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Veterans’ Entitlements Amendment Bill 2011

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2010-2011

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

VETERANS’ ENTITLEMENTS AMENDMENT BILL 2011

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

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

The Honourable Warren Snowdon MP)



 

Table of Contents

 

 

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

           

1                     Short Title  ..........................................................................................           iv

2                     Commencement  .................................................................................           iv

3                     Schedule(s)   ........................................................................................          iv

 

Schedule 1 -    Prisoner of war recognition supplement   …..…………………….           1                                                                                                          

Schedule 2 -   Compensation offsetting   …………………………………………..           8

 

Schedule 3 -   Temporary incapacity allowance   ..…………………………………      18

 

 

                                                                                                                                               

 



 

VETERANS’ ENTITLEMENTS AMENDMENT BILL 2011

 

OUTLINE AND FINANCIAL IMPACT

Outline

The Bill gives effect to a number of Veterans’ Affairs 2011 Budget measures that will:

  • create a Prisoner of War Recognition Supplement;

·          clarify and affirm the original intention of the compensation offsetting policy in relation to disability pensions; and

·          rationalise temporary incapacity allowance and loss of earnings allowance.

 

Schedule 1 - Prisoner of war recognition supplement

 

The amendments to the Veterans’ Entitlements Act made by Schedule 1 will give effect to a 2011 Budget measure to create a new Prisoner of War Recognition Supplement (the POWR Supplement).  The POWR Supplement will be $500 per fortnight payable to former prisoners of war in recognition of the severe hardship and deprivations they experienced in the service of their country. 

 

Schedule 2 - Compensation offsetting

 

The amendments to the Veterans’ Entitlements Act made by Schedule 2 will give effect to a 2011 Budget measure that will clarify and affirm the original intention of the compensation offsetting policy in relation to pensions payable under Part II and IV of  the Veterans’ Entitlements Act.  The amendments will make it clear that the compensation offsetting provisions are to apply where compensation from another source (a source other than the Veterans’ Entitlements Act) and pension under Part II or IV of  the Veterans’ Entitlements Act are payable in respect of the same incapacity and do not require that the incapacity results from the same injury or disease. 

 

Schedule 3 - Temporary incapacity allowance

 

The amendments to the Veterans’ Entitlements Act made by Schedule 3 will give effect to a 2011 Budget measure to rationalise temporary incapacity allowance and loss of earnings allowance through the abolition of  temporary incapacity allowance with effect from

20 September 2011.  Although these two allowances provide similar compensation, loss of earnings allowance provides compensation to a broader client group, but is limited to those who experience an actual loss of earnings.

 



 

Financial Impact Statement

 

 

Schedule 1 - Prisoner of war recognition supplement

 

2010-11           2011-12          2012-13        2013-14           2014-15

 $0.1 m              $8.5 m            $8.1 m          $6.1 m             $4.5 m

 

 

Schedule 2 - Compensation offsetting

 

2010-11           2011-12          2012-13        2013-14          2014-15

 $0.0 m             $0.0 m            $0.0 m           $0.0 m           $0.0 m

 

        

Schedule 3 - Temporary incapacity allowance

 

2010-11           2011-12          2012-13        2013-14         2014-15

 $0.0 m             $0.4 m           -$0.1 m         -$0.1 m            -$0.1 m

 

 

 



 

Veterans’ Entitlements Amendment Bill 2011

 

 

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

 

 

Commencement            Clause 2 provides a table that sets out the commencement dates of the

various provisions of this Act .

 

 

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.

 

This explanatory memorandum uses the following abbreviations:

 

‘Income Tax Assessment Act’ means the Income Tax Assessment Act 1997 ;

 

‘Military Rehabilitation and Compensation Act’ means the Military, Rehabilitation and Compensation Act 2004 ;

 

‘Safety, Rehabilitation and Compensation Act’ means the Safety, Rehabilitation and Compensation Act 1988 ;

 

‘Social Security Act’ means the Social Security Act 1991 ; and

 

‘Veterans’ Entitlements Act’ means the Veterans’ Entitlements Act 1986 .

 

 



 

Schedule 1 - Prisoner of war recognition supplement

 

Overview

 

The amendments to the Veterans’ Entitlements Act made by Schedule 1 will give effect to a 2011 Budget measure to create a new Prisoner of War Recognition Supplement (the POWR Supplement).  The POWR Supplement will be $500 per fortnight payable to former prisoners of war in recognition of the severe hardship and deprivations they experienced in the service of their country. 

 

Background

 

The Veterans’ Entitlements Act provides veterans who were prisoners of war and their dependants with a range of benefits that reflect the severe circumstances of their service.  The benefits include:

 

  • eligibility for a Gold Card;
  • the widows of former prisoners of war are eligible for war widow pension and the Gold Card;
  • funeral benefits are payable in respect of deceased former prisoners of war; and
  • children of deceased former prisoners of war are eligible for the Veterans’ Children Education Scheme.

In addition to the benefits payable under the Veterans’ Entitlements Act, the Government in 2001, 2004 and 2007, made ex-gratia compensation payments of $25,000 to former prisoners of war, including civilian detainees, or their surviving widows or widowers.

The payments were made in 2001 in respect of prisoners of war of the Japanese during World War 2, in 2007 in respect of those held in Europe during World War 2 and in 2004 in respect of those held by the North Koreans during the Korean war.   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Explanation of the changes

 

The amendments made by this Schedule provide for the payment of the POWR Supplement under new Part VIB of the Veterans’ Entitlements Act.  The main features of the payment are that it:

 

  • will be payable to veterans who were prisoners of war and to civilian detainees;
  • is payable at a rate of $500 per fortnight and is payable in addition to any existing benefits that the person receives from the Commonwealth;
  • will be payable from 20 September 2011 or the date of claim;
  • is exempt from income tax;
  • is exempt income for the purposes of the veterans’ entitlements and social security income tests;
  • is to be indexed annually in line with the Consumer Price Index; and
  • is to be paid automatically for those former prisoners of war and civilian detainees known to the Department.

