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2002
VETERANS’ AFFAIRS LEGISLATION AMENDMENT BILL (No.
3) 2002
(Circulated by authority of the Minister for Veterans’
Affairs,
The Honourable Danna Vale MP)
3 Schedule(s)............................................................ v
Schedule
1 – Amendment of the Veterans’ Entitlements Act
1986
Part 1 - Amendments concerning child-related payments
1
Part 2 - Amendments concerning commutation of
income streams
4
Part 3 - Amendments concerning accrual of certain pension
bonuses
unclaimed under social security law 8
Part 4 - Amendments concerning
the calculation of pension
bonuses 14
Part 5 - Amendments
concerning the backdating of claims
for partner service pension in certain
circumstances 18
Part 6 - Amendments to achieve alignment with social
security
law concerning the treatment of compensation payable
in lump
sums 21
OUTLINE AND FINANCIAL IMPACT
Part 1 – Amendments concerning child-related payments
These amendments to the VEA will provide for the continued indexation of
the “saved” child-related payments being received by a small number
of persons in receipt of a service pension or income support supplement.
1 July 2000
Financial Impact
No financial
impact.
Part 2 – Amendments concerning the commutation of
income streams
Outline
These amendments to the VEA will prevent the misuse of the commutation provisions relating to income streams.
Royal Assent
Financial
Impact
Negligible
Part 3 – Amendments concerning the
accrual of certain pension bonuses
unclaimed under social security
law
Outline
These amendments to the VEA will
ensure that, in certain cases, periods of membership of the pension bonus scheme
that would have accrued under social security law will contribute towards the
calculation of a pension bonus payable under the VEA.
Royal Assent
Financial
Impact
Negligible
Part 4 – Amendments
concerning the calculation of pension
bonuses
Outline
A number of amendments are
required as a result of the amendments in Part 3. At the same time, a number of
other technical amendments are being made to ensure that the bonus paid to a
person accurately reflects the pension they were deferring and their marital
status throughout the period they were accruing the bonus.
Royal Assent
Financial
Impact
Negligible
Part 5 – Amendments concerning the
backdating of claims for partner
service pension in certain
circumstances
Outline
These amendments to the
VEA will allow, in specified circumstances, a claim for partner service pension
to be granted from a date earlier than the date the claim was
lodged.
Royal Assent
Financial
Impact
Negligible
Part 6 – Amendments to achieve
alignment with social security law
concerning the treatment of
compensation payable in lump sums
Outline
These
amendments to the VEA will align the compensation recovery provisions applicable
to multiple lump sums of compensation with those that apply under the Social
Security Act 1991.
Financial Impact
Negligible
Clauses
|
Clause 1 sets out how the Act is to be cited.
|
|
Clause 2 sets out various commencement dates of the provisions in the Act. |
|
Schedule(s)
|
Clause 3 provides that the Act specified in a Schedule to this Act is amended as set out in the items of that Schedule. |
Part 1 – Amendments concerning child-related
payments
Overview
These amendments to the VEA
will provide for the continued indexation of the “saved”
child-related payments being received by a small number of persons in receipt of
a service pension or income support
supplement.
Background
Until 1 January 1998 all
child-related payments to eligible persons receiving a service pension or income
support supplement under the VEA were payable under the then relevant provisions
of the VEA. The child-related payment was a component of the service pension or
income support supplement and was the equivalent of the family payment, guardian
allowance and rent assistance payments that were payable under the Social
Security Act 1991.
The amendments made by the Veterans’
Affairs Legislation Amendment (Budget and Simplification Measures) Act 1997
removed the provisions relating to the child related payments from the VEA and
transferred responsibility for the payments to the equivalent provisions of the
Social Security Act 1991 (SSA).
The amending act included a
savings provision that preserved the inclusion of the child-related payments in
the service pension or income support supplement for a small number of families
who would have been financially disadvantaged by a transfer to the
SSA.
The amendments also saved the indexation provisions applicable to
the child-related payments so that the rates of the saved child-related payments
would continue to be indexed in line with increases in the equivalent payment
types under the SSA.
The savings provisions also imposed a test of
continued eligibility for the saved child-related payments. The test provides
that a person’s service pension or income support supplement will only
include the saved child-related amount until that amount ceases to be greater
than the above the minimum family allowance child-related payment that would be
payable under the SSA.
The application of the test means that the saved
child-related payments are payable only until that point is reached and from
that time on the payments are to be made under the family assistance provisions
of the SSA.
The responsibility for the family payments now referred to as
the Family Tax Benefit (FTB) was subsequently transferred to the Family
Assistance Office from 1 July 2000. The new system of payments is an
amalgamation of a number of payments and rebates that were previously payable
and was set out in the A New Tax System (Family Assistance) Act 1999
(FAA). The provisions relating to family payments were repealed by amendments
to the SSA made by the A New Tax System (Family Assistance) (Consequential
and Related Measures) Act (No. 1) 1999.
The repeal of the those
provisions has meant that the references to the SSA family payments in the saved
VEA indexation provisions are obsolete with the effect that the rate of the
saved child-related payments has been frozen at the rate payable at the time of
the repealed provisions.
