Dva Deeming Rate Calculator

Calculate your deemed income for Department of Veterans’ Affairs (DVA) pension purposes with our accurate deeming rate tool.

Comprehensive Guide to DVA Deeming Rates (2024)

The Department of Veterans’ Affairs (DVA) deeming rates are a critical component of how income from financial assets is assessed for pension purposes. This guide explains everything you need to know about deeming rates, how they’re calculated, and how they affect your DVA payments.

What Are Deeming Rates?

Deeming rates are percentages used by the Australian Government to calculate income from financial assets for social security purposes. Instead of using the actual income you earn from these assets, the government “deems” or assumes you earn a certain rate of return, regardless of what you actually receive.

This system was introduced to:

• Simplify the income assessment process
• Encourage pensioners to maximize their income from savings
• Prevent pensioners from being disadvantaged by low-interest investments

Current DVA Deeming Rates (2024)

As of 1 July 2023, the deeming rates are:

• Lower deeming rate: 0.25% per annum (for financial assets up to the threshold)
• Higher deeming rate: 2.25% per annum (for financial assets above the threshold)

Official Source:

For the most current rates, always check the DVA Deeming Rates page.

Deeming Thresholds for 2024

The thresholds determine how much of your financial assets are deemed at the lower rate and how much at the higher rate. Here are the current thresholds:

Category	Single	Member of a Couple (each)	Member of a Couple (Illness Separated)	Member of a Couple (One Partner Receiving Allowance)
Lower threshold	$60,400	$100,200	$60,400	$100,200
Upper threshold	$268,000	$448,000	$268,000	$448,000

How Deeming Rates Are Calculated

The calculation works in two parts:

1. First portion: The lower deeming rate (0.25%) is applied to your financial assets up to the lower threshold.
2. Second portion: The higher deeming rate (2.25%) is applied to any amount above the lower threshold up to the upper threshold.

For amounts above the upper threshold, the entire amount is deemed at the higher rate.

What Counts as Financial Assets?

Financial assets subject to deeming include:

• Bank, building society and credit union accounts
• Cash
• Term deposits
• Managed investments, loans and debentures
• Listed shares and securities
• Gifts made after 1 January 2015 that exceed $10,000 in a financial year or $30,000 over five financial years

Not considered financial assets:

• Your principal home
• Any property or assets not producing income
• Income streams (these have different assessment rules)
• Prepaid funeral expenses

Historical Deeming Rates

Deeming rates have changed over time in response to economic conditions. Here’s a historical comparison:

Period	Lower Rate	Higher Rate	Single Threshold	Couple Threshold
1 July 2023 – present	0.25%	2.25%	$60,400	$100,200
1 May 2023 – 30 June 2023	0.25%	2.25%	$56,400	$93,600
1 July 2022 – 30 April 2023	0.25%	2.25%	$56,400	$93,600
1 May 2020 – 30 June 2022	0.25%	2.25%	$53,000	$88,000
1 July 2019 – 30 April 2020	1.00%	3.00%	$51,800	$86,200

How Deeming Affects Your DVA Payment

The deemed income from your financial assets is added to your other income when assessing your eligibility for DVA payments. This total income is then used to determine:

• Whether you qualify for a pension
• The amount of pension you receive
• Your eligibility for other benefits like the Pensioner Concession Card

If your total income (including deemed income) exceeds certain limits, your pension may be reduced or you may not be eligible at all.

Strategies to Manage Deeming

While you can’t avoid deeming, there are legal strategies to potentially reduce its impact:

1. Diversify your assets: Consider a mix of deemed and non-deemed assets.
2. Prepay expenses: Using some financial assets to prepay funeral expenses or home modifications can reduce your deemed assets.
3. Gifting within limits: You can gift up to $10,000 per financial year or $30,000 over five years without it counting as a financial asset.
4. Home improvements: Spending on your principal home doesn’t count as a financial asset.
5. Financial advice: Consult a financial adviser who specializes in veterans’ affairs for personalized strategies.

Common Misconceptions About Deeming

There are several myths about deeming that can lead to confusion:

• Myth 1: “If I earn less than the deemed rate, I’ll be better off.”
  Reality: The deeming rules apply regardless of your actual earnings. The government assumes you could earn the deemed rate.
• Myth 2: “I can avoid deeming by putting money in my spouse’s name.”
  Reality: For couples, financial assets are combined and then split 50/50 for deeming purposes.
• Myth 3: “Term deposits are exempt from deeming.”
  Reality: All financial investments are subject to deeming, including term deposits.
• Myth 4: “The deeming thresholds are the same as the assets test thresholds.”
  Reality: These are completely separate tests with different thresholds and rules.

Deeming vs. Actual Income: Which is Used?

The government will use whichever is higher between:

• The income actually earned from your financial assets, or
• The income deemed to be earned under the deeming rules

In most cases, especially with current low interest rates, the deemed income will be higher than the actual income earned.

