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Evidence of Earnings
Last amended: 20 September 2009
Examining the evidence of earnings
As allowances, expense amounts and salary sacrifice arrangements have an effect on the assessment of earnings, it is necessary that payslips and other evidence of earnings be properly examined to determine the assessable income amount, rather than immediately relying on the gross income figure. Where the initial evidence of earnings (such as a payslip) provided by the veteran does not contain sufficient detail, a further statement detailing earnings, allowances and deductions should be obtained from the employer.
Allowances paid to the employee to meet genuine work-related expenses are excluded from the income assessment, as these amounts are intended to meet incurred work costs and are therefore not available for the use or benefit of the person.
Use of income tax returns and payment summaries
Income tax returns and annual payment summaries provide an accurate record of a pensioner's earnings, and can be used to confirm the annual rate of income where annual reviews are conducted. Where more regular periodic earnings reviews are conducted, the income tax returns and payment summaries should be supplemented with other evidence (e.g. payslips) of recent earnings.
Income tax returns and payment summaries provide confirmation of the amount of earnings over the year, and the finalisation of an income tax return is not generally considered to represent an earnings 'event' or change in circumstances that is required to be notified. Changes to the rate of earnings during the assessment year, when compared to the pensioner's notification obligations, will determine whether a notifiable earnings event has occurred during the year (and will therefore determine the date of effect). For this reason the date of receiving an income tax return or payment summary will rarely be the date of effect for pension reassessment purposes. This position is also maintained in those cases where, by agreement, a pensioner's earnings are reviewed annually on the basis of information in an annual tax return or payment summary. Where the earnings information shows that a notifiable event took place during the year (for example, earnings have increased over the previous year's return), the date of the notifiable event during the year will determine the date of effect for pension adjustment.
However, the completion of an income tax return or similar end of financial year records may be regarded as an “event” for date of effect purposes in those cases where evidence confirming the rate of income is not otherwise available over the course of the review period. This is expected to more commonly arise where entities such as private trusts and companies, sole traders and partnerships are reviewed annually, rather than in employment earnings cases.
According to section 5H of the VEA income is:
- an amount earned, derived or received by a person for the person's own use or benefit;
- a periodical payment by way of gift or allowance; or
- a periodical benefit by way of gift or allowance.
The date of effect, or effective date, is the day on which a certain incident or 'event' begins affecting a pension assessment.