Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2008

Overview

The Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2008, enacted on 20 March 2008 by the Minister for Families, Housing, Community Services and Indigenous Affairs, addresses the need to adjust the deeming rates under the Social Security Act 1991. These deeming rates are applied to calculate income from financial investments, impacting the eligibility and amount of social security benefits. The determination was made to increase the below threshold rate from 3.5 per cent to 4 per cent and the above threshold rate from 5.5 per cent to 6 per cent, effective from 20 March 2008. This change aims to reflect changes in investment returns and ensure that the deeming rates remain aligned with market conditions. The determination revokes the previous Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2007 and was developed in consultation with the Department of Education, Employment and Workplace Relations to maintain a consistent approach to income calculation.

Scope and Application

The Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2008 applies to individuals and couples who are recipients of social security benefits, specifically under the deeming rules outlined in the Social Security Act 1991. These rules determine the income attributed to an individual's financial assets for the purposes of assessing their eligibility for social security payments. The Act applies to the financial assets of individuals, with different thresholds for single persons, pensioner couples, and allowee couples. The Act's jurisdiction is Commonwealth-wide, as it is a legislative instrument under the Social Security Act 1991, which is a Commonwealth Act. The Act's application is extended through subordinate instruments which set the deeming rates, and these rates are subject to annual indexation. There are no stated exclusions or exemptions in this particular determination, although the deeming rules themselves may exclude certain types of assets or income from being assessed. The Act does not require a Regulatory Impact Statement or a Business Cost Calculator as it is not considered to have a direct impact on business activities.

Key Provisions

The Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2008, which was established under section 1082 of the Social Security Act 1991, primarily provides the rates at which financial assets are deemed to earn income for the purposes of calculating social security payments. This is done using what are known as deeming rules. Specifically, section 5 of the Determination sets out the below threshold rate at 4 per cent, while section 6 sets out the above threshold rate at 6 per cent (sections 5 and 6). These rates apply to the value of a customer's financial assets, where the first $39,400 of a single person's financial assets (or $65,400 for pensioner couples and $32,700 for allowee couples) is deemed to earn the below threshold rate, and any balance over these amounts is deemed to earn the above threshold rate. These thresholds are indexed annually on 1 July. The Act imposes specific obligations on the parties it governs, primarily the Minister for Families, Housing, Community Services and Indigenous Affairs, who is responsible for determining the below and above threshold rates as per section 1082 of the Social Security Act 1991. The Determination sets out these rates from 20 March 2008, superseding the previous rates that were in effect until that date (section 4). The Determination also revokes the Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2007 to ensure that the most current rates are applied. Additionally, the Act mandates that any changes to these rates must be communicated effectively to ensure proper calculation and application in determining social security payments. There are no specific offences, penalties, or civil/criminal consequences outlined in the Determination for breaching its provisions. However, it is important to note that the accuracy of financial asset reporting and compliance with deeming rules are crucial for recipients of social security payments. Any failure to correctly report or underreport financial assets could result in overpayments or underpayments of benefits, which may lead to recoupment actions by Centrelink or other penalties under the Social Security Act 1991. The penalties for such actions are not specified in this Determination but would be governed by the broader provisions of the Social Security Act 1991.