The Military Rehabilitation and Compensation Act 2004 (MRCA) provides treatment, rehabilitation and compensation for members and former members of the Australian Defence Force (ADF), their dependants and other eligible persons in respect of injury, disease or death related to service rendered on or after 1 July 2004.  The MRCA also sets out governance, administration and reporting requirements.

A primary aim of this legislation is rehabilitation for ADF members and former members whose capacity for work is affected by conditions that have been accepted as related to their service.  All members due for medical discharge, whether or not this results from service related injury or disease, will be individually case-managed through their transition to civilian life.

Prior to this legislation ADF members were subject to two compensation acts, depending on service.  They were the Veterans' Entitlements Act 1986 (VEA) and the Safety, Rehabilitation and Compensation (Defence-related claims) Act 1988 (DRCA). Existing veterans, ADF members and former members will not lose their entitlements or their ability to claim under either the VEA or the DRCA.  All conditions due to service prior to the 1 July 2004 will continue to be covered by the VEA and/or the DRCA.

The MRCA is designed to create a fair and equitable compensation system recognising the needs of serving members of the ADF as well as eligible former members. The MRCA adopts the beneficial 'beyond reasonable doubt' standard of proof provided in the VEA for determining whether an injury, disease or death relating to warlike or non-warlike service is a service injury, disease or death.  The 'reasonable satisfaction' standard of proof applies when determining whether an injury, disease or death relating to peacetime service is a service injury, disease or death and for all other determinations under MRCA. It utilises the Statements of Principles (SOPs) from the VEA in linking injury, disease or death with service.  Where service after 01 July 2004 aggravates a pre-existing condition, and the cause of the aggravation satisfies a SOP factor, compensation can be provided to the extent of the aggravation, as is the case under the DRCA.

The actual financial benefits for permanent impairment arising from warlike or non-warlike service are higher than those arising from peacetime service, except for the most serious impairment and for service related deaths, where the same compensation benefits are payable.