Time for the Government to step up on deeming rates: Labor

Retirees are suffering from cash rate cuts, prompting calls for cuts to deeming rates.

Time for the Government to step up on deeming rates: Labor

It’s no secret that retirees are suffering from the repeated interest rate cuts, and many face the prospect of negative returns on term deposits when taking into account earnings versus the rate of inflation.

After last week’s Reserve Bank of Australia (RBA) interest rate cut to a record low one per cent, and with interest rates on term deposits at their lowest levels since the 1950s, the Government is again facing accusations of “balancing the budget on the backs of pensioners”.

“The Government understands that reductions in the official cash rate impacts on older Australians on fixed incomes,” Social Services Minister Anne Ruston told The Australian.

The current deeming rate for singles is 3.25 per cent for assets over $51,200 and 1.75 per cent for those under that level. These rates have not changed since 2015, even though the Reserve Bank has cut official rates by 1.25 per cent over that time.

Deeming rates work on the assumption that pensioners earn a specified return on their investments, but when the deemed rate is higher than this actual rate of returns – which it currently is –pensioners lose out.

Canstar data shows that 22 per cent of 12-month term deposits currently offer a rate under two per cent. After the RBA’s rate cut last month, the average term deposit rate was also cut by 0.27 per cent – more than the central bank’s 25-percentage point reduction. The inflation rate is currently 1.8 per cent and forecast to rise to two per cent next year, so more retirees with money in the bank will have negative returns.

Little wonder then that Labor and seniors groups are demanding an urgent reduction in the deeming rate to help those who have been punished by interest rate cuts.

“Up to 627,000 age pensioners, who are on a part-pension because of the income test, are impacted by the government’s refusal to reduce deeming rates,” said Opposition social services spokeswoman Linda Burney.

“How does Scott Morrison expect pensioners to find term deposits or other secure investments that pay anything like 3.25 per cent?”

Labor analysis reveals that if the Government cut deeming rates by that same 1.25 per cent, a single homeowner on a part pension would be up to $63 better off per fortnight or up to $1628 better off a year, with single non-homeowners potentially being able to gain up to $3125 a year. Couple homeowners could also have an extra $1850 and couple non-homeowners could be up to $3875 better off.

These amounts, which could be going to more than 600,000 retirees, instead line the Government’s coffers.

There have been reports that the Coalition will announce deeming rates reductions as early as this week, with Federal Treasurer Josh Frydenberg telling The Sydney Morning Herald to “watch this space” while cautioning that any deeming rate cut might not match the RBA cash rate cuts.

Should any deeming rate cut match the cash rate cut? Are you suffering as a result of the RBA cuts?

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    COMMENTS

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    McDaddy
    8th Jul 2019
    9:47am
    I think I read somewhere that the majority of Pensioners are asset tested, so changes to deeming won't matter at all for them.
    Karl Marx
    8th Jul 2019
    11:43am
    You are right McDaddy, most pensioners are accessed under the assets test. Only a small percentage of pensioners would be accessed under the income testing that incorporates the deeming testing.
    The pensioner that has few assets but some savings in the bank are the ones that are affected by Deeming
    older&wiser
    8th Jul 2019
    11:46am
    Deeming DOES come into affect with any assets that incur interest.
    McDaddy
    8th Jul 2019
    11:48am
    You are right O & W but even so a single Pensioner with no other source of Income can have $174k in savings and still get full Pension, $286k for couples. These figures will increase if deeming rates lowered.
    Sundays
    8th Jul 2019
    1:30pm
    This is a critical issue for 25% of pensioners who are income tested.
    McDaddy
    8th Jul 2019
    4:02pm
    Depends Sundays, not all of the 25% will have their funds in savings accounts or term deposits, so even a smaller % impacted.
    GeorgeM
    9th Jul 2019
    8:53pm
    Your comments are right, McDaddy. Also, they are confident the disgustingly altered Assets test will stop too many part-pensioners from availing of the benefits from lowering the Deeming rates. Both Liberals and Labor (Keating having put both Deeming and Assets tests in place) love these tests and work as a Tag Team against Retirees.
    Mrt
    8th Jul 2019
    10:08am
    Think you are right McDaddy deeming rate reduction doesn't help me as my part pension is calculated on assets (mainly super in my case)
    Anonymous
    8th Jul 2019
    10:16am
    Always thought that super was part of the deeming regime. Money in super and money on term deposits I thought of one and the same. Anyone can set me right?
    Anonymous
    8th Jul 2019
    10:22am
    I suspect it depends how much super you have. If over the asset limit, it's effectively 'deemed' at 7.8%+, but if it's under the limit I think it then depends on the income it generates and also when the super pension began - because I believe some older superannuation pensions are exempt from some forms of testing. It's all way too complicated! Even Centrelink advisers get confused.
    Karl Marx
    8th Jul 2019
    11:48am
    the OAP is calculated using both Asset & income testing & super is used under the asset calculations & also what income it is forecasted to generate under the Deeming rates.
    Centrelink will pay you the lesser of the 2 calculations.

