EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Compensation payments in respect of certain World War Two internments) Determination
Instrument No. R5/2008
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
The Compensation payments in respect of certain World War Two internments are one-off payments of $25,000, made to a person or a person’s partner where the person was a former prisoner of war of the Axis force during World War Two. The payments are being made by on behalf of the Commonwealth by the Australian Government Department of Veterans’ Affairs under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007. The compensation payment is in recognition of the hardship and suffering endured by former prisoners of war, or their widows or widowers.
The purpose of this instrument is to ensure that a payment received under the Compensation payments in respect of certain World War Two internments under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007 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 a Compensation payment in respect of certain World War Two internments because the payment 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 31 May 2007 under the social security law.
This instrument is beneficial to pensioners because it exempts from the VEA income test Compensation payments in respect of certain World War Two internments paid by the Australian Government Department of Veterans’ Affairs under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007.
Public consultation was therefore seen as unnecessary.
Retrospectivity
FaHCSIA has already exempted Compensation payments in respect of certain World War Two internments. The relevant instrument under the social security law operates from 31 May 2007. This instrument is effective from the same date. The instrument is entirely beneficial for pensioners receiving income support payments from the Department of Veterans’ Affairs and does not disadvantage them in any way.
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Compensation payments in respect of certain World War Two internments) Determination Instrument No. R5/2008 was enacted to address the issue of ensuring that certain compensation payments made to former World War Two prisoners of war and their partners are exempt from the income assessment process under the Veterans’ Entitlements Act 1986. This instrument was introduced by the Australian Government Department of Veterans’ Affairs to ensure that the one-off payments of $25,000 do not reduce the income support payments of pensioners, thereby recognising the hardship and suffering endured by these individuals. The determination ensures that these payments are not regarded as ordinary income for the purposes of the income test under the Veterans’ Entitlements Act, thus maintaining the income support levels for those affected.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Compensation payments in respect of certain World War Two internments) Determination Instrument No. R5/2008 applies to payments made under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007, specifically to former prisoners of war of the Axis force during World War Two and their widows or widowers who are recipients of a one-off payment of $25,000. The purpose of this instrument is to exempt these compensation payments from being considered as ordinary income for the purposes of the means-testing under the Veterans’ Entitlements Act 1986. This exemption ensures that recipients of service pensions or income support supplements under the VEA will not experience a reduction in their income support payment upon receiving these compensation payments. The instrument operates on a national level, aligning with the federal jurisdiction of the Commonwealth of Australia, and is effective from the same date as the related instrument under the social security law, which is 31 May 2007. This determination does not disadvantage any recipients and is entirely beneficial, as confirmed by the consultation process with the Department of Families, Housing, Community Services and Indigenous Affairs.
Key Provisions
The Veterans’ Entitlements Income (Exempt Lump Sum – Compensation payments in respect of certain World War Two internments) Determination 2008 (Instrument No. R5/2008) aims to exempt certain payments from the income assessment process under the Veterans’ Entitlements Act 1986 (VEA). Specifically, it addresses the one-off compensation payments of $25,000 made to former World War Two prisoners of war or their widows or widowers, as per the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007. By deeming these payments as exempt lump sums under paragraph 5H(12)(c) of the VEA, the Determination ensures that they do not reduce the income support payments of the recipients or their partners (section 1(2)). This measure is designed to alleviate the financial burden on these individuals who have already suffered significant hardship during the war.
The primary obligation imposed by this Determination is on the Australian Government Department of Veterans’ Affairs, which is responsible for administering the compensation payments. The Department must ensure that these payments are not treated as ordinary income for the purposes of assessing the income support entitlements of the recipients or their partners under the VEA (section 1(1)). This obligation extends to clearly stating the amount of the exempt lump sum in the Determination and ensuring that it is consistent with the provisions of the VEA and the Social Security and Veterans’ Affairs Legislation Amendment Act 2007.
Failure to comply with the provisions of this Determination could result in legal consequences, though the Determination does not explicitly outline specific offences or penalties for non-compliance. However, given its purpose and the context of the VEA, any non-compliance might indirectly affect the rightful recipients of the compensation payments, potentially leading to disputes over the assessment of their income support entitlements. The Department of Veterans’ Affairs, therefore, has a duty to adhere strictly to the terms of the Determination to avoid any legal repercussions and to ensure the intended beneficiaries receive the full benefit of the exempt lump sum provisions.