DATE OF ISSUE: 30 April 1993
VETERANS' AFFAIRS LEGISLATION AMENDMENT ACT (No. 2) 1992
1.The Veteran's Affairs Legislation Amendment Act (No.2) 1992 contains the Budget 1992 legislative amendments and other non-Budget amendments. Amendments have been made to the following Acts:
.The Veterans' Entitlements Act 1986 (VEA).
.The Seamen's War Pensions and Allowances Act 1940 (SWPA Act).
.The Defence Service Homes Act 1918 (DSH Act).
The amendments include:
.Allowing use of Defence Service Homes loans for repair or modification of properties or to discharge existing mortgages.
.Extension of war widows/ers' pensions and orphans' pensions to dependants of certain former Prisoners of War (POWs).
.Provision of a one-off increase in pension rates and remote area allowance
.Simplification of assessment of managed investments.
.Reform of the rent assistance provisions.
.Extension of current assessment rules for compulsorily preserved superannuation to all superannuation benefits held.
.Extension of fringe benefits entitlement to all service pensioners.
.Improve assistance for carer service pensioners.
.Assessment of capital gains and losses from shares, and other listed securities, as income with provision to offset losses against other shares and managed investments.
.Inclusion of pharmaceutical allowance in the assessment of service pension (non-budget item).
.Other Income Support non-Budget legislation.
2.The Act gained Royal Assent on 24 December 1992.
3.Departmental Instructions on pensions for widows or widowers of ex POWs (B51/92) and increase in remote area allowance (B56/92), have already been issued. Other departmental instructions will be issued shortly.
4.This instruction covers all Income Support non-Budget legislative amendments other than those for pharmaceutical allowance. The amendments detailed in this instruction all commence or commenced on 1st July 1991, or at Royal Assent.
TABLE OF CONTENTS
SUBJECTPARAGRAPHDATE OF EFFECT
Change to the rounding base for the
indexation of rent assistance.5 — Royal Assent
Restoration of asset disposal limits for gifts
made during the 5 years before 1st March 1991.9 — 1 July 1991
Combination of deeming free limits for members
of a couple.12 — Royal Assent
Amendment of the definition of "Commonwealth
Veteran" to restore its original meaning.15 — Royal Assent
Exemption from the income test of payments
made by the Mark Fitzpatrick Trust to victims
of medically acquired HIV and AIDS.17 — Royal Assent
Change to the date of effect of payment increases
to a pensioner, resulting from loss of income due to the
death of the non-pensioner partner of that person.20 — Royal Assent
Redefinition of the term "cash maintenance".23 — Royal Assent
Clarification that remote area allowance is only
payable if a person's rate of service pension is
greater than nil.26 — 1 July 1991
Provision of the date of effect of an increase in
pension payable to a person, after the death of
that person's partner, where the person is not paid
a bereavement payment.30 — 1 July 1991
Offset of one person's overpayment by deductions
made from another person's payments.35 — Royal Assent
Recovery of overpayments made under either the
old or new Social Security Act through Veterans'
Affairs entitlements.40 — 1 July 1991
Provision of pension limitation for an "armed
services widower".42 — 1 July 1991
Redraft of various sections to maintain consistency.44 — Royal Assent
CHANGE TO THE ROUNDING BASE FOR THE INDEXATION OF RENT ASSISTANCE.
Background
5.Rent assistance is indexed automatically every six months. New rates are worked out by multiplying the existing rates by an indexation factor and then rounding off the result.
6.The rounding base of $2.60 for rent assistance was meant to ensure that fortnightly rates of rent assistance would be a multiple of 10 cents, since there are 26 fortnights in a year. This did not, however, take into account that each partner of a pensioner couple share rent assistance and that as a result the rate for each partner is a multiple of 5 cents.
7.In calculating the fortnightly pension payment for a person, which includes any rent assistance, the final amount is rounded to the nearest 10 cents. This causes an unfair situation where a pensioner couple paying a certain amount of rent can be paid more rent assistance than an individual paying the same amount of rent.
The Amendment
8.The rounding base of $2.60 located at item 3, column 6 of the CPI indexation table in subsection 59B(1), has been increased to $5.20. This ensures that fortnightly rates of rent assistance will always be multiples of 10 cents and that the same rates of rent assistance will apply equally to all pensioners.
RESTORATION OF ASSET DISPOSAL LIMITS FOR GIFTS MADE DURING THE 5 YEARS BEFORE 1ST MARCH 1991.