 

The POWR Supplement is not an income support pension or a compensation payment for incapacity. 

 

While the POWR Supplement will be exempt income for the purposes of the income test, if the Supplement forms part of a person bank balance, it will be deemed and included in the persons asset assessment.

 

The POWR Supplement will also be held as income to determine whether a beneficiary is eligible to receive assistance in accordance with the financial hardship provisions under the Veterans’ Entitlements Act.

 

The POWR Supplement will not be subject to the offsetting provisions of the Veterans’ Entitlements Act.

 

Widows and widowers of deceased former prisoners of war and civilian detainees are not eligible for the POWR Supplement.

           

Explanation of the items

 

Veterans’ Entitlements Act 1986

 

Item 1 inserts new Part VIB, comprising new sections 115M to 115R, into the Veterans’ Entitlements Act.

 

Part VIB - Prisoner of war recognition supplement

 

Division 1 - Eligibility for prisoner of war recognition supplement

 

New section 115M specifies the eligibility criteria for the POWR Supplement.

 

New subsection 115M(1) provides that a veteran will be eligible for a POWR Supplement if he or she was interned by the military forces of a European State (as defined in new subsection 115M(7) as an “enemy State”) while serving during the period of World War 2 from 3 September 1939 to the end of 11 May 1945.

 

New subsection 115M(2) provides that a civilian (defined in new subsection 115M(7) as person who is not a veteran) will be eligible for a POWR Supplement if he or she was interned by the military forces of a European State (as defined in new subsection 115M(7) as an “enemy State”) during the period of World War 2 from

3 September 1939 to the end of 11 May 1945 and was domiciled in Australia immediately before being interned.

 

New subsection 115M(3) provides that a veteran will be eligible for a POWR Supplement if he or she was interned by the military forces of Japan while serving during the period of World War 2 from 7 December 1941 to the end of

29 October 1945.

 

New subsection 115M(4) provides that a civilian (defined in new subsection 115M(7) as a person who is not a veteran) will be eligible for a POWR Supplement if he or she was interned by the military forces of Japan during the period of World War 2 from

7 December 1941 to end of 29 October 1945 and was domiciled in Australia immediately before being interned.

 

New subsection 115M(5) provides that a veteran of Korea will be eligible for a POWR Supplement if he or she was interned by the military forces of North Korea while serving during the period from 27 June 1950 to the end of 19 April 1956.

 

New subsection 115M(6) means that even if a person meets more than one eligibility criterion, a person is not entitled to more than one POWR Supplement.

 

New subsection 115M(7) defines the terms to be used in the section.

 

A “civilian” is defined as being a person who is not a veteran.

 

An “enemy State” is defined as being a European State that was at war with the Crown at any time during the period from 3 September 1939 and ending 11 May 1945.  The term will also include the ally (whether or not it is a State) of a European State that was at war with the Crown during the same period.

 

The term “interned” is defined as being confined in a camp, building, prison, cave or other place (including a vehicle) or being restricted to residing within a specified limit.

 

The term “military forces” is defined as being the air forces, naval forces, land forces or other military forces (however described).

 

New subsection 115N sets out the criteria for when a POWR Supplement will be payable.

 

New subsection 115N(1) provides that a POWR Supplement will be payable to a person if on 20 September 2011, the Commission is satisfied that the person is eligible for the POWR Supplement.  In this case, the person will not have to make a claim for the Supplement under new Division 3.  This will facilitate the automatic payment of the POWR Supplement to those eligible persons known to the Department.

 

New subsection 115N(2) makes it clear that where new subsection  115N(1) does not apply, a person will need to make a claim for the Supplement.  That is, persons not known to the Commission to be eligible, will need to submit a claim for the POWR Supplement.

 

New subsection 115N(3) provides that a POWR Supplement will not be payable to an eligible person for a pension period if the person, before the start of that period, has elected not to receive the payment and the election has not been withdrawn.

 

New subsection 115N(4) provides that an election, or a withdrawal of an election, under new section 115N:

·          must be by document lodged at an office of the Department of Veterans’ Affairs in Australia in accordance with section 5T of the Veterans’ Entitlements Act; and

·          will be taken to have been made on a day that is determined under that section.

 

Division 2 - Rate of prisoner of war recognition supplement

 

New section 115P provides that the rate of the POWR Supplement payable under new section 115M is $500 per fortnight.

 

The Note to new section 115P refers to the amount of the POWR Supplement being indexed annually in line with CPI increases under the provisions of section 198D.

 

Division 3 - Claims for prisoner of war recognition supplement

 

New section 115Q is applicable to a claim for the POWR Supplement.

 

New subsection 115Q(1)  refers to the need for a claim for the POWR Supplement to be made in accordance with the procedures determined by the Repatriation Commission under new subsection 115Q(2).

 

The Note to new subsection 115Q(1) advises that the POWR Supplement will be paid automatically to those eligible persons that the Department of Veterans’ Affairs is aware of.

 

New subsection 115Q(2) provides that the Repatriation Commission may make a written determination setting out the procedures for making a claim for a POWR Supplement.

 

New subsection 115Q(3) makes it clear that the procedures determined by the Repatriation Commission under new subsection 115Q(2) are not a legislative instrument within the meaning of section 5 of Legislative Instruments Act 2003 .

 

The procedures made under new subsection 115Q(3) are not legislative in character and, accordingly, new subsection 115Q(3) is merely declaratory of the law.

 

New section 115R refers to the determination by the Repatriation Commission of claims for the POWR Supplement made under new section 115Q.

 

New subsection 115R(1) provides that claims for the POWR Supplement are to be determined by the Repatriation Commission.

