Deciding Compensation is Subject to Recovery Provisions

Step

Action

1

Determine if the compensation claimant, at the time of the accident or settlement, was under pension age, or if in receipt of income support supplement, under qualifying age. If not, compensation recovery provisions do not apply, otherwise proceed to step 2.

2

Determine if the compensation claimant is, or was receiving invalidity service pension, partner service pension, or income support supplement, i.e. a CAP. If not, compensation recovery provisions do not apply, otherwise proceed to step 3.

3

Determine if the payment meets the definition of periodic or lump sum compensation in section 5NB of the VEA, (wholly or partly in respect of lost earnings or lost capacity to earn). If definition is not met, or the payment is an excluded amount under subsection 5H(8) of the VEA, compensation recovery provisions do not apply, otherwise, proceed to step 4.

4

Determine if the payment is excluded from the definition of compensation under subsection 5NB(3),(4),(5),(6) or (6A) of the VEA. If it is, the compensation recovery provisions do not apply, otherwise, proceed to step 5.

5

If the compensation is paid as periodic payments, determine if the person was already receiving a CAP at the time of the event which gave rise to entitlement to compensation. If yes, compensation recovery provisions do not apply, otherwise, proceed to the procedure table called [How to decide a payment is affected by compensation].

If the compensation is paid as a lump sum, the compensation recovery provisions apply regardless of whether the person started to receive the CAP before the event which gave rise to entitlement to compensation.

Step

Action

1

Is the person receiving a compensation affected pension?

If ...

Then ...

no

compensation recovery provisions do not apply:

• assess periodic payments as ordinary income,
• assess lump sum payments for economic loss under section 46A VEA, and
• end process here

yes

go to step 2.

2

Is the person claiming, or has received payments which are considered to be compensation as defined under subsection 5NB(2) of the VEA?    

If ...

Then ...

no

compensation recovery provisions do not apply:

• assess periodic payments as ordinary income.
• assess lump sum payments for economic loss under section 46A VEA.
• do not assess exempt or excluded payments under subsection 5H(8) and 5H(12) of the VEA, and
• end process here.

yes

go to step 3

3

Are both of the following conditions met:

• the compensation claim was settled before 1 — st January 1995, and
• if service pension, the person's claim for the CAP made on or after 1 — st May 1987

If ...

Then ...

no

compensation recovery provisions do not apply:

• assess periodic payments as ordinary income, and
• lump sum payment under section 46A VEA
• end process here

yes

go to step 4

4

If the compensation is a periodic payment, is the compensation in respect of an event occurring after date of grant of compensation affected pension?

If ...

Then ...

yes

compensation recovery provisions do not apply:

• assess periodic payments as ordinary income and
• end process here.

no

apply compensation recovery provisions.

5

Amount of compensation assessed where disability pension is limited

If a compensation recipient is also receiving disability pension (DP), the amount of compensation assessed for income support purposes will be reduced if:

• the condition for which compensation is paid is the same as an accepted condition, and
• the rate of disability pension paid is reduced (that is a limitation is applied) under Part II or Part IV of the VEA because compensation is paid for the same condition.    
  More →

  Policy Library – Compensation Offsetting

  Chapter 9.10

  More → (go back)

Note: Liaise with veterans' compensation section to confirm if reduction under Part II or Part IV of the VEA applies, also referred to as compensation offsetting, and the amount of the compensation payment used to reduce the DP.    

This process applies whether assessing compensation under the compensation recovery rules or the ordinary income and assets test.

If the disability pension is ...

Then ...

• not reduced by compensation

the total compensation amount is  taken into account when applying the compensation recovery provisions or ordinary income test

• reduced by compensation, and
• all of the compensation is used to reduce the disability pension

there is no residual amount to take into account under the compensation recovery provisions or ordinary income test as :

• periodic payments are exempt income paragraph 5H(8) (ea) VEA
• lump sum payment is assessed according to how the investment of the funds, and
• end process here

• reduced by compensation, and
• only part of the compensation is used to reduce the disability pension

compensation recovery or ordinary income test applies for the balance of the compensation which does not affect the disability pension eg if $25,000 of a $75,000 compensation payment is assessed as affecting the disability pension, then the balance of $50,000 of the compensation is assessed for compensation recovery purposes, or applying the income test