Bills Digest no. 130 2006–07
Veterans' Affairs Legislation Amendment (2007 Measures
No. 1) Bill 2007
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Veterans' Affairs
Legislation Amendment (2007 Measures No. 1) Bill
2007
Date introduced:
28 March 2007
House: House of Representatives
Portfolio: Veterans' Affairs
Commencement:
Schedule 1, items 1, 3-7,
10-16, 18-25, 29-51, 54-56, 65-78, 80-82, and 84 as well
as Schedules 2 and 4 commence on the day after
this Act receives Royal Assent. Schedule 1, items 8-9, 17,
26-28, 52-53, 57-64, 79 and 83 commence on Royal Assent.
Schedule 1 item 2, and Schedule 3 items 1 and 2
have retrospective commencement dates to correct technical errors.
Schedule 5 commences on 1 July 2007. The various
different commencement dates for the different amending provisions
are set out in the Table in Clause 2 of the
Bill.
The Bill
presents amendments to the Veterans Entitlements Act 1986
(VEA) to generally:
- enhance and streamline Veterans Affairs administrative
practices.
- align provisions in the VEA with like provisions in the
Social Security Act 1991 (SSA).
Specifically, the Bill will achieve this by
provisions designed to:
- amend the asset test provisions in the VEA allowing the
disposal of assets to be disregarded where the asset is returned or
adequate consideration was received.
- amend the compensation recovery provisions to include
supplementary payments, paid in addition to a basic income support
payment, such as telephone allowance, advance pharmaceutical
allowance and education entry payments in the definition of
compensation-affected pension . This will allow the recovery of
these supplementary payments from the compensation payment, where
the recovery of income support payment/s previously paid is
retrospective.
- amend the compensation-affected pension definition to not
include Income Support Supplement (ISS) paid after the person turns
veteran qualifying age (that is, age service pension qualifying
age), rather than from when the person turns pension age (that is,
civilian age pension qualifying age).
- amend the VEA to explicitly identify which determinations made
by the Repatriation Commission have to be communicated in writing
to the claimant.
- extend access to rent assistance (RA) to recipients of the
Special Rate Disability Pension (otherwise known as the Totally and
Permanently Incapacitated pension (T&PI)).
- make minor changes and technical amendments to the VEA to
remove ambiguities and anomalies.
The Bill also:
- makes consequential amendments to the Income Tax Assessment
Act 1997 (ITAA) to include ISS as one of the payments that can
be exempt from the claimant being required to provide a tax file
number and also to describe Defence Force Income Support Allowance
(DFISA) provided under the VEA as taxable income, unless the income
support payment the claimant would otherwise be paid under the SSA
is not taxable income.
- makes technical amendments to the Military Rehabilitation
and Compensation Act 2004 (MRCA) in regards to injuries or
diseases arising from the treatment for a service related injury or
disease and also to clarify that there is no onus of proof for the
acceptance of liability of claims.
Many of the Parts presented in this Bill
involve aligning provisions in the VEA with the like provisions in
the SSA. Many of the provisions for income support payments in both
the VEA and the SSA mirror each other and this parity is maintained
to ensure consistency and equity of treatment between like
payments. These mirrored provisions commonly refer to rates of
payment, income testing, asset testing and treatment of
compensation income. All of the income support pensions and
allowances provided under the SSA (except for blind pensions) are
income and assets tested. The like income support payments provided
under the VEA, which are also income and assets tested, are age
service pension, invalidity service pension and ISS.
For a general introduction to veterans issues
see the Bills Digest to the Veterans' Entitlements
(Clarke Review) Act 2004.(1)
Amendment to the definition of Australia for the purposes of
the Veterans Entitlement Act 1986 (VEA)
Part 1 presents amendments to
the definition of Australia in the VEA. The current definition in
sub-section 5Q(1) of the VEA includes the external territories as a
part of Australia for the purposes of Parts III and IIIA of the
VEA.(2) Part III of the VEA provides for service pension
and Part 111A provides for ISS.
As set out in the Explanatory Memorandum
attached to the Bill,(3) the Acts Interpretation Act
1901 (AIA) details that the external territories includes
Christmas Island and Cocos (Keeling) Island but not Norfolk
Island.(4) A good description of the unique tax and
welfare status of Norfolk Island is provided in the report by the
Joint Standing Committee on the National Capital and External
Territories on the Committees visit to Norfolk
Island.(5) The Committee visited Norfolk Island in
August 2006 in order to renew its association with the Norfolk
Island Government and to engage in discussions with the Norfolk
Island community on matters of concern, particularly in light of
foreshadowed changes to the Island s governance arrangements. The
report provides a good and concise description of the taxation,
immigration, social services and other arrangements that apply on
the island.