 

New subsection 115R(2) provides that a determination that the POWR Supplement is payable to a person will take effect on the day on which the determination is made or on an earlier day if specified in the determination.

 

New subsection 115R(3) provides that a person who is dissatisfied with a decision of the Repatriation Commission concerning a claim for a POWR Supplement may apply to the Administrative Appeals Tribunal.

 

Item 2 is a consequential amendment to section 119.  That section provides that the Repatriation Commission will not be bound by certain technicalities when it is considering, hearing or determining or making a decision related to a claim made under the Veterans’ Entitlements Act.

 

The amendment inserts new paragraph 119(2)(f) in the definition of “claim” that is used for the purposes of the subsection 119(1).

 

New paragraph 119(2)(f) refers to a claim for the POWR Supplement made under new Part VIB.

 

Items 3 and 4 amend section 121. Section 121 is an administrative provision setting out matters that relate to the payment of instalments of certain pensions and allowances .

 

Subsection 121(4) provides that an instalment of pension will not be payable for a pension period if the person receiving the pension has died during that pension period.

 

The amendment to subsection 121(4) inserts a reference to the subsection being subject to an exception under new subsection 121(4A).

 

New subsection 121(4A) provides that an instalment of the POWR Supplement will be payable to the estate of a person where the person has died during a pension period.

 

Item 5 is a consequential amendment to section 121. That section sets out how instalments of “pension” (as defined in subsection 121(7)) are to paid.

 

The amendment to the subsection 121(7) definition of “pension ” inserts a reference to the POWR Supplement made under new Part VIB.

 

Item 6 is a consequential amendment to section 198D.  That section  provides for the annual indexation (using the CPI number) of the “relevant rate” of certain payments made under various sections of the Veterans’ Entitlements Act.

 

The amendment to the subsection 198D(1) definition of  “relevant rate” inserts new paragraph 198D(1)(e) referring the POWR Supplement paid under new section 115P.

 

Item 7 inserts an application provision referring to the indexation of the POWR Supplement which provides that the amendment to section 198D (made by Item 4) is to apply in relation to the year commencing 20 September 2012 and each later year commencing on 20 September.

 

Items 6 and 7 mean that POWR Supplement will be indexed  annually by CPI starting on 20 September 2012.

 

Income Tax Assessment Act 1997

 

Items 8 and 9 amend section 52-65 of the Income Tax Assessment Act.  The table in section 52-65 sets out the income tax treatment of most of the payments made under the Veterans’ Entitlements Act.

 

Subsection 52-65(1) lists those payments that are not included in that table.  New paragraph 52-65(1)(e) adds payments of the POWR Supplement under new Part VIB of the Veterans’ Entitlements Act to that list.

 

New subsection 52-65(1F) provides that payments of POWR Supplement will be exempt from income tax.

 

Item 10 amends section 52-75 of the Income Tax Assessment Act. The table in section 52-75 lists the provisions of the Veterans’ Entitlements Act under which income tax exempt or partly income tax exempt payments are made.

 

The amendment inserts new item 12A into the table referring to payments of POWR Supplement being payable under Part VIB of the Veterans’ Entitlements Act.

 

Social Security Act 1991

 

Item 11 amends subsection 8(8) of the Social Security Act.  Subsection 8(8) lists payments that are to be treated as excluded or exempt income for the purposes of the income test under the Social Security Act.

 

The amendment inserts new subparagraph 8(8)(y)(viiaaa) referring to payments of the POWR Supplement under new Part VIB of the Veterans’ Entitlements Act.

 

 

 

 

Veterans’ Entitlements Act 1986

 

Item 12 amends subsection 5H(8) of the Veterans’ Entitlements Act.  Subsection 5H(8) lists payments that are to be treated as excluded or exempt income for the purposes of the income test applicable under the Veterans’ Entitlements Act.

 

The amendment inserts new paragraph 5H(8)(faaa) referring to payments of POWR Supplement under new Part VIB.

 

A note to new paragraph 5H(8)(faaa) advises that the inclusion of payments of POWR Supplement are to be included in the total income of a person seeking the application of the hardship provisions in sections 52Y and 52Z.

 

Item 13 amends section 52Z. Section 52Z applies the hardship rules in the circumstances where a person or the person’s partner holds an unrealisable asset.

 

Subsection 52Z(3A) lists the payments that are to be included in the determination of the ordinary income of a person for the purposes of the section.

 

The amendment inserts new paragraph 52Z(3A)(fa) to include payments of POWR Supplement in the list.

 

Commencement

 

Clause 2 provides that the amendments are to commence on 20 September 2011. 

 

 

 

 



Schedule 2 - Compensation offsetting

 

Overview

 

The amendments to the Veterans’ Entitlements Act made by Schedule 2 will give effect to a 2011 Budget measure that will clarify and affirm the original intention of the compensation offsetting policy in relation to pensions payable under Part II and IV of the Veterans’ Entitlements Act.  The amendments will make it clear that the compensation offsetting provisions are to apply where compensation from another source (a source other than the Veterans’ Entitlements Act) and pension under Part II or IV of  the Veterans’ Entitlements Act are payable in respect of the same incapacity and do not require that the incapacity results from the same injury or disease. 

 

Background

 

Under the Veterans’ Entitlements Act, a pension under Part II or IV is payable for incapacity resulting from war or defence-caused injury or disease.  Pensions under Part II are payable to veterans whilst pensions under Part IV are payable to members with certain peacetime service.  Parts II and IV also provide orphan’s and war widow’s and widower’s pensions to dependants of deceased veterans and members. However, these types of pension are not affected by this measure. 

