Deeming rate reductions
Clients who receive income support payments from DVA will soon benefit from changes to the way financial assets are assessed, thanks to changes to deeming rates.
Financial assets include bank accounts, shares and managed funds. A financial asset is deemed to earn a set rate of return, regardless of how much interest a financial asset actually earns. Deeming rates are set by the Minister for Social Services.
On 22 March, the Prime Minister Scott Morrison announced a second cut to deeming rates. This will mean that the deeming rate will decrease from 1.0% to 0.25% for financial investments up to $51,800 for singles and $86,200 for couples. It will be cut from 3.0% to 2.25% for investments over these amounts.
For example, if you have a bank account with a balance of $5,000, it is currently deemed to earn 1.0% interest. It will soon be deemed to earn 0.25% interest, reducing your assessed income and potentially increasing your pension amount.
The deeming rates reduction takes effect from 1 May 2020. You don’t need to do anything. If you have deemed income, DVA will automatically apply the new deeming rates.