When calculating an interim impairment payment amount under subsection 75(2) of the MRCA, the Commission must allocate a lifestyle rating using the following methodology:

Step 1:
Obtain the lifestyle rating for all conditions previously determined.

Step 2:
Work out the lifestyle rating for all conditions (including the current condition in respect of which a determination has not been made) using:

1. the top of the shaded area for impairment points between 0 and 15; or
2. in any other case — the bottom of the shaded area.

Step 3:
Use the highest of the lifestyle ratings from steps 1 and 2 to calculate the interim PI payment

This method of assessment for interim permanent impairment is not to be used when subsection 75(4) of the Act applies. The methods as outlined in Section 5.16.3.2 should then be used.

Once all conditions have stabilised, lifestyle effects are to be assessed by applying Tables 22.1 to 22.5 in Chapter 22 in accordance with that chapter. There are three optional methods of assessing lifestyle effects:

• Option 1 allows the claimant to self-assess the effects of the accepted conditions on his or her lifestyle;
• Option 2 is to be used if the claimant chooses not to self-assess or to complete a Lifestyle Questionnaire;
• Option 3 is to be used if the claimant completes a Lifestyle Questionnaire.

The claimant may choose which of these methods is to be used for his or her assessment. Where no option has been or can be chosen, the delegate is to determine a lifestyle rating by following Option 2. See Chapter 22: Lifestyle Effects of GARP M for more information.

This policy explains how Chapter 25 of the Guide to Determining Impairment and Compensation 2026 (GARP M 2026) must be applied when a veteran claims Permanent Impairment (PI) compensation under the Military Rehabilitation and Compensation Act 2004 (MRCA) from 1 July 2026.   

Chapter 25 of the GARP M 2026 applies where a veteran has an old Veterans’ Entitlements Act 1986 (VEA) and/or the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA) accepted condition and has previously determined impairment ratings in respect of those conditions under those Acts. Chapter 25 of the GARP M 2026 also applies to veterans who, in relation to a MRCA PI claim before 1 July 2026, had been assessed under an earlier version of Chapter 25 of the GARP M. 

Under the changes to veterans’ portfolio legislation which commenced on 1 July 2026, the VEA and the DRCA closed to new claims for compensation. Any worsening of old VEA or DRCA conditions can instead be compensated for PI purposes under the MRCA. Chapter 25 facilitates this and prescribes the method for calculating the compensation payable under the MRCA in respect of the increased degree of a veteran’s impairment from 1 July 2026, in relation to any service-related condition.

To ensure claims for PI compensation from 1 July 2026 are assessed and determined correctly, the new GARP M 2026 contains a modified Chapter 25. This modified Chapter 25 still contains a seven-step method, applied in the order given, as well as the same offsets at the later steps. However, Chapter 25 now calculates the amount of PI compensation payable for the increase in impairment from the baseline impairment rating. Chapter 25 does this by working out the amount of compensation notionally payable for all service-related conditions (using new medical evidence) and subtracting what is notionally payable for the baseline impairment rating (if that baseline impairment rating were compensable under the MRCA). 

Delegates should be mindful that for veterans with service exclusively from 1 July 2004 (and therefore have only ever had coverage under the MRCA), Chapter 25 of the GARP M 2026 (and earlier versions of Chapter 25) does not apply.

A copy of the new GARP M 2026 is available on the Federal Register of Legislation at www.legislation.gov.au/F2026L00595/asmade/text

Application of earlier versions of the GARP M

The version of the GARP M in force at the time of the original assessment leading to the original determination must continue to apply until the claim is finally determined, including internal reconsiderations and external appeals. For clarity, the GARP M 2016 will continue to apply in respect of all MRCA PI claims made before 1 July 2026.

The new Chapter 25 seven-step method requires the delegate to calculate the compensation payable for the baseline impairment rating in accordance with the new Chapter 26 of GARP M 2026 and to determine whether there has been an increase in impairment in the requisite degree from the baseline impairment rating. 

