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DEFENCE COMPENSATION INSTRUCTION – NO 33

Military Compensation Scheme Safety - Rehabilitation and Compensation Act 1988 (SRCA)

Subject

SELF EMPLOYMENT AS A VIABLE REHABILITATION OUTCOME

REVOKED

This instruction has been revoked. Information contained in this instruction is now included within the document "Rehabilitation Policy & Procedure Guide Chapter 9 Section 9.9 "Self Employment as a Viable Rehabilitation Outcome".

View Section 9.9 "Self Employment as a Viable Rehabilitation Outcome" here.

1.The purpose of this Defence Compensation Instruction is to provide some general guidelines for considering a self employment proposal from a rehabilitation client.

Background

2.There are instances when rehabilitation clients choose to pursue self employment in preference to pursuing paid employment with a new employer. This option must always be at the instigation of the client as any self employment venture contains a degree of risk which must ultimately be borne by the client. It is worth noting that a high percentage of small business ventures fail. Accordingly some Rehabilitation Coordinators may choose to pursue self employment on behalf of a client only after all other options have been explored. In any event the Rehabilitation Coordinator should be satisfied that the client understands the risks and has sufficient information to make an informed decision.

3.An often quoted advantage of self employment is that it provides the client with the flexibility to work hours that suit the needs of their injury and the inconsistent nature of their symptoms.

Small Business Advice

4.Each State and Territory has Small Business Advisory Centres. These are listed in the Attachment. These centres provide “Starting Your Own Business” workshops for a small fee. The workshops are generally of 3 hours duration and provide the necessary introductory information to enable the client to decide whether they wish to proceed with their small business proposal.

5.Small Business Advisory Centres also provide a range of other services for people starting in business. This includes:

Information about licence requirements
Government and local business assistance programs
Local businesses providing services to business
Referrals and introductions to experts in particular fields
Details of business education courses
Seminars on current business issues
Employment assistance programs
Books and computer software packages for business management

Specific information fact sheets are also available about:

Planning to start a business
Starting your own business
Business Names
Partnerships
Proprietary companies
Insurance
How an accountant can help you manage your business
Using your home as business premises
Choosing a business structure.

6.The Australian Taxation Office (ATO) provides an information booklet titled “A Tax Guide For New Small Business” containing information on:

Business Taxes
Record keeping
Claiming Deductions
Employer obligations

The ATO also provide a range of free services including fortnightly run seminars, personal visits and quarterly newsletters to assist people already in or commencing a new business.

7.TAFE colleges also run courses of 10 - 18 weeks duration in all aspects of Small Business Management.

Rehabilitation Assistance

8.A rehabilitation plan for a client wishing to commence in small business could include the following:

Referral to the nearest Small Business Advisory Centre.
Referral to the nearest ATO.
Attendance at a “Starting Your Own Business” workshop. Cost $35
A business plan prepared by a suitably experienced Accountant or Business Planner. Cost $200 -300.
Small Business Management training. Cost $200.
Occupational Therapy assessment of the new business and provision of necessary Aids and Appliances in accordance with section 39 of the SRCA.

9.Capital set up costs must always be the responsibility of the client. However to assist the client establish themselves in business, incapacity benefits may continue to be paid for a period of up to 6 or 12 weeks in accordance with sub section 37(5) of the SRCA. This enables the client to complete the training component of their rehabilitation plan and at the same time establish a client base.

The Business Plan

10.Preparation of a business plan is seen as an integral part of the rehabilitation plan for any client who proposes to enter into self employment. The process of preparing a business plan enables the client to determine the level of commitment they are prepared to make to the venture.

The business plan should include:

A description of the business, including who will work in the business and where the business will be located.
An analysis of the market, including the competition.
A list of the initial outlay costs.
A cash flow projection which details the monthly financial incomings and outgoings of the business over a 12 month period, and
A projected profit and loss statement for a 12 month period.

Redemption and Self Employment

11.Section 30 of the SRCA provides that the delegate shall redeem an employee's incapacity entitlement where:

The employee has an entitlement to receive incapacity benefits
The amount of the incapacity benefits falls below an amount as prescribed by Comcare from 1 July each year, (see DCI No. 2) and
The delegate is satisfied that the degree of the employee's incapacity is unlikely to change.

12.A lump sum redemption in accordance with section 30 of the SRCA may provide the capital to fund a self employment venture where the delegate is able to determine a notional ability to earn. The issue of a delegate determining an ability to earn is the subject of another DCI which is yet to be issued. However delegates seeking more information should refer to the commentary within the Incapacity Calculator.

13.Section 31 of the SRCA makes provision for the reinstatement of incapacity benefits at a reduced rate after redemption under section 30. Incapacity benefits may be reinstated only where the employee becomes totally incapacitated and such incapacity is likely to continue indefinitely. In such cases the amount of the benefit is reduced by the amount that was redeemed.

14.Self employment is a viable rehabilitation outcome where:

The employee is committed to such a venture
Medical evidence of the employee's ability to do the work exists, and
The employee is able to provide documentary evidence via a properly prepared business plan of their ability to earn in a particular self employment venture.

Any queries concerning this instruction should be directed to Glen Tye (ADCR) on (02) 6266 8639.

C. NEUMANN

ASPSIM

May 1998

Attachment:List of Small Business Advisory Centres in each State and Territory.
STATE AND TERRITORY SMALL BUSINESS ADVISORY SERVICES

Queensland

Department of Tourism Small Business and Industry

Level 20, 111 George Street

Brisbane Qld 4000

Telephone:(07) 3225 1915

Qld country:1800 177 324

Fax:(07) 3224 2099

New South Wales

Department of State and Regional Development

Level 43 Grosvenor Place

225 George Street

Sydney NSW 2000

Telephone:(02) 9242 6700

Helpline — 131 145

NSW country — 1800 451 151

Fax:(02) 9242 6707

Australian Capital Territory

ACT Business Link

ACT & Regional Chamber of Commerce & Industry

12A Thesiger Court

Deakin ACT 2600

Telephone:(02) 6282 2199

Fax:(02) 6282 2436

Victoria

Small Business Victoria

Level 5

55 Collins Street

Melbourne VIC 3000

Telephone:(03) 9651 9888

Vic country:1800 136 034

Fax:(03) 9651 9725

Attachment to DCI No. 33

Tasmania

Small Business Service Tasmania - Development and Resources

5th Floor, ANZ Centre

22 Elizabeth Street

Hobart TAS 7000

Telephone:(03) 6233 5712

Fax(03) 6233 5800

South Australia

The Business Centre

145 South Terrace

Adelaide SA 5000

Telephone:(08) 8233 4600

SA country:1800 188 018

Fax:(08) 8231 1199

Western Australia

Small Business Development Corporation

553 Hay Street

Perth WA 6000

Telephone:(08) 9220 0222

WA country — 1800 199 125

Fax:(08) 9221 1132

Northern Territory

Territory Business Centre

Department of Asian Relations, Trade and Industry

Ground Floor, Development House

76 The Esplanade

Darwin NT 0800

Telephone:(08) 8999 7916

NT country:008 193 111

Fax:(08) 8999 7924