Commonwealth Numbered Regulations - Explanatory Statements

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VETERANS' ENTITLEMENTS (DFISA-LIKE PAYMENT) REGULATIONS 2005 (SLI NO 26 OF 2005)

 

EXPLANATORY STATEMENTMEMORANDUM

 

Select Legislative Instrument 2005 No. 26

 

Issued by the Authority of the Minister for Veterans’ Affairs

 

                                               Veterans' Entitlements Act 1986

 

Veterans’ Entitlements (DFISA-like Payment) Regulations 2005

 

 

Section 216 of the Veterans’ Entitlements Act 1986 (the Act) provides, in part, that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters which are by the Act required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

From 20 September 2004, an allowance called the Defence Force Income Support Allowance (DFISA) was introduced under Part VIIAB of the Act (section 118N), payable to people whose social security income support payment is reduced or not payable because of certain service-related disability benefits (referred to as adjusted disability pension). 

 

The amount of DFISA payable equals the difference between the amount of social security payment (including a nil amount) a person actually receives and the amount of social security payment the person would have received if their adjusted disability pension was exempted from their assessment but included in the calculation of any rent assistance entitlements.  DFISA was introduced by amendments to the Act.

 

The DFISA amendments could not also provide for beneficiaries of Commonwealth income support payments paid under schemes or legislation other than the Social Security Act 1991(SSA) because these other income support payments were based on, but not necessarily identical to, the calculation of the SSA payments.  Therefore, the DFISA amendments also included an amendment to enable these beneficiaries to be compensated by benefits made pursuant to regulations under the Act (section 118NJ).

 

The purpose of the Regulations is to enable DFISA-like payments to be paid to people who are eligible for income support payments (primary payment) under certain Commonwealth programs but who miss out on those benefits either totally or partially because they or their partner receive adjusted disability pension and these benefits are included as income in the means test for the primary payment.

 

The Regulations make provision for DFISA-like payments.  DFISA-like payments represent the difference between the amount of income support payment (including a nil amount) a person actually receives (primary payment) and the amount of income support payment the person would receive if adjusted disability pension was not included in the assessment, but was included in the calculation of any rent assistance entitlements.

 

The Regulations also provide for two other types of benefits to be made available to DFISA-like payment recipients whose primary payment is reduced to nil because of the adjusted disability pension: 

 

·        The first type consists of a financial payment that is equivalent to any amount that would have been payable to a person (as a secondary benefit) if the person had received the primary payment.

 

·        The second type consists of non-financial benefits such as Health Care Cards that would have been provided to the person (as a secondary non-financial benefit) if the person had received the primary payment.

 

Further details of the operation of the DFISA-like payment scheme are at Attachment A.

 

Details of the Regulations are set out in Attachment B.

 

The Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.

 

The Regulations would be a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations would be taken to have commenced on

20 September 2004 in order to ensure that DFISA-like payments are payable on and from the same date that DFISA payments were payable. 

 

For the purposes of subsection 12(2) (retrospective legislative instruments) of the Legislative Instruments Act 2003 the Regulations would not disadvantage a person or impose liabilities on a person.

 

For the purposes of the definition of “explanatory statement” in subsection 4(1) of the Legislative Instruments Act 2003 (documents incorporated in legislative instruments) the documents incorporated-by-reference in the Regulations are:

 

(i)               Aboriginal and Torres Strait Islander Study Assistance Scheme (ABSTUDY);

(ii)             Farm Household Support Act 1992;

(iii)          Social Security Act 1991;

(iv)           Taxation Administration Act 1953;

(v)              Veterans’ Entitlements Act 1986.

 

These documents are available on the website (COMLAW http://www.comlaw.gov.au/) of the Australian Government Attorney-General’s Department.

 

(vi)           interim income support guidelines;

 

The program is outlined on the Department of Agriculture, Farms and Fisheries' website at:

 

http://www.daff.gov.au/

 

      (vii)   Overall Living Allowance Rate Calculator;

 

The Calculator is referred to on the Department of Education, Science and Training's website at:

 

http://www.dest.gov.au/schools/indigenous/abstudy_2005/abstudy2005/calculating_ABSTUDY_rates.htm

 

(viii)   Sugar Industry Reform Program 2004 Guidelines.