This is required because:

• For further MRCA PI compensation to be payable, there must be a worsening in impairment of at least 5 points from the baseline impairment rating, and
• Further MRCA PI compensation is only payable for the increase in impairment from the baseline impairment rating.

Note that the 5-impairment point worsening may also be required when considering the new threshold tests for the purpose of section 80 compensation eligibility and Gold Card eligibility (former exclusive old DRCA veterans only).

Chapter 25 of GARP M 2026 only applies to MRCA PI claims lodged from 1 July 2026. It prescribes the method for calculating the compensation payable under the MRCA for the PI claim by:

• Working out the notional amount payable under the MRCA in respect of all service-related conditions (regardless of the Act they were originally accepted under), and

• Reducing that amount by the notional amount payable in respect of the baseline impairment rating.

The amount of MRCA PI compensation payable for the PI claim is subject to prescribed offsets of impairment compensation payments under the DRCA and/or the VEA, as well as permanent impairment amounts paid under the MRCA.

Step 1 

Step 1 requires the delegate to use the GARP M 2026 to assess, as at the date of the MRCA PI determination, the combined effect of all service-related conditions, to work out the notional MRCA PI weekly in respect of those conditions. This will be undertaken, where possible and appropriate, using contemporaneous medical evidence.

For Step 1, ‘old DRCA accepted conditions’ are treated as peacetime and ‘old VEA accepted conditions’ are treated as warlike/non-warlike, when applying Chapter 23 and working out the compensation factor.

In respect of ‘old DRCA accepted conditions’ that are also ‘old VEA accepted conditions’, delegates must only assess the ‘old VEA accepted conditions’ and treat them as warlike/non-warlike.

Step 2 

Step 2 requires delegates to compare the baseline impairment rating (worked out using Chapter 26) with the impairment rating used at Step 1, to assess whether there has been an increase in impairment by 5 points from the baseline impairment rating.

If there has been an increase by 5 points, delegates can proceed to Step 3. If there has not been an increase by 5 points, the MRCA PI claim is rejected.

Step 3 

Subject to Step 2, Step 3 requires delegates to use the GARP M 2026 to work out the MRCA PI weekly that would be payable for the baseline impairment rating.

At this step, delegates should use the lifestyle rating that is the higher of the ‘shaded area’ in accordance with Chapter 23 of GARP M 2026. 

Step 4 

Step 4 requires delegates to reduce the MRCA PI weekly amount at Step 1, by the MRCA PI weekly amount at Step 3 for the baseline impairment rating. 

Step 5 

The MRCA PI weekly amount identified at Step 4 is the provisional MRCA PI weekly amount payable for the PI claim, subject to Steps 6 and 7.

Step 6 

At Step 6, the delegate is deciding whether the amount of compensation already received for all accepted conditions exceeds the maximum MRCA PI weekly amount.

Step 6 asks the delegate to add the following amounts together:

• the amount worked out at Step 4, plus,

• the amount of disability compensation payment under Part II or IV of the VEA, plus, 

• Any previous MRCA PI weekly compensation amounts paid, plus,

• the weekly equivalent of PI lump sums paid under the DRCA.

If the total of these amounts exceeds the maximum MRCA PI weekly rate, the delegate must proceed to Step 7. Alternatively, if the total of these amounts is less than the maximum MRCA PI weekly compensation rate, the amount payable is the amount worked out at Step 4. 

Step 7 

The delegate has already established that the total amount worked out at Step 6 exceeds the maximum weekly compensation amount payable under MRCA.

At Step 7, the delegate is working out the amount payable under MRCA by subtracting the MRCA PI excess from the amount worked out at Step 4.

MRCA PI excess equals:

• the amount worked out in Step 6(b), plus,
• DRCA converted lump sums to periodic payments, plus,
• Step 4 amount, plus,
• Any previous MRCA PI weekly compensation amounts paid, minus, 
• maximum MRCA PI rate.

Therefore, the final amount of MRCA PI payable is:

• The amount worked out at Step 4, minus
• MRCA PI excess.

