Centrelink & DVA apply a “deemed” rate of interest (when determining the Income Test for Pension purposes, & consequently aged care fee purposes) on investments like bank accounts, term deposits, shares, managed funds, Allocated Pensions (post Jan 2015), & loans to companies, trusts or families, & to gifts in excess of the gifting threshold).

The deemed rate of return on investments is simpler for Centrelink/DVA to apply than the actual interest rate being earned.

The deemed rate of interest on 1st July 2016 is 1.75%pa, & 3.25%pa (above a threshold), the threshold has just been indexed to $49,600 for singles & $81.600 for a couple or illness separated couple.
Ie for a single person with $100,000 in deemed assets, the first $49,600 is “deemed” to earn $1.75%pa, the remaining $50,400 is deemed to earn 3.25%pa (regardless of the actual rate of interest earned. Therefore, Centrelink/DVA would assess the deemed income from the investments to be $2,506pa. If you earned more interest than this, then you are not penalised for that. However, if your investments in the bank are earning less than the deemed rate of interest, you are being penalised under the income test, & you should check whether you are being limited by the assets test or income test, otherwise you may be getting less pension than you are entitled to receive.