EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Family Day Care Start Up Payment) Determination
Instrument No. R2/2008
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 Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) will be making Family Day Care Start Up Payments (a one-off payment of up to $1,500 per recipient) on behalf of the Commonwealth to persons under the 2005 Welfare to Work Budget Package. These payments will be made in order to assist people with meeting the initial costs of setting up a home‑based child care business through Family Day Care.
The purpose of this instrument is to ensure that a payment received under the Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package 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 Family Day Care Start Up Payment 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 21 May 2007 under the social security law.
This instrument is beneficial to pensioners because it exempts from the VEA income test a Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package, made by FaHCSIA. Public consultation was therefore seen as unnecessary.
Retrospectivity
FaHCSIA has already exempted Family Day Care Start Up Payments. The relevant instrument under the social security law operates from 21 May 2007. This instrument is effective from the same date. 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.