Background
9.In 1990, the rules concerning the disposal of assets by a pensioner were altered so that different disposal limits and rules applied to assets disposed of after 1st March 1991. For assets disposed of in the five years prior to this, the original disposal limits of $2000 for an individual and $4000 for a couple were retained.
10.The VEA was amended by the Social Security and Veterans Affairs' Legislation Amendment Act (No.2) 1990 to reflect these changes, but the original disposal limits, for assets disposed of in the five years prior to 1st March 1991, were inadvertently omitted from the wording.
The Amendment
11.As the pre 1st March 1991 disposal limits are still operative, this amendment alters the wording of section 52G (Disposal of assets - not a member of a couple) and section 52H (Disposal of assets - members of couples) to restore the limits to the Act.
COMBINATION OF DEEMING FREE LIMITS FOR MEMBERS OF A COUPLE.
Background
12.Under current rules for deeming, a person is taken to receive interest on portions of income money (the sum of the person's available money and deposit money exceeding $2000), at an assumed rate. This assumed rate is only applied where the person is actually receiving less interest than the assumed rate or no interest on the money. The interest the person is taken to receive is then counted as income.
13.As the rules stand, they may disadvantage members of a couple where available money and deposit money is not distributed equally between them. Say, for example, that one member of a couple has $3000 of available and deposit money, and the other member has $500 of available and deposit money, and both amounts are earning interest at less than the assumed rate. In this case, the first member would be taken to receive interest, at the assumed rate, on income money of $1000. The second member would have no income money. If, however, the money were evenly distributed between the partners, neither would have any income money, and no interest would be taken to be received.
The Amendment
14.Three new subsections have been added to section 46W (Basic concept - income money and interest received) of the VEA. These are subsections 46W(2A), (2B) and (2C). They operate by specifying that where a person is a member of a couple, their available money, deposit money that does not attract interest and deposit money attracting a particular rate of interest, is calculated by adding the equivalent amount belonging to the partner and dividing the result by two. Notes have been added to the method statement to direct the reader to the new subsections when working out the income money of a member of a couple.
AMENDMENT OF THE DEFINITION OF "COMMONWEALTH VETERAN" TO RESTORE ITS ORIGINAL MEANING.
Background
15.During the re-write of the VEA, the definition of a 'Commonwealth veteran', contained in section 5C (eligibility related definitions), was unintentionally altered such that it allowed a broader interpretation than previously.
The Amendment
16.This amendment adds the words 'of the naval, military or air forces' to subsection 5C(1) paragraph (b). The revised definition now reads:
'Commonwealth veteran' means a person who rendered continuous, full-time service as a member of:
(a)the naval, military or air forces; or
(b)the nursing or auxiliary services of the naval, military or air forces; or
(c)the women's branch of the naval, military or air forces;
of a Commonwealth country during a period of hostilities.
EXEMPTION FROM THE INCOME TEST OF PAYMENTS MADE BY THE MARK FITZPATRICK TRUST TO VICTIMS OF MEDICALLY ACQUIRED HIV AND AIDS.
Background
17.The Mark Fitzpatrick Trust, established in 1989, provides financial assistance to people with medically acquired HIV infection and AIDS, or their dependants and carers. Payments can be in the form of lump sums or periodic payments.
18.Prior to this amendment, payments from the trust constituted income for the purposes of the income test. The Government's intention when the trust was established was to exempt such payments from the income test.
The Amendment
19.A new paragraph has been added to section 5H (Income test definitions), subsection 5H(8) (Excluded amounts - general) of the VEA. The new paragraph, 5H(8)(xa), relates to payments from the Mark Fitzpatrick Trust. Subsection 5H(8) specifies that certain amounts are not income for the purposes of the Act.
CHANGE TO THE DATE OF EFFECT OF PAYMENT INCREASES TO A PENSIONER, RESULTING FROM LOSS OF INCOME DUE TO THE DEATH OF THE NON-PENSIONER PARTNER OF THAT PERSON.
Background
20.The income test for a service pensioner who is a member of a couple, takes into account any income of the pensioner's partner, regardless of whether the partner is a pensioner or not. Thus a pensioner may be paid at a reduced rate because of the partner's income.
21.Prior to this amendment, if the partner died, the VEA only provided authorisation to increase the service pensioner's rate from the payday after the day the pensioner notified the Department of his or her partner's death. This meant that for a period of time, the pensioner did not have the benefit of his or her partner's income but still received a reduced rate of pension.