The amendment presented in the Bill aims to
include Norfolk Island as an external territory for some parts of
the VEA. This will mean that for service pension and ISS provided
under the VEA, residence in Norfolk Island will be treated as
residence in Australia.
The proposal to include Norfolk Island as a
part of Australia for the service pension and ISS is to bring it in
line with current practice and application. Persons who only have
Norfolk Island residence will be able to claim and qualify for the
service pension and the ISS, so long as all other qualification
requirements are met.
For age service pension under the VEA, the
equivalent payment under the SSA is the age pension. Under section
23 and sub-section 7(4)(f) of the SSA, a resident of Norfolk Island
is not regarded as a resident of Australia.(6) So a
person who only has Norfolk Island residence cannot qualify for the
Australian age pension. Residence on Norfolk Island can count
towards making up residence in Australia, but the person needs to
initially have Australian residence.(7)
The age service pension provided under the VEA
is in almost all respects the same as the civilian age pension
provided under the SSA. The rates paid and the income and assets
tests are the same. The main difference is that service pension
minimum qualifying age (60 for males) is 5 years younger than for
the age pension (65 years for males).(8) With this
proposed amendment, service pension and ISS will be different to
the like payment under the SSA in recognising Norfolk Island
residence as if it were the same as Australian residence. This in
part recognises the compensatory element in the service pension, it
being payable 5 years earlier than the age pension recognising the
extra stresses and strains of having been exposed to war
service.
The Repatriation Commission is established by
Part XI of the VEA. Section 180A in Part XI empowers the Commission
to make decisions about claims for disability pension under the VEA
and also claims by dependants of persons for war widows /ers
pension (WWP) under the VEA.(9)
The Bill proposes to insert words into the VEA
regarding the recording of determinations and reasons for
determinations made by the Commission under the VEA. The amendments
specify that determinations and reasons in respect of a claim for
assistance or a payment under the VEA must:
- be recorded in writing,
- set out the Commission s findings on material questions of
fact,
- refer to the evidence or other material on which the findings
of fact are based, and
- provide reasons for the Commission s determination.
The amendments further set out that the
Commission must give the claimant:
- a copy of the record of the Commission s decision,
- a copy of the Commission s findings on material matters of
fact, the evidence or other material on which the findings of fact
are based and the reasons for the decision, and
- the claimant s rights of appeal.
These obligations about the recording of
Commission decisions and the notification of decisions have not
been spelt out in the VEA before. They have been largely undertaken
previously but as a matter of policy rather than as a legislative
requirement for the Commission.
Repatriation Commission decisions about the
disability pension and the WWP are certainly the most contentious
decisions made under the VEA. For the disability pension, decisions
involve whether an injury/illness is war/service related or not and
the extent of the impact of the illness/injury. Likewise for the
WWP, the decisions are about the reasons for the death of a
veteran/service person and whether the death was war/service
related or not. With almost all of these decisions, what hangs off
the decision is not only the assistance that can be provided under
the VEA (disability pension or WWP) but also there is often the
emotional element of the claimant seeking official recognition from
government that their illness/injury was caused by their service or
the death of a partner was caused by or originated in their
service. Therefore, these sorts of decisions will always be a
matter of contest and emotion.
There are no other like provisions in the VEA
or the SSA that spell out in such detail the requirements to record
decisions and the notification of decisions.
Most family assistance payments (Family Tax
Benefit Part A (FTB-A), Family Tax Benefit Part B (FTB-B), Child
Care Benefit (CCB)) are paid fortnightly during the year or
alternatively claimed and paid at the end of the year in the tax
assessment. Family assistance payments are not counted as income by
the income tests in the VEA and the SSA. However, some family
assistance payments have been provided as a one-off lump sum
payment.(10) Some examples have been a one-off payment
of $600 per FTB-A child to all FTB-A families announced in the
2004-05 Budget(11) and also a one-off payment of $600
per person for each recipient of the carer allowance, also
announced in the 2004-05 Budget.(12)
When the one-off payments of family assistance
legislation was passed by the Parliament, amendments were then made
to the SSA to exclude these one-off family assistance payments as
income under the income test but amendments were not also made to
the VEA.(13) This Bill presents amendments that will
amend the VEA to exclude these one-off family assistance payments
as income under the income tests applied in the VEA.
