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Veterans' Affairs Legislation Amendment (2007 Measures No. 1) Bill 2007

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2004 - 2005 - 2006 - 2007

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 Veterans’ Affairs Legislation Amendment

(2007 Measures No. 1) Bill 2007

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Veterans’ Affairs,

The Honourable Bruce Billson MP)





 

Table of Contents

 

 

Outline and Financial Impact …………………………………………………….             ii

           

Preliminary

 

1                     Short Title  ..........................................................................................           iii

2                     Commencement  .................................................................................           iii

3                     Schedule(s)  ........................................................................................           iii

 

 

Schedule 1 -   Amendment of the Veterans’ Entitlements Act 1986   ..................            1

           

Schedule 2 - Amendment of the Military Rehabilitation

                      and Compensation Act 2004   ………………………………………           31

 

Schedule 3 - Amendment of the Military Rehabilitation and Compensation

                      (Consequential and Transitional Provisions) Act 2004   ……….…            35       

 

Schedule 4 - Amendment of the Income Tax Assessment Act 1936   …………..            36

 

Schedule 5 - Amendment of the Income Tax Assessment Act 1997    …………..            37



 

OUTLINE AND FINANCIAL IMPACT

 

Outline

 

The amendments in this Bill, to various provisions in the Veterans’ Entitlements Act 1986 , the Military Rehabilitation and Compensation Act 2004, the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 , the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 will enhance or streamline Veterans’ Affairs administrative practices, align the Veterans’ Entitlements Act 1986 with the Social Security Act 1991 and make minor changes to certain income support regimes.  The Bill also contains a number of minor and technical amendments. 

 

Financial Impact

 

The amendments have a negligible financial impact.

 

 



 

 

Veterans’ Affairs Legislation Amendment

(2007 Measures No. 1) Bill 2007

 

 

Notes on Clauses

 

Clause 1 sets out how the Act is to be cited.

 

Clause 2 provides a table that sets out the commencement dates of the various items in, and Schedules to, the Act. 

 

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule. 

 



Schedule 1 - Amendment of the Veterans’ Entitlements Act 1986

 

Part 1 - Amendments

 

Overview

 

The amendments made in this Schedule to various provisions in the Veterans’ Entitlements Act 1986 (the VEA) will enhance or streamline administrative practices, align the VEA with the Social Security Act 1991 (the SSA) and make minor changes to certain income support regimes.  The Schedule also contains a number of minor and technical amendments. 

 

Minor and technical amendments

 

Explanation of the items

 

The amendments made by Items 1, 6 and 7 repeal the entries referring to the definition of “realise” in subsection 5J(1) as the term is no longer used in the VEA in relation to financial assets and income streams. 

 

Item 1 repeals the term “realise” from the index of definitions in section 5.

 

Item 6 repeals the definition of “realise” from the financial assets and income streams definitions in subsection 5J(1).

 

Item 7 repeals subsections 5J(7) and (8) that define the term “realises an investment”.

 

The amendment made by Item 2 amends subsection 5F(1) by repealing the Note to the definition of “child” in subsection 5F(1).

 

In 1998, subsection 5F(5) of the VEA, which defined the expression “receiving full-time education at a school, college or university”, was repealed. 

 

The amendments neglected to delete the Note to the definition of “child” that referred the reader to “see also subsection (5) (receiving full-time education).”

 

The amendment to paragraphs 5H(8)(e) and (ea) made by Items 3 and 4 clarify the treatment of income that is regarded as exempt for some but not all of the purposes of the VEA.

 

Subsection 5H(8) provides a list of amounts that are not to be regarded as income for the purposes of the income test under the VEA.  However, certain payments that are exempt from the income test are included when working out the amount of rent assistance payable and for the purposes of the hardship rules. 

 

The current Note under paragraph 5H(8)(ea) is incorrect as it states the an amount described in paragraph 5H(8)(ea) is to be counted when working out the amount of rent assistance payable and for the purposes of the hardship rules.  An amount described in paragraph 5H(8)(ea) should only be included for the purposes of the hardship rules.

 

Item 3 inserts a Note to paragraph 5H(8)(e) that refers to the exempt income amounts that are listed in paragraphs 5H(8)(b), (c) or (e) and provides that the listed payments are:

 

(a)     counted for the purposes of working out the amount of Rent Assistance a person is entitled to; and

(b)    counted for the purposes of working out a person’s total income for the purposes of the hardship provisions in section 52Z.

 

Item 4 repeals the Note to paragraph 5H(8)(ea) and substitutes a new Note that provides that the exempt income amount referred to in paragraph 5H(8)(ea) is counted for the purposes of working out a person’s total income for the purposes of the hardship provisions in section 52Z.

 

Item 31 inserts new paragraph 52Z(3A)(da).  Subsection 52Z(3A) provides a listing of compensation payments that are included in the adjusted annual rate of ordinary income of a person for the purposes of the application of the hardship rules.  This amendment ensures that a payment of compensation (other than a payment covered by paragraph 52Z(3A)(d)) is to be included to the extent that the payment is taken into account under Division 5Aof Part II or under section 74 to reduce a disability pension payable under the VEA.  If part of the compensation payment has not been taken into account under Division 5A of Part II or under section 74, any excess amount is already included in the person’s ordinary income under paragraph 52Z(3)(a).

 

Item 8 amends paragraph 5JB(1A)(b) by replacing the reference to “subsection (1D)” with a reference to “subsections (1C) and (1D)”.

 

Paragraph 5JB(1A)(b) is subject to the operation of both subsections 5JB(1C) and (1D). 

 

An “asset” is defined in subsection 5L(1) as meaning “property or money (including property or money outside Australia)”.  The definition can be misleading in that it does not indicate that certain assets can be disregarded in the calculation of the value of a person’s assets.

 

Item 9 inserts a Note to the definition of “asset” in subsection 5L(1) to make it clear that certain assets are disregarded under subsection 52(1).

 

The amendment made by Item 12 amends the definition of “Australia” in subsection 5Q(1).

 

The current definition of “Australia” in subsection 5Q(1) of the VEA is expanded for the purposes of the Parts III and IIIA provisions relating to eligibility and payment of service pensions and income support supplement to include “the external territories”.

 

“Australia” is defined in section 17 of the Acts Interpretation Act 1901 (AIA) as meaning “the Commonwealth of Australia and, when used in a geographical sense, includes the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, but does not include any other external Territory”.

 

The effect of paragraph 17(pd) of the AIA is that the only external territory at the present time that is not part of Australia is Norfolk Island.  For the purposes of Parts III and IIIA, references to Australia will include Norfolk Island while for all the other references to Australia in the VEA, outside those Parts, Norfolk Island is excluded.

 

The effect of the current definition of Australia is that it excludes (with the exception of Parts III and IIIA) residents of Norfolk Island from being eligible for those payments and benefits that would otherwise be payable to them under the provisions of the VEA that are outside of Parts III and IIIA.  This is because the affected provisions require an action or event to occur in Australia.  For example, section 118OA in Part VIIAC requires that the person be in Australia.

 

The amendment being made by Item 12 to the definition of “Australia” in subsection 5Q(1) will ensure that Norfolk Island is included in the definition of Australia in relevant provisions of the VEA so that residents of Norfolk Island are eligible for the various income support payments and benefits. 

 

Item 12 amends the definition of “Australia” to include the external Territories for the purposes of section 5PAA, Parts III, IIIA and IIIAB, Division 8A of Part IIIB, Subdivision E of Division 11 of Part IIIB, section 52ZO, Parts VIIA, VIIAC, VIIAD, VIIB and VIIC, section 132 and Schedule 6. 

 

The amendment made by Item 17 amends the Note to section 35H.

 

The note to the section refers the reader to the review rights for a determination made under the section in Division 16.  The note does not specify that Division 16 is in Part IIIB with the implication being that it is located in Part III.

 

Item 17 amends the Note to section 35H with the reference now stating that the location is “Division 16 of Part IIIB”.

 

The amendments made by Items 26 and 28 correct references in the Notes to subsections 49C(5) and 49S(6).

 

The Notes to subsections 49C(5) and 49S(6) refer to the reader to the Pension Bonus Scheme in Part IIIAB but refer only to the deferral of the age service pension.  The Note is misleading as a person who has reached pension age may defer either, age service pension,  partner service pension or income support supplement in order to be eligible for a pension bonus.

 

Items 26 and 28 amend the Notes to subsections 49C(5) and 49S(6) to refer to a person being eligible “for a designated pension (as defined in section 45TA).”  A “designated pension” means age service pension, partner service pension or income support supplement. 

 

Item 27 corrects a typographical error referring to “income supplement” instead of “income support supplement” in section 49F.

 

Item 52 amends subsection 59Q(6) by removing the reference to subsection (5) which was repealed in 2003.