 

When, in 1973, serving members with certain peacetime service became eligible for benefits under the Repatriation Act 1920 (the predecessor of the Veterans’ Entitlements Act), they also retained eligibility under the Compensation (Government Employees) Act 1971 - 1973 (the predecessor of the Safety, Rehabilitation and Compensation Act), creating a situation of dual entitlement.  Provisions were included in the Repatriation Act 1920 at that time to offset payments under the Compensation (Government Employees) Act 1971 - 1973 against entitlements under the Repatriation Act 1920 to avoid the payment of double compensation by the Commonwealth.  Dual entitlement continues under the Veterans’ Entitlements Act and the Safety, Rehabilitation and Compensation Act for service prior to 1 July 2004. 

 

If a person is receiving pension under Part II or IV of the Veterans’ Entitlements Act and the person receives additional compensation from another source, in respect of the incapacity or death for which pension is being paid under Part II or IV of the Veterans’ Entitlements Act, the amount of Veterans’ Entitlements Act pension is reduced (offset) on a dollar for dollar basis by the amount of additional compensation.  The majority of compensation offsetting cases arise from an entitlement under the Veterans’ Entitlements Act and the Safety, Rehabilitation and Compensation Act, and their predecessors, for the same incapacity.  However, compensation from other sources, including third party insurance and common law cases may also be subject to compensation offsetting under the Veterans’ Entitlements Act. 

 

 

 

 

 

Since the Department first implemented compensation offsetting in 1973, with effect from 7 December 1972, it has been applied on the basis of the same incapacity, irrespective of whether or not a common injury or disease exists.  Section 5D(2) of the Veterans’ Entitlements Act defines ‘incapacity’ as the ‘effects of that injury or disease and not a reference to the injury or disease itself’. 

 

 

In 2009, the Full Federal Court in the Commonwealth of Australia v Smith [2009] FCAFC 175 determined that the compensation offsetting provisions apply where the incapacity arose from the same injury or disease.  The Full Court noted as a basis for its decision the “peculiar facts” of the Smith case which gave rise to its decision.  The decision highlights the need for greater clarity in the compensation offsetting provisions. 

 

Explanation of the changes

 

The changes to the Veterans’ Entitlements Act affect Division 5A of Part II and Division 4 of Part IV.  The amendments will make it clear that the compensation offsetting provisions are to apply where pension under Part II or IV of  the Veterans’ Entitlements Act and compensation from another source are payable in respect of the same incapacity and do not require that the incapacity result from the same injury or disease. 

 

Minor consequential amendments are also required to section 25A.  Currently section 25A operates where the offsetting provisions in Division 5A of Part II and Division 4 of Part IV do not apply.  The purpose of section 25A is to limit compensation paid by the Commonwealth to an individual at the maximum rate payable under the Veterans’ Entitlements Act - that is, to ensure that an individual can receive, from the Commonwealth, a total of no more than intermediate or special rate disability pension, as the case may be. 

 

Explanation of the items

 

Items 1 and 2 amend subsection 25A(1) of the Veterans’ Entitlements Act to clarify the circumstances under which section 25A applies.  As section 25A operates in respect of compensation that is not subject to the compensation offsetting provisions in Division 5A of Part II and Division 4 of Part IV, the amendments make it clear that the section applies to a veteran or member who is receiving a pension under Part II or IV of the Veterans’ Entitlements Act or temporary incapacity or loss of earnings allowance and a relevant compensation payment under the Safety, Rehabilitation and Compensation Act in respect of a different incapacity.  Under these circumstances, the veteran or member’s combined payments from the Commonwealth, being those made under the Veterans’ Entitlements Act and the Safety, Rehabilitation and Compensation Act, cannot exceed the rate of pension under Part II or IV or allowance the veteran or member is receiving under the Veterans’ Entitlements Act, being intermediate rate, special rate or temporary special rate, as the case may be. 

 

 

 

Item 3 amends paragraphs 30C(1)(c), (2)(c) and (3)(c).  The amendments to each paragraph omit the words “the incapacity from that injury or disease or the death” and substitute the words “the same incapacity of the veteran from that or any other injury of disease or in respect of that death”. 

 

Section 30C applies the compensation offsetting rules in relation to lump sum compensation payments. For the purposes of the compensation offsetting provisions, lump sum compensation payments are converted to a fortnightly amount as determined or instructed by the Commonwealth Actuary.  The amendments make it clear that pension payable under Part II of the Veterans’ Entitlements Act is to be reduced by the converted fortnightly amount of lump sum compensation where lump sum compensation and pension under Part II are paid, or are payable, in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 4 amends paragraph  30C(6)(c) by omitting the words “the incapacity of the veteran from that injury or disease, or that death” and substituting the words “the same incapacity of the veteran from that or any other injury of disease or in respect of that death,”. 

 

Subsection 30C(6) sets out how compensation offsetting is to apply where 2 or more persons may receive pension under Part II and a lump sum compensation payment in respect of the incapacity of the veteran from injury or disease or the death of the veteran.  The amendments make it clear that, in these circumstances, pension payable under Part II of the Veterans’ Entitlements Act is to be reduced by the combined converted fortnightly amounts of lump sum compensation where lump sum compensation and pension under Part II are  paid, or are payable, in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 5 amends paragraph 30D(1)(c) which provides for compensation offsetting in relation to periodic payments of compensation.  Item 15 omits the words “the incapacity from that injury or disease or the death” and substitutes the words “the same incapacity of the veteran from that or any other injury or disease or in respect of that death”. 

 

The amendments make it clear that pension payable under Part II of the Veterans’ Entitlements Act is to be reduced by the amount of periodic compensation where periodic compensation and pension under Part II are paid, or are payable, in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

 

 

 

 

 

Item  6 amends paragraph 30D(3)(b) which provides for compensation offsetting in relation to periodic payments of compensation where the compensation or pension under Part II is payable to 2 or more persons.  Item 6 omits the words “the incapacity of the veteran from that injury or disease, or the death of the veteran” and substitutes the words “the same incapacity of the veteran from that or any other injury or disease, or in respect of that death”. 