Provisions to prevent people from depriving
themselves of property or income in order to obtain a pension date
back to the Invalid and Old-age Pensions Act 1909.
Initially, where a person disposed of an asset without adequate
consideration the sanction was disqualification from receipt of a
pension altogether. This situation applied until the introduction
in 1976 of an income only means test. Under the then new
provisions, where a person deprived themselves of income in order
to qualify for a pension, or for a higher rate of pension, the
disposed of income continued to be deemed as income for the
purposes of the income test.
The deprivation of assets rules dates back to
the introduction of the assets test in 1985. Disposal of assets
without adequate return was allowed to the value of $2 000 per
annum for a single person or $4 000 for a couple. Disposal above
these values resulted in the excess asset being assessable under
the asset test. The assessed value of disposed assets was then
reduced by 10 per cent each year. The deprivation of income or
assets rules were again modified from 1 July 2002.(14)
The new rules allowed the disposal of $10 000 in assets in a year
and $30 000 over five years.
The amendments to the VEA presented in this
Bill are to align the deprivation provisions with those in the SSA,
especially to allow disposals that occurred up to five years before
the deprivation rule changes that occurred from 1 July 2002, as
well as disposals after 1 July 2002.
The Bill proposes to replace the existing
definition of a compensation affected pension in the VEA with a new
definition, which adds in supplementary payments such as telephone
allowance, an advance of pharmaceutical allowance and education
entry payment. This will align the supplementary payments that are
a compensation affected pension with the like definition in the
SSA. The adding of supplementary payments to the list of
compensation recoverable payments was originally provided for in
the SSA with the passage of the Social Security Amendment
(Further Simplification) Act 2003.(15)
Supplementary payments are those that are not
payable in their own right, rather only payable contingent on some
other primary payment or entitlement existing. For example, RA is
not payable on its own; only if the person claiming it is otherwise
qualified for an income support payment or to FTB-A at more than
the base rate.
The adding of these supplementary payments to
the list of compensation affected pension payments means they will
be recoverable if the person otherwise received a compensation
payment for the same period for which these payments were
provided.
The essential reason these additional or
supplementary payments are being added to the list of compensation
affected pension , is that if the primary payment is recoverable
under the compensation recovery rules, then any supplementary
payments paid in addition to that primary payment, should also be
recoverable. Without qualification for and payment of the primary
income support payment, then the supplementary payment would not
have been made.
The amendments to the compensation recovery
provisions of the VEA (that is Part IIIC of the VEA) presented in
this Bill are basically to amend wording in the VEA that currently
provide for an unintended result. Currently, there is the allowance
in the VEA for the Repatriation Commission to disregard the receipt
of compensation payments in special circumstances . Currently,
Special circumstances might exist where there is no connection to
the entitlement to the compensation (for example workers
compensation) and to the entitlement to a compensation affected
payment provided under the VEA (for example disability pension). It
was never intended that special circumstances might exist, just
because the compensation received had no connection with the person
s eligibility for a compensation affected payment provided under
the VEA.
Compensation received might be for various
reasons like pain and suffering, medical costs and expenses, loss
of enjoyment in life or for lost earnings. There are special rules
in the VEA and the SSA for the treatment of compensation provided
as replacement earnings. These special provisions are to ensure
that persons, who are able to access replacement earnings from
compensation, should not at the same time access assistance from
government-provided income support. It has been a long-standing
view of successive governments that the compensation system has the
first responsibility for the provision of income support to those
with a compensable illness or injury, not the taxpayer by way of
government support. The foremost concern of governments has been
that there should not be any double-dipping, that is receiving
compensation for lost earnings from a compensation payer or insurer
while at the same time receiving government income support.
Periodic payments of compensation for economic
loss, such as lost earnings from employment, reduce a person's
entitlement to income support payments, paid under the VEA or the
SSA, on a dollar-for-dollar basis. These payments, being payments
for lost salaries/wages, therefore provide income support.
Lump-sum compensation payments are examined to
identify the component that has been paid for lost salary or wages,
being the part for lost earning capacity. Where a court or tribunal
ascribes the part for economic loss within a lump-sum payment, this
is usually accepted. Where there is no court or tribunal
attribution for economic loss (commonly in out-of-court
settlements), the VEA (and the SSA) ascribes 50 per cent of the
lump-sum as being for economic loss. The residual 50 per cent is
then ascribed for other non-economic loss items such as pain and
suffering and loss of enjoyment of life, medical expenses.
