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.