 

Item 53 repeals the Note to subsection 59Q(8) which referred to an Example that had been repealed in 2002.

 

Item 57 amends subsection 93D(1) by repealing the current definition of “pathology service” and substituting a new definition.  The new definition of “pathology service” refers to a procedure of the kind described in an item in the table of pathology services prescribed by regulations made for the purposes of subsection 4A(1) of the Health Insurance Act 1973 .

 

Item 58 repeals subsection 93D(11) as it has been made redundant because the table contained in the regulations does not contain the references to “OP” and “SP” that the table in repealed Schedule 1A did.

 

The amendments made by Items 59 and 60 are to section 112 which provides for the payment of travelling expenses for an eligible veteran or a dependent of a deceased veteran, and where necessary, an attendant, to attend the closest practicable health provider to the veteran’s home.  Travel expenses are not payable in respect of travel for treatment outside Australia.

 

The current provisions require that the claim for travelling expenses must be lodged within three months of the date of the first treatment visit claimed.

 

The period for lodgement of an application for reimbursement of travel expenses is being extended from three months to twelve months to allow claimants more time to submit claims.

 

Items 59 and 60 amend section 112 to remove the reference to “3 months” and replace it with a reference to “12 months”.

 

Item 73 corrects a minor error in column 5 of table item 4 of subsection 198E(1).  The current provision refers to the highest “March or September” quarter, but it should refer to the highest “September or March” quarter.

 

The amendments made by Items 74 and 75 are to point SCH6-A1 of the Rate Calculators.

 

An amendment to the rate calculators in Schedule 6 of the VEA made by the Veterans’ Entitlements Amendment (Direct Deductions and Other Measures) Act 2004   was intended to apply the same provisions that enable the adjustment of ceiling rate income support supplement where the person’s war widow or widower’s pension is compensation reduced, to ceiling rate service pension.

 

However, the 2004 amendments were ineffective as they did not make the necessary amendments to the Method Statements in subpoints SCH6-A1(4) and (5).  In both Method Statements the relevant Steps refer to the working out of the “ceiling rate” of service pension in “accordance with points SCH6-A4 and SCH6-A5”.

 

For the amendment that included the reference to payments of “service pension” in point SCH6-A6 to be effective consequential amendments to subpoints SCH6-A1(4) and SCH6-A1(5) should have been made so that the “ceiling rate” of service pension was to be worked out “in accordance with points SCH6-A4 - SCH6-9”.

 

Items 74 and 75 amend Steps 2 and 1 respectively of the Method Statements in subpoints SCH6-A1(4) and SCH6-A1(5) to replace the references to the “ceiling rate” of service pension being worked out in accordance with “points SCH6-A4 and SCH6-A5” with a reference to the rates being worked out in accordance with “points SCH6-A4 to SCH6-A9”.

 

Item 79 amends subparagraph SCH6-G1(a)(iii) by replacing the reference to “Part IIID” with a reference to “Part IVA”.  Part IVA of the VEA replaced Part IIID of the VEA in 1997. 

 

Commencement

 

Items 1, 6, 7, 12, 73, 74, and 75 commence on the day after this Act receives Royal Assent.

 

Item 2 commences immediately after the commencement of item 59 of Schedule 13 to the Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998 .  

 

Items 8, 9, 17, 26, 27, 28, 52, 53, 57, 58, 59, 60, and 79 commence on Royal Assent.

 

Exempt Family Assistance Payments from the Veterans’ Entitlements Income Test

 

Background

 

The A New Tax System ( Family Assistance Act) 1999 (Family Assistance Act) introduced a simplified structure and delivery mechanism for the provision of family assistance through the taxation and social security systems.  The Act formed part of the Government's new tax system, and took effect from 1 July 2000.

 

Subsequently, additional payments of family assistance were provided for in amendments to the Family Assistance Act made by the Family Assistance Legislation Amendment (More Help for Families - One-Off Payments) Act 2004 .

 

Consequential amendments were made by that Act to the SSA to insert new paragraphs 8(8)(jaa) and (jab).  The amendments provided that the new one-off and other payments to families were not to count as income for the purposes of social security law.  The other stated purpose of the amendments was to clarify that family assistance payments were generally not to be regarded as income for the purposes of social security law.

 

The amending Act did not make similar amendments to the VEA.



 

Explanation of the items

 

Item 5 amends subsection 5H(8) by inserting new paragraphs 5H(8)(paa) and (pab) which mirror paragraphs 8(8)(jaa) and (jab) of the Social Security Act 1991 .  The new paragraphs provide that payments of family assistance and one-off payments to families made under the Family Assistance Act and the Family Assistance Legislation Amendment (More Help for Families - One-Off Payments) Act 2004 are exempt income for the purposes of the VEA income test.

 

Commencement

 

Item 5 commences on the day after Royal Assent.

 

Alignment of the discretion to disregard disposals of assets with the Social Security law

 

Background

 

The calculation of the rate of service pension or income support supplement payable to a person involves the application of the income and assets tests.  Where a person or a couple have given away or disposed of an asset for inadequate consideration the amount of the gift or disposal may be regarded as being a “deprived asset”.  A deprived asset may be included in the calculation of the total amount of assets held by the person or the couple for a period of five years from the date of the disposal.

 

The relevant provisions of the VEA concerning the disposal of assets are located in Division 11 of Part IIIB.  Amendments to those provisions were made as part of the Social Security and Veterans’ Entitlements Legislation Amendment (Disposal of Assets - Integrity of Means Testing) Act 2002 and took effect from 1 July 2002.

 

Prior to the amendments made by that Act the relevant provisions were all contained in Subdivision B of Division 11.  Disposals of assets made on or after 1 July 2002 are now covered by the provisions set out in new Subdivision BB of Division 11.  The existing provisions applicable to disposals made before that date were maintained in new Subdivision BA.

 

Whether or not the amount of any gift or disposal is regarded as a “deprived asset” will depend on the amount and the timing of the gift or disposal.  The 2002 amendments allow an individual person or a couple to dispose of (for no or inadequate consideration) assets to the value of $10,000 during each financial year (defined in the VEA as a “tax year”) but restrict the total amount of allowable disposals over a rolling period of five years to a total of $30,000.

 

Disposals which total in excess of $10,000 during a tax year or take the total during the five year rolling period in excess of $30,000 will have the excess amount considered as a “deprived asset”.

 

The amendments to the VEA and the Social Security Act 1991 (SSA) introduced the five year “rolling period” for the assessment of deprived assets from 1 July 2002.  Disposals made before that date are covered by the provisions of Subdivision BA which means that Subdivision will still be applicable to disposals made before that date for a period of five years ending 30 June 2007.

 

Section 52J provides that the provisions of Subdivision BA will not apply to disposals that took place more than 5 years before the person became eligible to receive a service pension or income support supplement.

 

The section also provides the Repatriation Commission with the discretion to disregard a disposal that took place within 5 years of becoming eligible to receive service pension or income support supplement.

 

The discretion can only be exercised where the Repatriation Commission is satisfied that the disposal took place before the person disposing of the asset could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension or income support supplement.

 

Section 52J was originally inserted into Subdivision B and was applicable to the provisions of that Subdivision.  The provisions of section 52J should continue to apply to all disposals made before 1 July 2002.

 

The amending Bill made similar amendments to the Social Security Act 1991 (SSA) with the exception that the relevant provisions of that Act were not put into separate Subdivisions.  The effect of this difference in legislative formatting is that section 1127 (the SSA equivalent of section 52J) provides for the discretion to disregard disposals in certain circumstances to be applied to disposals made on or after 1 July 2002 as well as disposals made before 1 July 2002.

 

Explanation of the items

 

Item 10 is a consequential amendment to the Note to subsection 5MB(7) to replace the reference to section “52J” with a reference to “52JE”.

 

Item 30 inserts new section 52JE.  New section 52JE provides that Subdivision BB of Division 11 of Part IIIB will not apply to a disposition of assets that took place:

 

·          more than 5 years before the person or the person’s partner became eligible to receive a service pension or income support supplement ; or

·          less than 5 years before the person or the person’s partner became eligible and before the time when the Repatriation Commission is satisfied that the person who disposed of the assets could reasonably have expected that the person or the person’s partner would become eligible to receive a service pension or income support supplement.

 

Item 78 is a consequential amendment to point SCH6-F1 to replace the reference to section “52J” with a reference to “52JE”.



 

Commencement

 

Items 10, 30, and 78 commence on the day after Royal Assent.

 

Inclusion of supplementary payments in the definition of “compensation affected pension”

 

Background

 

Recent amendments to the SSA definition of “compensation affected payment”, the SSA equivalent of the “compensation affected pension” referred to in the VEA, have meant that the VEA compensation recovery provisions in Part IIIC do not align with those found in Part 3.14 of the SSA.

