DVA Deeming and Financial Assets: What Veterans Need to Know

What Is Deeming and How Does It Affect Veterans?

Deeming is the method DVA uses to calculate income from your financial assets when determining your pension eligibility and payment rates. Rather than assessing the actual returns on each individual investment, DVA assumes your financial assets earn a set rate of interest, regardless of what they actually earn.

The Department of Veterans' Affairs implemented this approach to simplify the assessment process and encourage veterans to maximise their private income. Deeming only applies to means-tested payments like the Service Pension, Income Support Supplement, and Veteran Payment—not to Disability Compensation Payments or War Widow(er)'s Pensions.

Understanding Financial Assets Under DVA Rules

Financial assets include a range of investments that DVA deems to be earning income. Knowing what counts as a financial asset is the first step to managing your pension entitlements effectively.

According to the DVA's current financial assessment guidelines, financial assets typically include:

• Bank accounts (savings, cheque accounts, term deposits)
• Managed investments (cash, mortgage, property, and equity trusts)
• Shares in public companies
• Loans you've made to others, including family and friends
• Certain superannuation investments (depending on your age)
• Excess gifts above the allowable limits

It's important to note that not all your assets are considered financial assets. Your principal home, car, household contents, and personal effects aren't subject to deeming rules.

Current Deeming Rates and Thresholds for 2025

Deeming rates and thresholds are regularly adjusted to reflect market conditions. As of March 2025, the current DVA deeming rates are:

For Singles:

• Lower rate of 0.25% on financial assets up to $62,600
• Higher rate of 2.25% on financial assets above $62,600

For Couples:

• Lower rate of 0.25% on combined financial assets up to $103,800
• Higher rate of 2.25% on combined financial assets above $103,800

Understanding these thresholds is critical because they determine how much income DVA assumes you're earning from your assets, which directly impacts your pension rate.

How DVA Calculates Deemed Income

The way deemed income is calculated follows a straightforward formula, but it can have significant impacts on your pension payments.

Let's look at a simple example of how this works for a veteran couple with $120,000 in financial assets:

1. First $103,800 is deemed at 0.25% = $259.50 per year
2. Remaining $16,200 is deemed at 2.25% = $364.50 per year
3. Total deemed income = $624 per year or approximately $24 per fortnight

This deemed income is then counted in the income test used to determine your pension rate. We at Veterans First Consulting can help you understand how these calculations affect your specific situation and entitlements.

Strategies to Manage Your Financial Assets

Understanding how to optimise your financial arrangements can help you maximise your pension benefits while maintaining financial security.

Consider Asset Allocation

Since different assets are treated differently, strategically allocating your wealth between financial and non-financial assets may help optimise your pension rate. For instance, improvements to your principal home or purchasing a new vehicle aren't deemed, while a term deposit is.

Be Aware of Gifting Rules

If you're considering giving away money or assets, be mindful of the DVA gifting rules. You can give away up to $10,000 in a financial year or up to $30,000 over a rolling five-year period without affecting your pension. Anything over these limits will still be counted as your financial asset for five years.

Understand Superannuation Impacts

Superannuation in the accumulation phase isn't deemed until you reach pension age. However, once you start drawing an income from your super, different rules may apply depending on when your income stream commenced and your individual circumstances.

When You Don't Need to Report Financial Changes

DVA automatically monitors certain changes, so you don't need to report everything. According to the DVA's reporting exemptions, you don't need to tell them about:

• Interest rate changes on your financial assets
• Small changes in account balances (within specified limits)
• Gifts below the allowable limits

Special Circumstances and Exemptions

Some financial investments may be exempt from deeming under special circumstances. These can include:

• Funeral bonds (up to two per funeral) meeting specific criteria
• Certain amounts are held for NDIS participants for future disability expenses
• Sale proceeds from your principal home when you intend to buy another home (exempt for up to 24 months)

The DVA can provide information about current exemptions that may apply to your situation.

Getting Help With DVA Financial Asset Assessment

Navigating DVA's deeming rules can be challenging, especially when your financial situation changes. Our team at Veterans First Consulting specialises in helping veterans understand and optimise their DVA entitlements.

We recommend reviewing your financial assets whenever your circumstances change—such as receiving an inheritance, selling property, or reaching pension age—to ensure you're receiving the right pension rate.

Making Informed Financial Decisions

Understanding how DVA deeming affects your financial assets empowers you to make informed decisions about your finances and maximise your pension entitlements. At Veterans First Consulting, we're committed to helping you navigate these complex rules and secure the benefits you deserve.

If you have questions about how deeming applies to your specific situation, contact us for expert guidance tailored to your circumstances.