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Veterans’ Affairs Legislation Amendment (Budget Measures) Bill 2009

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2008-2009

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 Veterans’ Affairs Legislation Amendment

(Budget Measures) Bill 2009

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

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

The Honourable Alan Griffin MP)



 

Table of Contents

 

 

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

           

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

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

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

 

Schedule 1 - Amendments

 

Part 1- Deposit of certain payments into foreign bank accounts  ……………….           1

 

Part 2 - Amendments relating to insurance  ...........................................................          4                                                                                                                                          

Part 3 - Provisions relating to dependants’ pensions  ............................................           7                                                                                                                     

                                                                                                           

 

 



 

VETERANS’ AFFAIRS LEGISLATION AMENDMENT

(BUDGET MEASURES) BILL 2009

 

OUTLINE AND FINANCIAL IMPACT

Outline

The Bill will give effect to three Veterans’ Affairs portfolio 2009 Budget measures.  The measures will:

 

  • provide for the payment of Veterans’ Affairs pensions and allowances into overseas bank accounts;
  • extend eligibility for Defence Service Homes Insurance to persons eligible under the Defence Home Ownership Assistance Scheme Act 2008 ; and
  • cease payment of the majority of Dependants’ Pensions.

 

 

Financial Impact Statement

 

Payments into overseas bank accounts

           

            Financial Impact                     2009-10           $0.2 m

                                                            2010-11           $0.1 m

                                                            2011-12           $0.1 m

                                                            2012-13           $0.1 m

 

           

Defence Service Homes Insurance

 

Financial Impact                     2009-10           - $0.2 m

                                                            2010-11           - $0.2 m

                                                            2011-12           - $0.3 m

                                                            2012-13           - $0.3 m

 

 

Dependants’ Pension

 

Financial Impact                     2009-10             $5.3 m

                                                            2010-11           - $2.2 m

                                                            2011-12           - $2.0 m

                                                            2012-13           - $1.9 m

 



 

 

 

 

Veterans’ Affairs Legislation Amendment

(Budget Measures) Bill 2009

 

 

Short Title

 

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

 

Commencement

 

Clause 2 provides that the Act commences on the day after it receives the Royal Assent. 

 

Schedules

 

Clause 3 provides that each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

 

 

 



 

Schedule 1  - Amendments

 

Part 1 - Deposit of certain payments into foreign bank accounts

 

Overview

 

Part 1 of Schedule 1 will enable certain Veterans’ Affairs pensions, allowances and other pecuniary benefits to be paid into an account with a bank or similar financial institution that is outside Australia.

 

Background

 

Under existing arrangements, persons residing permanently outside Australia who are in receipt of pensions and other payments under the VEA or MRCA are required to have an account in Australia with a bank or financial institution into which Veterans’ Affairs payments can be made.

 

Veterans’ Affairs payments that may be paid to persons permanently residing overseas are:

 

  • service pension payable under Part III of the VEA,
  • income support supplement payable under Part IIIA of the VEA;
  • Defence Force Income Support Allowance (DFISA) payable under Part VIIAB;
  • disability, war widow/er and orphan pensions payable under Parts II and IV of the VEA;
  • certain allowances payable under Part VI of the VEA; and
  • compensation payments under MRCA. 

 

This measure will improve the economic and social welfare of pensioners residing overseas by enabling them to have their Veterans’ Affairs payments made directly into their account with a bank or similar financial institution that is outside Australia.     This measure will align the Department of Veterans’ Affairs policy on payment to overseas bank accounts with other Commonwealth Government agencies, including Centrelink and the Child Support Agency.

 

Explanation of the changes

 

The changes made by Part 1 of Schedule 1 will enable the Repatriation Commission to make arrangements for the payment of pensions, allowances or other pecuniary benefits, payable under the VEA or the MRCA, to be paid into an account with a bank or similar financial institution that is outside Australia.



 

Explanation of the items

 

Military Rehabilitation and Compensation Act 2004

 

Item 1 amends subsection 430(1) of the MRCA by omitting the words “an account with a bank” and substituting the words:

 

“an account with:

(a)     a bank; or

(b)    if the person is physically outside Australia, a foreign corporation that takes money on deposit.”