 

The SSA amendments were included in the Social Security Amendment (Further Simplification) Act 2004 .  The amendments made by that Act defined certain supplementary benefits as “compensation affected payments”.

 

The amendments to the SSA resulted in payments of telephone allowance, advance pharmaceutical allowance and education entry payments being included in the definition of “compensation affected payments”.  As such the payments became subject to the compensation recovery provisions of Part 3.14 of the SSA.

 

The inclusion of the supplementary benefits within the definition of “compensation affected payment” in the SSA allows for the recovery of the payments from the compensation payment where the reduction in an income support pension or benefit is retrospective.

 

Under the current provisions of the VEA, only overpayments of invalidity service pension, partner service pension or income support supplement can be retrospectively recovered from the compensation payment.

 

Overpayments of the supplementary benefits have had to be recovered directly from the recipient under the general overpayment provisions of the VEA.

 

The amendments to include the supplementary benefits in the definition of “compensation affected pension” will simplify the recovery of the overpayment of the additional supplementary payments by providing for their recovery from the compensation payment under the compensation recovery provisions of Part IIIC.

 

Compensation payments to be disregarded for the purposes of the compensation recovery provisions

 

Background

 

The receipt of compensation by a member of a couple can impact on the rate of pension payable to either member of the couple.  The exact impact on each member will depend on a number of factors and the impact on the recipient of the compensation is different to the impact on the partner of the recipient.

 

Subsection 59ZL(1) allows the Repatriation Commission to disregard the receipt of compensation payments for the purposes of Part IIIC if special circumstances exist.

 

Subsection 59ZL(2) states that special circumstances do not exist for the purposes of subsection 59ZL(1) if the sole reason is that there is no connection between the person’s eligibility for a compensation affected pension and the partner’s receipt of compensation.  The provision leaves open the possibility that a compensation payment received by a person may be disregarded if the sole reason is that there is no connection between the person’s eligibility for a compensation affected pension and the person’s receipt of compensation.

 

The equivalent provision in the SSA, section 1184K, provides that special circumstances do not exist if the sole reason would be that there is no connection between the receipt of compensation by the person or the person’s partner and the person’s eligibility for a compensation affected pension.

 

These changes enable the provisions to operate as intended.  The policy applied by the Department of Veterans’ Affairs has been that a compensation payment is not to be disregarded if the sole reason would be that there is no connection between the person’s entitlement to or payment of a compensation affected pension, and the receipt by the person, or the person’s partner of a compensation payment. 

 

Explanation of the changes

 

The amendments made by Item 54 to subsection 59ZL(2) will align the provision with subsection 1184K(2) of the SSA.

 

The amendment removes a potential ambiguity and aligns the legislation with the current policy.

 

Explanation of the items

 

Item 54 repeals and substitutes subsection 59ZL(2).  New subsection 59ZL(2) provides that if:

 

·          a person or the person’s partner is eligible for a compensation affected pension; and

·          the person receives compensation; and

·          the set of circumstances giving rise to the compensation are not related to the set of circumstances that give rise to the person’s or the person’s partner’s eligibility for the compensation affected pension;

 

the fact that those 2 sets of circumstances are unrelated does not in itself constitute special circumstances for the purposes of subsection 59ZL(1).



 

Commencement

 

Item 54 commences on the day after Royal Assent.

 

Exclusion of income support supplement (ISS) from the compensation recovery provisions at “qualifying age”

 

Background

 

The “pension age” for non-veterans is defined in section 5QB as being the same as age pension age under the SSA.  “Pension age” for veterans is defined in section 5QA as being five years less than age pension age under the SSA.

 

A person is eligible for income support supplement on the basis of age when they reach “qualifying age”.  “Qualifying age” is defined in subsection 45A(2) to be veteran pension age, regardless of whether or not the person is a veteran.

 

For all purposes in the VEA other than compensation recovery, the relevant age for a person in receipt of income support supplement is qualifying age, providing equal treatment to all income support supplement recipients regardless of whether or not the person is a veteran.

 

The use of pension age for compensation recovery purposes for recipients of income support supplement means that income support supplement recipients who are veterans will cease to have the compensation recovery provisions applied 5 years earlier than non-veteran income support supplement recipients.

 

From the time of the 1994 amendments it has been the policy of the Department of Veterans’ Affairs that income support supplement will cease to be a compensation affected pension from qualifying age rather than pension age.

 

The basis of that policy is that amendments were made to the VEA to provide that certain references to pension age were to be taken as references to qualifying age for recipients of income support supplement.

 

Other VEA provisions such as subsections 5H(9) and 5J(1D) provide that for the purposes of subparagraph 5H(8)(i)(iv) and subsection 5J(1C) that references to pension age in relation to the income support supplement are to be taken to be references to qualifying age as defined in subsection 45A(2).

 

Section 52 was similarly amended by the Veterans' Affairs Legislation Amendment and Repeal Act 1995 .  The Explanatory Memorandum for that Act states that the amendments were made to ensure that references to "pension age" in Part IIIB were meant to be read as references to "qualifying age" for ISS recipients.



 

Explanation of the changes

 

The definition of “compensation affected pension” in subsection 5NB(1) is also being amended so that, in relation to income support supplement, the stipulated age is qualifying age, rather than pension age.

 

The amendment will ensure that all persons receiving income support supplement are treated equally, as intended, regardless of whether or not the person is a veteran.

 

The other amendments to the definition of “compensation affected pension” are to include the following payments in the definition:

 

·          telephone allowance;

·          education entry payment; and

·          advance pharmaceutical allowance

 

However, those payments are only to be considered to be subject to the compensation recovery provisions where the supplementary payments are associated with the payment of a pension or benefit that is itself, a “compensation affected pension”.

 

The amended definition provides that the payments are not be included in the definition of “compensation affected pension” where eligibility for the supplementary payment arises because the person receives the payment for a reason other than because it is associated with a “compensation affected pension”.

 

Explanation of the items

 

Item 11 repeals and substitutes the definition of “compensation affected pension” in subsection 5NB(1).

 

The amended definition of “compensation affected pension” provides that a “compensation affected pension” is an:

 

·          an invalidity service pension; or

·          a partner service pension; or

·          income support supplement; and

·          any of the following:

·          a telephone allowance, other than a telephone allowance payable because the person is the holder of a seniors health card, or is in receipt of a disability pension at the special rate or extreme disablement rate, or at an increased rate or is receiving a pension as a dependant of a veteran;

·          an advance pharmaceutical allowance other than an advance pharmaceutical allowance paid to a  person because the person  is eligible to be provided with treatment under Part V of the VEA; or

·          an education entry payment;

 

payable to a person who:

 

·          if the person is receiving invalidity or partner service pension, has not reached pension age; or

·          if the person is receiving income support supplement, has not reached qualifying age.

 

Items 45 to 51 are consequential amendments flowing from the amended definition of “compensation affected pension” being inserted in subsection 5NB(1) by Item 11.

 

Paragraph 59M(1)(b) is amended by Item 45 by the inclusion of a reference to “qualifying age”.

 

Subsections 59M(1), (2), (3), (4) and (6) are amended by Items 46, 48, 49, 50 and 51 to include references to “supplements, allowances and payments” in addition to the reference to “pensions”.

 

Subsection 59M(1) is amended by Item 47 to include at paragraphs (g), (h) and (i) respectively, references to “telephone allowance”, “advance pharmaceutical allowance” and “education entry payment” as payments that may be affected by the provisions of Part IIIC.

 

Commencement

 

Items 11, 45, 46, 47, 48, 49, 50, and 51 commence on the day after Royal Assent.

 

Written notification of decisions concerning income support pensions

 

Background

 

There are a number of references in the VEA to the making of decisions and determinations by the Repatriation Commission or the Secretary regarding claims for various pensions and benefits available under the Act.  Requests are also made for the review of decisions concerning those claims and other matters.

 

There are certain provisions of the VEA requiring the written notification of decisions made by the Repatriation Commission.  These include:

 

·          section 34 concerning a claim for a disability pension;

·          sections 57D and 57E concerning reviews of decisions on qualifying service and claims for income support;

·          sections 79V and 79W concerning reviews on advance payments of pension;

·          sections 93ZD and 93ZE for reviews of decisions concerning Repatriation Pharmaceutical Cards issued under Part VA; and

·          sections 116C and 116D concerning decisions on eligibility for the Veterans Children Education Scheme.

 

Decisions made by the Secretary that require written notification include decisions under section 49AB concerning pre-assessment requests made under the Retirement Assistance for Farmers provisions.

 

A written notification of the decision of the Veterans’ Review Board is required by section 140 concerning the review by the Board of decisions made by the Repatriation Commission.