Where compensation has been paid for a period
and the person has also received a compensation affected payment
for the same period, then the amount of the compensation affected
payment can be recovered from the person.
The decision to apply the special
circumstances provisions to waive recovery of compensation affected
payments is based on an holistic view of an individual's
circumstances, that is, the decision would not usually be based on
just one factor but a combination of factors. The guidelines state
that the special circumstances provisions should only be applied in
unusual, unforeseen and exceptional circumstances. This means in
situations where the compensation provisions could lead, or have
led to extreme hardship or created an inequitable, unjust or
unreasonable situation. There is usually not one factor which makes
a situation unusual, unforseen and exceptional, but a combination
of factors applying to each individual. If special circumstances
are considered to exist; all or part of a compensation payment can
be treated as not having been made, or not liable to be paid.
A more comprehensive description of the impact
of compensation payments on income support payments provided under
the VEA (and the SSA) can be seen in the Bills Digest for the
Compensation for Non-Economic Loss (Social Security and
Veterans' Entitlements Legislation Amendment) Act
1999.(16)
For a long period, the provision for persons
in gaol has been considered the responsibility of the State or
Territory. Income support payments provided under the VEA (and the
SSA) are not made while a person is imprisoned (held on remand or
as a result of a conviction). In 1999, both the VEA and the SSA
were amended so that all income support payments were paid
fortnightly in arrears and entitlement to payment linked to
entitlement on each day in the fortnight past.(17) In
the fortnight there are 10 working days for which payment is made.
Previously, pension income support payments were not paid in
arrears or in advance, rather, payment was linked to qualification
on the one payday in the fortnight. Under this previous pension
payment regime, a person incarcerated for 2 days would miss an
entire fortnight s payment, if one of those two days in gaol fell
on the pension payday.
Under the amendments presented in the Bill,
the VEA will be amended to mirror what is currently provided for in
the SSA, so that only the two days the person is in gaol are not
paid for and the residual payment days in the fortnight, that is 8
days are paid (as there are 10 days that are normally paid in the
fortnight).
A person on a DVA income support
pension(18) is issued with a health concession card
(Pensioner Concession Card (PCC)) and may also have a health
treatment card (Gold Card). As with the denial of payment of income
support to persons in gaol (see Allow payment of pension in
respect of days not imprisoned above), it has been a
long-standing understanding that the State or Territory is
responsible for the health needs of a person in gaol. The
amendments presented in this Bill will ensure that entitlement to
use a concession or treatment card is not available while the
person is in gaol, unless the person s payment of pension is
diverted to a partner or dependant child, which would normally only
be done for very short periods of incarceration. This will allow
the partner or dependant child the use of the concession card, even
though the primary card holder is or was in gaol.
An explanation of the deprivation of assets
provisions in the VEA and the SSA is provided in the section titled
Alignment of disposal of assets rules in the VEA with those
same rules in the SSA above. In some cases, an asset disposed
of without initial adequate consideration is later paid for, or
adequate consideration received at a later date. Currently, in such
cases, the deprivation provisions in the VEA do not allow for the
deprived asset to be later disregarded once the consideration is
received.
The amendments to the deprivation provisions
in the VEA presented in the Bill will allow the later disregard of
a deprived asset once adequate consideration for the asset has been
received.
The origins and purpose of the DFISA were
discussed in the Bills Digest for the Veterans' Entitlements
(Clarke Review) Act 2004.(19) The
DFISA eliminates the difference between a veteran s SSA income
support payment, which is reduced as their VEA disability pension
is regarded as income, and the amount they would receive if their
disability pension was not assessed as income. The DFISA makes up
for the loss incurred as the rate of income support payment paid
under the SSA is reduced.
Disability pension provided under the VEA is
income for the income test applied to income support payments
provided under the SSA. Up until the introduction of DFISA,
recipients of a VEA disability pension, who also were receiving an
income support payment under the SSA, might have a reduction in
their rate of income support payment (where the rate of VEA
disability pension paid exceeds the free area in the SSA income
test).