This section provides an overview of the assessment rules set out in Chapter 26 of the Guide to Determining Impairment and Compensation 2026 (GARP M 2026). It explains concepts regarding the use of the baseline impairment rating for assessments of Permanent Impairment (PI) compensation under the Military Rehabilitation and Compensation Act 2004 (MRCA), including: 

• when it is required, 
• what it includes, and 
• how impairments under previous legislation (i.e. the Veterans’ Entitlements Act 1986 (VEA) and/or the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA)) are considered for the calculations. 

A copy of the new GARP M 2026 is available on the Federal Register of Legislation at www.legislation.gov.au/F2026L00595/asmade/text

Under reforms to DVA’s legislation that were delivered by the Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) Act 2025 (VETS Act) on 1 July 2026, the VEA and the DRCA were closed to new compensation claims and the MRCA became the single Act under which PI compensation is payable. 

For clients who have previously been compensated in respect of impairments under the VEA and/or the DRCA exclusively, any additional payment of PI compensation can only be made under the MRCA when the degree of impairment increases by at least five impairment points when assessed using the GARP M 2026. 

The baseline impairment rating for this cohort of clients represents a methodology to translate earlier impairment ratings under the VEA and the DRCA into a figure suitable for the MRCA and the GARP M 2026 context.

For clients with service-related conditions under the DRCA and/or the VEA as well as under the MRCA (and who have previously been compensated for PI under the MRCA), an additional five points will also be required for further compensation. However, the baseline impairment rating which the five-point increase is measured against will involve a slightly different methodology.

The baseline impairment rating is established when a client with service-related conditions under the DRCA and/or the VEA lodges a claim for MRCA PI from 1 July 2026. Before the baseline impairment rating can be established, all outstanding claims under the DRCA and/or VEA must be finalised first. Chapter 26 in GARP M 2026 sets out the formula for calculating the baseline impairment rating.

The baseline impairment rating does not necessarily consider all service-related conditions and their associated impairments under the DRCA and/or the VEA. The methodology in Chapter 26 of GARP M 2026 broadly ensures that multiple impairment ratings for the same compensated functional losses are not counted twice. This also ensures the baseline impairment rating is not unfairly inflated, causing unintended difficulties in reaching the five-point increase for additional MRCA PI compensation to be paid.  

Clients with only DRCA and/or VEA impairment ratings 

Cohort 1: DRCA only

When impairment compensation has been received under the DRCA, the percentage value of whole person impairment ratings are expressed as impairment points and combined, from highest to lowest, using Table 18.1 of GARP M 2026 to find the baseline impairment rating. Where more than one whole person impairment percentage rating relates to the same functional loss, only the highest value is included.

Cohort 2: VEA only

When impairment compensation has been received under the VEA, the ‘unrounded’ impairment points from the VEA assessment resulting in eligibility for the Disability Compensation Payment will become the baseline impairment rating. 

Cohort 3: DRCA and VEA

When impairment compensation has been received under both the VEA and the DRCA, the VEA and DRCA ratings/points are identified using the same method as for cohorts 1 and 2, with an additional step, as follows: 

• Where the same condition has been recognised under both the VEA and the DRCA, only the VEA condition is considered. This ensures impairment ratings are not counted twice.

To determine the baseline impairment rating, the individual VEA impairment points and the DRCA impairment ratings are combined, from highest to lowest, using Table 18.1 of GARP M.

Clients with MRCA and DRCA or VEA impairment ratings

Cohort 4 

As this cohort of clients have already received a MRCA PI impairment rating under the GARP M, the baseline impairment rating will simply be the latest overall impairment rating resulting in an accepted MRCA PI claim (i.e. the latest Step 1 of Chapter 25 rating).

All subsequent claims

Cohort 5

For all subsequent claims moving forward, the ‘baseline impairment rating’ will be the latest overall impairment rating resulting in an accepted MRCA PI claim.

