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6.8.4 Former Part-time Reservists who were not Engaged in Civilian Work Immediately before Discharging from the ADF
This applies where a person incapacitated for work was:
- a part-time Reservist immediately before leaving the Defence Force;
- incapacitated as a result of an injury or disease that occurred while a part-time Reservist; and
- not working in civilian work immediately before leaving the Defence Force.
Normal earnings are defined as:
where pay related allowances are those that would be paid if the person was still a part-time Reservist (for a period advised by Defence) and the rate of pay means the daily rate that would be paid if the person was still a part-time Reservist.
Where NE is calculated by reference to seven times the daily rate of Reserve pay, as distinct from the actual number of Reserve days the person performed Reserve service, the total amount of incapacity payments are assessable for income tax purposes.
A former Reserve member was medically discharged on 1 December 2007 due to a back injury for which liability has been accepted. Prior to sustaining the back injury the person was in receipt of Centrelink benefits and undertook 3 – 4 days of Reserve employment in most weeks. At discharge the person had no civilian employment and had been receiving incapacity payments based on an NE equal to the national minimum wage for the previous 14 months. At discharge his NE changes to be calculated accordingly to the formula:
7 x person's daily rate of Reserve pay and allowances
The daily rate of reserve pay as a Private was $87.58.
7 x $87.58 = $613.06 per week
After 45 weeks incapacity payments are reduced to:
75% x $613.06 = $459.80 per week
Normal weekly hours (NWH) are 37.5 in accordance with subsection 132(2). This will be relevant in calculating the former Reservist's incapacity payments if they return to work after the maximum rate weeks have expired.
Section 179 and the national minimum wage continues to be the basis of determining the person's NE after 45 weeks however, he only receives a percentage of NE appropriate to the hours worked in a week.