 

Item 1 will enable the Commission to direct that the whole or part of a person’s compensation is to be paid, at the intervals that the Commission specifies, to the credit of an account of an overseas bank or foreign corporation that takes money on deposit. 

 

Item 2 amend the definition of account in subsection 430(4) of the MRCA by repealing the definition and substituting a new definition to take account of the new arrangements that will enable compensation payments to be credited to an account with an overseas bank or an account with a foreign corporation that takes money on deposit. 

 

Veterans’ Entitlements Act 1986

 

Item 3 amends the note at the end of section 58C of the VEA to include a reference to a “foreign corporation that takes money on deposit”.

 

Item 4 amends subsection 58F of the VEA by omitting the words “an account with a bank” and substituting the words:

 

“an account with:

(c)     a bank; or

(d)    if the person is physically outside Australia, a foreign corporation that takes money on deposit.”

 

Item 4 will enable the Commission to direct that the whole or part of a person’s pension is to be paid, at the intervals that the Commission specifies, to the credit of an account with an overseas bank or an account with a foreign corporation that takes money on deposit. 

 

Item 5 makes a technical amendment to paragraph 118PB(2)(c) so that the provision refers to “an account” instead of “a bank account”. 

 

Item 6 amends the note at the end of subsection 122(4) by omitting the words “with a bank”. 



 

Item 7 amends subsection 122A(1) by omitting the words “an account with a bank” and substituting the words:

 

“an account with:

(e)     a bank; or

(f)     if the pensioner is physically outside Australia, a foreign corporation that takes money on deposit.”

 

Item 7 will enable the Commission to direct that the whole or part of the amount of pension or allowance is to be paid, at such intervals as the Commission directs, to the credit of an account with an overseas bank or an account with a foreign corporation that takes money on deposit.  The account, nominated by the pensioner, may be an account maintained by the pensioner, either alone or jointly or in common with another person. 

 

Item 8 inserts a new subsection 122A(1AA) after subsection 122A(1).  New subsection 122A(1AA) provides that if the Commission gives a direction under subsection 122A(1), the pension is payable in accordance with the direction.  This amendment maintains the effect of existing subsection 122A(1) which previously provided that the payment is to be made according to the Commission direction. 

 

Item 9 makes a technical amendment to subsection 122A(1B).

 

Item 10 repeals section 122C and substitutes a new subsection 122C.  New subsection 122C provides that if a pension, allowance or other pecuniary benefit under the VEA, other than a pension or allowance to which section 58A applies, is payable to a person who is physically outside Australia, then the pension, allowance or other pecuniary benefit may be paid in the manner and in the instalments determined by the Commission. 

 

Pensions or allowances to which section 58A applies are excluded from this provision because section 58L applies in relation to these payments. 

 

Commencement

 

Clause 2 provides that the amendments in Part 1 commence on the day after the Act  receives Royal Assent.



Part 2 - Amendments relating to insurance

 

Overview

 

This Part amends the Defence Service Homes Act 1918 and extends eligibility for the Defence Service Homes Insurance Scheme to persons eligible under the Defence Home Ownership Assistance Scheme Act 2008

 

Background

 

Under the Defence Service Homes Act 1918 , eligible persons may obtain building insurance through the Defence Service Homes Insurance Scheme for their home, right of residence in a retirement village, land, building materials and home improvements.  Currently, persons eligible to access the Defence Service Homes Insurance Scheme are Australian veterans, members or peacekeepers (or widows or widowers of any of these persons) who qualify for:

 

benefits under the Veterans’ Entitlements Act 1986 ;

a Defence Service Homes loan under the Defence Service Homes Act 1918 , (whether a loan is used or not or even if the loan has been paid out); or

a person who has a Defence HomeOwner Scheme loan under the Defence Force (Home Loans Assistance) Act 1990

 

The Department of Defence established a new home loan subsidy scheme under the Defence Force Home Ownership Assistance Scheme Act 2008 .  The Defence Force Home Ownership Assistance Scheme is available to eligible current and former members of the Australian Defence Force who have served on or after 1 July 2008 and who have completed sufficient Australian Defence Force service. 