As described in the Explanatory Memorandum
attached to the Bill, new grants of disability pension and rate
increases are always retrospective.(20) Where these
retrospective new grants or rate increases are made, there needs to
be a reconciliation between the amounts of arrears of disability
pension owed, the excess of income support payment paid under the
SSA and the amount of DFISA owed. The amendments presented in the
Bill are to remedy anomalies in the VEA whereby the correct
reconciliation of payments paid for the same period is not achieved
for the partner of a disability pensioner.
The need for DFISA paid under the VEA and the
associated legislative arrangements were criticised by Senator Mark
Bishop when the Veterans' Entitlements (Clarke
Review) Act 2004 was debated in the Senate.(21)
Senator Bishop argued that the need for DFISA could have been
eliminated with a simple exclusion of VEA disability pension
payments as income under the income test applied in the
SSA.(22) Senator Bishop then said:
That brings me to the final item in this bill,
which is simply the greatest administrative mess and disaster I
have ever seen. When Labor and the Democrats began urging in this
place, without success, that the disability pension be exempted
from the means test at Centrelink, we simply intended that it be
made an exclusion under section 8(8) of the Social Security Act.
Effectively, this would have been one line of text. It would simply
have provided that any disability pension paid by DVA to any ex
service person would be disregarded as income. What we have instead
is the continuation of its inclusion as income in the means test
but the payment of a refund by DVA to all the people affected. This
refund, paid every fortnight, will be adjusted as any other payment
would be to changing levels of income from other sources. Instead
of taking one line of text, this provision to pay Defence Force
income support allowance DFISA takes 14 A4 pages of typed text. The
irony is that this new DFISA has to be excluded from the means test
under the Social Security Act, which will be done by an amendment
to section 8(8). So effectively the whole issue returns to where it
started. The DFISA that is, the value of the deduction for
disability pension still needs to be exempted from the Social
Security Act. It is without doubt one of the most complicated and
unnecessary pieces of legislation I have ever
seen.(23)
The amendments to the VEA presented in this
part of the Bill, to ensure a proper reconciliation of payments
paid under the VEA and those paid under the SSA for the same
period, almost entirely arise due to the existence of DFISA. These
amendments, and other DFISA related amendments in other parts of
this Bill, would not be necessary if the amendment to the SSA to
exclude VEA disability pension as income under the SSA, as
suggested by Senator Bishop, had been made instead of the creation
of DFISA.
Bereavement payments essentially involve the
continuance of an income support payment (for example, service
pension) paid at the rate that applied before the death of a
partner (or person being cared for) for a period after the date of
death. The purpose of bereavement payment is to allow the surviving
partner (or carer) a period to cope with the transition to a lower
rate of assistance, or in some cases the withdrawal of assistance.
The bereavement payment period is commonly seven fortnightly
payments after the date of death, paid at the rate received
immediately prior to the date of death. For example, where one of a
service pensioner couple dies, the surviving partner continues to
receive the partnered rate of service pension that was paid to both
partners, for seven payments after the date of death, before they
are then paid at the single rate of pension.
The amendments to the bereavement payment
provisions in the VEA presented in this part of the Bill are to
ensure that where a deceased person s VEA payments immediately
prior to death included DFISA, then the bereavement payment
provided to a surviving partner (or carer) after death also
includes the DFISA payment.
Again, these amendments are essentially fix-up
amendments to the VEA and arise due to existence of DFISA.
Therefore, the comments about the existence of DFISA made by
Senator Mark Bishop referred to above, in the context of the grant
of a VEA disability pension, also apply here.
The deferred pension bonus scheme was
introduced with the passage of the Social Security and
Veterans' Affairs Legislation Amendment (Pension Bonus Scheme) Act
1998.(24) Under the Deferred Pension Bonus Scheme,
a person claiming age pension (under the SSA) or service pension
(under the VEA) can defer payment of their pension for up to 5
years and receive a bonus when they eventually start pension
payments. The amount of the bonus depends on the rate of pension
the claimant is otherwise entitled to, had they not deferred
payment and the length of the deferment period.
Where a person dies during the deferment
period, the residual deferment amount owing up to the date of
death, is paid to the person s estate.
The amendments to the VEA presented in this
part of the Bill are to ensure that where a person does defer their
pension under the deferred pension bonus scheme and part of their
deferred pension includes deferred DFISA amounts, then the amount
of DFISA bonus owing to the deceased person can be paid after the
date of death. A description of the construct and the payment of
DFISA can be seen in the Bills Digest for the Veterans'
Entitlements (Clarke Review) Bill
2004.(25) This was the legislation that introduced
the DFISA.