    8th Jul 2019
    10:19am
    If you are asset tested, you might find your savings effectively deemed at a massive 7.8%, or even much more depending on pensioner concession eligibility. The deeming rates on savings are not at all harsh by comparison, though they most likely create more hardship given that they impact those with low asset balances.
    DanielTech
    8th Jul 2019
    11:11am
    The small amount that we have in savings investment doesn't even yield us $1000 a year now with the very low interest that we receive. The thing is, when we were paying off our home mortgage, we were paying something like 17 or 18 percent interest, so there was no such thing as savings for us. At least we do fully own our home now, so no mortgage to repay, at least helps a bit.
    DanielTech
    8th Jul 2019
    11:04am
    Given that my wife and I are already on the full OAP, even with the higher deeming rate, any reduction in the rate won't change a thing for us. We've really noticed how we've had to be careful about paying for the cost of living over the past 3+ years, with the tiny increases to the pension. We really need an increase, as almost everything that we have to buy has gone up much more than the pension.
    two cents worth
    8th Jul 2019
    11:05am
    Deeming rates will help those on a Government Aged Pension or part pension but it does nothing for self funded retirees.
    We have to draw down 4% up to age 65, 5% at age 65 etc.
    When investment returns are so low it means that we are going backwards at an even faster rate.
    Surely the minimum draw down rates have to be looked at if Govt. wants us to continue to self-fund.
    If not, then please bring on the 'universal' pensions that many have advocated for.
    Cheers
    Anonymous
    8th Jul 2019
    11:16am
    That doesn't affect us, two cents worth, but I agree with you that if the rate of return drops below the draw down rate then the lower rate should apply. That's running a parallel argument with the ridiculous deeming rate.
    Anonymous
    8th Jul 2019
    11:19am
    Well, if you are self funded you would have the finance to fund your retirement. When you have spent enough you will become eligible for a part age pension once you reach the appropriate age. Remember you cannot take it with you and to save every shilling for the next generation should not be your priority. To be self funded to the extent of the age pension amount you will have to possess quite a fortune.
    martel49
    8th Jul 2019
    11:25am
    I agree totally with you, bring on universal pensions as most self funded retirees have
    been paying taxes all of their working lives and are still paying in retirement.
    Old Geezer
    8th Jul 2019
    12:57pm
    Self funded retirees will be able to get the health care card with a lot more assets under a lower deeming rate.
    GeorgeM
    9th Jul 2019
    5:00pm
    Yes, two cents worth, with the Age Pension system broken on many fronts, and an inept and massively expensive Centrelink breathing down old pensioners necks adding to health costs, the only viable solution now is to scrap the system altogether and implement Universal Age Pension with NO tests for all on reaching Age 65 years and say 15 years Residency.

    This reform of Age Pensions should have been of far greater priority and urgency than the 3rd stage tax cuts which will hand out $11,640 tax cuts to all on $200K+ income.

    Labor has a massive opportunity to step in and offer this, if only they can see beyond their personal greed as all Federal MPs will get the $11,640 tax cuts.

    8th Jul 2019
    11:23am
    When Keating first brought in the deeming rate, the interest rates were very high with some home loans being charged 18% and investment rates also paying quite high rates. The deeming rates back then were negligible but there was no allowance in the legislation for automatic adjustments.

