Centrelink Deeming Rules: Calculation, Exemptions, and Appeals

Centrelink’s deeming rules assign a fixed rate of return to your financial assets when working out your Age Pension, no matter what those assets actually earn. From 20 March 2026, the lower rate is 1.25% and the higher rate is 3.25%, applied on either side of a threshold that depends on whether you are single or partnered.¹ If your investments earn more than the deemed figure, the extra is ignored. If they earn less, the deemed figure still stands.²

The current thresholds are $64,200 for a single person, $106,200 combined for a couple where at least one partner receives a pension, and $53,100 each for a couple where neither does. Below the threshold, the 1.25% rate applies; above it, 3.25%.¹

What Counts as a Financial Asset

Deeming applies to assets that can be turned into cash or that produce a financial return. The main categories are:

Bank accounts, term deposits, and debentures.
Shares, managed funds, and investment trusts.
Gold bullion and similar commodities, valued at market.
Superannuation, once you reach Age Pension age of 67. From that point your super balance counts in both the assets test and the income test through deeming.³
Deprived assets. Gifts above $10,000 in a single financial year or $30,000 over a rolling five years stay in the deeming pool for five years from the date of the gift.⁴

The gifting rule catches people who give money to children hoping to lift their pension. Centrelink keeps deeming the excess as though you still hold it for the full five years.

Cryptocurrency

Crypto sits outside deeming. Services Australia treats it as a personal asset, in the same bracket as jewellery, vehicles, and hobby collections.⁵ It counts under the assets test, but it produces no deemed income. The one exception is crypto held inside a self-managed super fund once you reach pension age, because the whole SMSF balance becomes a financial asset at that point.

What Is Left Out

Some things you might expect to be caught are deliberately excluded from the deeming calculation, though several still count under the assets test.

Your home, whatever its market value.
Household furniture, appliances, and private vehicles. These count as assets but produce no deemed income.
Superannuation held by you or a partner under 67, provided the fund is not paying a pension. This is excluded from both tests.³
Certain lifetime annuities and defined benefit income streams purchased before specific dates, which have their own assessment rules.

Granny Flat Interests

If you transfer money or assets to a family member (or anyone else) in exchange for a life interest or the right to live in a property for life, the transferred amount is not treated as a gift under the deprivation rules. It leaves the deeming pool.⁶ You must have paid for the interest, and the property must be your principal home. If you pay more than a reasonableness threshold based on actuarial tables, the excess is treated as a gift and deprivation kicks in on that portion.

Funeral Bonds

Up to two funeral bonds are exempt from the assets test entirely, provided you have no prepaid funeral expenses and the invested amount is under the allowable limit of $15,750 (as at 1 July 2025).⁷ Go over the limit or hold more than two, and the excess is counted as a financial investment with deeming applied. Joint owners share a single bond for this purpose; the limit is not doubled.

How the Deemed Amount Is Worked Out

The calculation is a two-tier sum. The lower rate applies up to the threshold, and the higher rate applies to everything above. Here is a worked example for a single person with $150,000 in financial assets:

First $64,200 × 1.25% = $802.50 a year.
Remaining $85,800 × 3.25% = $2,788.50 a year.
Total deemed income = $3,591.00 a year.
Fortnightly figure = $3,591.00 ÷ 26 = $138.12.

⁸

That $138.12 is what Centrelink treats as your investment income for the fortnight. It goes on top of employment, rental, or other income before the income test is applied. The actual interest, dividends, or capital gains those assets produce are irrelevant. Whether a term deposit earns 5% or shares fall in value, the deemed figure stays put until the total market value of your assets changes.²

How Deemed Income Affects Your Pension

Age Pension is worked out under two separate tests, income and assets, and Centrelink pays whichever produces the lower amount. Deeming feeds the income test side.

The Income Test

For a single person, the first $218 per fortnight of total income is the free area and does not affect your pension. Each dollar above $218 reduces the pension by 50 cents. For a couple living together, the combined free area is $380, and each partner’s pension drops by 25 cents for every combined dollar above it.⁹

In the earlier example, the single person’s $138.12 in deemed income sits well under $218, so the income test alone would not cut their pension. Somebody with $300,000 in financial assets is in different territory. Their deemed income clears the free area, and each extra dollar starts taking 50 cents off the payment.

