DEEMING RATE CHANGES FOR CENTRELINK PAYMENT RECIPIENTS
By Rebecca Lowe
Back in July, the Minister for Families and Social Services, Anne Ruston, announced deeming rates would be cut in an effort to increase means tested benefit payments. The change to deeming rates followed much discussion and pressure from retirees who argued the current deeming rates were inappropriate, given the current low interest rate environment in Australia. Prior to the announced change, deeming rates had not been adjusted since March 2015, despite five interest rate reductions during the same period.
Under current Income Test rules, a single is allowed to earn up to $174 per fortnight before seeing a reduction in their benefit payment, and couples are allowed to earn $308 per fortnight (combined). Income from financial investments such as bank accounts and term deposits are subject to deeming rules.
Both the lower and upper deeming rates will be reduced from September 20, as shown in the table below:
|Deeming Rate (current)||Deeming Rate (from Sept)|
|Single||Lower Threshold (less than $51,800)||1.75%||1.00%|
|Upper Threshold (above $51,800)||3.25%||3.00%|
|Couple||Lower Threshold (less than $86,200)||1.75%||1.00%|
|Upper Threshold (above $86,200)||3.25%||3.00%|
The government estimates that the reduction in deeming rates will result in an increased payment of up to $40.50 per fortnight for couples, and up to $31 a fortnight for singles, where eligibility for a payment is determined by the Income Test.
They also estimate that changes to the deeming rates are estimated to benefit around 630,000 Age Pension recipients, and around 350,000 people receiving other means tested payments such as the Disability Support Pension and Carer Payments, and income support allowances and supplements such as the Parenting Payment and Newstart.
Eligible recipients will not need to do anything to benefit from the change, and will begin to receive the increased payments at the end of the month, backdated to July 1.
If you have any questions about how the change may impact your payment, please get in touch with your adviser.
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