The other effect of the introduction of the
Family Tax Benefit and the repeal of the relevant SSA provisions is that it is
no longer possible to impose the test for continued eligibility for the saved
child-related payments. This is because there are no directly equivalent
payment types in the FAA that can be used as a
reference.
Explanation of the Changes
The amendments
to the VEA will provide for the continued indexation of the saved child-related
payments in line with increases in the rate of Family Tax Benefit resulting from
indexation.
The amendments will also remove those provisions relating to
the eligibility for continuation of the saved child-related payments that were
based on the now obsolete family payment provisions of the SSA.
The
amendments will also provide that a person eligible for the saved child-related
payments may opt out of receiving them if they elect to receive payments of
Family Tax Benefit under the FAA.
Item 1 repeals subclauses 10(2) and (3) of Schedule 5 and
substitutes new subclauses 10(2), (2A) and (3). Clause 10 of Schedule 5
preserved the inclusion of child-related payments in the service pension or
income support supplement of all those pensioners or recipients who would have
been disadvantaged by the transfer of the responsibility for all child-related
payments to the Social Security Act 1991 (SSA).
Repealed subclause
10(2) had provided that a person’s pension or supplement would include the
child-related payment until it ceased to be greater than the above the minimum
family payment under the SSA.
Repealed subclause 10(3) had provided that
if the saved status of the child-related payment was lost it could not later be
regained.
New subclause 10(2) provides that subject to the operation of
new subclause 10(2A) the rate of service pension or income support supplement
payable to a person will include the saved child-related payment.
New
subclause 10(2A) provides that a person’s pension or supplement will
include the saved child-related payment until:
• for payments made
before 1 July 2000, the saved child-related payment ceases to be greater than
the above the minimum family payment under the SSA; or
• for payments
made on or after 1 July 2000, the person elects by providing written notice to
the Secretary that they no longer wish to receive the saved child-related
payment.
New subclause 10(3) provides that if at any time before 1 July
2000, the saved status of the child-related payment was lost it could not later
be regained.
Item 2 amends the subclause 10(4) definition of
notional family allowance child-related amount by inserting a
reference to the rate of the payment before “1 July
2000”.
The notional family allowance child-related
amount is defined as being the amount by which the rate of family
allowance exceeds the minimum rate of family allowance payable under the
SSA.
Item 3 repeals and substitutes the definition of
notional pension/ supplement child-related amount in subclause
10(4).
The definition of notional pension/ supplement child-related
amount provides a definition for the saved child-related payment.
The notional pension/ supplement child-related amount is defined
as being the total of the pension supplement child-related amounts that would
have been included in the rate of service pension or income support supplement
payable to a person in respect of any child or children if the amendments made
by Schedule 1 to the Veterans’ Affairs Legislation Amendment (Budget
and Simplification Measures) Act 1997 had not been made.
Paragraph
(a) of the amended definition retains the existing definition for those saved
child-related payments made prior to 1 July 2000.
Paragraph (b) provides
that the amount of any child-related payments made from the 1 July 2000 will be
determined by the Commission in a disallowable instrument that refers to the
indexation of the Part A rate of family tax benefit under the A New Tax
system (Family Assistance) Act
1999.
Commencement
Clause 2 provides that items
1 to 3 of Schedule 1 commence on Royal Assent.
Part 2 – Amendments
concerning the commutation of income
streams
Overview
These amendments to the VEA will prevent the misuse of the commutation
provisions relating to income streams.
A number of changes were made to the means testing of income streams by
amendments to the Veterans’ Entitlements Act 1986 (VEA) contained
in the Social Security and Veterans’ Affairs Legislation Amendment
(Budget and Other Measures) Act 1997.
A complete definition of the
term income stream is found in subsection 5J(1) but it basically
applies to superannuation, roll over annuities, ordinary annuities, allocated
pensions and allocated annuities.
Subsequent to the 1997 amendments it
became apparent that further amendments were necessary because of the
development of new products and the need to clarify some areas of the
legislation.
Those amendments were made by the Veterans’ Affairs
Legislation Amendment (Further Budget 2000 and Other Measures) Act 2002.
The amendments were also intended to streamline the operation of the income
streams rules and to limit the abuse of the rules applicable to asset-test
exempt income streams. Similar amendments had been made to the Social Security
law in the Family and Community Services Legislation (Simplification and
Other Measures) Bill 2001.
The amendments included the insertion of
new provisions restricting the reasons for which an asset-test exempt income
stream could be commuted and still retain its asset-test exempt status. These
amendments were intended to prevent the misuse of the existing commutation
provisions.
The commutation provisions allow for the commutation of an
income stream in the circumstances where the payment resulting from the
commutation is used to purchase another income stream.
Section 52ZMA was
inserted by the most recent amendments to provide for the calculation of the
debt that arises from the overpayment of a service pension or income support
supplement while a person is in receipt of an income stream. The overpayment
arises where there has been the commutation of an asset-test exempt income
stream that contravenes the provisions of the contract or the governing rules
under which the income stream was provided, that would allow for the
commutation.
Subsection 52ZMA(2) provides that the debt will be an amount
equal to the difference between the amount of service pension or income support
supplement that was paid to the person during the relevant period
and the amount that would have been paid had the income stream not been
asset-test exempt for that period.