 

The program is outlined on the Department of Agriculture, Farms and Fisheries website at:

 

http://www.affa.gov.au/content/output.cfm?ObjectID=3662DAEF-3235-4FA8-86F13B5961C60A12&contType=outputs

 

For the purposes of the definition of “explanatory statement” (consultation) in subsection 4(1) of the Legislative Instruments Act 2003, the Rule-Maker decided that consultation in respect of the Regulations was not appropriate because interested parties had been consulted about the issues leading to the implementation of the DFISA legislation and the Regulations in the course of the Clarke Review 2004 and in any event the Regulations were required as a matter of urgency so as to enable benefits to be paid to the relevant beneficiaries as soon as possible.

 

 

 

0409987A-050221NT

 

 

 


ATTACHMENT A

 

Under the Act, adjusted disability pension paid under the Act or the Military Rehabilitation and Compensation Act 2004 is not taken into account when assessing the rate of income support payment payable to veterans, their partners and war widow(er)s.

 

However, adjusted disability pension is included in the assessment of the rate of social security payments and certain income support payments made under other Commonwealth legislation or programs.

 

For those people who qualify for income support payments other than those made under social security law which are reduced or not payable because of adjusted disability pension, a payment called the DFISA-like payment has been created. 

 

The Living Allowance under the ABSTUDY Program is an example of a means-tested income support payment that is provided other than under the Social Security Act 1991 (SSA) and that can be reduced or not payable if the beneficiary or their partner receives income in the form of adjusted disability pension.

 

The calculation of income support payments made outside of the social security law is generally based on social security law payment calculations.  However, as there can be slight differences in those calculations, it was not viable to include those payments in the DFISA legislation.  Instead, it was decided to provide the DFISA-like payment by way of regulations under the Act.

 

 

 


 

ATTACHMENT B

 

Details of the Veterans’ Entitlements (DFISA-like Payment) Regulations 2005

 

Part 1    Preliminary

 

Regulation 1            provides that the name of the  Regulations is the Veterans’ Entitlements (DFISA-like Payment) Regulations 2005.

 

Regulation 2            specifies 20 September 2004 as the date on which the Regulations will be taken to have commenced.

 

Regulation 3            sets out the purpose of the Regulations, namely that they enable a DFISA-like payment, an associated payment and an associated non-financial benefit to be paid and provided (as the case requires) to eligible persons on or after 20 September 2004.

 

Regulation 4            defines the terms used in the Regulations. 

 

The only definitions that are not self-explanatory and that require further explanation are “adjusted disability pension” and “Commonwealth scheme”

 

                              adjusted disability pension” is defined in section 118NA of the Veterans’ Entitlements Act 1986 (the Act) and means:

 

(a) a pension under Part II or IV [of the Act] (other than a pension that is payable under section 30 [of the Act] to a dependant of a deceased veteran); or

(b) temporary incapacity allowance under Part VI [of the Act]; or

(c) a pension payable because of subsection 4(6) or (8B) of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 (other than a pension payable in respect of a child); or

(d) a payment (either as a weekly amount or a lump sum) under section 68, 71, 75 or 80 of the MRCA [Military Rehabilitation and Compensation Act 2004] (permanent impairment); or

(e) a payment of a Special Rate Disability Pension under Part 6 of Chapter 4 of the MRCA.

 

                              “Commonwealth scheme” is defined in subsection 118NJ(3) of the Act and means:

 

(a) an Act; or

(b) regulations or an instrument made under an Act; or

(c) a program administered by the Commonwealth.