    Today we see interest rates that were never expected to be levied and deeming rates have become a problem. The time has come for the deeming rates to be on a parity with the rates announced by the RBA. We live in the computer age where adjustments can be made very simply in a matter of minutes so all it takes is a government to make a decision that is long overdue.
    Sen.Cit.90
    8th Jul 2019
    11:58am
    Hi Old Man, The point you make re interest rates at the time is correct. I still condemn ALP Keating for bringing it in. He also brought in other rules causing pensioners to seek the advice of Financial Advisers. I've forgotten they were but I did seek advice which within a very short time cost me about 90% of my life's savings.
    GeorgeM
    9th Jul 2019
    4:47pm
    OM, I agree "We live in the computer age where adjustments can be made very simply in a matter of minutes so all it takes is a government to make a decision that is long overdue." All they have to do is link it to the RBA rates, and preferably, insist on the Banks (esp. the big ones who get Govt guarantee support) to offer such interest rates to seniors accounts. Can't be simpler!
    However, I did hear the new Minister claim that it was a complex decision!

    Yes, Sen Cit.90, Keating certainly did a lot of damage by bringing in both Deeming and the Assets Test, besides doing many other things such as the biggest Recession all of us have seen which destroyed wealth in the stock market, sent up property prices, etc. etc, - too many things only an uneducated fool, as he was, could deliver!
    Karl Marx
    8th Jul 2019
    11:40am
    Most of those on a pension will not benefit anyway as most will be accessed under the assets testing as this will pay the less amount
    Deeming rates should be done away with entirely, same as asset testing & ALL income from investments, interest, super etc taxed the same as all other income earners.
    Also do away with franking credits & negative gearing which are basically rorts set up by the current & previous governments to benefit their rich mates & themselves.
    Anonymous
    8th Jul 2019
    11:57am
    The facts that emerged after Labor lost the unlosable election surrounding franking credits and negative gearing was that it would have affected those on average incomes and self funded retirees a lot more than the "top end of town". Shorten and Bowen kept referring to the investor buying their 6th and 7th house when the truth was that the great majority of those using negative gearing owned 1 investment property.
    Old Geezer
    8th Jul 2019
    12:52pm
    If franking credits are a rort then so are any tax refunds that people get from the ATO.

    Franking credits are withholding tax the same as PAYE and PAYG and the financial withholding tax if you don't supply a tax file number.
    Old Geezer
    8th Jul 2019
    12:52pm
    If you own 7 houses you can't afford to negative gear.
    Sundays
    8th Jul 2019
    1:55pm
    OWS, how many times have you banged on about Franking Credits and how they are a boon for SFR. Now, they are a ‘rort’? Your views seem to change as often as your name does
    Karl Marx
    8th Jul 2019
    2:28pm
    Sundays I have seen the light.
    Old Geezer
    8th Jul 2019
    3:15pm
    Well you need new glasses OWS as you are seeing it completely wrong now.
    Karl Marx
    8th Jul 2019
    3:53pm
    Sundays & OG don't know what you are on about.
    Old Geezer
    8th Jul 2019
    5:16pm
    Well all I'll say is that my franking credits alone make me more on my investmments than the deeming rates.
    Karl Marx
    8th Jul 2019
    5:28pm
    as does my Industry Super Fund with low fees OG
    Old Geezer
    8th Jul 2019
    6:10pm
    Fees way too high in an Industry Suoer fund for me. Smaller quote I could find on fees was over $20,000 which has one too many zeros f oir me.
    Sundays
    8th Jul 2019
    6:47pm
    Ask Anonymous or Whinging Grandma or OGR they will be able to help you
    TREBOR
    8th Jul 2019
    11:29pm
    OG - your franking credits shouldn't be making you money - they should be part of your gross income and thus liable to tax ... if not - you are very poor indeed.. poorer than a pensioner...

    Thank you for pointing out why franked credits should be outlawed - too much cash disappearing down rabbit holes..
    TREBOR
    8th Jul 2019
    11:30pm
    Oh, I dunno, OG - the amount you take out of your gross income as fees and costs must be astronomical... a lot more than a super fund.....