Subsection 52ZMA(3) provides that the
relevant period will be the later period beginning
either:
• 5 years before the income stream was commuted;
or
• the commencement day of the income stream; or
• the
period commencing 20 September 2001.
Advice has been provided by the
Department of Family and Community Services that both section 52ZMA and the SSA
equivalent are ineffective in particular circumstances in preventing the misuse
of the commutation provisions.
The scenario put forward is that a
pensioner has an asset-test exempt income stream that he or she has held for a
period of four years. The pensioner commutes the income stream and transfers
part or all of the proceeds to another asset-test exempt income stream as is
allowed under the existing commutation provisions.
The pensioner
subsequently commutes the income stream within a short period of the
commencement of the new income stream and the commutation is not in accordance
with the current commutation rules. Under the existing provisions of section
52ZMA the recoverable amount will be the overpayment of pension for the short
period for which the new income stream has been
payable.
Explanation of the Changes
These amendments
to the VEA are to provide for a determination that an asset-test exempt income
stream has an earlier commencement day. The earlier commencement day will
enable the determination of the overpayment of pension benefits in cases where
there has been a misuse of the commutation provisions.
The amendments are
applicable in those cases where a person has commuted an asset-test exempt
income stream in certain circumstances that are outside the criteria that would
allow the income stream to retain its asset-test exempt status.
The
amendments to section 52ZMA have the effect of removing the asset-test exempt
status of the previous income stream or of a succession of income streams. The
asset test would then apply for any part of that period in which the person was
eligible for a service pension or income support supplement.
Item 4 repeals and substitutes subsection 52ZMA(3). Subsection
52ZMA(3) defines for the purposes of subsection 52ZMA(2) the relevant
period being the period for which the overpayment of service pension or
income support supplement is to be determined.
New subsection 52ZMA(3)
defines the relevant period for the purposes of subsection
52ZMA(2) as the latest of the periods that began:
• the day 5 years
before the day on which the income stream was commuted; or
• the
commencement day of the income stream; or
• 20 September 2001;
and
ending when the income stream was commuted.
Item 5
repeals subsection 52ZMA(5) and substitutes subsections 52ZMA(5), (6), (7), (8),
(9), (10) and (11). Subsection 52ZMA(5) currently provides that section 52ZMA
is not applicable to income streams to which a determination under subsection
5JA(5) or 5JB(4) is in force.
New subsection 52ZMA(5) is applicable in
the circumstances where an asset-test exempt income stream has been commuted and
part of the proceeds have been used to purchase another asset-test exempt income
stream.
The new income stream will be regarded as having the same
commencement day as either the old income stream or the first of a succession of
asset-test exempt income streams.
Income stream payments made under the
old income stream or under any of the income streams in the succession of income
streams will be regarded as having been made under the new income
stream.
New subsection 52ZMA(6) provides that subsection 52ZMA(5) will
not be applicable where the amount used in the purchase of the new income stream
represents the balance of a commutation used for the payment of either a
hardship amount or a superannuation contributions surcharge
liability.
New subsection 52ZMA(7) is applicable in the circumstances
where the whole of an asset-test exempt income stream is commuted and no part of
the proceeds is used to purchase another asset-test exempt income
stream.
The commuted income stream will be regarded as having the same
commencement day as first of a succession of asset-test exempt income
streams.
Income stream payments made under any of the income streams in
the succession of income streams will be regarded as having been made under the
commuted income stream.
New subsection 52ZMA(8) provides that subsection
52ZMA(7) will not be applicable where the whole of the payment resulting from
the commutation of the old income stream is used for either the payment of a
hardship amount or a superannuation contributions surcharge
liability.
New subsection 52ZMA(9) defines in paragraph (a), a succession
of asset-test exempt income streams as comprising 2 or more asset-test exempt
income streams which (other than the first to be provided) have been funded by
means of the payment, or part of the payment, resulting from the commutation of
another of the succession of income streams.
Paragraph 52ZMA(9)(b)
defines an income stream as the first income stream in a succession of income
streams if it is the first income stream to be provided.
Subsection
52ZMA(10) refers to subsection 5JA(7) for the definition of hardship
amount.
Subsection 52ZMA(11) provides that section 52ZMA is not
applicable to income streams to which a determination under subsection 5JA(5) or
5JB(4) is in force.
Commencement
Clause 2 provides
that items 4 and 5 of Schedule 1 commence on Royal Assent.
Overview
These amendments to the VEA will ensure that,
in certain cases, periods of membership of the pension bonus scheme that would
have accrued under social security law will contribute towards the calculation
of a pension bonus payable under the
VEA.
Background
Under the VEA, the pension bonus
scheme enables a person who is eligible for an age service pension, partner
service pension or income support supplement to receive a lump sum
‘pension bonus’ if they defer claiming the pension. A similar
scheme operates under the social security law in relation to age pension. Part
IIIAB of the VEA contains the provisions for the pension bonus scheme.
An anomaly arises in relation to a person who has deferred an age
pension under social security law but who subsequently becomes a war widow/war
widower–pensioner. Under subsection 47(3) of the Social Security Act
1991 (SSA), a war widow/war widower–pensioner is no longer qualified
for age pension and would therefore lose any bonus period/s or part thereof that
they had accrued as a result of deferring age pension under social security law.