 

The need to provide written advice may also be implied by paragraphs 57A(1)(a), 79T(2)(a) and 118ZT(1)(a) under which, in seeking a review concerning certain determinations, the request for review must be made within 3 months of the person seeking a review being notified.

 

However this requirement is not explicitly provided for in the provisions which outline the duties of the Repatriation Commission in relation to those determinations.  The relevant provisions are:

 

·          section 35H concerning qualifying service;

·          section 36L concerning age service pension;

·          section 37L concerning invalidity service pension;

·          section 38 concerning partner service pension;

·          section 45Q concerning income support supplement;

·          section 79I concerning advance payments of pension; and

·          Section 118ZF concerning the seniors health card.

 

Under the social security law, while there is not a general requirement to provide a written notification of a decision, section 236 of the Social Security Administration Act 1999 requires a written record of all decisions.  There is no such general requirement in the VEA.

 

Explanation of the items

 

Items 16, 19, 21, 23, 25, 56 and 72 amend the following sections to require the Repatriation Commission to provide the claimant with a written notification of the determination of a claim:

 

·          section 35H;

·          section 36L;

·          section 37L;

·          section 38L;

·          section 45Q;

·          section 79I; and

·          section 118ZF.

 

The amendments insert new subsections which provide that:

 

  • the Repatriation must make a written record of the determination of a claim;
  • the Repatriation Commission in the written statement must set out its findings on  material questions of fact, refer to the evidence or any other material on which the findings were based and provide reasons for its determination;
  • the Repatriation Commission must as soon as practicable provide the person who made a claim with a copy of the record of the Commission’s determination and provide the person who made the claim with information about the rights of the person to have the determination reviewed by the Repatriation Commission;
  • the Repatriation Commission must not provide information in the circumstances where the Repatriation Commission is of the opinion that the relevant information includes a matter which is of a confidential nature or might, if communicated to the person who made the claim be prejudicial to the physical or mental health of the person who made the claim.

 

A consequential formatting amendment is made to section 79I by Item 55 to insert a reference to subsection (1).

 

Commencement

 

Items 16, 19, 21, 23, 25, 55, 56, and 72 commence the day after Royal Assent.

 

Allow payment of pension in respect of days not imprisoned

 

Background

 

Section 55 of the VEA provides that a person in receipt of a service pension or income support supplement may not receive an instalment of the payment while the person is in prison.

 

This meant that, if a person was in prison on the pension payday, then they would not receive the instalment for that pension period.  If the person was not in prison on the pension payday, then they would receive the full instalment.

 

In 1999, the SSA was amended to that instalments are not payable only in respect of the days on which the person is imprisoned.

 

Following the SSA amendments, the VEA provisions applicable to a person who has been imprisoned are now inconsistent with the SSA provisions.  In the circumstances where a person is undergoing periodic detention, the VEA provides that the whole instalment of service pension or income support supplement will not be payable if the period of detention includes the pension payday.  Under the amended SSA provisions only the part of the instalment of pension or benefit for those days of the instalment period the person was in prison is not payable.

 

Sections 55A and 1159 of the VEA and SSA respectively provide for the redirection of payments of pension or benefit to the dependant partner that would otherwise not be payable under sections 55 and 1158 of the Acts.

 

The amendments to subsection 55(1) mirror the amendments made to section 1158 of the SSA.  Although the amendments will result in a mirrored provision it should be noted that the subsection 55(4) definition of “in gaol” is to be retained as the VEA does not provide a general definition like the SSA does in subsection 23(5).

 

Explanation of the changes

 

The amendments made by Item 35 repeal subsections 55(1) and (2) and insert new subsection 55(1) as the amended subsection 55(1) will mean that there will be no need to retain subsection 55(2).  The introduction of a daily entitlement to the payment of service pension or income support supplement in July 1999 in amendments made by the Payment Processing Legislation Amendment (Social Security and Veterans’ Entitlements) Act 1998 made the subsection obsolete and should have been repealed.

 

 

Eligibility for treatment under Part V while in gaol

 

Background

 

Section 55 provides that service pension or income support supplement may be suspended or forfeited when a pensioner is in gaol.  Subsection 55(1) also provides that the forfeiture or suspension is subject to subsection 55A(1).

 

Subsection 55A(1) provides that the payment of an imprisoned person’s pension instalments may be redirected to the partner or the child of the person.  In such circumstances the imprisoned person is regarded as still being in receipt of the payments and is therefore eligible for the benefits attached to the receipt of the payments such as the pensioner concession card and treatment eligibility.

 

Note 1 to subsection 55(1) and the Note to subsection 55A(3) both refer to a person in gaol as being eligible for treatment at departmental expense in certain circumstances.

However, it has not been the policy of the Department of Veterans’ Affairs to cover health care costs for persons in gaol as those costs are the responsibility of the relevant State or Territory.

 

Note 2 to subsection 55(1) provides that the imprisoned person will not be eligible for treatment while the instalments of pension are suspended or forfeited unless a determination is in force under subsections 53D(3), 55(1) or 85(8).

 

A person will not eligible for treatment where payments of pension instalments have been suspended or forfeited unless a determination under subsection 55A(1) is in force to redirect the payments.

 

Explanation of the changes

 

The reference to subsection “55(1)” in Note 2 to subsection “55(1): is corrected and replaced in the amendments made by Item 35 with a reference to subsection “55A(1)”.

 

The Note to subsection 55A(3) is amended by Item 40 to remove the reference to a person who has had payment of service pension or income support redirected being eligible for treatment at Departmental expense.

 

Definition of “ in gaol” .

 

Background

 

Current subsection 23(5) of the SSA defines a person to be “in gaol” if the person:

 

(a)        is imprisoned in connection with the person's conviction for an offence; or

(b)        is being lawfully detained in a place other than a prison, in connection with the person's conviction for an offence; or

(c)        is undergoing a period of custody pending trial or sentencing for an offence.

 

The SSA also makes provision for a person who is confined to a psychiatric institution after having been charged with an offence. 

 

Currently, under the VEA, a person is only defined as being “in gaol” if the person is imprisoned in connection with the person’s conviction for an offence. 

 

Explanation of the changes

 

The amendments to sections 55 and 55A made by Items 35 to 39 align the VEA with the SSA so that persons who are imprisoned or confined to psychiatric institutions will be consistently treated under both Acts.

The VEA definition of “in gaol” is aligned with the SSA definition to allow for the redirection, suspension or forfeiture of VEA income support pensions for pensioners who are:

·          lawfully detained in prison or in a place other than a prison; or

·          undergoing a period of custody pending a trial or sentencing for an offence.

Paragraph 55A(1)(a) is amended to additionally provide for the redirection, suspension or forfeiture of payments where a person has been confined to a psychiatric institution after having been charged with an offence.

 

Consequential amendments to paragraph 36A(1)(b), 37A(1)(b), 38A(1)(b) and 45B(1)(b) are made by Items 18, 20, 22 and 24 to add references to a person being in “psychiatric confinement” to the references to a person being “in gaol”.

 

Explanation of the items

 

Item 18 inserts the words “or in psychiatric confinement” to paragraph 36A(1)(b) after the reference to a age service pension not being payable to a veteran who is “in gaol”.

 

Item 20 inserts the words “or in psychiatric confinement” to paragraph 37A(1)(b) after the reference to invalidity service pension not being payable to a veteran who is “in gaol”.

 

Item 22 inserts the words “or in psychiatric confinement” to paragraph 38A(1)(b) after the reference to a partner service pension not being payable to a person who is “in gaol”.

 

Item 24 inserts the words “or in psychiatric confinement” to paragraph 45B(1)(b) after the reference to income support supplement not being payable to a person who is “in gaol”.

 

Item 35 repeals subsections 55(1) and (2) and substitutes subsection 55(1).  New subsection 55(1) provides that, subject to subsection 55(3), that:

 

·          an instalment of service pension or income support supplement is not payable to a person in respect of a day on which the person is in gaol or is undergoing psychiatric confinement because the person has been charged with an offence.

 

The Note to new subsection 55(1) provides that while an instalment is not payable the person is not eligible for benefits under Division 12 of Part IIIB of the VEA unless a determination is in force under subsections 53D(3), 55A(1) or 85(8).

 

Item 36 repeals and substitutes subsection 55(4) and inserts new subsections 55(5) and (6).  New subsection 55(4) provides that for the purposes of the VEA a person is “in gaol” if the person is being lawfully detained in prison or elsewhere while under sentence for conviction of an offence and not on release on parole or licence or is undergoing a period of custody pending trial or sentencing.

 

New subsection 55(5) provides that, subject to subsection 55(6), “psychiatric confinement” includes confinement in the psychiatric section of a hospital or any other place where persons with psychiatric disabilities can be confined.

