B42/1994 VETERANS' AFFAIRS LEGISLATION AMENDMENT ACT 1994 INCOME SUPPORT MATTERS

DATE OF ISSUE:  23 SEPTEMBER 1994

Veterans' Affairs Legislation Amendment Act 1994 Income Support Matters

The purpose of this departmental instruction is to advise of the legislative amendments contained in the Veterans' Affairs Legislation Amendment Act 1994 relating to income support matters.  This act contains non-budget legislative amendments introduced during the 1993 Budget sittings.

Background

2.The Veterans' Affairs Legislation Amendment Act 1994 was introduced to Parliament as the Veterans' Affairs Amendment Bill (No. 3) 1993.  This Bill was laid aside by the House of Representatives on 24 February 1994 following disagreement between the Houses about the inclusion of Part 7 - Managed Investments.

3.The Government deleted Part 7 and re-introduced this Bill as the Veterans' Affairs Amendment Bill 1994.  This Bill was then passed by both Houses and it received Royal Assent on 21 June 1994.

4.The following list details the Income Support amendments and relevant effective date.

Amendment	Paragraphs	Date of Effect
The issue of a seniors health card	5	1 July 1994
The restructure of child related payments made to service pensioners - DCAO	6	1 January 1994
Clarification of the definition of "retirement village"	7 - 11	Royal Assent
Disposal of assets - extend the definition of pension year	12 - 15	Royal Assent
Tax File Number provisions - failure to comply	16 - 18	Royal Assent
Withdrawal of claims for service pension - orally	19 - 21	Royal Assent
Cancellation or suspension of carer service pension	22 - 23	Royal Assent
Pension rate reduction - earnings credit	24 - 27	Royal Assent
Income test definition - exempt income	28 - 31	Royal Assent
Recovery of Overpayments - administrative charge	32	Royal Assent

The issue of seniors health card

5.This amendment provides legislative authority for the issue of the seniors health card and its administration. For further information please refer to Departmental Instruction B13/94.

The restructure of child related payments made to service pensioners - DCAO)

6.This amendment provides the legislative authority for the integration of child related payments - Dependent Child Add On.  For further information please refer to Departmental Instruction B04/94.

Clarification of the definition of "retirement village"

Background

7.In the Federal Court case, Repatriation Commission v Clarke, the definition of "retirement village" was scrutinised.  The issue being the description of a retirement village as accommodation primarily intended for people at least 55 years old.

8.The accommodation at issue in Clarke was an age and disabled person's hostel.  Eligibility for entry to the hostel was based on either the person being disabled or aged (at least 60 years of age).  The Federal Court decided that residence in the hostel in question did not constitute residence in a retirement village as the hostel was for over 60's and therefore, was not intended for persons "who are at least 55 years old".

9.The effect of this interpretation is that many service pensioners who were not intended to be eligible for rent assistance would satisfy the eligibility criteria.

The amendment

10.This amendment inserts a new subsection 5M(3A) into the definition of retirement village.  This clarifies that accommodation in premises intended primarily for persons who are a certain age that is over 55 years, will be taken to be intended for persons who are at least 55 years old.

11.This amendment also ensures consistency with the Social Security Act 1991 (SSA).

Disposal of assets - extend the definition of pension year

Background

12.The disposal of assets provisions apply only where a person disposes of assets during a pension year.  A pension year is described as the period of 12 months "commencing on the day on which such a pension [service pension or social security pension] first became payable ...... and each succeeding and each preceding period of 12 months."  The VEA also provides for dispositions more than 5 years old to be disregarded when calculating the value of a person's assets for service pension purposes.

13.Recently a case was heard by the Social Security Appeals Tribunal regarding a claim for pension that included an asset held under the disposal provisions of the SSA; and the amount disposed is such that the claim was rejected because assets were in excess of the limits.  The SSAT determined that the SSA did not provide authority to deal with a disposition for a period preceding a pension year if pension was not payable.  That is, if pension is not payable there cannot be a pension year.

Amendment

14.This amendment introduces the new terms "pre-pension year" and "provisional commencement date".  "Pre-pension year" is defined as "a reference to the period of 12 months ending on the day that is the person's 'provisional commencement date and each preceding period of 12 months' (within a five year period).  "Provisional commencement date" is the day on which a person claims for service pension or an initial claim is lodged, whichever is the earlier.  These new terms enable the VEA to counter the SSAT's interpretation as described above.

