EXPLANATORY STATEMENT
Social Security (Deeming Threshold Rates) Determination (DEWR) 2007
Summary
The Social Security Act 1991 prescribes rules for calculating income from financial investments called deeming. Under these rules the value of a recipient’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 Employment and Workplace Relations determines these rates in respect of the social security payments administered under the Employment and Workplace Relations portfolio. Before 20 March 2007, the below threshold rate was 3 per cent and the above threshold rate was 5 per cent.
The Minister for Employment and Workplace Relations, the Minister for Families, Community Services and Indigenous Affairs and the Minister for Education, Science and Training have determined that the deeming rates would be increased from 20 March 2007. The ‘below threshold’ rate would be increased to 3.5 per cent and the ‘above threshold’ rate would also be increased to 5.5 per cent.
The attached determination sets out the below and above threshold rates at 3.5 per cent and 5.5 per cent 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 Education, Science and Training 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.
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 not restrict competition. The Office of Best Practice Regulation Regulatory Impact Statement identification number is 9031.