To be eligible for income support supplement a person must be a war
widow or war widower. So for the period between the person’s registration
for age pension bonus under social security law and the granting of a war
widow/war widower pension, the person is eligible for age pension but not income
support supplement. After the granting of the war widow/ war widower pension,
the person is eligible for income support supplement but not age pension. Under
the current legislation, it is not possible to ‘transfer’ the bonus
period that they accrued under the social security law to the VEA pension bonus
scheme. This is because, under the existing provisions, a person is only able to
accrue bonus periods from the date they became eligible for a VEA pension.
As a result, whatever bonus periods they have accrued for age pension
under social security law are lost and they have to start accruing again in
relation to income support supplement under the VEA.
Explanation of
the Changes
These amendments to the VEA will enable a person who
was registered or was eligible to be registered for the Pension Bonus Scheme
under social security law, and who subsequently becomes a war widow/war
widower–pensioner, to have any bonus periods they would have accrued under
the social security law in respect of age pension to be treated as if they were
bonus periods accrued under the VEA.
Item 6 inserts a new dot point at the end of the simplified
outline in section 45T. The new dot point provides a brief summary of new
Division 12.
Item 7 adds a new Division 12 at the end of Part
IIIAB. New Division 12 will modify the application of relevant provisions in
Part IIIAB so that certain persons previously eligible for a pension bonus under
social security law, may have any bonus periods that would have accrued to them
under social security law, treated as a bonus period under the VEA.
Division 12 – Modification of this Part in relation to certain
persons previously qualified for age pension under social security
law
45UV Persons to whom this Division applies.
New
section 45UV specifies the criteria that a person must meet for the new Division
to apply to that person.
The criteria are:
• a person must
be a war widow/war widower–pensioner. This term is defined in section
5Q(1) of the VEA as:
a person who is receiving a pension under Part II or
IV at a rate determined under or by reference to subsection 30(1);
and
• a person must register as a member of the pension bonus
scheme under the VEA in respect of income support supplement;
and
• a person must either:
• have been registered
as a member of the pension bonus scheme under Part 2.2A of the Social
Security Act 1991 with effect from a date that is earlier than the date that
the person became a war widow/war widower–pensioner;
or
• have been, in the opinion of the Commission, eligible for
registration as a member of the pension bonus scheme under Part 2.2A of the
Social Security Act 1991 (the SSA pension bonus scheme)
before the person became a war widow/war widower-pensioner;
and
• the person cannot have started to receive age pension under
the social security law; and
• the person cannot have claimed a
pension bonus under the social security law before becoming a war widow/war
widower–pensioner.
45UW Commission may request the provision of
information
New section 45UW provides that the Commission may request
information from a person for the purpose of determining whether the person was
registered as a member of the SSA pension bonus scheme, or whether, in the
opinion of the Commission, the person could have been registered as a member of
the SSA pension bonus scheme had the person applied for registration of the
scheme.
New subsection 45UW also provides that the Commission may request
information from a person for the purpose of working out the bonus periods that
a person to whom this Division applies would have accrued under the social
security law if they had made a claim for a pension bonus under that law
immediately before becoming a war widow/war widower–pensioner.
Any
request for information from the Commission must be in writing and may specify a
time period within which the person should respond.
45UX Commission
may determine whether periods occurring before becoming a war widow/war
widower–pensioner are bonus periods under the social security
law
New section 45UX provides that the Commission may
determine:
• the bonus periods that would have resulted from a
person’s period of accruing membership under the social security;
or
• if a person was not a registered member of the scheme under
the social security law, but was eligible for membership of the scheme under the
social security law, the bonus periods that would have resulted from the period
of eligible membership under the social security law if the person had been
registered from the earliest possible date.
New subsection 45UX(1)
provides that the Commission may, subject to new subsection (3), determine that
a period of accruing membership of the SSA pension bonus scheme would have
accrued to a person as a bonus period under social security law if the person
meets the following criteria:
• the person is a person to whom new
Division 12 applies; and
• the person was registered as a member of
the SSA pension bonus scheme; and
• had the person made a claim for
a pension bonus under the social security law immediately before becoming a war
widow/war widower– pensioner, in respect of a period, Commission would
have determined that that period or part of that period would have been a period
of accruing membership of the SSA pension bonus scheme.
The Commission
in making this determination may have regard to information supplied under the
VEA or the social security law.
New subsection 45UX(2) provides that the
Commission may, subject to new subsection (3), determine that a period of
accruing membership of the SSA pension bonus scheme would have accrued to a
person as a bonus period under social security law if the person meets the
following criteria:
• the person is a person to whom new Division
12 applies; and
• even though the person was not registered as a
member of the SSA pension bonus scheme, the person could in the opinion of the
Commission, have been registered before becoming a war widow/war
widower–pensioner had the person applied for that registration;
and
• if the person had been registered from the earliest possible
date and had the person made a claim for a pension bonus under the social
security law immediately before becoming a war widow/war
widower–pensioner, in respect of a period, Commission would have
determined that that period or part of that period would have been a period of
accruing membership of the SSA pension bonus scheme.