The Amendment
22.A new subsection 56G (2C) has been added to section 56G (Date of effect of favourable determination) of the VEA. The new subsection specifies that if a non-pensioner partner of a service pensioner dies, and the Department is notified or becomes aware of the partner's death within 4 weeks of the date of death, a determination to increase the service pension payable would take effect from the date of death.
REDEFINITION OF THE TERM "CASH MAINTENANCE".
Background
23.In line with changes made to the Social Security Act 1991, the term 'cash maintenance' needed to be defined more specifically in section 5K (Maintenance income definitions) of the VEA.
The Amendment
24.The original definition in subsection 5K(1) has been removed and replaced with the following:
'cash maintenance', in relation to a person, means maintenance income of the person that consists of the amount of a payment received by the person or by a dependent child of the person:
(a)that is a periodic amount; or
(b)that is an amount of $1500 or less.
25.An additional subsection 5K(1A) has been added to further define an amount as 'a periodic amount' if it is:
(a)the amount of one payment in a series of related payments, even if the payments are irregular in time and amount; or
(b)the amount of a payment making up for arrears in such a series.
CLARIFICATION THAT REMOTE AREA ALLOWANCE IS ONLY PAYABLE IF A PERSON'S RATE OF SERVICE PENSION IS GREATER THAN NIL.
Background
26.Prior to the re-write of Part III, section 57 (Remote area allowance) of the VEA clearly implied that remote area allowance is only payable if a person's rate of service pension is greater than nil. During the re-write, this implication was accidentally removed.
The Amendment
27.Notes stating that 'an amount of remote area allowance is to be added only if the person's rate of pension is greater than nil' have been placed after the appropriate rate calculator method statements for Service Pension contained in Division 7 of the Act. The method statements that have had this note added are contained in the following rate calculators:
.Service pension rate calculator where there are no dependant children (section 41, point 41-A1).
.Service pension rate calculator where there are dependant children (section 42, point 42-A1)
.Service pension rate calculator for widows, widowers and non-illness separated spouses (section 44, point 44-A1).
28.In addition, a new paragraph (aa) has been added to those which specify the conditions under which an amount for remote area allowance is to be added to a person's rate of pension. These paragraphs are contained in the remote area allowance module for each of the above rate calculators. The new paragraphs are: 41-G1(aa), 42-H1(aa), and 44-G1(aa).
29.The revised conditions now read:
An amount by way of remote area allowance is to be added to a person's rate of pension if:
(aa)the person's rate of pension apart from this point is greater than nil; and
(a)the person's usual place of residence is situated in the remote area, and
(b)the person is physically present in the remote area.
PROVISION OF THE DATE OF EFFECT OF AN INCREASE IN PENSION PAYABLE TO A PERSON, AFTER THE DEATH OF THAT PERSON'S PARTNER, WHERE THE PERSON IS NOT PAID A BEREAVEMENT PAYMENT.
Background
30.Subsections 36P (Eligibility for bereavement payments - age service pension), 37P (Eligibility for bereavement payments - invalidity service pension), and 39R (Eligibility for bereavement payments - carer service pension) of the VEA provide for payment to the surviving partner of a deceased service pensioner or social security pensioner during a bereavement period (fourteen weeks) following the date of death of the person's partner. They also contain provisions for the surviving partner to elect not to receive bereavement payments.
31.The subsections provide that if a person's entitlement to service pension as an unmarried veteran is equal to, or greater than, the amount payable as a bereavement payment (the combined married rate) then the person will be paid at the unmarried (greater) rate.
32.The subsections do not, however, provide for the date of effect of a determination to increase the pension payable to a person, where the person's entitlement as an unmarried veteran is greater than bereavement payments, or, where the person elects not to receive bereavement payments. Provision for a date of effect was inadvertently omitted during re-write of the VEA.
The Amendment
33.Two new subsections, 56G(2A) and 56G(2B) have been added to section 56G (Date of effect of favourable determination) of the VEA. Section 56G provides a date of effect for favourable determinations made under section 56C (Rate increase determination) or 56F (Resumption of payment after suspension). The new subsections specify that the date of effect of a favourable determination, where a person elects not to receive bereavement payments, or where a person is not eligible for bereavement payments, is the day after the day on which the person's partner died.
34.Notes have been added to the subsections of the VEA providing for bereavement payments (36P, 37P and 39R) to direct the reader to the new subsection 56G(2A) where a person elects not to receive bereavement payments.
