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6.7.1 Serving Permanent Forces Members and Continuous Full-Time Reservists
Normal earnings are calculated in accordance with section 91:
normal ADF rate of pay + normal pay-related allowances
- normal ADF pay means the amount of pay the member would have received for the week if not incapacitated for service; and
- normal pay related allowances means the total compensable pay related allowances that the member would have received for the week if not incapacitated for service.
The delegate must obtain advice from Defence (through the single access mechanism - SAM) of the dates that each compensable pay-related allowance would normally have ceased to be paid if the member were not incapacitated for service.
Actual earnings are calculated in accordance with section 92:
actual ADF pay + actual pay-related allowances
- actual ADF pay means the amount of pay the member earns for the week; and
- actual pay related allowances means the total compensable pay related allowances (as defined above) that were paid to the member for the week.
A member was posted to Operation Astute (non-warlike service) for the period 27 May 2006 to 24 September 2006. The member returned to Australia on 9 June 2006 due to a service related disease. As a result, the member lost 15 weeks of pay-related allowances as follows:
Field Allowance$300.09 per week;
Separation Allowance$45.64 per week; and
Deployment Allowance$550.20 per week.
It should be noted that all deployment related allowances while on non-warlike service are exempt from income tax.
The member's normal ADF pay as a Corporal is $960.12 per week.
The member's NE for the period 27 May 2006 to 24 September 2006 is:
$960.12 + $300.09 + $45.64 + $550.20 =
The member's actual earnings (AE) for this period was her/his normal ADF pay as a Corporal, $960.12 per week.
NE - AE =
$1,856.05 - $960.12 =
$895.93 per week
The member receives incapacity payments at the rate of $895.93 per week for the 15-week period from 9 June 2006 to 24 September 2006. In accordance with subsection 51-32(3) of the Income Tax Assessment Act 1997 (ITAA) deployment related allowances during a period of non-warlike service are tax exempt.
In practice each allowance could have a different end date. For example, field allowance ceases on the day the member leaves the field, separation allowance will cease when the member arrives home and deployment allowance may cease a few weeks later after the expiration of leave accrued during the deployment.