The Commission in
making this determination may have regard to information supplied under the VEA
or the social security law.
New subsection 45UX(3) relates to a period
that Commission determines:
• would have been a period of accruing
membership under social security law in respect of a person who was or could
have been registered under that law; and
• would have been a
part-year period of accruing membership under that law.
If that period
was not immediately preceded by another period that would have accrued to the
person as a bonus period under the social security law, but the person met the
work test for the period, the Commission may, despite the terms of subsection
92T(3) of the Social Security Act 1991, treat the part-year period as a
bonus period under the social security law.
This provision, in
conjunction with subsection 45UY(2) ensures that, where a person has accrued
only a part-year period of membership under the social security law, that period
can be included in the calculation of the bonus under the VEA, where a minimum
of one year has been accrued.
45UY Modification of provisions of
this Part in respect of persons to whom this Division applies
New
section 45UY modifies the provisions of Part IIIAB of the VEA so that certain
persons may carry over, to the VEA Pension Bonus Scheme, bonus periods that
would have accrued to the person under social security law had the person not
become a war widow/war widower–pensioner.
New subsection 45UY(1)
provides that, subject to subsection (2), for the purposes of working out the
amount of pension bonus payable to a person to whom this Division applies, if
the Commission determines under section 45UX, that a period would have accrued
to a person as a bonus period under the social security law then the bonus
period is to be treated as if it were a bonus period that had accrued to the
person under the VEA.
New subsection 45UY(1) also provides that if such a
bonus period or in the case of more than one bonus period, the last such bonus
period, is to be treated as a bonus period that accrued to the person under this
Act, then the bonus period is also to be treated as if it were continuous with
the first bonus period (if any) that accrues to the person under the VEA after
the person becomes a war widow/war widower–pensioner.
New
subsection 45UY(2) provides that a part-year period that the Commission
determines is a bonus period that would have accrued under the social security
law to a person to whom this Division applies may only be treated as a bonus
period under the VEA and may only be treated as continuous with any other bonus
periods that the person accrues under the VEA if:
• the bonus
period is immediately preceded by a period that the Commission determines would
have been another bonus period that accrued to the person under the social
security law; or
• the bonus period, when added to any bonus period
or bonus periods that the person accrues under the VEA after becoming a war
widow/war widower–pensioner, would amount to at least a year.
This
is because under the requirements of the Pension Bonus Scheme under both the
social security law and the VEA a person must have at least one bonus period
before they can claim a pension bonus. If the bonus period is a person’s
last bonus period it may be less than 12 months duration but it must be preceded
by a bonus period of at least 12 months and the person must have been an
accruing member of the scheme and have passed the work test for that period. If
it is not preceded by a bonus period of 12 months, it must, when added to a
bonus period accrued under the VEA, add up to a bonus period of at least 12
months.
New subsection 45UY(3) relates to the application of subsection
45TR(3) of the VEA to a part-year period that may accrue, under the VEA, to a
person to whom this Division applies. If such a part-year period is not
preceded by a bonus period accruing under this Act, the Commission may treat the
part-year period as if it was preceded by a part-year period accrued under the
VEA. However, this will only occur if:
• the person passes the
work test for the period; and
• the person specifies the period in
the claim for pension bonus; and
• the period is the person’s
last bonus period.
This will mean that, if the period is a period of less
than twelve months accrued since the person became a war widow/war
widow–pensioner, and is preceded by a period accrued under the social
security law that combines to at least a 12 month bonus period, that period can
be counted as a bonus period.
Item 8 provides that the amendments
to the VEA contained in this Part apply to any claim for pension bonus made
under the VEA, on or after the day on which this Act receives the Royal
Assent.
Commencement
Clause 2 provides that items 6
to 8 commence on Royal Assent.
A number of amendments are required as a result of the amendments in Part
3. At the same time, a number of other technical amendments are being made to
ensure that the bonus paid to the person accurately reflects the pension they
were deferring and their marital status through the period they were accruing
the bonus.
Background
A number of different formulas are provided
for the calculation of pension bonus to cater for the various circumstances that
may apply to a person and affect the amount of their pension bonus. The pension
bonus is calculated based on the rate of the deferred pension or pensions as at
the time of grant of pension. The types of personal circumstances that can vary
include a change in marital status and a change in pension deferred.
Explanation of the Changes
Items 10 to 13 amend section 45UG to provide for a circumstance
where a person’s marital status does not change, but their pension
eligibility does change. This could occur if a person is a widow/widower who
has registered as a member of the pension bonus scheme and is thus deferring
partner service pension and during their membership of the scheme the person
becomes a war widow/war widower–pensioner. As a war widow/war
widower–pensioner the person is no longer eligible for partner service
pension but is eligible for and may defer income support supplement. Under the
current provisions, this change in pension eligibility with no change in marital
status was not suitably catered for.
Items 14 to 19 amend section
45UH. These amendments correct a number of minor errors in the formulas and
cater for the new category of persons provided for in Part 3 of this Act;
persons who are carrying over pension bonus periods that would have accrued to
them under the social security law.
Items 20 to 26 amend section
45UI. These amendments correct a number of minor errors in the formulas and
cater for the new category of persons provided for in Part 3 of this Act;
persons who are carrying over pension bonus periods that would have accrued to
them under the social security law.
