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.