How to Appeal a Deeming Decision

If you believe your deeming assessment is incorrect, you can:

1. Request a review from DVA in writing
2. Provide evidence if you believe your assets were incorrectly valued
3. Seek assistance from a veterans’ advocacy service
4. If still unsatisfied, appeal to the Administrative Appeals Tribunal

Need Help?

For free financial information services, contact DVA’s Financial Information Service on 133 254 (or 1800 555 254 for regional callers).

The Economic Rationale Behind Deeming

Deeming rates are set based on several economic factors:

• Prevailing interest rates: The Reserve Bank of Australia’s cash rate influences deeming rates
• Inflation: Higher inflation may lead to higher deeming rates
• Investment returns: The rates aim to reflect what could reasonably be earned
• Government policy: Balancing budget considerations with fair pension payments

According to research from the Australian Treasury, deeming rates are designed to:

“Provide a simple, fair and consistent method for assessing income from financial assets while encouraging pensioners to maximize their income in retirement.”

Deeming Rates for Different DVA Payments

Deeming applies to several DVA payments, including:

• Service Pension
• Income Support Supplement
• Veteran Payment
• Age Pension (for veterans who qualify)

Each payment type may have slightly different income test rules, but the deeming rates themselves remain the same across all payments.

Recent Changes and Future Outlook

The most recent change to deeming rates occurred on 1 July 2023, when thresholds were increased to account for inflation. The rates themselves (0.25% and 2.25%) have remained unchanged since 1 May 2020.

Looking ahead, potential changes might include:

• Adjustments to thresholds in line with inflation
• Possible rate changes if interest rates rise significantly
• Simplification of the deeming rules as part of broader pension reform

Veterans and their families should stay informed about potential changes by:

• Subscribing to DVA’s news and updates
• Following reputable financial news sources
• Consulting with financial advisers who specialize in veterans’ affairs

Case Study: How Deeming Affects a Veteran Couple

Let’s examine how deeming works for a typical veteran couple:

Scenario: John and Mary are both veterans receiving the Service Pension. They have $200,000 in financial assets (savings and shares) and no other income.

Calculation:

1. First $100,200 (threshold for couples) at 0.25% = $250.50 per year or $9.63 per fortnight
2. Remaining $99,800 at 2.25% = $2,245.50 per year or $86.37 per fortnight
3. Total deemed income = $2,496 per year or $95.99 per fortnight

This $95.99 per fortnight would be counted as income when assessing their pension rate, potentially reducing their payment.

Alternative Assessment Options

In some cases, you may qualify for an alternative assessment if:

• You have financial assets that don’t perform as well as the deemed rates
• You’re in severe financial hardship
• You have special circumstances that make the standard deeming unfair

To apply for an alternative assessment, you’ll need to provide detailed evidence to DVA about your financial situation.

Deeming and the Age Pension

For veterans who also qualify for the Age Pension (through Services Australia), the same deeming rates apply. However, the thresholds may differ slightly between DVA and Services Australia payments. It’s important to understand how deeming affects all your payments if you’re receiving benefits from multiple agencies.

Important Note:

Always verify current rates and thresholds with official sources as they can change. The information in this guide is current as of January 2024 but may be subject to future government changes.

Frequently Asked Questions

Q: Are superannuation pensions subject to deeming?

A: Account-based superannuation pensions purchased after 1 January 2015 are assessed under the deeming rules. Pensions purchased before this date may have different assessment rules.

Q: How often are deeming rates reviewed?

A: Deeming rates can be changed at any time by the government, but typically they’re reviewed when there are significant changes in economic conditions or as part of the annual budget process.

Q: Do deeming rates apply to my home?

A: No, your principal home is exempt from the assets test and deeming rules.

Q: Can I structure my investments to avoid deeming?

A: While you can’t completely avoid deeming for financial assets, proper financial planning can help manage its impact. Always seek professional advice before making significant financial decisions.

Q: How is deeming different from the assets test?

A: The assets test looks at the total value of your assets to determine pension eligibility, while deeming calculates assumed income from your financial assets. Both tests are used to determine your pension rate.

Glossary of Terms

Deeming

The process of assuming a rate of return on financial assets for income test purposes

Financial Assets

Assets subject to deeming, including bank accounts, shares, and managed investments

Income Test

One of two tests (along with the assets test) used to determine pension eligibility and rates

Threshold

The amount of financial assets up to which the lower deeming rate applies

Fortnight

The standard payment period for DVA pensions (two weeks)

Additional Resources

For more information about DVA deeming rates and related topics:

• DVA Deeming Rates Official Page
• Services Australia Deeming Information
• MoneySmart Retirement Income Guide
• ATO Account-Based Pensions Information

Disclaimer:

This guide provides general information only and does not constitute financial advice. For advice specific to your situation, consult a qualified financial adviser or contact DVA directly. Pension rules and rates can change, so always verify current information with official sources.