    Any loopholes needing to be closed that you can think of?
    Old Geezer
    9th Jul 2019
    3:20pm
    Fees on my super are current 0.14% pa. Find me fund with lower fees and I'll check it out.
    Old Geezer
    9th Jul 2019
    3:20pm
    Fees on my super are current 0.14% pa. Find me fund with lower fees and I'll check it out.
    GeorgeM
    9th Jul 2019
    4:51pm
    All good comments (main comment), OAW, before OG stepped in to divert the discussion as per his usual self-centred rubbish comments.
    Old Geezer
    10th Jul 2019
    10:14am
    Another one that has no understanding of franking credits. No wonder so many people are on welfare today.
    GeorgeM
    10th Jul 2019
    1:01pm
    Another stupid reply from a self-interested person. Franking credits should only be allowed to decide whether there is any MORE tax to pay or not (depending on the person's marginal tax rate), and MUST NOT return any of the Business taxes companies have to pay. Your attempts to confuse Business and Personal Taxes is pathetic. I smell a change is coming and great if it fixes rorters such as you!
    Your 2nd comment is also uninformed, presumptuous and pathetic as you have no idea of my situation or the facts to substantiate what you are saying - good reason why I have to conclude we are dealing with a fool with too much wealth obtained by rorting the system and luck but definitely not matched by brains.
    Old Geezer
    11th Jul 2019
    11:12am
    GeorgeM so you agree that interest should be taxed at 30% and if you don't get levied enough tax you don't get a refund.

    Also I have in no way rorted the system but yes I have used the law to make money which does take a few brains. Yes I am fully self funded in retirement and yes I still earn more than I spend.

    If the laws change I just change my investment to adjust.

    Yes if the law changes so people get taxed more then people like me then people will just not make the money in the first place. Why make money with little or no benefit to yourself?
    Karl Marx
    8th Jul 2019
    11:52am
    Would be interesting to see how many pensioners are finally accessed, income testing or asset testing.
    My personal thought is the asset testing would be calculation used by centrelink especially after 1st Jan 2017 when when the pension was affected from $1.50 / $1,000 to $3.00
    Sundays
    8th Jul 2019
    2:03pm
    25% of pensioners including those with minimal assets and all defined benefit pensioners are income tested
    older&wiser
    8th Jul 2019
    11:55am
    I have found a REAL simple easy way to boost pension - think outside the box! I don't have much super, and own my own home. I love garage sales, and rarely have I not had a win. I have JUST sold a chair that I bought for $40 - all it needed was a little bit of clean, and sold it for $390. Sold some paintings for $165 - bought for $5. I clean an art gallery once a month for $60. People might poo-poo that as saying that isn't much - but that is $720 for the year, and it pays for my car rego, and half the insurance. I occasionally mind post op dogs for $30-$40 a day. Do the occasional emergency over-night house sit for $50. Every little bit helps and I am free to spend my time as I want.
    Karl Marx
    8th Jul 2019
    12:06pm
    I hope you are declaring all of this extra income to centrelink & the ATO.
    Anonymous
    8th Jul 2019
    12:24pm
    I thought that your post was a breath of fresh air in2sunset, a nice positive comment. Didn't take long for the knockers to spoil the moment.
    TREBOR
    8th Jul 2019
    2:41pm
    Hobbies aren't paid for... the art gallery (do I know you?) is merely compensating you for petrol and materials....
    sunnyOz
    10th Jul 2019
    10:50pm
    Gee OlderandWiser - for someone who acts like a smart-ass, you sure are dumb! Learn about what the difference is between a 'hobby' and a 'business'. I have been doing similar to in2sunset, and have a damn good accountant who advises me. You only need to declare money if you are a business. I also do some 'bartering' which helps. Recently helped out a neighbor with her computer, and her son did some much needed electrical work. This is a summary of what she has advised to me -

    There is no single rule to determine when your hobby turns into a business, however the ATO will consider whether:

    • you have registered a business name
    • you have an Australian Business Number
    • your main purpose is to make a profit
    • you continually undertake the activity and make repeated sales, for example an occasional market stall to sell your old clothes at a cheaper price than you bought them is more likely to be a hobby compared with selling a type of clothing that you have available in different sizes, colors or styles
    • you expect to increase the activity so it becomes a fulltime commitment
    • you have a separate bank account
    • your online presence looks like a shop, i.e. you have a brand name, you paid fees to set up online, you have a business plan, you have systems and processes in place.
    If you have answered yes to most of these above, then yes, it is more likely you are classed as a business.

