EXPLANATORY STATEMENT
Guide to Determining Impairment and Compensation 2026
EMPOWERING PROVISION
The Military Rehabilitation and Compensation Commission (the Commission) makes the Guide to Determining Impairment and Compensation 2026 (the GARP M 2026) under subsection 67(1) of the Military Rehabilitation and Compensation Act 2004 (the MRCA).
PURPOSE
The GARP M 2026 repeals the Guide to Determining Impairment and Compensation 2016 (the repealed instrument). The GARP M 2026 applies to claims for permanent impairment compensation under the MRCA from 1 July 2026.
BACKGROUND
The repealed instrument is the approved guide for assessing the degree of impairment and lifestyle ratings when determining the permanent impairment compensation payable under Part 2 of Chapter 4 of the MRCA. Its applied in relation to claims for compensation under the MRCA before 1 July 2026.
Chapter 25 of the repealed instrument provides the formula for determining the permanent impairment compensation payable under the MRCA, for a person with service-related conditions under the MRCA and the Veterans’ Entitlements Act 1986 or the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (the old Acts), or both. The formula operates by working out:
- what would be notionally payable for all conditions (including conditions under the old Acts), and
- subtracting what would be notionally payable for the conditions under the old Acts (as if they were conditions under the MRCA), to
- find the amount payable for conditions under the MRCA only.
The formula includes additional steps factoring in impairment compensation received under the old Acts, ensuring the total amount payable under the old Acts and the MRCA combined, does not exceed a statutory maximum amount.
On 1 July 2026, the Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) Act 2025 (the VETS Act) closed the old Acts to new impairment compensation claims. From that date, veterans can only claim permanent impairment compensation under the MRCA for:
- deteriorations of impairment of existing conditions under the old Acts; and
- deteriorations of impairment of existing conditions under the MRCA; and
- impairment relating to new conditions accepted under the MRCA from 1 July 2026.
To help facilitate this, conditions under the old Acts automatically transferred to the MRCA on 1 July 2026 by way of section 24A. The repealed instrument was required to be remade to incorporate a modified Chapter 25 methodology to address the new arrangements from 1 July 2026. A new Chapter 26 was also required to convert historical impairment ratings under the old Acts to a Baseline Impairment Rating suitable for the MRCA context, and to address the reforms delivered by the VETS Act. The Baseline Impairment Rating is used to determine the starting degree of impairment, from which deteriorations in impairment under the MRCA can be assessed.
The GARP M 2026 therefore contains the modified Chapter 25 formula and the new Chapter 26. The GARP M 2026 also remakes Chapters 1 to 24 of the repealed instrument in similar terms, only fixing typographical and style errors, and removing incorrect content relating to the Guide to the Assessment of Rates of Veterans’ Pensions (the GARP V).
OVERVIEW
Subsection 67(1) of the MRCA provides the Commission may determine, in writing, a guide setting out various criterion for determining impairment levels and lifestyle ratings. These are provided in Chapters 1 to 22 of the GARP M 2026. The Commission may also determine the different methods for calculating compensation amounts when service-related conditions arise from warlike/non-warlike or peacetime service, or a combination of both. This is provided for in Chapter 23 of the GARP M 2026.
Subsection 67(3) of the MRCA provides the Commission may, from time to time, repeal or amend the guide in writing.
Modified Chapter 25
Chapter 25 of the GARP M 2026 provides the new 7-step formula for calculating the permanent impairment compensation payable under the MRCA for veterans with conditions under the old Acts. This formula now operates by working out:
- what would be notionally payable for all conditions, and
- subtracting what would be notionally payable for the Baseline Impairment Rating (if that Baseline Impairment Rating was compensated under the MRCA), to
- find the amount payable for any deteriorations in impairment (in respect of any conditions, including new conditions) under the MRCA.
Chapter 25 of the GARP M 2026, like the repealed instrument, factors in impairment compensation under the old Acts (at Steps 6 and 7), ensuring the total amount payable under the old Acts and the MRCA combined, does not exceed the statutory maximum permanent impairment amount under the MRCA.
New Chapter 26 - Baseline Impairment Rating
The Baseline Impairment Rating in Chapter 26 of the GARP M 2026 is a new Chapter, specifically required to address reforms delivered by the VETS Act. It specifies how the Baseline Impairment Rating is assessed and determined for five different veteran ‘cohorts’. The cohorts classify veterans into distinct groups, relevant to individual circumstances and whether their service-related conditions were accepted under one of the old Acts or both, or the old Acts and the MRCA, before the transition to the MRCA as the sole Act from 1 July 2026.