 

New subsection 55(6) provides that the confinement of a person in psychiatric institution during a course of rehabilitation is not to be taken to be a “psychiatric confinement”.

 

Item 37 amends paragraph 55A(1)(a) by replacing the words “be suspended or forfeited under section 55” with the words “not to be payable because of section 55”.

 

Items 38 and 39 amend subsection 55A(3) to include references to “psychiatric confinement”.

 

Item 40 omits the words “and may be eligible for treatment at Departmental expense from the Note to subsection 55A(3).

 

Commencement

 

Items 18, 20, 22, 24, 35, 36, 37, 38, 39, and 40 commence on the day after Royal Assent.



 

Deprivation where consideration is subsequently received

 

Background

 

The calculation of the rate of service pension or income support supplement that is payable to a person involves the application of the income and assets tests.  Where an asset has been disposed of for less than its full value, the asset may be regarded as being a “deprived asset” and may be included in the calculation of the total amount of assets held by the person or the couple for a period of five years from the date of the disposal.

 

The application of the deprivation provisions has in some circumstances resulted in some unfair outcomes where the deprived asset or assets have subsequently been returned to the person who disposed of them.  In such circumstances the asset will effectively be double counted as there is no mechanism in the legislation by which a deprived asset can be disregarded once the disposal of assets provisions have been applied.

 

As an example, if a couple separate and in the splitting of the couple’s assets, one partner forgoes their rightful half share of an asset, then that half share of the asset is held against the partner under the deprivation provisions.  If the couple subsequently reconcile within five years, the deprivation provisions do not contain a mechanism for cancelling the holding of the disposal of the half share of the asset in the couple’s assessment.  The asset is effectively assessed one and a half times, as the asset itself is included as well as the partner’s deprived half share.

 

Explanation of the changes

 

The amendments insert in Item 29 new section 52FAAA into Division 11 of Part IIIB.  New section 52FAAA provides that the Repatriation Commission is to disregard the application of the deprivation provisions to certain dispositions of assets in certain circumstances.

 

New section 52FAA relates solely to the need for a discretion to disregard the disposal of assets provisions and does not include any discretion concerning the disposal of income.

 

Explanation of the items

 

Item 29 inserts new section 52FAAA.  The new section provides that the application of the disposal of assets provisions of Subdivision BA and BB of Division 11 of Part IIIB will cease in relation to assets that have been reacquired or where adequate consideration has been received where the value of the asset has been included in the value of the person’s assets under those Subdivisions.

 

The request for the cessation of the deprivation provisions must be made by the person in a document lodged by the person with the Department in accordance with section 5T.  The request must outline the circumstances of the disposal and the subsequent reacquisition or receipt of adequate consideration.  The application of the deprivation provisions ceases from the day the person lodges the document notifying that adequate consideration or the asset has been received. 

 

Commencement

 

Item 29 commences on the day after Royal Assent.

 

Indexation of the Income/Assets Reduction Limits for treatment eligibility

 

Background

 

Section 53E of the VEA provides treatment eligibility for certain veterans in receipt of service pension through the application of the Income/Assets Reduction Limit. 

 

The indexation of the limits is provided for in the general indexation provisions set out in sections 59B to 59E.

 

From the 20 September 2004 the “partnered” rate of additional IARL for each dependent child is no longer half the rate of the “not a member of a couple” rate.  This imbalance is due to the application of the rounding rules to the indexation of the amounts.  Once the difference has been established, future indexation increases are unlikely to correct the imbalance.

 

Explanation of the Items

 

The amendments made by Items 32 to 34 to subsection 53E(2) will correct the imbalance.

 

Subsection 53E(2) is amended by Item 32 by replacing the words “amount in column 5” with the words “amount in, or worked out in accordance with, column 5”.

 

The Table in subsection 53E is amended by Items 33 and 34 by replacing the references for table item 2 in Columns 5 and 6 respectively with references to “50% of the amount in column 5 of item 1” and “50% of the amount in column 6 of item1”.

 

Commencement

 

Items 32, 33, and 34 commence on the day after Royal Assent.

 

Indexation of the Income/Assets Reduction Limit for dependant children

 

Background

 

Subsection 53E(2) sets out in a table the income/ assets reduction limits that are applicable to veterans in various circumstances.  The table provides for the limit to be increased (by the base amount of $14 per fortnight as indexed) for each additional dependant child of the veteran.

 

The income/ assets reduction limits are increased in line with increases in the maximum basic rate of pension.  The indexation provisions provide for the indexation of the additional IARL for each dependant child.

 

This step in the indexation process was intended to apply an adjustment to the indexation increase in the additional IARL for a dependant child to compensate for the fact that the additional income free area (IFA) component of the income test for each dependant child was not indexed.

 

Service pensioners without dependant children have the benefit of both the IFA and the IARL being indexed.

 

The current methodology is flawed as a fixed factor should not have been used because over time as the actual amount of the additional IARL increases the factor should have decreased.  With a fixed factor applying over a period of time the adjustments are potentially larger than they should be.

 

Another problem with the factor is that while it was meant only to apply to the amount of the increase due to indexation, the way in which the amending legislation was drafted has meant that the factor applies to the whole amount of the indexed additional IARL.

 

Explanation of the changes

 

The amendments made by Items 41 to 43 amend the method statement in subsection 59C(2) and substitute a new method of adjusting the amount of the indexation increase of the additional IARL in new subsection 59C(2AA).

 

The new method for determining the factor to be used in adjusting the indexation increase makes use of a formula, where the sum of the current additional income free area and the income/ assets reduction limit is divided by income/ assets reduction limit.

 

The adjustment factor derived from the formula when applied to the indexation increase in the additional IARL will produce the same outcome as if the additional IFA was indexed at the same rate as the additional IARL.

 

Explanation of the items

 

Item 41 amends step 3 of the method statement by replacing the reference to “provisional” indexed amount with a reference to the “initial” indexed amount.

 

Item 42 repeals and substitutes steps 4 and 5 of the method statement in subsection 59C(2).

 

New step 4 provides that the provisional indexed amount is:

 

(a)                          if paragraph (b) does not apply - the initial indexed amount as determined in step 3; or

(b)                         if the amount to be indexed under item 10 of the CPI Indexation Table in subsection 59B(1)(the IARL dependant child add-on) - the amount worked out by determining the difference between the initial indexed amount and the current figure then multiplying that difference by the indexation adjustment worked out under subsection 59C(2AA).

 

New step 5 provides that section 59E is used to round off the provisional indexed amount to obtain the indexed amount.  It also provides that the indexed amount may be increased under section 59EA in certain cases.

 

Item 43 inserts new subsection 59C(2AA) setting out a formula to calculate the indexation adjustment to be used in step 4 of the method statement in subsection 59C(2).

 

The indexation adjustment is calculated by using the formula:

 

            Income free area +  Income/ assets reduction limit

                        Income/ assets reduction limit

 

where:

 

“income/assets reduction limit” is the relevant amount specified in column 5 in Table 53E in subsection 53E(2).

“income free area” means the relevant amount specified in column 5 of Table E-1 in point SCH6-E6.

.

 

Item 44 is a consequential amendment to Note 1 to subsection 59E(1) to replace the reference to “Step 3” of subsection 59C(2) with a reference to “step 4” of subsection 59C(2).

 

Commencement

 

Items 41, 42, 43, and 44 commence on the day after Royal Assent.

 

Defence Force Income Support Allowance amendments

 

Overview

 

Amendments were made to the VEA, SSA and the Income Tax Assessment Acts by the Veterans’ Entitlements (Clarke Review) Act 2004 to provide for the introduction of the Defence Force Income Support Allowance.

 

DFISA is an amount payable to those persons whose primary payment of social security is reduced, or is not payable, because disability pension paid under the VEA has been included as income in assessing the amount of the primary payment of social security.

 

The actual amount of DFISA payable to the person is made up of two components.  The first component of the payment is the amount equal to the difference between the primary payment of social security a person receives under social security law and the social security payment the person would receive if VEA disability pension was not counted as income in the assessment of their social security payment.  The second component is the rent assistance reduction amount determined by the application of the VEA disability pension income test for rent assistance.

 

A number of consequential, minor and technical amendments to the DFISA provisions are set out under the headings below.

 

Recovery of overpayments of social security pension or benefit

 

Background

 

Disability pension received under either Part II or Part IV of the VEA is treated as income for the purposes of the income test for social security pensions and benefits.

 

New grants of disability pension and increases in the rate of disability pension are always made retrospectively under the provisions of sections 20 and 21 of the VEA.  Any grant of disability pension or increase in the rate of disability pension will result in the payment of arrears of disability pension.

 

Where pensioners and their partners are receiving a social security pension or benefit the receipt of an arrears payment of disability pension will result in a reassessment of the rate of social security pension or benefit for the period of the arrears payment of disability pension.

