deeming rules. Under these rules the value of a customer's financial assets are added together and income is deemed on these assets using a “below threshold rate” and an “above threshold rate”. The first $38,400 of a single person’s financial assets ($63,800 for pensioner couples and $31,900 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 for Education, Science and Training determines the below threshold and above threshold rates in respect of the social security payments administered under the Education, Science and Training portfolio. Until 20 March 2007 the below threshold rate is 3% and the above threshold rate is 5%.
The Minister for Education, Science and Training, the Minister for Families, Community Services and Indigenous Affairs and the Minister for Employment and Workplace Relations have determined that the deeming rates would be increased from 20 March 2007. The ‘below threshold’ rate would be increased to 3.5% and the ‘above threshold’ rate would also be increased to 5.5%.
The attached determination sets out the below and above threshold rates at 3.5% and 5.5%, respectively, from 20 March 2007.
Explanation of Provisions
Section 1 of the instrument states the name of the instrument.
Section 2 states that the instrument commences on 20 March 2007.
Section 3 contains a definition of the term “Act”.
Section 4 revokes the Social Security (Threshold Rates) Determination 2004 (No. 1).
Section 5 sets out the below threshold rate of 3.5%.
Section 6 sets out the above threshold rate of 5.5%.
Consultation
The Department of Families, Community Services and Indigenous Affairs and the Department of Employment and Workplace Relations were 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.
This instrument is beneficial to customers because it increases the thresholds for calculating income. Public consultation was therefore seen as unnecessary.
Regulatory Impact Analysis and Business Cost Calculator
The Office of Best Practice Regulation has confirmed that a Regulatory Impact Statement and a Business Cost Calculator are not required as the proposal does not have a significant impact on business or individuals, nor on the economy. The proposal also does it restrict competition. The Office of Best Practice Regulation Regulatory Impact Statement identification number is 9031.