Again, these amendments essentially are fix-up
amendments to the VEA to ensure the intended delivery of payments
occurs but they also arise due to existence of DFISA in the VEA.
Therefore, the comments about the existence of DFISA, made by
Senator Mark Bishop referred to above, also apply here.
The amendments presented in the Bill to expand
access to rent assistance (RA) for Special Rate Disability Pension
(SRDP) recipients are aimed at amending an unintended provision in
the VEA. The SRDP is more commonly known as the Totally and
Permanently Incapacitated disability pension (T&PI). The
unintended provision in the VEA currently precludes access to RA to
some SRDP recipients to whom it was never intended to deny access
to RA. These cases are those where the SRDP recipient is on a
reduced rate due to compensation income from another source for the
same injury/illness.
Normally, the full rate of SDRP precludes
access to RA under the RA income test but a reduced rate of SRDP
may allow access to RA, if the reduced SRDP rate is low enough.
The number of cases involved in this expansion
of access to RA for part-rate SRDP recipients is probably very
small. These cases refer to where the rate of SRDP paid is reduced
(can only be reduced by other compensation income for the same
illness/injury) and the recipient is also paying qualifying private
rent and is also on an income support payment provided under the
VEA. This would be a very small number of cases indeed.
The amendments to the MRCA presented in this
Bill in regards to unintended and intended consequences of
treatment of an injury or disease are aimed at fixing wording in
the MRCA so that the same coverage is provided that previously
applied under the VEA and the Safety Rehabilitation and
Compensation Act 1988 (SRCA). Under the current wording in the
MCRA, intended consequences of treatment may not be covered, only
unintended consequences of treatment. It is the aim that all
consequences of treatment are covered and provided for, whether
they were unintended or intended.
The amendments to the Income Tax
Assessment Act 1936 (ITAA 1936) presented in Schedule
4 are to amend the requirements for a claimant to provide
a tax file number (TFN) when claiming ISS. There are circumstances
where the power to waive the requirements to provide a TFN are
appropriate.
Generally, persons claiming an income support
payment under the VEA (and the SSA) are required to provide a TFN.
Claimants are generally expected to provide a TFN when claiming, as
most claimants are likely to have a TFN and it would not be
difficult for them to provide it and it does allow the checking and
cross verification of information provided (shares, property, bank
account balances, income and assets) with the Australian Tax Office
(ATO). However, there are situations where a claimant should be
exempted from providing a TFN. One example might be where the
claimant has applied for a TFN with the ATO but a TFN has not yet
been issued. Another example might be where the claimant is
residing overseas and is making a claim for a payment under an
international reciprocal agreement, which allows the making of a
claim for a payment under the VEA in the country of overseas
residence.
The amendments in Schedule 4
of the Bill are basically to update the provisions in the ITAA 1936
with references to ISS claimants, which is paid under Part IIIA of
the VEA, and the provision of a TFN.
Virtually all income support payments provided
under the SSA (and the VEA) are taxable income. The only exceptions
are:
- disability support pension (DSP) (where the recipient is below
age pension age),
- carer payment (where both the carer and the caree are below age
pension age), and
- wife pension (where both the partner and the pensioner are
below age pension age).
Notwithstanding that all the other income
support payments are taxable income, with the pensioner and
beneficiary tax offsets applied under the Income Tax Assessment
Act 1997 (ITAA 1997), recipients of taxable income support
payments pay no tax on the amount of pension or allowance paid.
The amendments to the ITAA 1997 presented in
Schedule 5 of the Bill are essentially to clarify
the taxable status of DFISA paid to individual recipients of
disability pension paid under the VEA. A description of the
construct and the payment of DFISA can be seen in the Bills Digest
for the Veterans' Entitlements (Clarke
Review) Bill 2004.(26) This was the legislation
that introduced the DFISA.
The proposed amendments to the VEA are aimed
at ensuring that the DFISA paid carries the same income tax status
as the payment it is substituting for. So if the DFISA payment is
substituting for the payment of age pension, which is a taxable
income, then the DFISA paid to an individual will also be taxable.
Likewise, if the payment that DFISA is replacing is DSP, which is
not taxable income, then the DFISA paid will also not be taxable
income.
Again, these amendments are essentially fix-up
amendments to the ITAA 1997 to ensure the legislation delivers the
policy intention. However, these amendments also arise due to
existence of DFISA in the VEA. Therefore, the comments about the
existence of DFISA, made by Senator Mark Bishop referred to above,
also apply here.