The five veteran cohorts are described as follows:
- ‘Cohort 1’ refers to a veteran who, but for the VETS Act, would only have had coverage under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (the DRCA). That is, their service-related conditions were covered exclusively under the DRCA.
- ‘Cohort 2’ refers to a veteran who, but for the VETS Act, would only have had coverage under the Veterans’ Entitlements Act 1986 (the VEA). That is, their service-related conditions were covered exclusively under the VEA.
- ‘Cohort 3’ refers to a veteran who, but for the VETS Act, would only have had coverage under both the DRCA and the VEA. That is, their service-related conditions were covered exclusively under both the DRCA and the VEA.
- ‘Cohort 4’ refers to a veteran who had coverage under the MRCA as well as the DRCA and/or the VEA and had received compensation under Part 2 of Chapter 4 of the MRCA, in respect of a claim for compensation under section 319 made before 1 July 2026.
- ‘Cohort 5’ refers to a veteran who had coverage under the DRCA and/or the VEA and has received compensation under Part 2 of Chapter 4 of the MRCA, in respect of a claim for compensation under section 319 made on or after 1 July 2026.
Working out the Baseline Impairment Rating for the five cohorts differs slightly, however it is designed to recognise prior impairment ratings in a consistent way for all cohorts. Chapter 26 sets out the 5 distinct methods for working out the Baseline Impairment Rating and supports the transition of all permanent impairment claims under the MRCA. Of note, for each subsequent claim for permanent impairment compensation after the first which transitions veterans in under the MRCA, the Baseline Impairment Rating will be the previous overall impairment rating (i.e. the ‘Step 1 rating’ of Chapter 25).
The modified Chapter 25 and the new Chapter 26 are necessary additions to the GARP M 2026, specifically designed to address the changes to veterans’ portfolio legislation brought about by the VETS Act on 1 July 2026.
EXPLANATION OF PROVISIONS
Section 1 states the name of the instrument.
Section 2 states the short title of this instrument.
Section 3 provides that the instrument commences on 1 July 2026. This is the same day as the VETS Act commencement.
Section 4 sets out the authority for the Commission to make the instrument, namely subsection 67(1) of the Act.
Section 5 provides that the Guide to Determining Impairment and Compensation 2016 is repealed.
Section 6 contains definitions.
Section 7 provides that each item in a Schedule to this instrument has effect according to its terms. The guide set out in Schedule 1 to this instrument is the Guide to Determining Impairment and Compensation determined by the Commission.
Section 8 sets out application provisions. These application provisions clarify that the instrument applies in respect of a claim for compensation made under the MRCA on or after 1 July 2026. The instrument also applies in respect of an original determination, or a reviewable determination, on a claim for compensation made under the MRCA on or after 1 July 2026.
Interim determinations
Section 8 also clarifies that an earlier version of the Guide to Determining Impairment and Compensation applies when the Commission is determining a final amount of permanent impairment compensation after 1 July 2026, but the claim for compensation was made under the MRCA before 1 July 2026 and the Commission determined an interim amount of compensation in relation to that claim.
Schedule 1— Guide to Determining Impairment and Compensation 2026
Purpose, legal background and definitions
This section explains the purpose of the guide in Schedule 1; the authorising provision and the definitions used in the guide.
How to use this guide
This section provides information about how the guide is to be applied to determine medical impairment and lifestyle ratings. It also briefly explains how compensation factors are determined having regard to service differentials.
Medical Impairment
This section includes:
- ‘Part A (System Specific Assessments)’, Chapters 1 to 12,
- ‘Part B: (Non-System Specific Assessment)’, Chapters 13 to 17,
- ‘Part C (Impairment Ratings: Combining, Apportioning, Partially Contributing)’, Chapters 18 to 21.
Lifestyle Effects
This section provides for the assessment of lifestyle ratings under Chapter 22.
Calculating Permanent Impairment Compensation
This section contains Chapter 23, providing the methods for calculating compensation amounts when service-related conditions arise from warlike/non-warlike or peacetime service, or a combination of both.
Converting Weekly Sums into Lump Sums
This section contains Chapter 24, providing that a periodic amount determined under sections 68, 71 or 75(2) may be converted to an age-based lump sum using tables provided by the Australian Government Actuary.