 

The VEA has provisions that allow for the recovery of the overpayment of the social security pension or benefit from the arrears payment of disability pension.  The relevant provisions are section 205AA which is applicable to the recipient of the disability pension and section 27A which allows for the recovery of overpayments of social security pension or benefit to the person or the partner of the person receiving the arrears of disability pension.

 

With the introduction of the payment of DFISA, from 20 September 2004, any decrease in the rate of the social security pension or benefit payable to a person will in effect be compensated with an increase in the rate of DFISA payable to the person during the arrears period.

 

For the recipient of the disability pension the overpayment of the social security pension or benefit will continue to be recovered from the arrears of disability pension.

 

But, for the partner of the recipient of the disability pension, the existing provisions do not allow for the recovery of the overpayment from the arrears payment of DFISA that the partner would be eligible for during the relevant period.

 

The current operation of section 27A is unfair to the disability pensioner as it would result in his or her partner receiving the benefit of both the overpayment of the social security pension or benefit during the arrears period and the arrears of DFISA that would be payable for the same period.

 

Explanation of the items

 

Item 13 amends section 27A so that it is applicable only in the circumstances where an overpayment of social security pension or benefit to the partner of the pensioner has not been fully recovered under the provisions of section 205 or 205AA.

 

Item 14 repeals Step 6 of the method statement in subsection 27A(2) and inserts new Steps 6 and 6A.

 

New Step 6 provides that the “notional excess payment” is the difference between the payment of income support received by the partner of the person receiving arrears of disability pension and the payment of income support the partner would have received if the increase in disability pension had been taken into account in determining the rate of income support.

 

New Step 6A subtracts the recovered amount (if an amount has been recovered under sections 205 or 205AA) from the amount of the notional excess payment to determine the actual “excess payment” to be recovered from the arrears payment of disability pension.

 

Item 15 replaces the reference to Steps 4, 5 and 6” with a reference to “Steps 4 to 6A” in subsection 27B(2).

 

Commencement

 

Items 13, 14, and 15 commence on the day after Royal Assent.

 

Rent assistance reduction amount

 

Background

 

The disability income test for rent assistance that is used in the determination of the rate of DFISA payable to a person is the same test as applied under Module C of the Rate Calculator in Schedule 6 of the VEA to a person in receipt of a disability pension or income support supplement to reduce the rate of rent assistance payable.

 

While the test is the same, the references in point SCH6-C13 are to an amount that is described as the “rent assistance reduction amount”.   These changes will change references to the “rent reduction amount” in the DFISA income test for rent assistance to the “rent assistance reduction amount” in line with the disability income test for rent assistance. 

 

Explanation of the items

 

Items 61 to 64 amend the references to “rent reduction amount” in Step 2 and the Note to Step 2 in subsection 118ND(1) and the definition in subsection 118ND(4) to refer to the “rent assistance reduction amount”.

 

Commencement

 

Items 61, 62, 63, and 64 commence on Royal Assent. 



 

Bereavement payments to certain carers

 

Background

 

Both the VEA and SSA provide for bereavement payments to the surviving partner or the estate of a deceased pensioner.  Section 118ND of the VEA has the effect of amending the SSA bereavement payment provisions applicable in respect of deceased persons who were receiving both DFISA and a social security pension or benefit at the time of their death.

 

Under the bereavement payment provisions of the SSA the income support entitlements of the deceased person continue to be payable to the partner of the deceased person for the duration of a period known as a bereavement period.  The rate of the bereavement payment is determined by the rate of income support payable to the deceased on the last day of the pension period prior to the death of the person.

 

Subsection 118ND(1) provides that the rate of the social security pension or benefit that would have been payable to a person during the bereavement period if they had not died is to be increased by the rate of DFISA that would have been payable to the person on that day.

 

The effect of the provision is to include DFISA in the determination of the amount of the bereavement payment to be made to the surviving partner, as determined under the SSA.

 

Subsection 118ND(4) defines for the purposes of section 118ND the “bereavement payment provisions” of the SSA that are to include payments of DFISA.

 

Under subsection 235(1) of the SSA the carer will continue to receive the carer payment and DFISA for the bereavement period.  The provisions of section 118ND have no impact on the amount of those payments as they are relevant only in regard to bereavement payments to the partner of a deceased person receiving DFISA at the time of their death and subsection 235(1) provides for the continuation of carer payment rather than the payment of a bereavement payment.

 

In the circumstances where either the deceased care recipient had no partner or a partner not in the receipt of an income support payment, section 236A(1) provides for the payment of a lump sum to the carer.  Under the current provisions, the addition of DFISA is not catered for.  These changes will rectify this error. 

 

Explanation of the items

 

Item 65 amends section 118ND to insert new subsection 118ND(1A).

 

New subsection 118ND(1A) provides that, for the purposes of the bereavement payment provisions of the SSA, the rate of the pension or benefit that would have been payable to the carer is to be increased by the rate of DFISA that would have been paid to the carer during the bereavement period if the care recipient had not died.

 

Item 68 inserts new subsection 118ND(2A).  New subsection 118ND(2A) refers to the situation where a payment of DFISA is paid to a carer after the care recipient has died.

 

The additional payment of DFISA will not be recovered from the carer where it can be assumed that the carer of the deceased person has had the benefit of the payment and the payment is not more than the carer of the deceased would have been entitled to under the bereavement payment provisions.  In those circumstances the amount payable under the Social Security Act bereavement payment provisions will be reduced by the additional amount of the DFISA paid.

 

Commencement

 

Items 65 and 68 commence on the day after Royal Assent.

 

References to the “Social Security Secretary”

 

Background

 

Subsection 118ND(2) refers to the situation where a payment of DFISA is made in the name of the deceased person during the bereavement period.

 

The additional payment of DFISA will not be recovered where it can be assumed that the partner of the deceased person has had the benefit of the payment and the payment is not more than the partner of the deceased would have been entitled to under the bereavement payment provisions.

 

In aligning this provision with the bereavement provisions in the SSA subsection 118ND refers to the need for the Social Security Secretary to be satisfied as to whether or not the surviving partner has received the benefit of the overpayment of DFISA.  If the assumption is that the survivor has had the benefit of the overpayment the amount is offset against the amount of the bereavement payment payable under the SSA.

 

The term “Social Security Secretary is defined in subsection 118ND(4) as the Secretary of the Department administered by the Minister who administers the Social Security Act.

 

Section 118ND is the only provision of the VEA that refers to decisions made under the VEA by the “Social Security Secretary”.  At the time Part VIIAB was inserted no provision was made to amend the delegation provisions of Part XII of the VEA to give the Social Security Secretary the power to delegate the making of his or her decisions under section 118ND to another person.  Therefore any decision concerning the need to offset overpayments of DFISA against the amount of a bereavement payment under the VEA must be made by the Social Security Secretary.

 

Explanation of the Items

 

Items 66 and 67 remove references to the “Social Security Secretary”.  Paragraph 118ND(2)(c) is amended to replace the reference to “Social Security Secretary” with a reference to “Commission”.  The Note to subsection 118ND(2) is amended to remove the reference to “and Social Security Secretary”.

 

Item 69 repeals the definition of “Social Security Secretary” should be omitted from subsection 118ND(4).

 

Commencement

 

Items 66, 67, and 69 commence on the day after Royal Assent.

 

Payment of DFISA pension bonus upon death of claimant

 

Background

 

A DFISA pension bonus is payable where the payment of adjusted disability pension to a person or the person’s partner has reduced the amount of the pension bonus payable to the person under the Pension Bonus Scheme in Part 2.2A of the SSA.

 

Section 118NH of the VEA provides that a DFISA bonus will only be payable after the death of the person eligible for the bonus in the circumstances where a DFISA bonus was payable to the person at the time of the person’s death.

 

Section 118NH does not provide for the payment of the DFISA bonus after the death of a person eligible for the DFISA bonus if the claim for the Pension Bonus has not been determined at the time of the death of the person.  This was an oversight.

 

The DFISA pension bonus provisions do not include a provision similar to those found in subsections 45UR(3) of the VEA and 59(3) of the SSA.  Under those provisions a pension bonus will be payable to the legal representative of a deceased person eligible for a pension bonus that has not been determined at the time of his or her death.

 

Explanation of the items

 

Item 70 inserts new subsection 118NH(2A) which  provides for the DFISA bonus to be payable after a person dies if:

 

·          a person has made a claim for a social security pension bonus; and

·          the person dies; and

·          at the time of the person’s death, the claim had not been determined; and

·          then if the claim is granted the DFISA bonus is payable to the legal representative of the person.

 

Item 71 is a consequential amendment inserting a reference to new subsection 118NH(2A) in subsection 118NH(3).

 

Commencement

 

Items 70 and 71 commence on the day after Royal Assent.

