Deeming explained: how Centrelink assumes your savings earn income

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.