Legislative definitions of taxable payments
The VEA does not define which payments made by DVA are taxable or non-taxable. This information is specified in the Income Tax Assessment Act 1997. The payments listed below are those specified as taxable in that legislation.
Taxable service pension
Service pension is taxable when paid on the following grounds:
- age,
- invalidity, once the recipient has reached age pension age,
- blinded once the recipient has reached age pension age,
- partner of an age service pensioner,
- partner of an invalidity service pensioner, once either the partner or veteran has reached age pension age,
- partner service pension paid to separated partners,
- partner of a carer service pensioner, and
- carer, once either the recipient or partner has reached age pension age and the partner is receiving invalidity service pension or was receiving it before they died.
Allowances paid in conjunction with these pensions are not taxable.
Note: The basic amount of pension supplement is taxable, but the other components of the pension supplement are not taxable. Pensions calculated under the transitional rules are apportioned as pension supplement components for income tax purposes.
Taxable income support supplement
Income support supplement (ISS) is taxable when paid on the following grounds:
- age,
- invalidity, once the recipient has reached age pension age,
- dependent child,
- partner of an invalidity service pensioner, invalidity ISS recipient or disability support pensioner, once one partner has reached age pension age,
- partner of a DVA or Centrelink income support pensioner receiving a payment other than invalidity service pension or disability support pension,
- blinded, once the recipient has reached age pension age, and
- carer, once one partner has reached age pension age.
Regardless of whether the client is paid under transitional arrangements, the minimum amount of ISS and allowances paid in conjunction with ISS are not taxable.
Blinded Pensioners
Where blinded pensioners over pension age are paid under the notional income and assets tested rate, the taxable amount is the rate of service pension actually paid to the person. This is true even if this is a reduced amount.
War widow/widower and invalidity ISS
If a war widow/widower in receipt of invalidity ISS ceases to be permanently incapacitated for work, their ISS becomes taxable. Their eligibility for invalidity ISS is not affected.
Veterans' Children Education Scheme (VCES)
Education allowance paid under the VCES in respect of a student who is 16 years of age and over is taxable income for the student, regardless of whether the payments are actually made to the:
- student,
- parent,
- guardian, or
- trustee.
Other education allowance payments are not taxable.
Veteran Payment
The maximum basic rate of [glossary::3668] is taxable for all recipients.
Note: The basic amount of pension supplement which is included as part of a veteran payment is taxable, but the other components of the pension supplement are not taxable
Without adequate means of support (AMS) pension
Any amount paid in addition to the basic or 'schedule amount' of without adequate means of support (AMS) pensions is taxable except when paid to parents who are under age pension age.
Adequate means of support payments to parents that are not taxable
11.6.3/Non-taxable Income Support Payments
Other taxable payments
In addition to those listed above the following payments also form part of a person's taxable income:
- education entry payment,
- Defence Force Income Support Allowance (DFISA) where the maximum basic rate of the social security payment on which the recipient's DFISA was based was taxable. DFISA ceased to be paid 1 January 2022.