 

Clarification of the eligibility criteria for rent assistance

 

Background

 

Duplicate rent assistance payments may occur when a person receives arrears of Family Tax Benefit (FTB) Part A that includes an amount of rent assistance at a time when they, or their partner, have already received rent assistance with a social security or veterans’ affairs income support payment.

 

Duplicate payments can also occur where a person, or their partner, is incorrectly paid rent assistance with both their ongoing family assistance or social security or veterans’ affairs payment. 

 

Amendments were made to the rent assistance provisions of the VEA by the Family and Community Services (Family Assistance and Related Measures) Act 2005 .  Although the amendments were intended to prevent the duplicate payment of rent assistance where an individual received both family tax benefit and a veterans’ affairs income support pension, the amendments unintentionally limited rent assistance eligibility to those persons entitled to be paid family tax benefit.  These changes correct this unintentional error. 

 

Explanation of the Item

 

Item 76 repeals and substitutes paragraph SCH6-C3(f) to provide that in a case where the person is entitled to be paid a family tax benefit, the person must satisfy either point SCH6-C3A or SCH6-C3B.

 

Commencement

 

Item 76 commences on the day after Royal Assent.

 

Extend rent assistance eligibility to SRDP recipients

 

Background

 

The new Military Rehabilitation and Compensation Scheme (MRCS) commenced on 1 July 2004.  The legislative basis of the new scheme was the Military Rehabilitation and Compensation Act 2004 .  Transitional provisions and consequential amendments were made by the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 .

 

The scheme covers all permanent and reserve members of the Australian Defence Force, cadets and cadet instructors who have warlike, non-warlike and peacetime service.  It provides treatment, rehabilitation and compensation for those members who have suffered a mental or physical injury, or contracted a disease, as a result of service after 30 June 2004.

 

The payment of a Special Rate Disability Pension (SRDP) was included in the scheme to provide for a payment very similar to the Totally and Permanently Incapacitated (TPI) pension payable under the VEA as the special rate disability pension.

 

For pensioners receiving income support under the VEA, payments of SRDP are treated in the same manner as payments of the special rate disability pension.  That is, both payments are excluded income for the purposes of determining the rate of service pension or income support supplement payable.  However, the two payments affect the rent assistance component of those payments differently.

 

In most cases, rent assistance will not be payable to a person receiving a TPI pension even though they may be eligible for the payment.  This is because the rent assistance payable under the VEA is reduced by 40 cents in the dollar for any amount of disability pension over the income free area.  Unless the TPI pension is being reduced by another compensation payment, the amount of TPI pension being received by the person will result in the amount of rent assistance payable being reduced to a nil amount.  However, in those compensation affected cases where the TPI pension is reduced, rent assistance may be payable.

 

The same circumstances do not apply where a person is receiving a reduced rate of SRDP.  This is because a consequential amendment was made to the rent assistance module of the Rate Calculator in Schedule 6 of the VEA by the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 .   The amendment inserted point SCH6-C4A precluding the payment of rent assistance to a person who is receiving an SRDP.

 

The Explanatory Memorandum refers to the amendment and states that it “reflects the situation applicable to people in receipt of pension at the rate set out under section 24(4) of the VEA”.  The reference is to the fortnightly rate of the special rate disability pension.

 

It further states that rent assistance “is not payable to a person in these circumstances because of the inclusion of the amount of VEA special rate pension as income for the purposes of assessing the rate of rent assistance”.  The statement was incorrect.

 

As the SSA does not preclude a person receiving an SRDP from eligibility for rent assistance, the amended provision means that in some instances an SRDP recipient could receive rent assistance with a social security pension whereas they would not be entitled to any rent assistance with their service pension or income support supplement.  In addition, the amended provision led to the possibility that an SRDP recipient would be denied rent assistance, whereas their partner would be eligible for the payment.

 

Explanation of the items

 

Item 77 repeals point SCH6-C4A.

 

Commencement

 

Item 77 commences on the day after Royal Assent.

 

 

Part 2 - Application and saving provisions

 

Item 80 is an application provision that provides that the amendments made by items 13 to 15 of Schedule 1 to sections 27A and 27B will apply if the decision to grant, or to increase the rate of pension payable under Part II is made after the commencement of the item.

 

Item 80 will commence the day after Royal Assent.

 

Item 81 is an application provision that provides that the amendments made by items 16, 19, 21, 23, 25, 55, 56 and 72 of Schedule 1 to sections 35H, 36L, 37L, 38L, 45Q, 79I and 118ZF respectively, will apply in respect of a determination made on or after the commencement of the item.

 

Item 81 will commence the day after Royal Assent.

 

Item 82 is an application and saving provision that is applicable to the amendments made by items 35 to 39 to sections 55 and 55A

 

Subclause (1) provides that the amendments to sections 55 and 55A that have been made by items 35 to 39 will not apply to any person who has commenced a period in gaol that has not ended before the commencement of the items.  Sections 55 and 55A will apply in respect of such persons as if the amendments had not been made.

 

Subclause (2) provides that any direction that is in force under sections 55 and 55A that has been made before the commencement of the amendments to those sections that have been made by items 35 to 39 will continue to be in force.  Such directions made under sections 55 and 55A will continue to be in force as if the amendments had not been made.

 

Subclause (3) provides that the amendments to sections 55 and 55A that have been made by items 35 to 39 will apply only in relation to an instalment of service pension or income support supplement that is payable to a person in respect of a day that is on or after the commencement of the items and is not part of a continuous period of psychiatric confinement that began before the commencement of the item.

 

Item 82 will commence the day after Royal Assent.

 

Item 83 is an application provision that provides that the amendments made by items 59 and 60 of Schedule 1 to section 112 will apply in respect of an application for travelling expenses that is made on or after the commencement of the item.

 

Item 83 will commence on Royal Assent.



 

Item 84 is an application provision that provides that the amendments made by items 70 and 71 of Schedule 1 to section 118NH will apply in respect of a claim for a social security pension bonus that is made on or after the commencement of the item.

 

Item 84 will commence the day after Royal Assent.



 

Schedule 2 - Amendment of the Military Rehabilitation and Compensation Act 2004

 

Overview

 

The amendments to the Military Rehabilitation and Compensation Act 2004 (MRCA) made by this Schedule will correct some minor errors and anomalies in the Act.

 

Background

 

The MRCA covers all permanent and reserve members of the Australian Defence Force, cadets and cadet instructors who have warlike, non-warlike and peacetime service.  It provides treatment, rehabilitation and increased compensation for those members who suffer a mental or physical injury, or contract a disease, as a result of service after 30 June 2004.  The MRCA combines elements of the Veterans’ Entitlements Act 1986 (VEA) and the Safety, Rehabilitation and Compensation Act 1988 (SRCA).  Benefits provided by the new Act match and in many cases, enhance those provided under the previous arrangements.

 

Part 1 - Amendments

 

Explanation of the changes

 

Unintended consequence of treatment for service injury or service disease

 

The amendments made by Item 1 relate to the acceptance of liability by the Military Rehabilitation and Compensation Commission (the Commission) for injuries and diseases contracted by service personnel as an intended or unintended consequence of receiving treatment for an earlier service injury or service disease.

 

Subparagraph 29(1)(a)(i) of the MRCA provides, that if a person receives medical treatment under the MRCA for an accepted condition, and as an unintended consequence of that treatment the person sustains an injury or contracts a disease, liability for the injury or disease is accepted under the MRCA.

 

Likewise, subparagraph 29(2)(a)(i) of the MRCA provides, that if a person receives medical treatment under the MRCA for an accepted condition, and as an unintended consequence of that treatment the injury or disease or a sign or symptom of the injury or disease of the member is aggravated by the treatment, liability for the injury or disease is accepted under the MRCA.

 

Those provisions were intended to mirror subsection 4(3) of the SRCA.  However, subsection 4(3) of the SCRC provides for the acceptance of liability for any consequence, either intended or unintended that result from medical treatment provided for an earlier compensable injury.

 

Subparagraph 29(1)(a)(ii) of the MRCA provides that if a serving member receives treatment pursuant to regulations made under the Defence Act 1903 and as an unintended consequence of that treatment the member sustains an injury or contracts a disease, liability for the injury or disease is accepted under the MRCA.

 

Subparagraph 29(2)(a)(ii) of the MRCA provides that if a serving member receives treatment pursuant to regulations made under the Defence Act 1903 and as an unintended consequence of that treatment the injury or disease or a sign or symptom of the injury or disease of the member is aggravated by the treatment, liability for the injury or disease is accepted under the MRCA.

 

Those provisions mirror section 6A of the SRCA, which provides for liability being accepted for the unintended consequences of medical treatment provided by the Commonwealth.  It does not provide for liability where such consequences are intended.

