Centrelink Q&A: How do deeming rates work?

A YourLifeChoices reader would like some clarification on how deeming works on financial investments.

Q. Mary

Suppose I own shares with a deemed income of, say, $200 per annum. During the year I receive a $100 dividend from the shares. 

Under the income test of the Age Pension, would the $100 dividend be subsumed under the deemed amount, assessing my share-related income as $200?

Or, would the $100 dividend be added to the $200 deemed amount, assessing my income as $300?


A. As the question was so specific, we contacted Services Australia for help.

Services Australia general manager Hank Jongen says deeming is the set of rules Services Australia uses to work out the income from your financial assets, including listed shares and securities.

“Deeming assumes that you receive a set income on these investments, rather than using the actual dividends or interest earned by the individual financial assets,” Mr Jongen says.

“It means you don’t have to keep telling us when your income from these investments changes.

“So, using the example provided, if your actual dividend from shares is $100 for the year, but your deemed income from that financial asset has been assessed at $200 per annum, then $200 is the amount of deemed income that will be included in the income test to work out your rate of payment.

“If your investments earn more than the deemed rates, the extra amount doesn’t count as your income.

“We add this deemed income to your other income and apply the income test to work out your payment rate along with the assets test for your assets.

“This helps keep people’s payments, such as Age Pension, steady instead of going up and down based on the performance of your financial assets.”

Change in circumstances

You must inform Services Australia if there is a change in your financial assets of $2000 or more from what they have on record. This includes owning more shares from reinvesting the dividends.

Deeming rates are frozen until 30 June 2024. Currently, the first $60,400 for a single person and $100,200 for a pension couple is deemed at 0.25 per cent and anything over is deemed to earn 2.25 per cent.

“It’s important to remember everyone’s situation is different.” Mr Jongen says.

“Customers can speak to Services Australia about their financial questions at any time by calling the Financial Information Service (FIS) on 132 300 for free and impartial information.

“Just say ‘financial information service’ when asked why you called. The FIS officer will talk to you about your situation, and either give you information immediately or book an appointment for you if your matter is complex.”

Services Australia also has Aged Care Specialist Officers (ACSOs) who can help you in more detail with your aged care matters, including financial information about aged care services.

You can book a free face-to-face appointment with an ACSO by calling the Aged Care line on 1800 227 475 or by visiting a service centre.

Do you have to deal with deeming rates? Do you find it difficult to understand? Why not share your experience in the comments section below?

Also read: Deeming rate freeze is coming to an end. What steps should you be taking?

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