    If you’re selling the odd item on eBay, then you’re fine. However, Centrelink does need to know if you’re earning a substantial income from such practices – a sum of $20,000 per annum is what has been advised.
    Good on you in2sunset! Like you, I enjoy keeping busy, the mind and hands active, interacting with people. Some weeks I might not go to a garage sale, other times there might be nothing worth while. I too occasionally mind neighbors sick kid, or dog. Just ignore the stupid comment from knockers - perhaps jealous?
    Pines
    8th Jul 2019
    12:01pm
    I totally agree with Daniel Tech. The meagre increases to the Aged Pension no where near compensates for the massive increases in Service charges alone especially when you're home owners living on Couple Aged Pension. Our land and water Rates have been constantly increasing by large amounts over quite a long time now, yet we have to do more for ourselves. For instance our local Council cut out the free Cleanup we used to get several years ago while at the same time charging to take anything to the Tip. We try to keep up our Private Health fund payments but it is also constantly increasing with the Government's agreement. We follow all the laws etc and it just seems like we are barely keeping our finances above water. Yet we still never get a mention in all the Governent policies. They have given themselves another Increase and we now read in the news that they also get up to $46000 a year as an expense account and if they don't use it they get to keep the remainder, then we hear poor Barnaby Joyce telling us "But we have to pay tax on it" well Big Deal, some of us would just like to get that amount alone. I hope he and Joel Fitzgibbon don't think they are going to get any sympathy for that because they will be sadly mistaken.
    TREBOR
    8th Jul 2019
    2:43pm
    Might be our local Council - been after them to do a clean-up day at the local Aboriginal part of town... let 'em know someone cares and that they are worth some effort by Council apart from waving a flag around and talking the usual BS ....
    Tricky
    8th Jul 2019
    12:49pm
    #Plots and Prayers# - We don't get the government we deserve, BIG DONORS get the government they WANT!
    Tricky
    8th Jul 2019
    12:51pm
    Lets see how the government Plots and Prays there way out of reducing the Deeming Rate so as to help the over TAXED Pensioners.
    TREBOR
    8th Jul 2019
    2:46pm
    Put it to committee - jeez - even St. Tanya Of the Rive Gauche wants to put a rise in Unemployment Benefits to a committee... (read pay a few mates extra for sitting on it while the peons starve genteelly - if you MUST starve, you peasants, kindly do so with a little decorum while we deliberate on your potential future ... if you have one... (bloody parasites).....
    Old Geezer
    8th Jul 2019
    12:55pm
    The deeming rate is also used for other forms of welfare and health care cards. This is also a cost that the government will be considering.
    TREBOR
    8th Jul 2019
    2:47pm
    Pensions aren't welfare.... Social Security (note the capitals).... no are Unemployment Benefits...
    TREBOR
    8th Jul 2019
    2:49pm
    .. that leaves the field open for a discussion of what actually constitues welfare in Oz these days..

    I'll start with affirmative action, PPL, and childcare benefits.. then we can look at industry subsidies..... run the gimlet eye over CGT concessions and such.. NG... dividend imputation.....

    Plenty of meat there - and also plenty in the till to fund them it seems - but not to pay the bills falling due....

    No wonder people say that pensioners and the unemployed are just moving targets for a parasitical government apparatus....
    Old Geezer
    8th Jul 2019
    3:14pm
    Pensions are welfare as they are only given to those who have no other means of support.

    CGT concessions are required as those gains are gained over many year but only taxed in the year they are actually made.

    Franking credits are just another withholding tax such as PAYE, PAYG and the financial withholding tax.

    Childcare benefits are a disgrace as if people want children they should look after them themselves instead of farming them out.
    Karl Marx
    8th Jul 2019
    4:03pm
    OG the pension IS NOT WELFARE. Only old scroogers like you have that opinion.
    FC's, how can you get a refund from the ATO when YOU HAVEN'T PAID ANY TAX TO START WITH. About time this RORT was changed back to the way it should be.
    If people want to have children then IT'S NON OF YOUR BUSINESS so any comments from you are those of a GRUMPY OLD SELFISH BASTARD
    TREBOR
    8th Jul 2019
    4:04pm
    Wrong - Pensions are a right bounded by asset and income tests.... the fact that you do not receive it does not mean it is not a right - a bought and paid for over a lifetime right.

    Let's all just agree that OG has the right to a Pension... even though he can't have one... all in favour?

    "I want to have babies!"

    "But you can't have babies! You're a man!"

    Monty Python for you, OG .... Life of Brian...
    Old Geezer
    8th Jul 2019
    5:20pm
    No I have to right to the pension as I am deemed to have other means of support.

    Pension is not a right but welfare as you simply don't have to means to support yourself.

    Why should I pay you to have kids? That's why it is my business.
    TREBOR
    8th Jul 2019
    11:33pm
    Wrong, OG - you are confusing right with governance... you are fully entitled to a pension - you just don't qualify for it.

