Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 2)

Overview

The Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 2) was introduced to amend the deeming rates prescribed under the Social Security Act 1991. Enacted by the Minister for Families, Housing, Community Services and Indigenous Affairs, this determination addresses the need for a more accurate calculation of income from financial investments for the purposes of assessing eligibility for social security benefits. The legislation aims to ensure that the deeming rates used reflect current economic conditions and provide a fair assessment of financial assets held by individuals and couples. The decision to implement this determination was made without public consultation, as it was deemed beneficial to customers, and the Department of Education, Employment and Workplace Relations was consulted to ensure consistency in the approach to calculating income from financial investments.

Scope and Application

The Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 2) applies to individuals and couples who are subject to the deeming rules under the Social Security Act 1991. These rules are used to calculate the income derived from financial investments for the purposes of assessing eligibility for social security benefits. The Determination specifically addresses the rates at which these assets are deemed to earn income, distinguishing between amounts held below and above certain thresholds. The below threshold rate applies to the first $41,000 of a single person's financial assets, while the above threshold rate applies to any amount exceeding this sum. For pensioner and allowee couples, the thresholds are $68,200 and $34,100 respectively. This legislation is applicable nationally as it pertains to the Social Security Act 1991, which is a Commonwealth Act. The Determination came into effect on 20 March 2009, and it replaced the previous rates set out in the Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 1). There are no exclusions or exemptions specified in this Determination; however, it does not extend or restrict its application through subordinate instruments.

Key Provisions

The Social Security (Deeming Threshold Rates) (FaHCSIA) Determination 2009 (No. 2) (the Determination) establishes the rates at which income is deemed to be earned on financial investments for the purposes of calculating social security benefits under the Social Security Act 1991. Section 5 of the Determination sets the below threshold rate at 2 per cent and section 6 sets the above threshold rate at 3 per cent, effective from 20 March 2009. These rates are applied to the value of a customer's financial assets, with the first $41,000 for a single person deemed to earn the below threshold rate and any amount over this deemed to earn the above threshold rate. For pensioner couples and allowee couples, the first $68,200 and $34,100 respectively are subject to the below threshold rate. The Determination, which revokes the previous rates set out in the 2009 (No. 1) Determination, is designed to ensure a consistent approach to deeming income from financial investments under the income test. The Determination imposes specific obligations on the entities it governs, primarily through its interaction with the Social Security Act 1991. It mandates that financial assets of individuals and couples be assessed and deemed income calculated according to the rates specified in the Determination. The Act requires that these deemed rates be applied to determine eligibility for social security benefits. The Department of Education, Employment and Workplace Relations was consulted to ensure the Determination aligns with broader policy objectives and maintains consistency in the calculation of income from financial investments. Failure to comply with the provisions of the Determination may result in incorrect assessments of social security benefits, potentially leading to overpayments or underpayments. While the Determination itself does not specify particular offences or penalties, breaches of the Social Security Act 1991, which incorporates these rates, can lead to civil or criminal consequences. These may include financial penalties, recovery of overpaid benefits, and in severe cases, prosecution. The exact penalties for breaches of the Social Security Act 1991 can vary depending on the nature and extent of the breach, but they are designed to ensure compliance with the income test for social security benefits.