EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Compensation paid by Aviva Australia) Determination
Instrument No. R8/2008
Paragraph 5H(12)(c) of the Veterans’ Entitlements Act 1986
The Purpose and Operation of the Attached Instrument
A payment is deemed not to be ordinary income for means-testing under the Veterans’ Entitlements Act 1986 (VEA) once it is stated to be an exempt lump sum by a determination under paragraph 5H(12)(c) of the VEA. The amount specified in the Determination at Part 2 of the Schedule as an exempt lump sum is an exempt lump sum for the purposes of the definition of ‘ordinary income’ in subsection 5H(1) of the VEA.
The attached instrument provides for the exemption of these payments from the income assessment of the person’s or the person’s partner’s service pension or income support supplement.
Background
Compensation paid by Aviva Australia is a one-off compensation payment paid by Aviva Australia to certain people whose income support payments were affected (directly or indirectly) as a result of Aviva Australia incorrectly recording the purchase price for one or more of the following income stream products:
(i) the Navigator Personal Retirement Plan – Allocated Pension;
(ii) the Navigator Personal Retirement Plan – Growth Pension; and
(iii) the PremiumChoice Retirement Service – Allocated Pension.
This Compensation paid by Aviva Australia is to meet any shortfall in income support payments, or repayment of debts to the Department of Veterans’ Affairs for overpayments made as a result of the incorrect purchase price being assessed.
The purpose of this instrument is to ensure that Compensation paid by Aviva Australia is an exempt lump sum for the purposes of paragraph 5H(12)(c) of the VEA.
The effect of this instrument is that people who are in receipt of an income support pension under the VEA will not have their income support payment reduced because of receiving Compensation paid by Aviva Australia because Compensation paid by Aviva Australia will not be regarded as income for the purposes of the VEA income test.
Consultation
In the interest of consistency of approach, the Department has worked closely with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to ensure that this instrument has the same effect as a similar instrument executed on 4 July 2007 under the social security law.
This instrument is beneficial to pensioners because it exempts from the VEA income test Compensation paid by Aviva Australia. Public consultation was therefore seen as unnecessary.
Retrospectivity
FaHCSIA has already exempted Compensation paid by Aviva Australia. The relevant instrument under the social security law operates from 4 July 2007. The payments are entirely beneficial to eligible Department of Veterans’ Affairs income support recipients and does not disadvantage them in any way.