    Now stop your politics of envy... you didn't pay me to have kids - I was on $100k real at the time and so was their mother - as much or more than your average politician.... with the difference that we worked for a living...
    Poppa
    8th Jul 2019
    1:12pm
    Does deeming rates apply from money made from Super
    Sundays
    8th Jul 2019
    1:40pm
    Depends on when you started the OAP. Yes if after 1 July 2015. It’s complicated with granfathered rules prior to that date so best check your situation with Centrelink
    Poppa
    8th Jul 2019
    1:12pm
    Does deeming rates apply from money made from Super
    Harrie
    8th Jul 2019
    1:26pm
    Both the assets test and deeming tests are applied to super (pension) the calculation that gives you the least Gov pension is the one that will used.
    KSS
    8th Jul 2019
    1:20pm
    It's a bit rich having Labor call this when they had nothing but pain for pensioners in their election manifesto. Smacks of bandwaggoning to me!

    I read elsewhere that a change could be made as early as this week. So let's wait and see.
    Paddington
    8th Jul 2019
    9:21pm
    Rubbish! Pensioners were to get dental care which is a huge thing for them.
    Pensioners were not targeted by Labor.
    The cancer initiative alone should have raised votes.
    Unfortunately, the Palmer 60 m hurt big time. Franking credits would affect everyone was one of the biggest lies. Death tax was coming in was another lie.
    You know all this but choose to support the LNP.
    Old Geezer
    9th Jul 2019
    12:40pm
    Pensioners already get free dental care and anyone with cancer already gets free treatment under the public system. Labor system would have just made those who charge excessive fees richer.

    Franking credits was a big issue and many families voted against Labor so their elders would not get hurt by such an insane wealth tax.
    Old Geezer
    9th Jul 2019
    12:40pm
    Pensioners already get free dental care and anyone with cancer already gets free treatment under the public system. Labor system would have just made those who charge excessive fees richer.

    Franking credits was a big issue and many families voted against Labor so their elders would not get hurt by such an insane wealth tax.
    Harrie
    8th Jul 2019
    1:21pm
    I understand the deeming rate only affects small percentage of retirees. However where the disparity occurs is that under the assets test the 'excess' reduces the state pension at a rate equivalent to a 7.8% deeming rate. (Since the rules changed in 2017 I recall) if the deeming rate was used on my asset then I would receive a much higher part pension than currently. The only option then is to draw down on capital to have an acceptable standard of living. The system can hardly be considered fair to those who went without to save more for retirement compared to others that may have had the same earnings and opportunity, but spent much of what they earned. Basically there is little incentive to save for retirement when someone with 400K in assets have the same income a someone with a up to $1M in assets. There is a massive disparity that needs addressing here as well.
    Aggle
    8th Jul 2019
    2:39pm
    I agree with you Harrie. Also, had Labor been elected, there would have been even greater disparity with regard to franking credits, as they were going to let pensioners keep theirs,
    whilst denying self funded retirees theirs.
    Anonymous
    8th Jul 2019
    2:54pm
    Should have put that extra $600'000 into your house and you'd be sweet. Why do you think house prices are out of order in this country? Any extra you have you put into your own property and C/Link gives you the full entitlement. I just retired early and used up the extra dollars till age 65. Young people read these columns as well and they learn - you won't have savers any more - as Harrie says: the incentive is missing!!
    Farside
    10th Jul 2019
    11:27am
    There are some caveats to that advice Cowboy. Putting that extra $600K into your residence in specific circumstances but makes little sense if you are already at upper end of the market for the area, content with your property and wish to avoid the risk of overcapitalising. The reluctance to upsize the property to a better property shares the reluctance to move argument used by those anti-downsizing to free up cash.
    Poppa
    8th Jul 2019
    1:29pm
    Finally something may happen so there is a lot of Pensioners involved here so maybe the deeming rate will come down but the Treasurer is saying it won't equal the current bank rate or maybe it will ??
    Poppa
    8th Jul 2019
    1:29pm
    Finally something may happen so there is a lot of Pensioners involved here so maybe the deeming rate will come down but the Treasurer is saying it won't equal the current bank rate or maybe it will ??
    Sundays
    8th Jul 2019
    1:57pm
    It’s not eneough to look at the deeming rates which affect 25% of pensioners. The very unfair taper rate also needs to be changed.
    Karl Marx
    8th Jul 2019
    4:07pm
    The whole sytem needs to be replaced. Not just partly fixed.
    Chooky
    8th Jul 2019
    1:58pm
    Those with franking credits continue to be well looked after by the Libs but you pensioners are suckers for voting for this bunch who sees you as liabilities. Yep, that’s exactly how you are seen. Four years since the deeming rate was moved and you voted for them anyway so if you feel you are not fairly treated by the Libs don’t complain, you voted for it.
    Old Geezer
    8th Jul 2019
    2:33pm
    Franking credits are fair they way they are. Labor's policy was completely unfair and very biased. Disgusting policy that favoured the wealthy but fleeced the vulnerable. If you don't believe that you have no idea what franking credits are or how they work.
    Aggle
    8th Jul 2019
    2:43pm
    Chooky, you forget that Labor was going to allow pensioners receiving franking credits to continue to receive theirs, but stop self fund retirees receiving theirs. It's just lucky that enough voters saw through Labor's unfair policies and voted for the Coalition.
    cupoftea
    8th Jul 2019
    2:55pm
    Chooky how right you are
    cupoftea
    8th Jul 2019
    2:55pm
    Chooky how right you are
    TREBOR
    8th Jul 2019
    11:36pm
    As far as franking credits go? Not unfair at all - abolish franking and there is no problem and no rorting... it is, after all, part of your gross income, so if handled correctly, should make zero difference to your tax liability.

