Note for CLIK Users
Under changes commencing on 1 July 2026, the Veterans’ Entitlements Act 1986 (VEA) and the Safety, Rehabilitation and Compensation (Defence‑related Claims) Act 1988 (DRCA) were closed to new claims. For incapacity claims, the changes mean that all new claims for incapacity payments are determined under the Military Rehabilitation and Compensation Act 2004 (MRCA) from that date.
Most veterans receiving incapacity payments under the DRCA immediately before this date automatically transitioned to MRCA incapacity payment arrangements, with no requirement to reapply or notify the Department. A veteran was deemed to be ‘receiving payments immediately before 1 July 2026’ when they were entitled to receive incapacity payments on the day before the new arrangements commence (i.e. 30 June 2026). Payments were automatically transitioned where there was an ongoing entitlement after this date.
Claims for incapacity which are still being investigated on 1 July 2026 will be finalised under the MRCA.
The changes are beneficial for DRCA payment recipients due to several key differences in how incapacity entitlements are calculated under the MRCA, regardless of the Act that may have applied before 1 July 2026:
- Remuneration Loading: The MRCA includes an additional ‘remuneration loading’ component in the Normal Earnings calculation for those who were injured during Permanent Force or Continuous Full-Time Service and have separated from the ADF to compensate for ‘non‑salary’ service benefits, which is not available under the DRCA.
- No 5% Superannuation Contribution Deduction: The 5% deduction that previously applied under the DRCA for veterans who are eligible for superannuation does not apply under the MRCA.
- Indexation: the ADF component of Incapacity payments under the MRCA are indexed by reference to movements in ADF pay, while payments under the DRCA were indexed using the Wage Price Index.
The differences mean that DRCA incapacity recipients who transitioned to the MRCA generally receive higher incapacity payments than they previously received.
Note that the changes did not apply to ‘Former Employees’ who were receiving weekly compensation payments under the 1971 Act immediately prior to 1 December 1988. Payments for this group will instead continue and be indexed under ‘grandparenting’ arrangements.
Those already in receipt of incapacity payments under the MRCA experienced no change.
The changes also mean that, from 1 July 2026, VEA veterans of working age may (for the first time) be eligible to claim for incapacity payments under the MRCA if they are prevented from undertaking remunerative work due to their service‑related injury or illness.
Existing VEA Disability Compensation Payments will continue unchanged.
Note: Additional information on incapacity payment processes and transitional arrangements will be available in the relevant CLIK chapters and sub‑chapters soon.
Information videos covering the 1 July legislative reform changes are also available via the following link Information Videos
The policy on incapacity payments under the Military Rehabilitation and Compensation Act 2004 (MRCA) is now contained under the “Incapacity Policy Manual” tab. The manual relates to incapacity payments under both the DRCA and MRCA. Please go to the Incapacity Policy Manual.