Item 27 provides a definition
for the new term “apportioned amount” which appears in
new subsection 45UG(1A).
Item 28 is an application
provision.
Explanation of the Items
Item 9 amends the definition of pension in
subsection 5Q(1) by inserting “IIIAB” after “Parts
IIIA,”.
Item 10 amends paragraphs 45UG(1)(a) and (b) by
repealing the paragraphs and substituting new paragraphs (a), (b) and
(c).
New paragraphs 45UG(1)(a), (b) and (c) provide that the formula at
the end of subsection 45UG(1) applies to a person who either:
• was
a member of couple throughout the person’s overall qualifying period and
who remained eligible for the same pension throughout the person’s overall
qualifying period and who, if the person is a war widow/war
widower–pensioner, was a war widow/war widower–pensioner throughout
the whole of the person’s overall qualifying period; or
• was not a member of a couple at any time during the
person’s overall qualifying period and remained eligible for the same
pension throughout the person’s overall qualifying period and if the
person is a war widow/war widower–pensioner, the person was a war
widow/war widower–pensioner throughout the whole of the person’s
overall qualifying period.
Item 11 inserts a new subsection
45UG(1A) after subsection 45UG(1).
New subsection 45UG(1A) provides for
a new formula to apply when calculating the pension bonus for persons who meet
certain criteria. The criteria that a person must meet to be subject to the new
formula are:
• the person was a member of a couple throughout the
person’s overall qualifying period and the person is a war widow/war
widower–pensioner but the person was not a war widow/war
widower–pensioner for some or all of the person’s overall qualifying
period; or
• the person was not a member of a couple at any time
during the person’s overall qualifying period and the person is a war
widow/war widower–pensioner but the person was not a war widow/war
widower–pensioner for some or all of the person’s overall qualifying
period.
If a person meets either of the above criteria then the formula
at the end of new subsection 45UG(1A) is to be used to calculate the amount of
the person’s pension bonus. The formula calculates the pension bonus by
taking the apportioned amount, times the pension multiple, times the number of
years in the person’s overall qualifying period.
The new term
“apportioned amount” is defined in new section 45UIA.
Item
12 amends subsection 45UG(2) by omitting the words “subsection (1)
does not apply” and substituting “neither subsection (1) nor (1A)
applies”.
Item 13 amends subsection 45UG(4) by inserting
“, (1A)” after “subsection (1)”.
Items 14 -
16 amend the table in subsection 45UH(1).
Item 14 amends the
cell at column 3 of item 1 in the table in subsection 45UH(1) by repealing it
and substituting a new cell. The new cell provides that the annual notional
single pension rate for a person who is not permanently blind and is not
a war widow/war widower–pensioner is “the sum of the adjusted
percentage of the person’s maximum basic rate under point SCH6-B1 and the
person’s pension supplement under Module BA, worked out, in each case, as
at the date of grant of the designated pension if it were assumed that the
person were not a member of a couple at that date”.
Item
15 amends the cell at column 3 of item 3 in the table in subsection 45UH(1)
by repealing it and substituting a new cell. The new cell provides that the
annual notional single pension rate for a person who is a war widow/war
widower–pensioner and was a war widow/war widower–pensioner
throughout so much of the overall qualifying period as occurred when the person
was not a member of a couple is “the person’s annual pension rate
worked out as at the date of grant of the designated pension”.
Item 16 amends the cell at column 2 of item 4 in the table in
subsection 45UH(1) by repealing it and substituting a new cell. The new cell
provides that for this item to apply to a person, the person must be a war
widow/war widower–pensioner, who was not a war widow/war
widower–pensioner for some or all of the overall qualifying period
occurring while the person was not a member of a couple.
Item 17
repeals the definition of annual pension rate in subsection
45UH(2) and substitutes a new definition. The new definition for “annual
pension rate” provides that it is the person’s annual pension rate,
worked out as at the date of grant of the designated pension.
Item 18
adds a note at the end of subsection 45UH(2). The note advises that there
may be circumstances where one or other of the bracketed parts of the formula
will have a nil value.
Item 19 repeals the definition of
provisional payment rate in subsection 45UH(2) and substitutes a
new definition. The new definition provides new provisional payment rates for
persons who are carrying over bonus periods that they would have accrued under
the social security law and new provisional payment rates for persons who are
blind in accordance with the method statements in SCH6-A1. It also omits the
references to the type of pension that a person is granted as this is not
relevant to the person’s circumstances during the relevant part of their
overall qualifying period. Instead it details the person’s circumstances
which are relevant to that part of their overall qualifying
period.
Item 20 amends the cell at column 3 of item 1 in the table
in subsection 45UI(1) by repealing the cell and substituting a new cell. The
new cell provides that the annual notional partnered pension rate for a person
to whom this item applies is the sum of the adjusted percentage of the
person’s maximum basic rate under point SCH6-B1 and the person’s
pension supplement under Module BA, worked out, in each case, as at the date of
grant of the designated pension if it were assumed that the person were a member
of a couple at that date.