 

Part 2    DFISA-like payment

 

Regulation 5            sets out the eligibility criteria for a DFISA-like payment to a person on a day on or after 20 September 2004 (subregulation 5(1)):

 

·        adjusted disability pension is payable to the person or their partner on the day; and either

 

(i)                a primary payment (defined in regulation 4) is payable to the person on the day but because adjusted disability pension is payable to the person or their partner on that day, the primary payment is reduced, including being reduced to a nil amount; or

(ii)              if it weren’t for the adjusted disability pension, a primary payment would be payable to the person on that day.

 

There are some times when DFISA-like payment is not payable to an eligible person on a day on or after

20 September 2004 (subregulation 5(2)):

 

·        the payment would be a nil amount;

·        the Department of Veterans’ Affairs (DVA) requested the person to nominate a bank account (into which DFISA-like payments could be made) within 28 days and the person failed to do so;

·        before the day, the potential recipient of the payment had notified DVA in writing that he or she did not want a payment and the person had not revoked this notification.

 

A potential recipient of a DFISA-like payment may decide he or she does not want a DFISA-like payment or wishes to revoke their election not to receive DFISA-like payments.  In this situation the  Regulations provide as follows (subregulation 5(3)):

 

·        the person must notify DVA in writing in accordance with section 5T of the Act; and

·        the day on which the notification takes effect will be ascertained in accordance with section 5T.

 

The Regulations make provision for a person in the situation where a (final) instalment of Exceptional Circumstances Relief Payment or Farm Help Income Support under the Farm Household Support Act 1992 (FHSA) (defined in  subregulation 4(1))(hereinafter these two payments are referred to as "primary farm help payment") that is otherwise payable to a person is deemed to be not payable to the person if the person dies.  Instead the final instalment is payable to the person’s estate

 

The difficulty here is that eligibility for DFISA-like payment is dependent on a primary payment being payable to a person (ie in this case the primary farm help payment) but because the FHSA states that the primary payment that a person is otherwise eligible to receive is deemed to be not payable to the person where the person dies then the eligibility rules for the DFISA-like payment do not, prima facie, apply and unless special provision was made in respect of the situation a DFISA-like payment would not be payable in those circumstances.  Accordingly the  Regulations address this situation (subregulation 5(4)):

 

·        by providing that despite the FHSA deeming an instalment of primary payment otherwise payable to be not payable, for the purpose of making a DFISA-like payment the primary payment is taken to have been payable to the person.

 

The result of this would be that one of the eligibility rules for the DFISA-like payment would have been satisfied and the DFISA-like payment may be made to the deceased person’s estate.

 

Part 3    Associated Benefits

 

Regulation 6            describes the means for working out the rate of the DFISA-like payment, namely via the Method Statements in Schedule 1 to the  Regulations.

 

Regulation 7            enables DFISA-like payment to be paid in arrears and by instalments and specifies the payday that the instalment is to be paid. 

 

It does this by applying section 121 of the Act to DFISA-like payment as if the payment were pension and as if the reference to "DFISA" in subsection 121(6A) were a reference to DFISA-like payment. 

 

Subsection 121(6A) deals with "rounding" and modifies the application of a number of subsections in section 121 to DFISA (and therefore, by virtue of this Regulation, to DFISA-like payments).

 

Regulation 8            deals with eligibility for associated payments. Associated payments are payable to a person to whom DFISA-like payments are payable but whose primary payment is not payable because of adjusted disability pension.  Associated payments are paid in lieu of secondary payments that would have been payable to the person if the primary payment had been payable. 

 

                              The eligibility criteria for an associated payment for a person on a day on or after 20 September 2004 is:

 

·        a primary payment (defined in regulation 4) is not payable to the person on the day but only because adjusted disability pension was payable to the person or the person’s partner on that day and it was regarded as ordinary income for the purpose of the means-test for the primary payment; and

·        a secondary payment is not payable to the person on the day but only because the primary payment is not payable to the person on that day; and

·        DFISA-like payment is payable to the person on that day.

 

Regulation 9            states that the rate of an associated payment for a person eligible for such a payment on or after 20 September 2004 is the same rate as that for the secondary payment that would have been payable to the person but for the primary payment not being payable to the person because adjusted disability pension was payable to the person or the person's partner.

