EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum –Farm Exit Support Grants) Determination
Instrument No. R48/2010
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 Farm Exit Support Program is a farmer specific exit program offering one-off exit assistance to those farmers within the pilot region that sell their farm enterprise and leave farming. It includes the Farm Exit Support Grant, the Farm Exit Support Advice and Re-training Grant, and the Farm Exit Support Relocation Grant.
The purpose of this instrument is to ensure that a Farm Exit Support Program grant 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 grant under the Farm Exit Support Program because the payment will not be regarded as income for the purposes of the VEA income test.
Consultation
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 proposed to be executed under the social security law.
This instrument is beneficial to customers because it exempts payments made under the Farm Exit Support Program from the VEA income test. Public consultation was therefore regarded as unnecessary.
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Farm Exit Support Grants) Determination Instrument No. R48/2010 was enacted to address a specific issue regarding the assessment of income for veterans receiving benefits under the Veterans’ Entitlements Act 1986. This instrument was introduced to ensure that payments made under the Farm Exit Support Program are not considered ordinary income for the purposes of income testing, thereby protecting the income support payments of veterans who participate in the program. This determination was made to avoid any reduction in their income support payments due to the receipt of grants under the Farm Exit Support Program. The policy objective is to provide financial support to farmers exiting the industry without negatively impacting their existing veteran entitlements. The instrument was developed in consultation with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and was deemed to be beneficial without the need for public consultation.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Farm Exit Support Grants) Determination 2010 applies to individuals who are recipients of service pensions or income support supplements under the Veterans’ Entitlements Act 1986 and who are also recipients of grants under the Farm Exit Support Program. This instrument ensures that payments made under the Farm Exit Support Program, which includes the Farm Exit Support Grant, the Farm Exit Support Advice and Re-training Grant, and the Farm Exit Support Relocation Grant, are exempt from being considered ordinary income for the purposes of income assessment under the VEA. This exemption prevents the reduction of income support payments for veterans due to the receipt of these grants. The instrument operates within the Commonwealth jurisdiction and is specifically targeted at farmers within the designated pilot region who sell their farm enterprise and exit the farming industry. The exclusion of these grants from ordinary income is intended to provide financial assistance without penalising the veterans' income support entitlements. Subordinate instruments may further detail the scope and application of this determination, but the primary focus remains on ensuring the specified grants are exempt from the income test under the VEA.
Key Provisions
The main operative sections of this Determination (Part 2 of the Schedule) specify the amount that is considered an exempt lump sum for the purposes of the Veterans’ Entitlements Act 1986 (VEA). This ensures that payments made under the Farm Exit Support Program are not treated as ordinary income for means-testing under the VEA. The amount specified in the Determination is deemed to be an exempt lump sum, which means that recipients of service pensions or income support supplements under the VEA will not experience a reduction in their payments due to receiving a grant from the Farm Exit Support Program.
The Act imposes certain obligations on the parties it governs. The Department of Veterans’ Affairs must ensure that the payments made under the Farm Exit Support Program are accurately classified as exempt lump sums. This classification is crucial to prevent any reduction in income support payments for recipients of service pensions or income support supplements under the VEA. Additionally, the Department must work closely with other relevant departments, such as the Department of Families, Housing, Community Services and Indigenous Affairs, to ensure consistency in the application of similar instruments across different legislative frameworks.
There are no specific offences or penalties outlined in this Determination for breaches of its provisions. However, the failure to correctly classify payments under the Farm Exit Support Program as exempt lump sums could lead to incorrect means-testing outcomes under the VEA. This could result in financial hardship for veterans and their families who are reliant on income support payments. Given the nature of the Determination, the primary consequence of a breach would likely be administrative in nature, with efforts made to rectify any incorrect income assessments to ensure that affected parties receive the correct level of support.
This Determination is designed to provide clarity and certainty to veterans who are participating in the Farm Exit Support Program. By exempting certain payments from the income assessment process under the VEA, it ensures that veterans who are exiting farming will not face financial penalties as a result of receiving support. The close collaboration between the Department of Veterans’ Affairs and other relevant departments highlights the coordinated effort to support veterans through comprehensive and consistent legislative measures.