C13/2010 VEA (Income Support Measures) Bill 2010

Amends DI No.

N/A

Replaces DI No.

C37/2005

Purpose

The purpose of this Departmental Instruction is to outline the minor and technical amendments contained in the Veterans' Entitlements Amendment (Income Support Measures) Act 2010 (IS Measures Act 2010).

Background

IS Measures Act 2010 contains the following m — easures:

1. Remove redundant references and provisions relating to “benevolent homes”;
2. Additional income test exemption in relation to “Labour Market Program”;
3. Require the partners of persons claiming, or receiving income support to claim a comparable foreign pension;
4. Align the treatment of arrears payment of comparable foreign pensions with treatment under the social security law; and
5. Clarify the value of certain superannuation investments in relation to the deeming rules and the deprivation rules.

The link to IS Measures Act 2010 is available on the Comlaw web site at: http://www.comlaw.gov.au/comlaw/Legislation/Act1…

Details of changes

Details of the changes are attached.

Implementation

The commencement date for all the measures is the date of Royal Assent, which was received on 6 July 2010.

Fact sheets

IS — 97 Foreign Pensions has been update to reflect the changes.

Policy updates – CLIK

3.7.5 Assessment of Comparable Foreign Pension Payments has been updated to reflect the changes.

Forms

No DVA forms have been updated.

Contact

The contact officers for this initiative are:

Anastasia Davy, Costing and Implementation x16 — 562

David Turner, Operational Policy Implementation x27619

Eddie Bolanac, Investment Database Unit x27875

Benevolent homes

The VEA and social security law provided that persons who were resident in a “benevolent home” were to have a portion of their pension payments directed to the home.  The last benevolent home ceased to exist in 1994.

IS Measures Act 2010 removes redundant references and provisions relating to 'benevolent homes'.  The equivalent measures were removed from the Social Security Act in 1995.

Labour market programs

Labour Market Programs are funded and administered by the Department of Education, Employment and Workplace Relations and aim to help meet the needs of job seekers while looking for and starting employment..

Under the existing legislation, payments associated with expenses for part-time training under a Labour Market Program are exempt from the veterans' entitlements income test.  However, payments associated with expenses for part-time work experience under a Labour Market Program are not exempt. Both these types of payment are exempt from the social security income test.

The amendments contained in IS Measures Act 2010 exempts income that is provided for expenses incurred during part-time work as a part of a Labour Market Program.  These payments tend to be for unavoidable work expenses such as uniforms.  This aligns the VEA and SSA provisions.

Comparable foreign pension

Previously, persons were only required to take reasonable action to claim a comparable foreign pension if they were applying for, or in receipt of a service pension or income support supplement in their own right.  IS Measures Act 2010 now requires the partners of income support claimants and recipients to also take reasonable action to claim any entitlement for a comparable foreign pension.

The amended notice and penalty provisions mean new service pension or income support supplement claims may be rejected if a person's partner fails to comply with the comparable foreign pension requirement.  Similarly, a recipient's payments may be cancelled or suspended, if their partner does not take reasonable action to claim a comparable foreign pension.

Current partners of income support pensioners will be given 6 months to claim any comparable foreign pension to which the person may be entitled.  This 6 month period is to be specified in the notice issued under new subsection 54BA(1A).

Comparable foreign pension (CFP) arrears

IS Measures Act 2010 requires that an arrears payment of a comparable foreign pension (CFP) be assessed as if it were received as periodic payments for the period of the arrears.  The amount, if any, by which their DVA income support payments should have been reduced over the period will be raised as an overpayment under new section 204.

This will replace the current practice of assigning the payment as income over the next twelve-month period. These changes will align the VEA and SSA treatment of these arrears.

The arrears of a comparable foreign pension should be calculated for the entire arrears period.  Where there is evidence that the payment would not have been spread evenly across the period, this should be taken into account in assessing the overpayment. This DI replaces DI C37/2005, Treatment of Lump Sum Arrears of (Co — mparable) Foreign Pension.

Note: Section 204 applies specifically to CFP.

Disregarded superannuation assets

Section 52AA allow certain superannuation investments determined by the Minister to be disregarded in relation to the assets test.  The equivalent SSA provision is 1118B.

The IS Measures Act 2010 rectifies an oversight made when Section 52AA was originally introduced.  T — he deeming provisions and deprivation rules are now added to the list of provisions where Section 52AA does not apply.  Legal advice received indicated that those provisions should be added to clarify the scope of 52AA.  The corresponding exclusions are specified in SSA 1118B.

As the deeming provisions contain separate powers for the Minister to determine that a particular asset or class of assets should be disregarded,   s52AA exemptions currently in place may require an additional determination to remain exempt from deeming.  This process and the impact on future submission — s to disregard superannuation assets will be established pending further consultation with Legal Services and FaHCSIA.  The Investment Database Unit (IDU) remains the Income Support Group contact point for deeming exemption requests and superannuation fund exemption requests.