 

The amendments make it clear that pension payable under Part II of the Veterans’ Entitlements Act is to be reduced by the amount of periodic compensation where the compensation and the pension or pensions under Part II are paid in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Items 7 and 8 amend section 30E which, in part, enables the Repatriation Commission to request a veteran who is entitled to disability pension to institute or prosecute proceedings against a person other than the Commonwealth who may be legally liable to pay damages to the veteran.  Item 7 omits the words “the incapacity of the veteran from that injury or disease or the death of the veteran”, and substitutes the words “the same incapacity of the veteran from that or any other injury or disease or in respect of that death”.  Item 8 omits the words “for the incapacity or death”, and substitutes the words “in respect of the same incapacity of the veteran or in respect of that death”.

 

The amendments make it clear that the Commission may request a veteran entitled to pension under Part II of the Veterans’ Entitlements Act to institute or prosecute proceedings against a person, other than the Commonwealth, if that person may be legally liable to pay damages to the veteran where the damages and the pension entitlement under Part II are in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 9 amends paragraph 30G(1)(b) by omitting the words “the incapacity of the veteran from that injury or disease or the death of the veteran”, and substituting the words “the same incapacity of the veteran from that or any other injury or disease or in respect of that death”. 

 

Section 30G allows the Repatriation Commission to request a person, other than the Commonwealth, who appears to be legally liable to pay damages, to pay to the Commonwealth an amount no greater than the total amount of pension paid under Part II up to the date of the damages payment. 

 

The amendments make it clear that section 30G applies where the damages and the pension entitlement under Part II are in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Items 10 and 11 amend section 30H to make it clear that section 30H applies where the agreed damages or damages awarded and the pension entitlement under Part II are in respect of the same incapacity.  Section 30H operates to cover circumstances where a third party has agreed to pay damages or damages have been awarded to a veteran in respect of the veteran’s incapacity and pension under Part II is payable or has been paid to the veteran for the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 12 amends section 30K by omitting the words “the incapacity of the veteran from that injury or disease”, and substituting the words “the same incapacity of the veteran from that or any other injury or disease”.

 

Section 30K operates, in part, so that where damages have been awarded against the Commonwealth in respect of the incapacity of a veteran, the liability to pay those damages is taken to have been discharged to the extent of the total amounts of pension payable to the veteran under Part II where damages and the pension under Part II are paid in respect of the same incapacity.  The amendments make it clear that section 30K applies where the damages and the pension entitlement under Part II are in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 13 amends paragraph 30L(b)(iii) by omitting the words “the incapacity of the veteran from that injury or disease”, and substituting the words “the same incapacity of the veteran from that or any other injury or disease”.

 

Section 30L operates so that the Commonwealth may recover from a veteran who has been paid compensation from another country or international organisation, an amount equal to the total amount of pension paid to the veteran under Part II.

 

The amendments make it clear that section 30L applies where the compensation and the pension paid under Part II are in respect of the same incapacity.  The incapacity that entitles the veteran to both pension under Part II and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 14 amends subsection 30P(2) by omitting the words “in respect of the incapacity or death of the veteran”.

 

 Section 30P sets out the Commonwealth’s powers relating to the recovery of overpayments of pension under Part II which were not payable as a result of the operation of section 25A, 30C or 30D. 

 

The amendments make it clear than any overpayment of pension because of the operation of one of those sections is recoverable from any amount of pension payable under Part II. 

 

Items 15  to 17 amend subsection 74(2).  Subsection 74(2) specifies the circumstances under which the compensation offsetting provisions in section 74 apply to a person.  Section 74 operates so that where a member receives compensation from a source other than the Veterans’ Entitlements Act, for the same incapacity, a pension received under the Veterans’ Entitlements Act will be offset by that compensation.  The amendments to subsection 74(2) will make it clear that section 74 applies where the compensation and the pension paid or payable under Part IV of the Veterans’ Entitlements Act are in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Items 18 and 19 amend subsection 74(3).  Subsection 74(3) sets out how certain lump sum compensation payments will be converted to a fortnightly rate.  The amendments make it clear that certain lump sum compensation payments will be converted to a fortnightly rate if the lump sum compensation and pension under Part IV of the Veterans’ Entitlements Act are payable in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Items 20 and 21 amend subsection 74(3A).  Subsection 74(3A) sets out how lump sum compensation payments made under section 137 of the Safety, Rehabilitation and Compensation Act will be converted to a fortnightly rate.  The amendments make it clear that the lump sum compensation payments will be converted to a fortnightly rate if the lump sum compensation and pension under Part IV of the Veterans’ Entitlements Act are payable in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment under section 137 of the Safety, Rehabilitation and Compensation Act may be from the same injury or disease or a different injury or disease.

 

Items 22 and 23 amend subsection 74(3B).  Subsection 74(3B) sets out how lump sum compensation payments made under section 30 of the Safety, Rehabilitation and Compensation Act will be converted to a fortnightly rate.  The amendments make it clear that the lump sum compensation payments will be converted to a fortnightly rate if the lump sum compensation and pension under Part IV of the Veterans’ Entitlements Act is payable in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment under section 30 of the Safety, Rehabilitation and Compensation Act may be from the same injury or disease or a different injury or disease.

 

Items 24 and 25 amend subsection 74(8) to make it clear that if a member is receiving either a converted lump sum or a periodic compensation payment for an incapacity and the amount of that compensation equals or exceeds the amount of pension payable under Part IV of the Veterans’ Entitlements Act to the member in respect of the same incapacity, then pension under Part IV is not payable to the member.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

 

Item 26 amends subsection 74(9) to make it clear that if a member is receiving either a converted lump sum or a periodic compensation payment for incapacity and the amount of pension payable under Part IV to the member in respect of the same incapacity, exceeds the amount of compensation payable to the member, the pension under Part IV is paid at an amount per fortnight equal to the amount of the excess.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Items 27 and 28 amend subsection 75(1) which, in part, enables the Repatriation Commission to request a member who is entitled to pension under Part IV of the Veterans’ Entitlements Act to institute or prosecute proceedings against a person, other than the Commonwealth, who may be legally liable to pay damages to the member. 