Item 21 amends the cell at column 3 of
item 3 in the table in subsection 45UI(1) by repealing the cell and substituting
a new cell. The new cell provides that the annual notional partnered pension
rate for a person to whom this item applies is the person’s annual pension
rate worked out as at the date of grant of the designated
pension.
Item 22 amends the cell at column 2 of item 4 in the
table in subsection 45UI(1) by repealing it and substituting a new cell. The
new cell provides that for this item to apply to a person, the person must be a
war widow/war widower–pensioner, who was not a war widow/war
widower– pensioner for some or all of the overall qualifying period
occurring while the person was a member of a couple.
Item 23
amends the formula in subsection 45UI(2) by replacing the incorrect term
“annual payment rate” in the second bracketed part of the formula
with the correct term “annual pension rate”.
Item 24
amends the definition of annual pension rate in subsection 45UI(2)
by repealing the definition and substituting a new definition. The new
definition provides that the “annual pension rate” is the
person’s annual pension rate, worked out as at the date of grant of the
designated pension.
Item 25 adds a note to the end of subsection
45UI(2). The note advises that there may be circumstances where one or other of
the bracketed parts of the formula will have a nil value.
Item 26
amends the definition of provisional payment rate in subsection
45UI(2) by repealing the definition and substituting a new definition. The new
definition provides new provisional payment rates for persons who are carrying
over bonus periods that they would have accrued under the social security law
and new provisional payment rates for persons who are blind in accordance with
the method statements in SCH6-A1. The new definition also omits the references
to the type of pension that a person is granted as this is not relevant to the
person’s circumstances during the relevant part of their overall
qualifying period. Instead it details the person’s circumstances which
are relevant to that part of their overall qualifying period.
Item
27 inserts a new section 45UIA after section 45UI. New section 45UIA
provides a formula for working out a person’s ‘apportioned
amount’ for the purposes of the formula in new subsection 45UG(1A).
The new section also provides definitions for each of the terms used in
the formula for ‘apportioned amount’.
Item 28
provides that the amendments in this Part of this Act apply to any claim for
pension bonus that is made under the VEA on or after the day on which this Act
receives the Royal Assent.
Commencement
Clause 2
provides that items 9 to 28 commence on Royal Assent.
Part 5 –
Amendments concerning the backdating of claims for partner
service
pension in certain circumstances
Overview
These
changes to the Veterans' Entitlements Act 1986 (VEA) provide for the
payment of certain partner service pensions from a date earlier than the date
the claims are lodged.
Background
A veteran with
qualifying service may make a claim for an age or invalidity service pension.
As a consequence the veteran's partner may claim for a partner service pension.
Both of these pensions provide income support for veterans and their
partners.
It is often the inability of a disabled veteran to continue
employment that triggers these applications for income support. In many cases
the disabled veteran will also be applying for either a disability pension or an
increase in the rate of disability pension in those instances where the veteran
is already receiving a disability pension.
The applications are normally
lodged concurrently or within a short time of each other. Priority is given to
determining the application for service pension to ensure that the veteran has
access to income support payments as soon as possible.
The disability
pension is paid at the special rate, also referred to as the Totally and
Permanently Incapacitated (TPI) rate, in those cases where due to the total and
permanent incapacity of the veteran resulting from war service, the veteran is
unable to resume or to continue in their employment.
The various factors
relating to the investigation of an application for the payment of disability
pension at the special rate and the pursuance of appeal rights mean that it can
take months or even years (in a small number of cases) to resolve the
claim.
If the outcome of the claim is that the person is granted a
special rate of disability pension, then that rate of pension may, for a person
making an initial claim for a disability pension, be backdated 3 months prior to
the date of lodgement of the application.
The issue to be addressed by
the proposed amendments relates to the changes to the partner service pension
provisions made by the Veterans' Affairs (1995-96 Budget Measures)
Legislation Amendment Act 1995. Those amendments provide that a person will
not be eligible to receive a partner service pension unless the person has
reached 50 years of age or has a dependent child when the claim is made.
However, an exception was provided where a person is the partner of a veteran
receiving a special rate of disability pension.
The issue that arises
relates to the exception providing for the payment of a partner service pension
to the partner of a veteran who is eligible for a disability pension at the
special rate. The initial claim for the special rate of disability pension may
not be granted for a number of reasons and therefore the claim of the partner of
the veteran for a partner service pension will be refused.
Subsequently,
the disability pension is assessed as being payable at the special rate with the
date of effect being either the date the claim was lodged or a date 3 months
prior to the lodgement of the application.
The partner will then need to
make a second claim for a partner service pension but the payment of the pension
can only be granted from the date of the later claim. The current legislation
does not allow for the backdating of the second claim to the date of the
first.
Explanation of the Changes
The proposed
amendments are applicable to the partner of a veteran in the circumstances where
the veteran has had a claim for payment of the disability pension at the special
rate rejected initially but has subsequently had the claim accepted.
The
proposed amendments provide that in the circumstances where the veteran partner
is subsequently granted a disability pension at the special rate, the payment of
a partner service pension to the partner of the veteran may be backdated to the
date that the veteran becomes eligible for the special rate of disability
pension.
The amendments also include an amendment to provide for the
disclosure of personal information concerning the payment of the special rate of
disability pension to the partner of the veteran.
