EXPLANATORY STATEMENT
Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 2)
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 $41,000 of a single person’s financial assets ($68,200 for pensioner couples and $34,100 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 below threshold and above threshold rates are determined, by legislative instrument, by the Minister. Until the end of 19 March 2009, the below threshold rate is 3 per cent and the above threshold rate is 4 per cent.
The attached Determination sets out the below and above threshold rates, at 2 per cent and 3 per cent, respectively, from 20 March 2009.
Explanation of Provisions
Section 1 of the Determination specifies that the name of the Determination is the Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 2).
Section 2 provides that the Determination commences on 20 March 2009.
Section 3 provides that ‘Act’ means the Social Security Act 1991.
Section 4 revokes the Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 1).
Section 5 sets out the below threshold rate of 2 per cent.
Section 6 sets out the above threshold rate of 3 per cent.
Consultation
The Department of Education, Employment and Workplace Relations was consulted during the preparation of the Determination. This was done to ensure a co-ordinated and consistent approach for calculating income from financial investments under the income test.
Public consultation was seen as unnecessary as the Determination is beneficial to customers.
Regulatory Impact Analysis
The Determination does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator Figure. The Determination is not regulatory in nature and will not have any direct impact on business activity.