 

An estimated 7,500 Australian Defence Force and Reserve members will gain access to Defence Service Homes Insurance. 

 

Explanation of the changes

 

The changes made by Part 2 of Schedule 1 will extend eligibility for the Defence Service Homes Insurance Scheme to persons eligible for assistance under the Defence Home Ownership Assistance Scheme Act 2008 .  It should be noted that the eligible person need not have accessed a subsidised loan under the Defence Home Ownership Assistance Scheme Act 2008 , the person need only be eligible under the new Scheme.

 

Explanation of the items

 

Defence Service Homes Act 1918

 

Item 11 inserts a new section 38CAA after section 38CA.  Paragraph 38CAA(1)(a) of new section 38CAA provides that the Commonwealth may undertake insurance of, or in relation to, a house if the person is eligible under the Defence Force Home Ownership Assistance Scheme Act 2008 and the person has an interest in the house.

 

Paragraph 38CAA(1)(b) of new subsection 38CAA provides that the Commonwealth may undertake insurance of , or in relation to, building materials on the site of a house, being materials used in the building of, or otherwise in relation to a house, if the person is eligible under the Defence Force Home Ownership Assistance Scheme Act 2008 and the person has an interest in the house.

 

Paragraph 38CAA(1)(c) of new subsection 38CAA provides that the Commonwealth may undertake insurance of, or in relation to, any permanent improvement of a structural kind that has been made to a house mentioned in paragraph 38CAA (1)(a), or that has been constructed on land on which such a house is built, and any building materials on the site of, and used in the building of, or in relation to such an improvement, if the person is eligible under the Defence Force Home Ownership Assistance Scheme Act 2008 and the person has an interest in the house.

 

New subsection 38CAA(2) provides that the Commonwealth may undertake insurance against risks related to the land on which a house mentioned in paragraph 38CAA(1)(a) is built, or on which a house mentioned in paragraph 38CAA(1)(b) is being, or is to be built.

 

New subsection 38CAA(3) states that the terms eligible and house have the same respective meanings as in the Defence Force Home Ownership Assistance Scheme Act 2008

 

Item 12 inserts a new subsection 38EAA after section 38EA.  As provided by new subsection 38EAA(1), new section 38EAA applies if the Commonwealth has undertaken insurance under section 38CAA in relation to a house and the person ceases to be eligible for insurance under the Defence Service Homes Insurance Scheme. 

 

Subsection 38EAA(2) provides that, if this section applies, the insurance undertaken in relation to the house does not cease to have effect when the person ceases to be eligible.  Furthermore, the Secretary must give reasonable notice in writing to each person having an interest in the house that the insurance will cease to have effect on a day specified in the notice.  The Secretary does not need to send such a notice if the insurance has already ceased to have effect for some other reason. 

 

In accordance with new subsection 38EAA(3),  if the Secretary gives a notice under subsection 38EAA(2), the insurance ceases to have effect on the day specified in the notice unless it has already ceased to have effect.

 

Under new subsection 38EAA, if section 38EAA applies because a person dies and the person is survived by a widow or widower, the Secretary must be satisfied that the widow or widower is not eligible before the Secretary issues a notice under paragraph 38EAA(2)(b) in relation to the house.

 

New subsection 38EAA(5) states that the terms eligible and house have the same respective meanings as in the Defence Force Home Ownership Assistance Scheme Act 2008

 

 

Commencement

 

Clause 2 provides that the amendments in Part 1commence on the day after the Act  receives Royal Assent.

 



 

 

Part 3 - Provisions relating to dependants’ pensions

 

Overview

 

Part 3 of Schedule 1 will cease payment of the majority of dependants’ pensions and will provide for a lump sum payment to the existing recipients. 

 

Background

 

Under previous Repatriation legislation, if a veteran or member was receiving disability pension for incapacity, in certain circumstances, the veteran or member’s dependants were also eligible for a dependants’ pension in respect of the veteran or member.  Furthermore, upon the death of a veteran, certain dependants other than the partner or child of the veteran or member may have been eligible for a dependants’ pension.  Depending on the circumstances, a dependant could include the veteran or member’s family members such as parents, siblings or grandparents.