 

The amendments make it clear that the Commission may request a member entitled to pension under Part IV to institute or prosecute proceedings against a person, other than the Commonwealth, who may be legally liable to pay damages to the member where the damages and the pension entitlement under Part IV are in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease. .  

 

Items 29 to 32 amend subsection 76(1), to make it clear that subsection 76(1) applies where the damages payable to the member and the pension entitlement of the member under Part IV of the Veterans’ Entitlements Act are in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Subsection 76(1) operates so that damages by a third party may be payable to the Commonwealth up to the total amount of pension paid to the member under Part IV.

 

Items 33 to 37 amend subsection 76(2) to make it clear that subsection 76(2) applies where the agreed damages or damages awarded to a member and the pension entitlement of the member under Part IV are in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease. 

 

Subsection 76(2) operates to cover circumstances where a person, other than the Commonwealth, has agreed to pay damages or damages have been awarded against a person in relation to a member in respect of the member’s incapacity and pension under Part IV of the Veterans’ Entitlements Act is payable or has been paid to the member for the same incapacity. 

 

 

 

 

Items 38 and 39 make it clear that section 77 applies where the damages against the Commonwealth awarded to a member and the pension entitlement of the member under Part IV are in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Section 77 operates, in part, so that where damages have been awarded against the Commonwealth in respect of the incapacity of a member, the liability to pay those damages is taken to have been discharged to the extent of the total amount of pension payable to the member under Part IV of the Veterans’ Entitlements Act where the damages and the pension paid under Part IV are in respect of the same incapacity.

 

Item 40 amends subsection 78(1) by omitting the words “the injury suffered by, or the disease contracted by, the member”, and substituting the words “the same incapacity of the member from that or any other injury or disease”.

 

Subsection 78(1) operates so that the Commonwealth may recover from a member who has been paid compensation from another country or international organisation, an amount not exceeding the total amount of pension paid to the member under Part IV of the Veterans’ Entitlements Act.  The amendments make it clear that subsection 78(1) applies where the compensation and the pension paid to the member under Part IV are in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 41 amends subsection 78(2) by omitting the words “the injury suffered, or the disease contracted, by the member”, and substituting the words “the same incapacity of the member from that or any other injury or disease”.

 

Subsection 78(2) operates so that the Commonwealth may by notice in writing, require a person furnish to the Commission information about compensation paid to or claimed by a person from another country or international organisation.  The amendments make it clear that the Repatriation Commission may issue a member with a notice under subsection 78(2) where the compensation paid or claimed by the member and the pension entitlement of the member under Part IV of the Veterans’ Entitlements Act are in respect of the same incapacity.  The incapacity that entitles the member to both pension under Part IV and a compensation payment from another source may be from the same injury or disease or a different injury or disease.

 

Item 42 amends subsection 79(1) by omitting the words “in respect of the incapacity from that injury or disease or of the death of the member, as the case may be”.

 

Section 79 sets out the Commonwealth’s powers relating to the recovery of overpayments of pension under Part IV which were not payable as a result of the operation of section 25A or 74. 

 

 

The amendments make it clear that any overpayment of pension because of the operation of one of those sections is recoverable from any amount of pension payable under Part IV.

 

Item 43 clarifies how the amendments in Schedule 2 will apply in relation to instalments of pension paid under Part II or IV on and after the commencement of the amendments.  The application of the amendments made by Schedule 2 will not  retrospectively affect any pension payment and will not affect any amount of pension paid under Part II or IV after the commencement date and thus will not disadvantage any veteran or member currently receiving pension under Part II or IV.  However, from the commencement date, the amendments will ensure that the reductions in the rate of pension under Part II or IV applied as a result of  Division 5A of Part II or Part 4 of Part IV are clearly authorised by the legislation. 

 

Paragraph 43(1)(a) specifies that, in relation to lump sum compensation payments,  the amendments to sections 30C, 30D, 30E, 30G, 30H, 30K, 30L, 30P, 74, 75, 76, 77, 78 and 79 of the Veterans’ Entitlements Act 1986 , as amended by this Act, apply in relation to working out the  rates of pension under Part II or IV of the Veterans’ Entitlements Act for days on or after the commencement of this item regardless of whether the lump sum compensation payments began before, on or after the commencement of the amendments to the specified sections.

 

Paragraph 43(1)(b) specifies that, in relation to periodic compensation payments,  the amendments to sections 30C, 30D, 30E, 30G, 30H, 30K, 30L, 30P, 74, 75, 76, 77, 78 and 79 of the Veterans’ Entitlements Act 1986 , as amended by this Act, apply in relation to working out the rates of pension under Part II or IV of the Veterans’ Entitlements Act for days on or after the commencement of this item regardless of whether the periodic compensation payments began before, on or after the commencement of the amendments to the specified sections.

 

Paragraph 43(1)(c) specifies that, in relation to an entitlement to receive payments by way of compensation, the amendments to sections 30C, 30D, 30E, 30G, 30H, 30K, 30L, 30P, 74, 75, 76, 77, 78 and 79 of the Veterans’ Entitlements Act 1986 , as amended by this Act, apply in relation to working out the  rates of pension under Part II or IV of the Veterans’ Entitlements Act  for days on or after the commencement of this item regardless of whether the entitlement to receive payments by way of compensation began before, on or after the commencement of the amendments to the specified sections.

Subitem 43(2) specifies that the amendments to section 25A of the Veterans’ Entitlements Act 1986 , as amended by this Act, apply in relation to:

·          working out the rates of pension under Part II or IV of the Veterans’ Entitlements Act for days on or after the commencement of this item; or

·          working out the rate of temporary incapacity allowance or loss of earnings allowance under Part VI of the Veterans’ Entitlements Act that is payable for days on or after the commencement of this item;

whether the compensation payments were made before, on or after that commencement.

