The Treasurer, Josh Frydenberg, has signalled the Government’s intention to revisit deeming rates on the basis of changed economic circumstances having made last year’s decision to reduce them now questionable.
Speaking in the context of December quarter national accounts and the changed circumstances with respect to the coronavirus and other factors, Frydenberg acknowledged the problems confronting self-funded retirees and others in a low-interest environment.
While pointing to the benefits to mortgage holders of this week’s interest rate cut, the Treasurer said this had nonetheless made things difficult for depositors.
“That is something that the Government is also considering, because you’ll remember last year we announced some changes to the deeming rate, the lower level deeming rate was brought down to 1%, the upper level deeming rate is at 3%,” he said.
“We are now having another look at the deeming rate. That change that we introduced and announced last year was around $600 million in terms of its cost, but we do recognise that both depositors and borrowers, are affected by the changing interest rates.”