OFFSET OF ONE PERSON'S OVERPAYMENT BY DEDUCTIONS MADE FROM ANOTHER PERSON'S PAYMENTS.
Background
35.Prior to the re-write of Part III, section 125 (Pensions &c., absolutely inalienable) of the VEA provided for pensions, allowances and pecuniary benefits payable under the Act to be absolutely inalienable, subject to all provisions contained in the Act. One of those provisions was paragraph 205(2)(c) which allowed a person to consent to deductions from their payments being used to offset an overpayment of another person.
36.After the re-write, section 58G (Service pension to be absolutely inalienable) of the VEA provides for service pension to be absolutely inalienable, but subject only to sections 58H (Payments to the Commissioner of Taxation at pensioner's request) and 58J (Payments to the Commissioner of Taxation - section 218 Income Tax Assessment Act). No reference is made to the provision allowing deductions from one person's payments to be used to offset the overpayment of another person, which is still contained in paragraph 205(2)(c).
The Amendment
37.A new subsection 58G (2) has been added to section 58G of the VEA. It reads:
Deductions may be made from instalments of service pension payable to a person if the recipient consents under paragraph 205(2)(c) to the deductions being made.
38.A note has also been added, explaining what paragraph 205(2)(c) does.
39.Subsection 58G has been amended so that now service pension is inalienable subject to the new subsection 58G(2) and sections 58H and 58J.
RECOVERY OF OVERPAYMENTS MADE UNDER EITHER THE OLD OR NEW SOCIAL SECURITY ACT THROUGH VETERANS' AFFAIRS ENTITLEMENTS.
Background
40.Section 205 (Recovery of overpayments) of the VEA provides a mechanism for the Commission to recover overpayments made under various Acts, including the Social Security Act. Prior to this amendment, the reference was to the Social Security Act 1947.
The Amendment
41.The words "the Social Security Act" have been added to various paragraphs of section 205 to indicate the 1991 version of the Act. It was not necessary to add the year of the Act since "Social Security Act" is defined as meaning the Social Security Act 1991 in section 5Q (General definitions) of the VEA. References to the Social Security Act 1947 have been retained to allow recovery of overpayments made under that Act that are still outstanding.
PROVISION OF PENSION LIMITATION FOR AN "ARMED SERVICES WIDOWER".
NOTE: THIS AMENDMENT IS TO THE SOCIAL SECURITY ACT AND IS DESCRIBED HERE FOR INFORMATION ONLY.
Background
42.Sections 1064 (Rate calculator - age, invalid, wife and carer pensions for people who are not blind) and 1065 (Rate calculator - age and invalid, pensions for people who are blind) of the Social Security Act provide a pension limitation for 'armed services widows', but not for the new pensioner category which came into effect on 22 January 1991, 'armed services widowers'. The provision of a pension limitation was overlooked when repatriation benefits were extended to the dependants of female veterans on that date.
The Amendment
43.This amendment inserts a new subsection in section 1064 and section 1065 that provides a pension limitation for widowers in much the same manner as for widows. A note at the end of each new subsection directs the reader to the definition of an 'armed services widower' in subsection 4(1) of the Social Security Act.
REDRAFT OF VARIOUS SECTIONS TO MAINTAIN CONSISTENCY.
Background
44.Section 21 (Allowance for attendant) of the of the Seamen's War Pensions and Allowances Act (SWPA Act) provides for payment of attendant allowance to eligible Australian mariners. Subsection 21(11) specifies that the allowance is not payable where a person is receiving a carer service pension under the VEA.
45.A recent amendment added a new subsection, 21(12), which specifies that the allowance is also not payable where a person is receiving a carer pension under the Social Security Act. This new subsection operates in much the same way as 21(11) but is worded in plain-English.
46.A similar situation exists in Section 98 (Attendant allowance) of the VEA. Subsection 98(4A) specifies that the allowance is not payable where a person is receiving a carer service pension under the VEA, and a new subsection, 98(4B), specifies that the allowance is not payable where a person is receiving a carer pension under the Social Security Act. Although both subsections operate in the same way, they are worded differently.
The Amendment
47.Subsection 21(11) of the SWPA Act and subsection 98(4A) of the VEA have been redrafted in a style consistent with the newly inserted subsections; 21(12) of the SWPA Act, and 98(4B) of the VEA. No change of meaning has occurred with the amendments.
PETER HAWKER
NATIONAL PROGRAM DIRECTOR
BENEFITS