15.This amendment also ensures consistency with the SSA.

Tax file number provisions - failure to comply

Background

16.The tax file number provisions contained in section 128A of the VEA were introduced in 1990.  The purpose of this section is to provide the Secretary with the authority to require a person to provide a tax file number on request and that failure to comply with this request would result in the loss of entitlement to an "income support payment" for the period of non compliance.

17.However, there was some doubt to whether the legislation also allowed retrospective payment upon presentation of the person's tax file number.  To allow retrospective payment was never the intention of section 128A.

Amendment

18.This amendment puts beyond doubt the operation of the tax file number provisions by inserting new subsections 128A(3B) and (3C).  These subsections prescribe that where a person complies with the request for a tax file number within three months of the date the income payment was "not paid", the income payment is to be back dated to the date it had ceased to be paid.  Where a person complies with the request after three months have expired, the income payment will recommence from the first pay-day after compliance (if the date the person complies is a pay-day payment will recommence from that pay-day).

Withdrawal of claims - orally

Background

19.Prior to this amendment, the VEA provided for the withdrawal of a claim for qualifying service, age service pension, invalidity service pension, partner service pension and carer service pension.  However, a person must "give written notice of withdrawal".

Amendment

20.This amendment inserts new sections into Divisions 2, 3, 4, 5 and 6 of Part III of the VEA.  These sections provide that:

• an undetermined claim may be withdrawn either orally or in writing;

• the Secretary must give written acknowledgement confirming the oral withdrawal and advising the claimant of the 28 day cooling off period.

• a claimant, or person acting on behalf of the claimant, may reactivate the claim within 28 days of the Secretary's acknowledgement notice.

21.This amendment also ensures consistency with the SSA.

Cancellation or suspension of carer service pension

Amendment

22.This amendment inserts a reference to carer service pension into sections 56J and 56K of the VEA and provides for:

• a carer service pension to be cancelled at the carer's request; and

• the Commission to cancel or suspend carer service pension as a result of the carer failing to draw instalments of his/her carer service pension for a continuous period of 6 months.

23.Prior to this amendment sections 56J and 56K referred only to age, invalidity and partner's service pension.

Pension rate reduction - earnings credit

Background

24.Notices are issued to service pensioners under section 54 of the VEA advising that they must advise the department of an event or change of circumstance, that affects the rate of service pension, within 21 days of the event or change.  Where a service pensioner fails to comply with such a notice and the event or change results in a reduction in service pension, section 56B requires that the service pension is "payable at the reduced rate immediately after the day on which the event or change occurs".

25.Where a service pensioner, with an earnings credit, fails to notify of payment of remunerative work, they fail to comply with a section 54 notice and therefore section 56B is enacted.  Prior to this amendment, section 56B did not specify whether the earnings credit was to be taken into account when determining the date which the reduced rate is payable from.

Amendment

26.This amendment inserts section 56BA which enables service pensioners who fail to advise of remunerative employment to access their earnings credit before service pension is reduced.

27.This amendment also ensures consistency with the SSA.

Income test definition - exempt income

Background

28.The NSW Medically-Acquired HIV Trust was established by the NSW Government to provide a package of financial assistance for persons who are infected with medically-acquired HIV in the state of NSW.  The financial assistance provided by this trust is similar to that provided under the Mark Fitzpatrick Trust to people with medically acquired HIV infection.  Subsection 5H(8) VEA prescribes that payments made by the Mark Fitzpatrick Trust are excluded under the income test.

29.Prior to this amendment, financial assistance provided by the NSW Medically-Acquired HIV Trust constituted as income for the purposes of the VEA.

Amendment

30.Paragraph 5H(8)(xa) of the VEA is amended by inserting a reference to the "New South Wales Medically-Acquired HIV Trust".  This ensures that financial assistance provided by this trust is disregarded under the income test.

31.This amendment also ensures consistency with the SSA.

Recovery of Overpayments - administrative charge

32.This amendment links the administrative charge contained in subsection 205(5) with the threshold for the automatic waiver of debts contained in subparagraph 206(1)(b)(ii).  This provides legislative support to current policy.

GOSP Amendments

33.The need for amendments to the GOSPs will be examined and if required will be completed for the next amendment release for the General.

34.If you have any enquiries in relation to this DI please call John Fely on 06 289 6440.

KAY GRIMSLEY

ASSISTANT SECRETARY

INCOME SUPPORT BRANCH