For more detail on the formulas for calculating the baseline impairment rating for each cohort, delegates can refer to Chapter 26 of the GARP M 2026 on the Federal Register of Legislation at www.legislation.gov.au/F2026L00595/asmade/text

Delegates must apply the version of the GARP M that is in force on the day the MRCA PI claim is lodged. The GARP M 2026, which includes the new baseline impairment rating methodology, only applies to claims for MRCA PI lodged on and after 1 July 2026. Any MRCA PI claims lodged before 1 July 2026 must continue to be assessed under the earlier version of GARP M.

Claims resulting in interim determinations under the MRCA

When delegates are finalising a claim after 1 July 2026 following an interim determination under the MRCA, the version of the GARP M in force on the day the original MRCA PI claim was lodged must be applied to the claim.  

Chapter 25 prescribes a 7-step methodology used for calculating the MRCA PI compensation payable for a client with service-related conditions under the DRCA and/or the VEA. It involves subtracting the notional amount payable under the MRCA for the ‘baseline impairment rating’ from the notional amount payable under the MRCA for the current impairment rating from all service-related conditions combined. The resulting amount is the compensation payable under the MRCA, subject to offsets. Chapter 25 also requires that a client’s impairment has increased by at least five impairment points above the baseline impairment rating. 

Lifestyle ratings for the baseline impairment rating will be the top of the ‘shaded area’ using Chapter 23 of GARP M 2026.

This policy must be read in a way that is consistent with the definitions and prescribed formulas contained in Chapter 26 of the GARP M 2026. 

This policy does not replace any requirement of the MRCA or the GARP M 2026, nor does it create additional entitlements or decision-making powers. If there is any difference between this policy and the GARP M 2026, the GARP M 2026 takes precedence. This policy may be revised when the GARP M 2026 is amended or when further clarification is required to support consistent application across permanent impairment assessments.

Example 1 - Captain Johnson

Captain Johnson is a DRCA-only client with service-related conditions of hypertension and cervical spondylosis. DRCA PI compensation was previously paid at 15% WPI for hypertension and 20% WPI for cervical spondylosis.

To find Captain Johnson’s baseline, the DRCA PI ratings are first expressed as impairment points and then combined. Both ratings are counted, because there is no overlap or doubling up on functional losses.

The DRCA PI WPI percentage ratings expressed as impairment points are 15 points and 20 points.

These are then combined using scale 18.1 in Chapter 18 – Combined Values. Captain Johnson’s baseline is 32 impairment points.

Example 2 - Private Harris

Private Harris is a DRCA-only client with four lower limb conditions. DRCA PI was paid for three lower limb conditions at 20% WPI and one lower limb condition at 30% WPI. Private Harris also has one mental health condition compensated at 10% WPI.

To find Private Harris’ baseline, only the highest lower limb rating is counted. The mental health impairment rating is also counted, as it is the single, mental health functional loss impairment.

The DRCA PI WPI percentage ratings expressed as impairment points are therefore 30 points and 10 points. These impairment points are then combined using scale 18.1 in Chapter 18 – Combined Values. Private Harris’ baseline is 37 impairment points.

Example 3 – Warrant Officer Williams

WO Williams is a VEA and DRCA client. Under the VEA, her accepted conditions are PTSD, bruxism, tinea and bilateral shoulder osteoarthritis. She is receiving a VEA DCP of 100%, which is 65 points (unrounded) under GARP V.

Under the DRCA, her accepted conditions are PTSD, bruxism, tinea, bilateral shoulder osteoarthritis and lumbar spondylosis. Lumbar spondylosis is the only condition unique to the DRCA and PI was paid for 10% WPI which is expressed as 10 impairment points.

To find WO Williams’ baseline, the VEA GARP V points and unique DRCA PI ratings expressed as impairment points are combined, from highest to lowest, using scale 18.1 in Chapter 18 – Combined Values. 

Example 4 - Major Smith

Major Smith has a loss of efficient use (LOEU) rating of 20% for a lower limb condition under the 1971 Act. LOEU ratings are not counted towards the baseline impairment rating. Major Smith’s baseline is therefore 0 impairment points.