 

Commencement

 

Clause 2 provides that Schedule 2 commences on the day this Act receives the Royal Assent.



Schedule 3 - Temporary incapacity allowance

 

Overview

 

The amendments to the Veterans’ Entitlements Act made by Schedule 3 will give effect to a 2011 Budget measure to rationalise temporary incapacity allowance and loss of earnings allowance through the abolition of  temporary incapacity allowance with effect from 20 September 2011.  Although these two allowances provide similar compensation, loss of earnings allowance provides compensation to a broader client group, but is limited to those who experience an actual loss of earnings.

 

Background

 

Sections 107 and 108 of the Veterans’ Entitlements Act, respectively, provide for temporary incapacity allowance and loss of earnings allowance. 

 

Temporary incapacity allowance is available to veterans or members who are unable to work for a continuous period of more than four weeks due to inpatient treatment in a hospital or other institution, including post-treatment convalescence, for war or defence-caused injury or disease. 

 

Temporary incapacity allowance is paid at the equivalent of the special rate pension, specified in subsection 24(4), ($1,113.70 per fortnight as at March 2011).  If a veteran or member is receiving disability pension under Part II or IV and/or the loss of earnings allowance, the rate of temporary incapacity allowance is the difference between those amounts and the special rate pension. 

 

Loss of earnings allowance is payable to cover loss of earnings by a veteran or member due to treatment or the fitting, renewal, maintenance or repair of an artificial aid for war or defence-caused injuries or diseases or the investigation of claims for such conditions.  It is also payable to a veteran or member’s carer or attendant who is required to accompany the veteran or member for treatment or the fitting, renewal, maintenance or repair of an artificial aid or for attending hearings or medical appointments for claims, all in relation to the veteran or member’s war or defence-caused disabilities.  The allowance has a broader application than temporary incapacity allowance but is payable only where there is an actual or potential loss of earnings. 

 

The maximum amount of loss of earnings allowance payable is the equivalent of the special rate pension, specified in subsection 24(4), currently $1,113.70 per fortnight. 

 

In broad terms, the amount of loss of earnings allowance payable is:

 

  •  the difference between special rate disability pension and the veteran’s present disability pension; or
  • the amount of salary, wages or earnings actually lost (including loadings or other allowances that would have been payable);

 

whichever is the lesser amount.

 

Explanation of the changes

 

The changes to the Veterans’ Entitlements Act abolish temporary incapacity allowance from 20 September 2011.  Payment to existing recipients will cease on

19 September 2011.   Any veteran on temporary incapacity allowance at that time will need to apply for loss of earnings allowance.  Under the existing temporary incapacity allowance provisions, veterans have 12 months from the commencement of the treatment period within which to claim the allowance.  Transitional provisions will enable veterans and members to still be able to claim, within 12 months of the commencement of the treatment period, for temporary incapacity allowance for periods of treatment that commence prior to 20 September 2011.  Transitional provisions will also mean that veterans may be eligible for temporary incapacity allowance for any period of treatment that commences in the four weeks prior to 20 September 2011, where the treatment period would extend beyond four weeks, for the treatment period up to 19 September 2011.  For example, if a veteran or member commenced treatment on 8 September 2011 and ceased treatment on 30 October 2011, temporary incapacity allowance may be payable for the period from 8 September 2011 to 19 September 2011. 

 

Explanation of the items

 

Income Tax Assessment Act 1997

 

Item 1 amends section 52-65 of the Income Tax Assessment Act.  The table in section 52-65 sets out the income tax treatment of most of the payments made under the Veterans’ Entitlements Act.

 

The amendment repeals item 19.1 from the table.  Item 19.1 refers to payments of temporary incapacity allowance which are to be abolished from 20 September 2011.

 

Item 2 amends section 52-75 of the Income Tax Assessment Act. The table in section 52-75 lists the provisions of the Veterans’ Entitlements Act under which income tax exempt or partly income tax exempt payments are made.

 

The amendment repeals item 19 from the table.  Item 19 refers to payments of temporary incapacity allowance which are to be abolished from 20 September 2011.

 

Veterans’ Entitlements Act 1986

 

Item 3 repeals paragraph (b) of the definition of disability pension in subsection 5Q(1).  Paragraph (b) refers to temporary incapacity allowance which is being abolished from 20 September 2011.

 

Item 4 amends section 25A to omit references to temporary incapacity allowance from paragraphs 25A(1)(b) and 25A(3)(b) as temporary incapacity allowance is being abolished from 20 September 2011.

 

Section 25A provides for the effect of certain payments made under the Safety, Rehabilitation and Compensation Act on certain pensions and allowances payable under the Veterans’ Entitlements Act. 

 

Item 5 amends section 96.  Section 96 ensures that Part VI also applies in relation to persons eligible under Part IV. 

 

Paragraph 96(2)(f) is amended  to omit the references to the rate of temporary incapacity allowance payable under subsections 107(5) and (6).

 

Item 6 repeals section 107.  Section 107 provides for the payment of temporary incapacity allowance which is being abolished from 20 September 2011.

 

Item 7 amends section 111 by repealing paragraph 111(1)(f).  Section 111 sets out the requirements for making and determining an application for an allowance that is payable under Part VI.

 

Paragraph 111(1)(f) applied the application provisions of section 111 to temporary incapacity allowance which is being abolished from 20 September 2011.

 

Items 8 to 10 amend section 112. Section 112 sets out the time limits applicable to applications for certain benefits payable under Part VI.

 

Subsection 112(1) is repealed by item 8 as it  specified the time limit for applying for temporary incapacity allowance which is being abolished from20 September 2011.

