Incapacity Payments

Legislative Authority

Military Rehabilitation and Compensation Act 2004
Chapter 4 Parts 3, 4 and 5

Stated Current Purpose/Intent

To provide income replacement for economic loss where members and former members are incapacitated for service or work as a result of injury or disease for which liability is accepted under the MRCA.

Current Eligibility Criteria

Incapacity payments may be made to members and former members of the ADF, including reservists, cadets and declared members, who are incapacitated for service or work as a result of an injury or disease for which liability is accepted.

Notes

1. Incapacity payments are paid when normal earnings exceed actual earnings, up to Age Pension age.
2. Incapacity payments are taxable where they replace taxable earnings and non-taxable where they replace non-taxable earnings.
3. Incapacity payments are calculated by looking at what a member would normally earn prior to the injury that causes the incapacity and any amount that is actually earned whilst incapacitated. If the amount actually earned is less than the amount that is normally earned, incapacity payments will cover that difference.
4. Where the normal earnings of discharged ADF members are based on full-time ADF pay and allowances, a remuneration loading of $152.01 per week is added to compensate for the loss of non-salary benefits you received whilst serving in the ADF.  This amount is indexed annually to the percentage increase in the ADF Workplace Remuneration Arrangement.
5. In the case of a Permanent Force member, normal earnings are calculated against the member's service earnings. In the case of Reserve members, normal earnings are calculated against either civilian or reserve earnings or a combination of both. In all cases, the normal earnings are calculated by looking at what the member was earning at the time of the injury/disease, for serving members, or what was earned at the date of discharge for former members. Special rules apply in calculating payments for school cadets.
6. Incapacity payments are offset dollar for dollar by the Commonwealth funded component of superannuation a member receives.
7. The above rate of payment is applicable as at 1 July 2014 and is indexed annually on 1 July.

Date of Introduction

1 July 2004

Original Purpose/Intent

The original intention has not changed.