Item 11 replaces the existing
definition of a compensation affected pension in the VEA with a new
definition which adds in supplementary payments such as telephone
allowance, an advance of pharmaceutical allowance and education
entry payment.
Item 12 amends the definition
of Australia in the VEA to include Norfolk Island as an external
territory for the purposes of the income support payments provided
under Parts III and IIIA of the VEA.
Items 16, 19, 21, 23, 25, 56 and
72 place words within the VEA regarding the recording of
determinations, the reasons for determinations and the notification
of decisions made by the Repatriation Commission under the VEA.
Items 29 insert provisions to
ensure the deprivation provisions of the VEA no longer apply once
proper notification is received that adequate consideration has
been received for a previously deprived asset. Item
30 inserts provisions to ensure that the deprivation
provisions of the VEA apply to assets deprived up to 5 years before
1 July 2002, being the date the then new asset test deprivation
provisions commenced.
Item 36 inserts provisions
into the VEA defining the meaning of in gaol and also the meaning
of psychiatric confinement and are the same as the like provisions
in the SSA.
Item 68 inserts provisions to
ensure that the amount of DFISA paid to a carer of a deceased
person is not more than the carer s bereavement payment
entitlement.
Item 70 inserts provisions to
include any unpaid bonus of DFISA payment payable to the estate of
a deceased person, where that person was entitled to an amount of
DFISA bonus.
Schedule 2 Amendment of the Military Rehabilitation and
Compensation Act 2004
Item 1 inserts provisions to
ensure that injuries and diseases caused by treatment, whether
intentional or unintentional, are covered by the MRCA.
Items I and 2 inserts
provisions into the ITAA 1936 to allow an exemption from the
provision of a TFN, for ISS claimants.
Item I inserts a provision in
the ITAA 1997 to ensure that any DFISA paid to a person has the
same tax status as the primary income support payment paid under
the SSA to the person.
Much of the amendments to the VEA presented in
this Bill are to align the VEA with like provisions in the SSA,
hence there is nothing really contentious or controversial in the
Bill. Some of these corrections to the VEA aligning with the same
text in the SSA are due to the policy or legislation drafters
overlooking the need to make the VEA amendments at the time of the
original SSA amendments.
Other amendments are to ensure that the
provisions in the VEA and other acts like the ITAA 1937 and the
ITAA 1997 are worded correctly to deliver the intended policy
result.
The amendments to the VEA and other acts in
regards to DFISA mainly arise due to the existence of DFISA.
Senator Mark Bishop has argued that the existence of DFISA is a
matter of contention and an unnecessarily complex way of dealing
with the treatment of disability pension paid under the VEA as
income for the income tests applied under the SSA.(27)
It would far simpler to just exempt disability pension as income
under the SSA income test.
- Peter Yeend,
Veterans' Entitlements (Clarke Review) Bill 2004, Bills Digest
No. 134,
2003-04, Parliamentary Library, Canberra, Australia, 28 May
2004. http://www.aph.gov.au/library/pubs/bd/2003-04/04bd134.htm
- Section 5Q(1).
Australia includes the external territories for the
purposes of Parts III and IIIA.
- Explanatory
Memorandum, pp. 2 3.
- ACTS
INTERPRETATION ACT 1901
SECT 17 - Constitutional and official definitions [see
Note 2]
In any Act, unless the contrary intention appears:
(a) Australia or the
Commonwealth means 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;
- Joint Standing
Committee on the National Capital and External Territories,
Report on the Visit to Norfolk Island, Canberra,
Australia, September 2006.
http://www.aph.gov.au/house/committee/ncet/norfolk_visit/report.htm
- SOCIAL
SECURITY ACT 1991 - SECT 23
General definitions
23(1) In
this Act, unless the contrary intention appears:
"Australia" includes the Territory of
Cocos (Keeling) Islands and the Territory of Christmas
Island.
Note: see also
subsection 7(4), (6) and (7) for
special residence rules for external Territories.
SOCIAL SECURITY ACT 1991 SECT 7(4)
7(4) For the purposes of:
(a) Part
2.2 (age pension); and
(b) Part
2.3 (disability support pension); and
(d) Part
2.7 (bereavement allowance); and
(e) Part
2.8 (widow B pension);
the
following apply:
(f)
residence of a
claimant in an
external Territory other than Norfolk Island is taken to be
residence in
Australia; and
(g)
residence of a
claimant in Norfolk Island is taken not to interrupt the
continuity of residence of the
claimant in
Australia.
