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Deeming Rules Explained: How Centrelink Assesses Your Financial Assets
Deeming is Centrelink's method for calculating the income it assumes your financial assets are earning — regardless of what they actually earn. Instead of tracking your actual bank interest, dividends, or investment returns, Centrelink applies a standard deeming rate to your total financial assets. This deemed income then counts against the income test for your Age Pension.
Current Deeming Rates ()
Centrelink applies two deeming rates — a lower rate for financial assets below the threshold, and a higher rate for any amount above:
Deeming Thresholds
The lower deeming rate applies up to the threshold; the higher rate applies to anything above it:
| Situation | Lower Rate Applies To | Upper Rate Applies Above |
|---|---|---|
| Single | First | Above |
| Couple (combined) | First | Above |
Deeming rates current as of . Rates are updated periodically and are subject to government policy changes.
Which Assets Are Subject to Deeming?
✅ Assets That ARE Deemed
- Bank accounts, term deposits, and cash management accounts
- Shares and managed funds (listed and unlisted)
- Account-based super pensions (once you are of Age Pension age)
- Bonds, debentures, and other financial investments
- Loans you've made to others (e.g., money lent to family)
- Amounts in friendly societies and insurance bonds
- Amounts in first home super saver accounts
❌ Assets That Are NOT Deemed
- Your principal home (exempt from both income and assets tests)
- Investment properties (rental income is counted directly — deeming doesn't apply)
- Business assets (business income is assessed directly)
- Superannuation in accumulation phase if you (or your partner) are below Age Pension age
- Defined benefit pensions and certain lifetime income streams (assessed under a separate formula)
ℹ️ Account-Based Pensions: A Special Note
If you are receiving an account-based pension (ABP), it is deemed in the same way as other financial assets — even though you're taking regular drawdowns from it. Centrelink applies the deeming rates to the current account balance, not your actual drawdown amount. This means the deemed income may be very different from what you actually receive each fortnight.
How Deemed Income Is Calculated
The calculation is straightforward once you know the rates and threshold. The steps are:
- Add up all your financial assets
- Apply the lower deeming rate () to the first (for singles)
- Apply the upper deeming rate () to any amount above the threshold
- Add the two amounts together to get your annual deemed income
- Divide by 26 to get the fortnightly deemed income figure used in the income test
Worked Examples
📝 Example 1: Single — Below the Threshold
Barbara is single and has $50,000 in bank accounts and $120,000 in a managed fund. Total financial assets: $170,000.
$170,000 is below the single threshold of , so the lower rate applies to all of it.
- Deemed income: $170,000 × = $425/year = $16.35/fortnight
📝 Example 2: Single — Above the Threshold
James is single with $400,000 in an account-based pension and $30,000 in savings. Total financial assets: $430,000.
- First at : × 0.0025 = $156.50/year
- Remaining $367,400 at : $367,400 × 0.0225 = $8,266.50/year
- Total deemed income: $8,423/year = $324/fortnight
- Income-free area (single):
- Excess income: $324 − ≈ $112/fortnight
- Pension reduction: $112 × 0.50 = $56/fortnight
📝 Example 3: Couple
Tom and Jan have combined financial assets of $250,000 (savings, shares, ABP balance).
- $250,000 is below the couple deeming threshold of
- All $250,000 deemed at : $250,000 × 0.0025 = $625/year = $24.04/fortnight combined
What If Deeming Is Unfair to You?
Deeming is based on assumed returns, not actual earnings. If your actual investment returns are lower than the deeming rates — for example, if you keep large amounts in low-interest bank accounts — the deemed income could be higher than what you're actually earning. There is no general waiver for this.
💡 Strategy: Structure Assets to Minimise Deemed Income
While you can't avoid deeming on financial assets, the type of asset doesn't matter — $100,000 in a term deposit is deemed the same as $100,000 in shares. However, the timing and structure of your retirement portfolio can still affect your overall pension entitlement. A financial planner can help you model different scenarios based on your specific asset mix.
⚠️ Deeming Rates Can Change
Deeming rates are set by the government and can be changed at any time — they don't automatically follow official interest rates or CPI. The rates on this page are current as of , but always verify current rates with Services Australia before making decisions based on them.
How Does Deeming Affect Your Pension?
Use our entitlements checker to model different asset scenarios, or speak to a specialist.
Accuracy Note: Whilst every effort has been made to provide current and accurate information, I am only one person and there's a very good chance that I'll miss something. If you spot a factual error, or if a calculator breaks or gives incorrect answers, I'd be really grateful if you could let me know via the Contact Us page so I can fix it ASAP.
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Last reviewed: March 2026