Principle 11 of the Information Privacy Principles as set out in section
14 of the Privacy Act 1988 provides for the disclosure (at paragraph
1(d)) of personal information in those circumstances where the disclosure
“is required or authorised by or under law”.
Item 30 inserts a reference to new subsection 38B(3) into subsection
38B(1A). Subsection 38B(1A) currently provides, subject to subsection 38B(2),
that a person’s provisional commencement day is the day on which the
person claims the partner service pension.
The amendment makes the
provision also subject to subsection 38B(3).
Item 31 inserts new
subsection 38B(3). New subsection 38B(3) is applicable in the circumstances
where the veteran partner has become eligible for the special rate of disability
pension after the partner of the veteran has made a claim for partner service
pension.
New subsection 38B(3) provides that where:
• a
claim for partner service pension by the partner of a veteran has been refused;
and
• that claim would not have been refused if the veteran was
receiving a special rate disability pension; and
• the veteran has
subsequently been notified that he or she has been granted a disability pension
at the special rate; and
• the partner of the veteran makes another
claim for partner service pension within 3 months of the notification to the
veteran;
then the provisional commencement day for the payment of partner
service pension will be the later of:
• the day that the original
claim for partner service pension was made; or
• the day that the
veteran became eligible for the special rate of disability
pension.
Item 32 provides that the amendments made by items 29, 30
and 31 are to apply to claims for partner service pension that are lodged on or
after the commencement of the items.
Commencement
Clause 2 provides that items 29 to 32 commence on Royal
Assent.
Part 6 – Amendments to achieve alignment with social security law
concerning the treatment of compensation payable in lump
sums
Overview
These amendments to the
Veterans' Entitlements Act 1986 (VEA) will align the compensation
recovery provisions applicable to multiple lump sums of compensation with those
that apply under the Social Security Act
1991.
Background
The amendments to the VEA made
as part of the Veterans’ Affairs (1994-95 Budget Measures) Legislation
Amendment Act (No. 2) 1994 aligned the VEA with the Social Security Act
1991 (SSA) in relation to the way in which compensation payments received by
some pensioners were treated.
The VEA had previously provided that all
periodic payments of compensation were treated as income for the purposes of the
ordinary income test while all lump sum compensation payments were to be held as
an asset of the person.
The 1994 amendments inserted new Part IIIC into
the VEA to contain the compensation recovery provisions to mirror those found in
Part 3.14 of the SSA.
Included in Part IIIC is section 59Q which is
applicable to a person who receives a lump sum compensation payment while
receiving a pension which is subject to the compensation recovery provisions.
In those circumstances part or all of the person’s pension will not be
payable for a period known as the “lump sum preclusion period”. The
length of that period being determined by the amount and the nature of the lump
sum payment.
Subsection 59Q(5) is the equivalent of subsection 1165(3B)
of the SSA as it was at that time. The subsection provides for the calculation
of the lump sum preclusion period where a person receives compensation in the
form of two separate lump sums. The lump sum preclusion period for the second
lump sum is taken to commence on the day after the last day of the lump sum
preclusion period for the first payment.
The compensation recovery
provisions of the VEA were not subsequently amended to include similar
amendments to those made to the SSA made by Social Security Legislation
Amendment Act (No. 1) 1995. The amendments to section 17 of the SSA made by
that Act were intended to prevent the circumvention of the compensation recovery
provisions by the payment of compensation in more than two lump
sums.
Later amendments to the SSA by the Family and Community Services
Legislation (Simplification and Other Measures) Act 2001 repealed the
section 17 provisions relating to the payment of multiple lump sums and included
the provisions in new section 1171 as part of the rewrite of Part
3.14.
Explanation of the Changes
It is proposed to
amend the relative provisions of Part IIIC of the VEA applying to the treatment
of multiple lump sums of compensation so that they will align more closely with
the provisions that apply under the SSA following the rewrite of Part
3.14.
As a consequence subsection 59Q(5) relating to the receipt of two
payments of lump sum compensation will be repealed and a separate provision
applicable where two or more lump sums are received will be inserted as new
section 59QA.
Item 33 repeals subsection 59Q(5) which provides for the
calculation of the lump sum preclusion period where a person receives
compensation in the form of 2 separate lump sums.
Item 34 inserts
new section 59QA. New section 59QA provides for the determination of the deemed
lump sum that arises from two or more separate payments.
New section 59QA
will be applicable in the circumstances in which a person has received two or
more lump sum payments of compensation relating to the same event that gave rise
to an entitlement to compensation and at least one of the payments has been made
wholly or partly in respect of lost earnings or lost capacity to earn.
In
such circumstances the person will be taken to have received a single lump sum
compensation payment equal to the sum of the multiple payments. The single
payment will be taken to have been received by the person, on either the day on
which he or she received the last of the multiple payments or if the multiple
payments were all received on the same day, that day.
Subsection 59QA(2) provides that a payment is not to be regarded as a lump
sum payment if it relates exclusively to the payment of arrears of periodic
compensation.
Item 35 provides that the amendments made by items
33 and 34 are to apply to multiple compensation payments in relation to the same
event if at least one of the payments is received after the commencement of the
items.
Commencement
Clause 2 provides that items 33
to 35 commence on Royal Assent.