- ibid.
- This 5 years earlier
age qualification for age service pension is to recognise the extra
stresses and strains of having being exposed to the rigours of war
service.
-
VETERANS' ENTITLEMENTS ACT 1986
SECT 180 - Functions of Commission
(1) The functions of the Commission are:
(a) to grant pensions, allowances and other
benefits to veterans, dependants of veterans and certain other
persons under and in accordance with the provisions of this
Act;
(b) to establish, operate and maintain hospitals
and other institutions for the provision of treatment for veterans,
dependants of veterans and other persons eligible to be provided
with treatment under Part V;
(c) to arrange for the provision of treatment and
other services for veterans, dependants of veterans and other
persons in accordance with this Act;
(d) to provide the Minister with information
concerning, and to advise the Minister on, matters relating to the
operation of this Act, including, but without limiting the
generality of the foregoing, matters relating to pensions,
allowances and other benefits for veterans, and dependants of
veterans, incapacitated from injury or disease suffered as a result
of service in a war or in war-like operations and for dependants of
veterans whose deaths are attributable to any such service; and
(e) such other functions as are conferred on the
Commission by this or any other Act.
(2) The Commission shall, subject to the control of the
Minister, have the general administration of this Act.
- Family
Assistance Legislation Amendment (More Help for Families One-Off
payments) Act 2004.
- Department of Family and Community Services, Portfolio
Budget Statements, 2004-05 Budget, Budget Related Paper No.
1.8, p. 51.
http://www.facs.gov.au/internet/facsinternet.nsf/aboutfacs/budget/budget2004-pbs.htm#budget
- ibid., p. 57.
- Family
Assistance Legislation Amendment (More Help for Families One-Off
payments) Act 2004, Schedule 1, Item 19.
- Dale Daniels, Social
Security and Veterans Entitlements Legislation Amendment (Disposal
of Assets - Integrity of Means Testing) Bill 2002, Bills Digest
No. 131, 2001-02, Parliamentary Library, Canberra, Australia,
8 May 2002. http://www.aph.gov.au/library/pubs/bd/2001-02/02bd131.htm
- Peter Yeend, Social
Security Amendment (Further Simplification ) Bill 2003, Bills
Digest
No. 86, 2003-04, Parliamentary Library, Canberra, Australia,
30 June 2004. http://www.aph.gov.au/library/pubs/bd/2003-04/04bd086.pdf
- Peter Yeend and
Fiona Walker, Compensation for Non-Economic Loss (Social Security
and Veterans' Entitlements Legislation Amendment) Bill 1999,
Bills Digest No. 189, 1998-99, Parliamentary Library,
Canberra, Australia, 24 June 1999.
http://www.aph.gov.au/library/pubs/bd/1998-99/99bd185.htm#Contact
- Chris Field, Social
Security and Veterans' Affairs Legislation Amendment (Payment
Processing) Bill 1998, Bills Digest No. 5, 1998-99,
Parliamentary Library, Canberra, Australia, 4 August 1999. http://www.aph.gov.au/library/pubs/bd/1998-99/99bd005.htm
- Income support
pensions provided under the VEA are age service pension, income
support supplement and invalidity service pension.
- Peter Yeend,
Veterans' Entitlements (Clarke Review) Bill 2004, Bills Digest
No. 134,
2003-04, op. cit.
- Explanatory
Memorandum, p. 22.
- Senator Mark Bishop,
Senate, Debates, 21 June 2004, Veterans' Entitlements
(Clarke Review) Bill 2004, pp. 24401-24402. http://www.aph.gov.au/hansard/hanssen.htm
- ibid.
- ibid.
- Peter Yeend, Social
Security and Veterans' Affairs Legislation Amendment (Pension Bonus
Scheme) Bill 1998, Bills Digest No. 173, 1997-98,
Parliamentary Library, Canberra, Australia, 6 April 1998.
http://www.aph.gov.au/library/pubs/bd/1997-98/98bd173.htm#Contact
- Peter Yeend,
Veterans' Entitlements (Clarke Review) Bill 2004, Bills Digest
No. 13,
2003-04, op. cit.
- ibid.
- Senator Mark Bishop,
Senate, Debates, 21 June 2004, op. cit.
Peter Yeend
4 May 2007
Social Policy Section
Parliamentary Library
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