The Assets Test

The assets test works on its own. As of 20 March 2026, a single homeowner can hold up to $321,500 in assessable assets on a full pension; the couple homeowner limit is $481,500 combined. Non-homeowners get $579,500 (single) and $739,500 (couple).¹⁰ Above those points, the pension tapers off and eventually cuts out.

Commonwealth Seniors Health Card

Deeming also feeds the income test for the Commonwealth Seniors Health Card. For 2026 the income cut-off is $101,105 a year for a single person and $161,768 for a couple, and account-based income streams purchased or altered on or after 1 January 2015 are subject to deeming for this card.¹¹

When an Exemption Is Possible

Deeming exemptions are narrow. Poor investment performance, falling share values, or a fund going through a rough patch will not qualify you. Only the Minister for Social Services can grant one, and only in specific situations:¹

A failed financial investment that is producing no return and where you cannot access the capital because of a legal obstacle from a third party (not just the fund manager), or because of conditions that were not disclosed in the product documentation.
Superannuation you cannot access because of the fund’s rules, a court order, or super regulations. If any part of the balance is accessible, you cannot qualify.
An account holding only money from a National Disability Insurance Scheme package.

Applications go through a Financial Information Service officer and need supporting evidence such as legal correspondence, insolvency reports, court documents, or fund statements. If granted, Centrelink uses your actual income from that asset instead of the deemed figure.

Reporting Changes

Pensioners have 14 days to tell Centrelink about a change in circumstances.¹² For financial assets, the trigger is a rise of $2,000 or more above what Centrelink currently has on file. For non-financial assets like property or vehicles, the threshold is $1,000. Anything received from a deceased estate must be reported within 14 days of receiving it.¹³

Missed reports can turn into an overpayment debt. Centrelink works out what you should have received against what you did receive and recovers the difference, often by reducing future payments. If your share portfolio jumps or you receive an inheritance, notifying promptly is safer than waiting for data-matching to flag it.

Ways to Reduce Deemed Income

Because deeming is driven by the market value of your financial assets, the practical lever is reducing that value. A few approaches worth talking through with a financial adviser or Centrelink’s free Financial Information Service:

Paying down a mortgage or other debt. The money leaves the deeming pool, and your home is exempt from both tests.
Prepaying larger expenses such as home maintenance or medical procedures.
Investing up to $15,750 in a qualifying funeral bond, which is exempt from both the assets test and deeming.⁷
A granny flat arrangement that meets Centrelink’s criteria, which shifts assets out of the financial pool without triggering the full deprivation rules.⁶

Gifting is the trap. Anything over $10,000 in a year or $30,000 over five years stays in your deeming calculation for five years from the date of the gift, whether or not you still have the money.⁴ Parents sometimes hand over a large sum expecting an immediate pension increase and find it is still being assessed years later.

Challenging a Deeming Decision

If you think Centrelink has assessed your assets or deemed income wrongly, there is a set path to challenge it:¹⁴

Ask for an explanation. An experienced staff member walks you through how the decision was made, usually within 14 days. This step is optional and does not start any clock.
Apply for a formal review. An Authorised Review Officer looks at the facts, the law, and the policy. Apply within 13 weeks of being notified. If you apply later, any change in entitlement runs only from your application date.
Apply to the Administrative Review Tribunal if the formal review does not resolve it. You have 13 weeks from receiving the formal review decision.

The 13-week window matters. Waiting too long to challenge an overstated deemed income figure can cost you months of back-payment even when the underlying decision is eventually overturned.

1
Services Australia. Deeming
2
Department of Social Services. Social Security Guide – 4.4.1.10 Overview of Deeming
3
Services Australia. Superannuation
4
Services Australia. Gifting
5
Services Australia. Asset Types
6
Department of Social Services. Social Security Guide – Granny Flats – Features, Rights and Interests
7
Services Australia. Funeral Bonds and Prepaid Funerals
8
Department of Veterans’ Affairs. The Income We Deem You Received From Your Assets
9
Services Australia. Income Test for Age Pension
10
Services Australia. Assets Test for Age Pension
11
Services Australia. Income Test for the Commonwealth Seniors Health Card
12
Department of Social Services. Social Security Guide – 3.10.4.10 General Notification Period – 14 Days
13
Services Australia. Asset Types
14
Services Australia. Explanations and Formal Reviews of a Centrelink Decision