EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Exceptional Circumstances Exit Grant) Determination
Instrument No. R9/2008
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 Exceptional Circumstances Exit Grant payment only relates to payments made under the Exceptional Circumstances Exit Grant of the “Exceptional Circumstances Exit Package 2007” (DAFF Scheme). For the avoidance of doubt, the attached instrument does not exempt any Exceptional Circumstances Advice and Retraining Grants, which also form part of the DAFF Scheme.
The Exceptional Circumstances Exit Grant payment is a response to the extent and severity of the drought and is designed to assist farmers leaving the land to have the capacity to continue their lives outside of farming the land.
In general terms, the Exceptional Circumstances Exit Grant payment is a one-off payment of up to $150,000, made to a person or a person’s partner where the person was an Australian farm owner who has sold their farm enterprise and who meets the Department of Agriculture, Fisheries and Forestry eligibility guidelines under the DAFF Scheme.
The purpose of the attached instrument is to ensure that the Exceptional Circumstances Exit Grant payment under the DAFF Scheme 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 the Exceptional Circumstances Exit Grant under the DAFF Scheme because the Exceptional Circumstances Exit Grant 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 the attached instrument has the same effect as a similar instrument executed under the social security law.
The attached instrument is beneficial to eligible Department of Veterans’ Affairs income support recipients because it exempts from the VEA income test an Exceptional Circumstances Exit Grant under the DAFF Scheme. Public consultation was therefore seen as unnecessary.
Retrospectivity
FaHCSIA has already exempted an Exceptional Circumstances Exit Grant payment under the DAFF Scheme. The relevant instrument under social security law operates from 7 March 2008. The instrument is entirely beneficial to eligible Department of Veterans’ Affairs income support recipients and does not disadvantage them in any way. It is believed that none of the recipients to date has received or is currently in receipt of an income support payment under the VEA.