Deeming explained: how Centrelink assumes your savings earn income
Deeming assumes your savings, shares and super earn a set rate of income, 1.25% up to a threshold and 3.25% above it, regardless of what they actually return. Here is how it works.
Deeming is the way Services Australia works out how much income your financial assets produce. Rather than looking at the interest or dividends you actually receive, it assumes a set rate of return and counts that amount as income under the income test. The real return, whether higher or lower, is ignored.
Which assets are deemed
Financial assets include bank, building society and credit union accounts, term deposits, cash, shares, managed funds, bonds and debentures, gold and other bullion, loans you have made to other people, and superannuation in accumulation or an account-based pension once you have reached Age Pension age. Money from the sale of your home that you intend to use for a new one is deemed at the lower rate only, for up to 24 months.
The deeming rates from 1 July 2026
- 1.25% on the first $66,800 for a single person, or the first $110,600 combined for a couple
- 3.25% on everything above that threshold
The result is an annual figure, which is divided by 26 to give the fortnightly income used in the test.
A worked example
A single person with $430,000 in financial assets is deemed to earn 1.25% on the first $66,800 ($835 a year) and 3.25% on the remaining $363,200 ($11,804 a year). That is $12,639 a year, or $486.12 a fortnight, counted as income whether or not the assets actually earn it.
Why deeming matters
Because super balances are deemed once you reach pension age, deemed income is often the largest part of a retiree’s assessable income. It sits alongside any wages, rent or defined benefit pension, and the total is compared with the income free area of $226 a fortnight for a single person. Above the free area the pension reduces by 50 cents for every extra dollar.
Work out your deemed income
Both estimators apply the current deeming rates for you. The advanced estimator lists each type of financial asset separately, including home-sale proceeds at the lower rate, and shows the deeming calculation step by step.
This article is a general guide to how the Age Pension is worked out and is not financial advice. Rates and thresholds are those current at the time of writing and change on 20 March, 1 July and 20 September. Your entitlement can only be determined by Services Australia; for decisions about your finances, contact their free Financial Information Service on 132 300 or a licensed financial adviser.
More from the resources hub
Selling your home, downsizing and the Age Pension
Your home is exempt from the assets test, so selling it can change your pension more than anything else. Here is how sale proceeds, the 24-month exemption, renting and downsizer contributions are treated.
What age can you get the Age Pension? Eligibility explained
Age Pension age is 67, with no legislated increase beyond that. Here are the age and residence rules, when you can claim, and how the income and assets tests then decide your rate.
Superannuation and the Age Pension: how your super is assessed
Accumulation accounts, account-based pensions, grandfathered pensions and defined benefit schemes are all assessed differently. Here is how each kind of super counts towards the assets and income tests.
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