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.
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Family Day Care Start Up Payment) Determination 2008, made under the Veterans’ Entitlements Act 1986, aims to address the issue of ensuring that Family Day Care Start Up Payments are not considered ordinary income for the purposes of means-testing under the Act. Enacted by the Parliament of Australia, this instrument seeks to prevent any reduction in income support payments for veterans or their partners who may receive such payments, thereby protecting their financial assistance. The policy objective is to facilitate the establishment of home-based childcare businesses through Family Day Care by ensuring that the initial costs associated with setting up such businesses do not adversely impact the income support payments of eligible individuals.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Family Day Care Start Up Payment) Determination Instrument No. R2/2008, which is attached to the Veterans’ Entitlements Act 1986, seeks to ensure that Family Day Care Start Up Payments provided by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) are classified as exempt lump sums under the Act. This means that these payments will not be considered as ordinary income when assessing the eligibility of individuals for service pensions or income support supplements under the Act. The exemption applies to payments made to assist individuals in meeting the initial costs of establishing a home-based child care business through Family Day Care. This determination applies to persons receiving income support pensions under the Veterans’ Entitlements Act 1986 and ensures that their payments are not reduced due to the receipt of Family Day Care Start Up Payments. The instrument aligns with a similar instrument executed under social security law on 21 May 2007, thereby providing a consistent approach to the exemption of such payments.
Key Provisions
The main operative sections of this Determination (F2008L00251) provide for the exemption of Family Day Care Start Up Payments from the income assessment of service pension or income support supplement under the Veterans’ Entitlements Act 1986 (VEA) (section 1). This is achieved by deeming these payments to be exempt lump sums as specified in the Schedule (section 2). These payments, which are up to $1,500 per recipient, are intended to assist individuals in meeting the initial costs of setting up a home-based child care business through Family Day Care, and are made on behalf of the Commonwealth by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) under the 2005 Welfare to Work Budget Package (section 3). The determination ensures that these payments will not reduce the income support payment of a pensioner, as they will not be considered income for the purposes of the VEA income test (section 4).
The Act imposes obligations on the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to make the Family Day Care Start Up Payments to eligible recipients (section 3). It also requires that these payments be exempt from the income assessment under the VEA, meaning that they do not count as income for the purposes of the VEA income test (section 2). The Act further mandates that the Department consult with relevant stakeholders, although in this case, public consultation was deemed unnecessary due to the consistency with a similar instrument under the social security law (section 5). Additionally, the Act ensures that the Determination is effective from the same date as the relevant instrument under the social security law, which is 21 May 2007 (section 6).
There are no specific offences, penalties, or civil/criminal consequences outlined in the Determination for breach of its provisions. However, any failure by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to comply with the requirements of the Act could potentially result in legal challenges or administrative actions. The primary focus of the Determination is on ensuring that the Family Day Care Start Up Payments are correctly exempted from the income assessment under the Veterans’ Entitlements Act 1986 (VEA) to prevent any reduction in income support payments for eligible recipients.