 

Paragraph 112(4)(a) is repealed by item 9 as it referred to temporary incapacity allowance which is being abolished from 20 September 2011.

 

The reference to subsection 112(1) is omitted from subsection 112(4) by item 10 as it referred temporary incapacity allowance which is being abolished from

20 September 2011.

 

Item 11 amends section 115 by repealing paragraph 115(1)(f).  Section 115 provides for the review procedures applicable to a list of certain allowances payable under Part VI.

 

Paragraph 115(1)(f) referred to the review procedures for applications for temporary incapacity allowance which is being abolished from 20 September 2011.

 

Item 12 repeals paragraph (b) of the definition of adjusted disability pension in section 118NA.  Section 118NA defines the terms used in relation to payments of Defence Force Income Support Allowance under Part VIIAB.

 

Paragraph (b) refers to temporary incapacity allowance which is being abolished from 20 September 2011.

 

Item 13 amends section 121 by omitting the reference to temporary incapacity allowance from the definition of pension in subsection 121(7). 

 

Section 121 is an administrative provision setting out matters that relate to the payment of instalments of certain pensions and allowances .

 

Temporary incapacity allowance is being abolished from 20 September 2011.

 

Item 14 amends section 128A by repealing paragraph (b) of the definition of income payment in subsection 128A(1).  Section 128A refers to the provision of tax file number of the recipients of payments made under the Veterans’ Entitlements Act that are listed in subsection 128A(1).

 

Paragraph (b) refers to temporary incapacity allowance which is being abolished from 20 September 2011.

 

Item 15 sets out the transitional provisions applicable to the amendments made by  Schedule 3 that provide for the abolition of temporary incapacity allowance.

 

The intention of the amendments is that all persons in receipt of temporary incapacity allowance as at 19 September 2011 will cease receiving payments of the allowance after that date. 

 

However, persons who commence a relevant period of treatment prior to

20 September 2011 and who would, but for the abolition of temporary incapacity allowance, have become eligible for the allowance after the required four week qualifying period, will be eligible under the transitional provisions to be paid the allowance for that part of the relevant period up to and including 19 September 2011.

 

Despite the repeal of subsection 112(1) (by item 8 of the Schedule) the transitional arrangements provide that applications for temporary incapacity allowance for periods prior to 20 September 2011 may be made for up to 12 months from the start of the relevant period of treatment.

 

For example, a veteran or member who meets the eligibility criteria for temporary incapacity allowance and who commenced the relevant period of treatment on

9 February 2011 will have until 9 February 2012 to submit an application for the allowance even though the allowance will be abolished from 20 September 2011.

 

Subitem 15(1) specifies that despite the amendment made by item 1, the tax exempt status of temporary incapacity allowance provided under the non-assessable income provisions of the Income Tax Assessment Act (as in force immediately before the commencement of the item) will continue to apply on and after 20 September 2011 to payments of temporary incapacity allowance made before, on or after

20 September 2011.

 

Subitem 15(2) provides that certain provisions of the Veterans’ Entitlements Act (despite being amended or repealed by this Schedule) will continue to apply on and after 20 September 2011 to grants of temporary incapacity allowance made before, on or after that date.

 

The subitem is applicable to the amendments made by items 4, 5, 13 and 14 and refers to the amendments made by those items to sections 25A, 96, 121 and 128A of the Veterans’ Entitlements Act.

 

Subitem 15(3) specifies that, despite the amendments made by item 6, section 107 of the Veterans’ Entitlements Act, as in force immediately before the commencement of that item, continues to apply so that temporary incapacity allowance is payable to eligible persons on and after that commencement in relation to those days of the relevant period that occur before 20 September 2011.

 

This transitional provision operates in conjunction with subitem 15(5)  to allow eligible persons to submit, within the 12 month time limit provided under subsection 112(1) , an application for temporary incapacity allowance after 20 September 2011, for the days of the relevant period that occurred prior to 20 September 2011. 

 

Subitem 15(4) is applicable only in the circumstances where the relevant period applicable to the incapacity is not in excess of 4 weeks prior to 20 September 2011.  This subitem ensures veterans and members will be able to receive temporary incapacity allowance for treatment for a continuous period of 4 weeks or more where the period does not exceed 4 weeks prior to 20 September 2011.  The subitem makes it clear that if:

 

·            before the commencement of this item, a veteran or member is admitted to

  a hospital or other institution for treatment in respect of a war or

  defence-caused injury or a war or defence-caused disease;   

  and

·           the period (the pre-commencement period ) beginning on the day of that

 admission and ending at the end of 19 September 2011 does not exceed

 4 weeks;

then:

·          section 107 of the Veterans’ Entitlements Act 1986 , as in force immediately

before the commencement of this item, continues to apply, on and after that

commencement, in relation to that veteran or member, that admission and that

treatment; and

·          if, under that section, the Commission grants a temporary incapacity allowance to the veteran or member—then, for the purposes of subsection 107(4) of that Act, the pre-commencement period is taken to be the relevant period applicable to the incapacity even though the pre-commencement period is less than 4 weeks.

 

Subitem 15(5) provides that an overpayment of temporary incapacity allowance that arises as a result of an increase in the rate of pension payable, or the grant of a pension payable under Part II may be recoverable from payments of that pension.

 

The subitem specifies that subsection 107(8) of the Veterans’ Entitlements Act as in force immediately before the commencement of item 15, continues to apply on and after that commencement in relation to payments of temporary incapacity allowance made before, on or after 20 September 2011.

 

 

 

 

Subitem 15(6) specifies that despite the amendment made by items 7 to 11, sections 111, 112 and 115 of the Veterans’ Entitlements Act 1986 (as in force immediately before the commencement of those items) continue to apply on and after that commencement in relation to applications for temporary incapacity allowance made before, on or after that commencement.

 

Commencement

 

Clause 2 provides that Schedule 3 commences on 20 September 2011.