    The very fact that it is advertised as 'tax effective' means it is not paying its way.

    Your personal income tax is not the company tax....
    Old Geezer
    9th Jul 2019
    10:23am
    So when should people replace their CBA and BHP with Apple and Goggle shares?

    Get rid of franking credits refunds and you will have a whole lot of retirees with way too much risk and a whole lot of Aussie companies heavily indebted paying interest to multinationals instead of tax.

    Tax effective means that it has tax advantages which has nothing to do with franking credits.
    Old Geezer
    9th Jul 2019
    10:23am
    So when should people replace their CBA and BHP with Apple and Goggle shares?

    Get rid of franking credits refunds and you will have a whole lot of retirees with way too much risk and a whole lot of Aussie companies heavily indebted paying interest to multinationals instead of tax.

    Tax effective means that it has tax advantages which has nothing to do with franking credits.
    The Phonse
    8th Jul 2019
    2:19pm
    I think the proposed lower deeming rate will apply to both income and asset tested pensioners Not as some of the above has suggested that it will apply to income tested pensioners only .Correct me if I'm wrong.
    Karl Marx
    8th Jul 2019
    2:32pm
    Centrelink test you under both & will pay you the lesser.
    If your AOP is based on calculations from assets then lower deeming rates will not increase your calculated OAP
    Mrt
    8th Jul 2019
    2:34pm
    Think I'm right in saying.Lower deeming rates will mean more pensioners will be assets tested because Govt takes whichever is the highest amount
    Old Geezer
    8th Jul 2019
    2:35pm
    You will be able to have a lot more assets and still get the health care card under a lower deeming rate.
    Karl Marx
    8th Jul 2019
    4:59pm
    bollocks OG
    Old Geezer
    8th Jul 2019
    5:21pm
    OlderandWiser you obvioysly have no idea how deeming rates work either.
    Sundays
    8th Jul 2019
    6:47pm
    OG is right. There is no Asset test for the Health Care Card. Income including deeming only
    TREBOR
    8th Jul 2019
    2:36pm
    a. deeming rate is a simple calculation that could be done periodically or even set to adjust on a daily basis for a final (gasps) solution at year's end.

    b. while we're not on the subject - howzabout a little relief for not receiving a tax cut..... say ... a cut in GST for pensioner cards or whatever? As I said to an old
    digger mate years ago when he was lauding the GST, 'you will now be paying tax you were not paying before'.... now .... how about we look at it from the opposite point of view?

    c. while ever there is plenty in the till to pay for the never-ending handouts of government to the undeserving or marginally deserving (and that includes PPL and childcare subsidy in many cases) - there is plenty in the till to pay the bills coming due, such as Pensions and Unemployment Benefits. Pay the bills first - then we can talk about your offers of handouts to mates etc....
    Old Geezer
    8th Jul 2019
    2:44pm
    OAP has already been adjusted for the 10% GST.
    TREBOR
    8th Jul 2019
    2:54pm
    .. but never adjusted to cater for increasing costs of services etc, which all incur GST..... it's a moving feast, OG - not just one fix at one time.... things have changed since then, primarily due to the parasites in 'privatisation' - the privateers (pirates with an official stamp).......... (wait for it).... and those without moral values who buy shares in them...

