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1. Legislation and Definitions

Last amended 
8 August 2017


Incapacity payments are economic loss compensation payments due to the inability (or reduced ability) to work, because of a service injury or disease. Incapacity payments are essentially the difference between the amount a person would normally earn in a week and the amount they are actually earning in a week following their injury. The basic formula to calculate a person’s payments is normal (weekly) earnings minus actual earnings i.e. N(W)E-AE.

Incapacity payments can only be made where the Commonwealth has accepted liability for the medical condition causing the incapacity.

‘Incapacity’ does not mean the same thing as a 'disability' under the VEA. 'Incapacity' for the SRCA and MRCA relates specifically to the ability to engage in suitable employment. Incapacity is not determined on the basis of pain, suffering, functional loss or bodily impairment, except in so far as these have a direct and medically certified effect on the person’s capacity to engage in suitable employment.