 

The amendments to Repatriation legislation made by the Repatriation Legislation Amendment Act 1985 prevented future grants of dependants’ pension to the dependants of living veterans or members or to dependants of deceased veterans or members, other than to an eligible partner or child.  While the amendments provided that no future grants of dependants’ pension were to be made, other than to an eligible partner or child of a deceased veteran or member, section 66 of the Repatriation Legislation Amendment Act 1985 saved existing recipients’ entitlement to the pension.   

 

 

  Upon the enactment of the   Veterans’ Entitlements Act 1986,  the saved status of dependants’ pensioners under section 66 of the   Repatriation Legislation Amendment Act 1985  was continued under     section 4 of the    Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986  .  Subsection 4 of the   Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986   was subsequently amended to save the entitlement to dependants’ pension for persons whose rate had been reduced to nil, at the time the relevant provisions were repealed, due to compensation offsetting arrangements. 

 

    

 

  Dependants’ pensions are exempt from income tax. 

 

    

 

  It should be noted that pensions granted on the grounds of the person being without adequate means of support are not part of this measure.  Without adequate means of support pensions will continue to be payable to entitled persons under section 4   of the    Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986  .        

 

    

 

  It should be further noted that pensions payable to eligible orphans and war widows and war widowers of deceased veterans and members are not included in this measure.     



 

    

Explanation of the changes

 

The changes to the Veterans’ Entitlements Act 1986 made by Part 3 of Schedule 1 will cease the person’s entitlement to the pension and provide for a lump sum payment of dependants’ pension (excluding without adequate means of support dependants’ pension).  The lump sum payment will be equivalent to three years worth of pension (78 fortnights).  A person’s entitlement to an affected dependants’ pension will cease on and from 22 September 2009.  It is anticipated that the lump sum payment will be made on 24 September 2009.  The lump sum payment will be exempt from income tax. 

 

Explanation of the items

 

Income Tax Assessment Act 1997

 

Item 13 amends the section 11-15 of the Income Tax Assessment Act 1997 by inserting, in alphabetical order, a ‘lump sum payment under section 198N of the Veterans’ Entitlements Act 1986 ’.

 

Item 14 amends subsection 52-65(1D) of the Income Tax Assessment Act 1997 by inserting a new subsection 52-65(1E).  New subsection 52-65(1E) provides that a lump sum payment under section 198N of the Veterans’ Entitlements Act 1986 is exempt from income tax. 

 

Veterans’ Entitlements Act 1986

 

Item 15 inserts new subsection 198N after section 198M. 

 

New subsection 198N(1) provides that section 198N applies if, because of subsection 4(6) or 4(8B) of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 , a dependants’ pension is payable to the person, including a pension whose rate has been reduced to nil.  A rate may be reduced to nil in accordance with the compensation offsetting rules in Division 5A of Part II or Division 4 of Part IV.

 

New subsection 198N(2) provides that despite section 4 of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 , the dependants’ pension is not payable to the person on or after 22 September 2009.  This provision ceases the persons entitlement to the pension including a person whose rate has been reduced to nil. 

 

New subsection 198N(3) provides that:

 

·          following the cessation of entitlement to dependants’ pension, the person is entitled to a lump sum payment; and  

·          the lump sum payment is to be equivalent to 3 years (or 78 fortnights) worth of the ceased pension; and  

·          the lump sum payment is to be paid on or after 24 September 2009; and

·          the lump sum payment is to be calculated according to the rate at which the person’s last payment of pension was made. 

 

New subsection 198N(4) states that subsections 198N(2) and 198N(3), ceasing the payment of dependants’ pensions and providing for the lump sum payment, do not apply to a person if the person is being paid a dependants’ pension on the basis that the person was, at the time section 66 of the Repatriation Legislation Amendment Act 1985 came into force, without adequate means of support.  This provision makes it clear that the payment of dependants’ pensions granted on the basis that the person was without adequate means of support are not being ceased and will continue to be paid, and a person receiving a pension because the person was without adequate means of support is not entitled to a lump sum payment of pension.

 

Commencement

 

Clause 2 provides that the amendments in Part 3 of Schedule 1 commence on the day after the Act receives Royal Assent.