    Is there no principle in play these day? No wonder the Iranians staged a revolt...
    Old Geezer
    8th Jul 2019
    3:10pm
    That's why they adjust it every few months to cover the increased costs and GST.
    TREBOR
    8th Jul 2019
    4:08pm
    No - they calculate it on CPI or increase in average male weekly earnings.. either or both... whichever is the higher...

    Nah, then - shall we discuss wage stagnation and rising inability of the dollar to purchase = equal lower value in the market place for the dollar ... or just one?

    Loaf of bread for a million bucks that nobody working earns anyone? How about you, Mr Dole Recipient - loaf of bread for a mil?
    Old Geezer
    8th Jul 2019
    5:23pm
    CPI etc takes GST into the calculations so you have been more than compensated for it.
    TREBOR
    8th Jul 2019
    11:26pm
    Ah, yes - the old mythical CPI... a loaf of bread, a jug of wine, and thee...... what about the real costs of living increases?
    invisible sock
    8th Jul 2019
    3:33pm
    A few years ago the ATO decided to quantify defined benefit Public Service pensions.
    They did this by dividing your fortnightly pension by 14 then multiplying by 365 to come up with a lump sum amount.
    Then, to arrive at a deeming rate they divided the lump sum amount by 16,
    resulted in a rate of 6.25%.

    “The Government understands that reductions in the official cash rate impacts on older Australians on fixed incomes,” Social Services Minister Anne Ruston told The Australian.

    It will be interesting to see, just how far the "undertanding" mentioned above will extend.
    TREBOR
    8th Jul 2019
    4:10pm
    Was going to say something along the lines of your last... indeed - they understand the issues.. but let's put it aside for now...

    Will they DO anything about it?

    Ummm... lock in.... d).. yes, d), Eddy --- not as long as their arse points to the ground...
    invisible sock
    8th Jul 2019
    5:03pm
    Details above are incorrect.
    What I should have said, is that they arrive at your annual pension amount by dividing your fortnightly pension by 14 and then multiplying the result by 365.
    They then multiply that amount by 16 to calculate a lump sum.
    This results in a deeming rate of 6.26%.
    Rodent
    8th Jul 2019
    4:51pm
    Dear McDaddy, Older and Wiser

    The Figures quoted in this article are Basically correct, as at Dec 2018 the were 2,506,968 Age Pensioners in Total, the 600,000 or up to 627,000 figure is generally correct as those people are on a Part Pension that are Income Tested, so therefore there are about 1.9Mil Part Age Pensioners under the Assets Test- they will also want to be treated FAIRLY wont they? even though they are under the Asset Test?
    Rodent
    8th Jul 2019
    4:58pm
    CORRECTION TO MY POST

    as at Dec 2016 -- Latest I can find there are
    1,470,545 full Rate Pensioners
    There are 610,548 Part Rate Pensioners on the Income Test
    There are 453489 Part Rate Pensioners on the Assets Test
    Sorry cant find later that 2016 although my Total is correct as at Dec 2018 Data source is DSS demographics its a huge file
    Adrianus
    9th Jul 2019
    8:07am
    People seem to be demanding quite a lot from Scott Morrison. He has been PM for about 10 months, during this time we have seen 2 cabinet reshuffles, an election, a Christmas break and the opposition doing what they do to make life difficult for us all. In my opinion if Labor hadn't kept them all busy playing politics with tax policy the deeming rate issue would have been done and dusted by now. We now have a game changing government, the likes of which we haven't seen since the Keating and Howard governments. There are exciting times ahead.
    Old Geezer
    9th Jul 2019
    12:37pm
    I agree. Scomo is doing a great job.
    Farside
    10th Jul 2019
    10:44am
    Scomo has no excuses about Opposition making government difficult. He has an obedient majority in the Reps and firm grip on the short and curlies of the Senate cross bench. He can essentially do pretty much whatever he wants so good times ahead for those in his constituency. For next three years, possibly longer, it might suck if you find yourself in the wilderness.
    Poppa
    9th Jul 2019
    1:07pm
    Thanks Sundays and Harrie for you answers
    Poppa
    9th Jul 2019
    1:07pm
    Thanks Sundays and Harrie for you answers


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