Method of Working Out the Amount of Compensation Payable under the MRCA for a Person with an Old VEA Accepted Condition or an Old DRCA Accepted Condition.
This section contains Chapter 25, providing the new 7-step methodology for calculating the permanent impairment compensation payable under the MRCA for veterans with conditions under the old Acts.
Baseline Impairment Rating
This section contains Chapter 26, specifying how the Baseline Impairment Rating is assessed and determined for different veteran cohorts.
Consultation
In relation to the VETS Act, DVA undertook extensive consultation with stakeholders, including three rounds of public consultation on the simplification and harmonisation of veterans’ portfolio legislation. The outcome of this process revealed strong support from veterans and other stakeholders and informed the pathway to establish an improved MRCA as the sole, ongoing scheme for veterans’ compensation and rehabilitation from 1 July 2026. To support the VETS Act commencing on 1 July 2026, the repealed guide was required to be remade, incorporating enhancements to address the new processes from 1 July 2026.
Concerning the new Baseline Impairment Rating in Chapter 26 of the GARP M 2026, the Department of Veterans’ Affairs (DVA) sought endorsement of the policy from the former Military Rehabilitation and Compensation Commission. Following endorsement, DVA undertook a period of targeted consultation for a period of two weeks in July 2025 with the Institute of Veterans’ Advocates and with members of the Advocacy Training and Development Program and the Operational Working Party. DVA received six submissions from stakeholders during consultation. Submissions were positive, endorsed the policy and recognised that historical impairment ratings under the old Acts needed to be translated in a consistent and fair way and that the Baseline Impairment Rating achieved that. As a result of the extensive consultation on the VETS Act and the positive submissions received during consultation with advocacy groups in 2025, broader consultation on the GARP M 2026 was not considered necessary.
Human rights implications
This instrument is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment A.
Making the instrument
The instrument is made by the Military Rehabilitation and Compensation Commission.
Approved by
Military Rehabilitation and Compensation Commission
Rule-maker
Attachment A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Guide to Determining Impairment and Compensation 2026
This Disallowable Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (the recognised rights).
Overview of the Disallowable Legislative Instrument
The Guide to Determining Impairment and Compensation 2026 (the instrument) repeals the Guide to Determining Impairment and Compensation 2016 (the repealed instrument) and applies to claims for permanent impairment compensation under the Military Rehabilitation and Compensation Act 2004 (the MRCA) on and after 1 July 2026. Schedule 1 of the instrument provides the Guide to Determining Impairment and Compensation 2026, used for assessing impairment and lifestyle ratings and determining amounts of permanent impairment compensation payable under Part 2 of Chapter 4 of the MRCA.
The instrument remakes Chapters 1 to 24 of the repealed instrument in similar terms, only fixing typographical and style errors, and removing incorrect content relating to the Guide to the Assessment of Rates of Veterans’ Pensions. The instrument also modifies Chapter 25 of the repealed instrument, ensuring it is fit-for-purpose to address claims for compensation under the MRCA from 1 July 2026, following commencement of the Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) Act 2025 (the VETS Act).
Human rights implications
The Disallowable Legislative Instrument engages and promotes the right to equality before the law because it clarifies the application of certain formulas to work out the compensation to which a veteran is entitled. It ensures that the formulas are applied in a consistent manner for all veterans who are entitled to the compensation, regardless of their personal, educational and social backgrounds.
Introduction of new and modified formulas ensures veterans can continue to receive compensation for deteriorations in impairment levels of any service-related condition, despite the closure of the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (the DRCA) and the Veterans’ Entitlements Act 1986 (the VEA) to new claims on 1 July 2026 by the VETS Act. This minimises disruption to claiming processes and avoids unintended consequences of consolidating the veterans’ portfolio legislation, reducing adverse impacts on financial support and veterans’ mental health.
Although the instrument contains formulas for calculating a person’s impairment for compensation purposes and to that extent relates to a person with disabilities, the nexus is technical and has no bearing on the provision of services for people with disabilities. Accordingly, the right to full and effective participation in society, on an equal basis with others, by people with a disability, contained in the Convention on the Rights of Persons with Disabilities, is not engaged.
Conclusion
The Disallowable Legislative Instrument is compatible with human rights as it does not limit any human rights.
Military Rehabilitation and Compensation Commission
Rule-Maker