 

Regulation 10          deals with eligibility for associated non-financial benefits.  These are benefits of a non-financial nature (eg health care card) that would have been provided to the person if the primary payment was payable to the person.  For this regulation to apply, the primary payment must be not payable because of adjusted disability pension and a DFISA-like payment must be payable to the person.

 

The eligibility criteria for an associated non-financial benefit for a person on a day on or after 20 September 2004 is:

 

·        a primary payment (defined in regulation 4) is not payable to the person on the day but only because adjusted disability pension was payable to the person or the person’s partner on that day and it was regarded as ordinary income for the purpose of the means-test for the primary payment; and

·        a secondary non-financial benefit is not provided to the person on the day but only because the primary payment is not payable to the person on that day; and

·        DFISA-like payment is payable to the person on that day.

 

Regulation 11          states that the associated non-financial benefit for a person eligible for such a benefit on or after 20 September 2004 is the secondary non-financial benefit that would have been provided to the person but for the primary payment not being payable to the person because adjusted disability pension was payable to the person or the person's partner.

 

Part 4    General

 

Regulation 12        operates where the Repatriation Commission (Commission), under section 122 of the Act (the provision setting out procedures for paying pension), determines (under subsection 122(4)) that DFISA-like payment or an associated payment ("the payments") is to be paid into a beneficiary’s bank account.  In this situation Regulation 12 provides as follows:

 

·        the Commission may direct that the payments be paid at certain intervals into a bank account nominated by the beneficiary.

·        a nominated bank account must be an account maintained by the beneficiary either as a sole account or as a joint account or an account-in-common.

·        where an eligible person fails to nominate a bank account as requested by the Commission, within 28 days or such longer period allowed by the Commission (relevant period), then DFISA-like payment ceases to be payable to the person.

·        if an eligible person does nominate a bank account after the expiry of the relevant period then DFISA-like payment is payable again from the date the person nominates the bank account.

 

Regulation 13        deals with the situation where the Commissioner of Taxation issues a notice to deduct tax from a person’s DFISA-like payment or associated payment.  In this situation the Repatriation Commission must, in accordance with Subdivision 260-A in Schedule 1 to the Taxation Administration Act 1953, direct the relevant officials in DVA to make the appropriate deductions from instalments of DFISA-like payment, or from an amount of associated payment, payable to the beneficiary concerned and pay the amount deducted to the Commissioner of Taxation.

 

                            Subdivision 260-A in Schedule 1 to the Taxation Administration Act 1953 enables the Commissioner of Taxation to, among other things, give notice to an entity (eg the Repatriation Commission) by whom money is due or accruing to the debtor (eg recipient of DFISA-like payment or an associated payment) to pay to the Commissioner of Taxation the amount specified in the notice.

 

Regulation 14        imposes obligations on those recipients of DFISA-like payment who do not receive any amount of a relevant primary payment. 

 

This Regulation is necessary because people who receive primary payments are often required to comply with obligations eg to provide certain reports. 

 

Accordingly, where the amount of primary payment payable to a person is nil, the DFISA-like payment is basically the equivalent of the primary payment the person would otherwise have received and it is consistent that the beneficiary should comply with the same obligations that would have applied if the person had received the primary payment.

 

If a recipient received some amount of the primary payment in addition to a DFISA-like payment then the person would automatically be required to comply with the relevant obligations in respect of the primary payment that were imposed under the income support scheme that governed the primary payment.   Regulation 14 does not apply in these situations.

 

                            Accordingly Regulation 14 provides that if a DFISA-like payment is payable to a person on a day and the rate of primary payment payable to the person on that day is nil or is not payable to the person on that day, then the person must comply with any requirements under the Commonwealth scheme that provides for the primary payment as if the person were receiving an instalment of the primary payment.  In addition, failure to do so will have the same consequences as if the person were receiving the primary payment and failed to comply with their obligations.

 

Schedule 1            contains the Method Statements for working out the rate of DFISA-like payment.

