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.
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Exceptional Circumstances Exit Grant) Determination 2008 (F2008L00670) was enacted to address the need to exempt certain lump sum payments from the income assessment of veterans receiving service pensions or income support supplements under the Veterans’ Entitlements Act 1986 (VEA). This determination was introduced by the Australian Government to ensure that eligible veterans who received the Exceptional Circumstances Exit Grant, a one-off payment designed to assist farmers exiting the land due to the severity of the drought, would not have their income support payments reduced as a result of receiving this grant. The objective of the determination is to provide clarity and consistency in the application of the VEA by exempting the specified lump sum from the income test, thereby protecting the income support payments of eligible veterans.
The instrument was developed in consultation with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to align with similar measures under social security law, ensuring a cohesive approach across relevant support programs. The instrument does not require public consultation as it is entirely beneficial to eligible veterans and does not impose any disadvantage. The determination operates retrospectively from 7 March 2008, reinforcing its supportive intent and immediate application to eligible recipients.
Scope and Application
The Veterans' Entitlements Income (Exempt Lump Sum – Exceptional Circumstances Exit Grant) Determination Instrument No. R9/2008 applies to individuals who receive service pensions or income support supplements under the Veterans' Entitlements Act 1986 (VEA) and who have received an Exceptional Circumstances Exit Grant payment under the "Exceptional Circumstances Exit Package 2007" (DAFF Scheme). This Act specifically excludes any Exceptional Circumstances Advice and Retraining Grants which also form part of the DAFF Scheme. The purpose of this instrument is to ensure that the Exceptional Circumstances Exit Grant payment is exempt from the income assessment for the purposes of the VEA, meaning that these payments do not reduce the income support payments for eligible veterans. This instrument operates at the Commonwealth level and its effect is to exempt the specified lump sum from being considered as income for the purposes of the VEA income test, thus preventing any reduction in pension or support payments for those who meet the eligibility criteria.
Key Provisions
The primary sections of the Veterans’ Entitlements (Exempt Lump Sum – Exceptional Circumstances Exit Grant) Determination 2008 (No. R9/2008) establish that certain payments under the Exceptional Circumstances Exit Grant of the “Exceptional Circumstances Exit Package 2007” (DAFF Scheme) are exempt from being treated as ordinary income under the Veterans’ Entitlements Act 1986 (VEA). Specifically, section 3 of the Determination identifies the payment as an exempt lump sum, which is then defined in Part 2 of the Schedule. This means that the specified amount of the Exceptional Circumstances Exit Grant will not be considered as part of the recipient's income when assessing eligibility for service pension or income support supplement under the VEA.
The obligations imposed by this Determination are primarily on the Department of Veterans’ Affairs (DVA) and the Department of Agriculture, Fisheries and Forestry (DAFF) to ensure that the payments made under the Exceptional Circumstances Exit Grant are accurately identified as exempt lump sums. The DVA must not consider these payments as ordinary income when calculating the income support payments for veterans who are receiving a service pension or income support supplement. Similarly, the DAFF must ensure that the payments are made in accordance with the eligibility guidelines set out in the DAFF Scheme.
The Determination does not explicitly outline specific offences, penalties, or consequences for breaches. However, any breach of the terms of the Determination could potentially lead to incorrect assessments of income support payments. For instance, if the DVA were to mistakenly include the exempted payment as ordinary income, this could result in the reduction or cessation of income support payments to the veteran, contrary to the intent of the Determination. While the Determination itself does not specify penalties, any such errors could be subject to review and correction by the DVA, and may also be subject to the general provisions of the VEA and other related legislation, which could include financial penalties or the need to repay any incorrectly paid benefits.
In conclusion, the Veterans’ Entitlements (Exempt Lump Sum – Exceptional Circumstances Exit Grant) Determination 2008 ensures that eligible veterans who receive an Exceptional Circumstances Exit Grant under the DAFF Scheme will not have their income support payments adversely affected by this grant. The Determination places the onus on both the DVA and DAFF to ensure that the payments are correctly identified and processed. While the Determination does not specify penalties for non-compliance, any incorrect application could lead to the need for corrective action to ensure the veteran receives the correct level of support.