 

Unintended consequences of treatment are:

 

·                not desired or aimed for by the provider of the medical treatment; and

·                not a likely consequence of the medical treatment.

 

For example, if a person were to receive treatment for a service injury or disease, and it was known that a side effect was a desired or likely consequence of the treatment, it could not be said that that side effect is an unintended consequence of that treatment.  Therefore, under the current legislation, a person could not receive rehabilitation or compensation for that side effect, as liability could not be accepted under either subparagraph 29(1)(a)(i) of the MRCA or subparagraph 29(2)(a)(i).

 

Item 1 repeals and substitutes subsections 29(1) and (2) of the MRCA.

 

New subsection 29(1) provides that an injury sustained or a disease contracted by a person will be a service injury or a service disease if it was caused by a consequence, either intended or unintended of medical treatment paid for by the Commonwealth for an earlier service injury or service disease.  This includes treatment  provided under the MRCA or regulations made under the Defence Act .

 

Subsection 29(1) also provides that an injury sustained or a disease contracted by a person will be a service injury or a service disease only where it was an unintended consequence of medical treatment provided under regulations made under the Defence Act 1903 for an earlier injury or disease that was not a service injury or service disease.  This applies to situations where a current serving members is provided treatment by the Department of Defence for an injury or disease unrelated to their defence service.

 

New subsection 29(2) provides that an injury sustained or a disease contracted by a person will be a service injury or a service disease if it was aggravated by a consequence, either intended or unintended, of medical treatment paid for by the Commonwealth for an earlier service injury or service disease.  This includes treatment provided under the MRCA or regulations made under the Defence Act 1903 .

 

Subsection 29(2) also provides that an injury sustained or a disease contracted by a person will be a service injury or a service disease only where it was aggravated by an unintended consequence of medical treatment provided under regulations made under the Defence Act 1903 for an earlier injury or disease that was not a service injury or service disease.  This applies to situations where a current serving member is provided treatment by the Department of Defence for a injury or disease unrelated to their defence service.

 

The amendments recognise that treatment for a service injury or service disease can be provided under either the MRCA or regulations made under the Defence Act 1903 .  The amendments also make it clear that liability can be accepted for any consequence of medical treatment provided in relation to a service injury or service disease.  However, where treatment is provided under the regulations made under the Defence Act 1903 to current serving members and the condition being treated has no other relationship to their defence service, the consequences of that treatment must be unintended for liability to be accepted.

 

Onus of Proof Relating to Claim for Liability

 

The amendments made by Item 2 clarify the issues concerning the onus of proof for liability claims under the MRCA.

 

It is the policy intention of the MRCA that nothing in any part of the Act will require the claimant, the Military Rehabilitation and Compensation Commission, any other Commonwealth or State organisation, or any other private person or group of persons to prove anything relating to a claim for the acceptance of liability or compensation benefits.

 

However, paragraph 337(a) of the MRCA, in the provision relating to the onus of proof, referred only to a person claiming compensation, and omitted references to claims for the acceptance of liability. 

 

The discrepancy appears to have been an oversight as the provisions of the MRCA relating to the onus of proof applicable to claims were modelled on provisions of the VEA, which does not make a distinction between a claim for the acceptance of liability and a claim for compensation.

 

Item 2 amends paragraph 337(a) of MRCA by inserting the words “or claiming for the acceptance of liability” after the reference to a person “claiming compensation”.

 

Commencement

 

Items 1 and 2 commence on the day after Royal Assent

 

Part 2 - Application provisions

 

The application provision inserted by Item 3 is beneficial in nature and provides that the amended subsections 29(1) and (2) of the MRCA as inserted by Item 1 of Part 1 will apply in relation to an injury sustained, or disease contracted, and to injuries or diseases aggravated before, on or after the commencement of the Item which has effect from 1 July 2004.

 

The application provision inserted by Item 4 provides that the amendment to paragraph 337(a) of the MRCA made by Item 2 of Part 1 will apply in relation to a matter that is, or might be relevant to the determination of a claim made on or after the commencement of the Item.

 



Schedule 3 - Amendment of the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004

 

Overview

 

The amendments to the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 (CTPA) made by this Schedule will correct some unintentional errors made by some of the amendments included in that Act.

 

Background

 

Items 126 and 130 of Part 4 of Schedule 1 of the CTPA made consequential amendments to subsections 23(5) and 24(5) of the VEA.

 

Subsequently, subsections 23(5) and 24(5) were repealed and substituted by Government amendments as Items 16A and 16B of Part 1 of Schedule 1 of the amending Act.

 

The effect of the later Government amendments was to make the earlier amendments redundant.

 

Explanation of the clauses

 

Items 1 and 2   repeal the redundant provisions inserted by Items 126 and 130 of Part 4 of Schedule 1 of CPTA .

 

Commencement

 

Items 1 and 2 commence immediately after the time specified in the CTPA for the commencement of items 126 and 130 of Schedule 1 to that Act.

 



 

Schedule 4 - Amendments to the Income Tax Assessment Act 1936

 

Overview

 

The amendments to the Income Tax Assessment Act 1936 made by this Schedule will include appropriate references to payments of income support supplement under the VEA in the Tax File Number (TFN) exemption provisions.

 

Background

 

Part IIIA was inserted into the VEA to provide for the payment of income support supplement to certain war widows and widowers.  It was created to replace the ceiling rate income support age, carer, wife and disability support pensions, paid to war widows/widowers under the SSA.

 

Sections 202EA and 202EB were inserted into the Income Tax Assessment Act 1936 as part of the amendments concerning Tax File Numbers made by the Taxation Laws Amendment (Tax File Numbers) Act 1988 .

 

Section 202EA refers to payments of “pension under Part III of the Veterans’ Entitlements Act 1986 ” in the list of payments made under the SSA and VEA for which an exemption is granted for the need to provide a TFN.

 

Section 202EB refers to payments of “pension under Part III of the Veterans’ Entitlements Act 1986 ” in the list of payments made under the SSA or VEA for which an exemption is given from the requirement to quote their TFN to an investment body in relation to certain investments.

 

With the introduction of the income support supplement consequential amendments to other Acts were made by the Veterans' Affairs (1994-95 Budget Measures) Legislation Amendment Act (No. 2) 1994 .  However, that Act did not make appropriate amendments to sections 202EA and 202EB of the Income Tax Assessment Act 1936 .

 

Explanation of the items

 

Items 1 and 2 insert new paragraphs 202EA(5)(ia) and 202EB(5)(d) into sections 202EA and 202EB respectively, to include a reference to “income support supplement under Part IIIA of the Veterans’ Entitlements Act 1986 ”.

 

Commencement

 

Items 1 and 2 commence on the day after Royal Assent.



 

Schedule 5 - Amendments to the Income Tax Assessment Act 1997

 

Overview

 

The amendments to the Income Tax Assessment Act 1997 to be made by this Schedule will clarify the taxable status of Defence Force Income Support Allowance (DFISA) payments.

 

Background

 

The Veterans’ Entitlements (Clarke Review) Act 2004 in providing for the payment of the DFISA included consequential amendments to section 52-65 of the Income Tax Assessment Act 1997 .

 

Section 52-65 refers to the taxable status of the various payments made under the VEA.  The amendments included DFISA as new item 5A.1 in the table of payments listed in section 52-65.

 

The reference to DFISA states that the “social security pension or social security benefit that is also payable to you on the day this allowance is payable to you is exempt from income tax under section 52-10”.

 

The intention of the provision is to associate the taxable status of a person’s DFISA payment with the taxable status of the basic rate component of the primary payment of social security pension or benefit.

 

Using the example of a person in receipt of an age pension under the SSA, the DFISA payment received by the person would be regarded as a taxable payment on the basis that the basic rate component of the age pension is a taxable payment.

 

Where the primary payment is regarded as being a tax exempt payment under the provisions of section 52-10 of the ITAA any associated payment of DFISA will also be regarded as being tax exempt.

 

While most taxable primary payments contain components that are tax exempt, such as rent assistance, pharmaceutical allowance and remote area allowance, it is the taxable status of the basic component of the primary payment that is to be relevant in determining the taxable status of DFISA.

 

Notwithstanding the intention of the amendments, the advice of the Australian Taxation Office is that because of the description of the taxable status of DFISA that is given in section 52-65 of the ITAA it will regard DFISA as being a tax exempt payment where the person is receiving a primary payment that contains both taxable and tax exempt components.

 

Explanation of the clauses

 

Item 1 amends section 52-65 of the Income Tax Assessment Act 1997 to clarify the taxable status of DFISA.

 

Table item 5A.1 is repealed and substituted.  The reference to DFISA states that it will be exempt only where the whole of the social security pension or benefit is fully exempt from income tax under section 52-10.

 

Commencement

 

Item 1 commences on 1 July 2007.