 

The main features of the Method Statements are as follows:

 

·        the methods used in the income-support scheme governing the relevant primary payment to work out the primary payment are to be applied. 

 

·        any income and assets that, under the income-support scheme governing the primary payment, are disregarded in working out the primary payment are likewise to be disregarded in working out the primary payment for the purpose of ascertaining the rate of DFISA-like payment.

 

·        In Method Statement 1, the working out of any rent assistance payable, or that would be payable, to a recipient is to take into account adjusted disability pension.  This is because adjusted disability pension is regarded as income when working out rent assistance under the Act and for consistency the same should apply when working out rent assistance for the purpose of ascertaining the rate of DFISA-like payment.  Method Statement 2 does not have this Step as rent assistance is not payable as part of the primary payment for which this method statement is applied.

 

 

 

Part 1    Method Statement 1

 

                            This Part would apply if the primary payment that applied to an eligible person was the ABSTUDY Living Allowance.

 

Item 1                   introduces definitions for the purposes of Part 1. 

 

The only definitions that are not self-explanatory and that require further explanation are as follows:

 

                            "daily provisional payment rate".  This definition refers to a person to whom step 10 of the Overall Living Allowance Rate Calculator (also defined) applies, but to whom step 11 of that Calculator does not apply, and a person to whom step 11 of the Calculator does apply.

 

                            A person to whom step 10 of the Overall Living Allowance Rate Calculator applies and to whom step 11 of the Calculator does not apply is a person who is not independent or who is independent but without a partner.  A person to whom step 11 of the Calculator does apply is a person who is independent with a partner.

 

                            "Excluded amount" has the meaning it has in section 118NA of the Act, namely:

 

excluded amount means an amount that is not income for the purposes of the Social Security Act (SSA) because of subsection 8(8) of that Act.

 

                            Examples of amounts that are not income for the purposes of subsection 8(8) SSA are:

 

·        a payment under the SSA;

·        any return on a person's investment in a superannuation fund until the person reaches pension age or starts to receive a pension or annuity out of that fund;

·        the value of emergency relief or like assistance.

 

Item 2      Method Statement

 

                            This Method Statement would be used as follows:

 

When the actual rate of a primary payment that was paid or that would have been paid to a person has been ascertained (ie being a rate that is nil, or a reduced rate, because adjusted disability pension was regarded as income in working out the primary payment)(Step 1) then, in order to ascertain the rate of DFISA-like payment payable, the actual rate is subtracted from the rate of primary payment that would have been payable (notional rate) (Step 2) and the net amount is the rate of DFISA-like payment payable (Step 3).  The notional rate is the amount that would have been payable if adjusted disability pension had not been regarded as income in working out the primary rate.  

 

Part 2      Method Statement 2

 

This Part would apply if the primary payment that applied to an eligible person was Exceptional Circumstances Relief Payment, Farm Help Income Support, Interim Income Support or Sugar Industry Reform Program 2004 - Income Support Payment.

 

Item 1                   introduces definitions for the purposes of Part 2. 

 

The only definition that is not self-explanatory and that would require further explanation is the definition of "daily provisional payment rate" in that it refers to sections 24A and 24B of the Farm Household Support Act 1992 (FHSA)

 

                            Section 24A FHSA sets out the method for determining the rate of Exceptional Circumstances Relief Payment and section 24B FHSA sets out the method for determining the rate of Farm Help Income Support.

 

 

 

 

Item 2                   Method Statement

 

This Method Statement would be used as follows:

 

When the actual rate of a primary payment that was paid or that would have been paid to a person has been ascertained (ie being a rate that is nil, or a reduced rate, because adjusted disability pension was regarded as income in working out the primary payment)(Step 1) then, in order to ascertain the rate of DFISA-like payment payable, the actual rate is subtracted from the rate of primary payment that would have been payable (notional rate) (Step 2) and the net amount is the rate of DFISA-like payment payable (Step 3).  The notional rate is the amount that would have been payable if adjusted disability pension had not been regarded as income in working out the primary rate.  

 

 

                           


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