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VETERANS' ENTITLEMENTS ACT 1986 - SECT 46D

Deemed income from financial assets--persons other than members of couples

             (1)  This section applies to a person who is not a member of a couple.

Note:          The whole of Division 3 does not apply when working out a person's ordinary income to find whether:

(a)           the person satisfies the farmers' income test for the purposes of Division 8 (see paragraphs 49J(2)(c) and (3)(c)); or

(b)           the person satisfies the sugarcane farmers' income test for the purposes of Division 8A (see paragraphs 49Y(2)(c) and (3)(c)).

             (2)  A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.

             (3)  This is how to work out the ordinary income that the person is taken to receive:

Method statement

Step 1.    Calculate the total value of the person's financial assets and compare it with the person's deeming threshold.

                   Note 1: For financial assets see subsection 5J(1).

                   Note 2: For deeming threshold see subsection 46H(1).

Step 2.    This step applies only if the total value of the person's financial assets is equal to or less than the person's deeming threshold. Multiply the total value of the financial assets by the below threshold rate. The result represents the ordinary income that the person is taken to receive per year on his or her financial assets.

                   Note:    For below threshold rate see subsection 46J(1).

Step 3.    This step applies only if the total value of the person's financial assets is higher than the person's deeming threshold. Work out the person's deemed income as follows:

               (a)     multiply the deeming threshold by the below threshold rate;

               (b)     subtract the deeming threshold from the total value of the person's financial assets;

               (c)     multiply the remainder by the above threshold rate;

                   Note:    For above threshold rate see subsection 46J(2).

               (d)     add up the amounts worked out at paragraph (a) and (c): the result represents the ordinary income that the person is taken to receive per year on his or her financial assets.

Example:    How deemed income of a person who is not a member of a couple is worked out

Facts:         Elaine, a single pensioner, has $36,500 worth of financial assets. $1,500 is in a cheque account not earning any interest. $25,000 is earning 6% in interest and $10,000 is earning 8% in interest. The below threshold rate is 5%. The above threshold rate is 7%.

Result:      

Step 1.       The total value of Elaine's financial assets ($36,500) is higher than her deeming threshold ($30,000--see subsection 46H(1)). So, the deeming threshold is multiplied by the below threshold rate:

Step 2.       Elaine's deeming threshold of $30,000 is subtracted from the total value of her financial assets ($36,500). The remainder is $6,500.

Step 3.       The amount of $6,500 is multiplied by the above threshold rate (7%):

Step 4.       The amounts worked out at Steps 1 and 3 are added together:

                   The ordinary income that Elaine is deemed to receive from her financial assets is $1,955 per year.

             (4)  The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) as ordinary income of the person during each week.


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