Veterans’ Entitlements Income (Exempt Lump Sum - income received after end of market-linked income stream term) Determination No. R25 of 2004

Overview

The Veterans’ Entitlements Income (Exempt Lump Sum—income received after end of market-linked income stream term) Determination No. R25 of 2004 was introduced to address the issue of how to treat residual balances from market-linked income streams for veterans receiving service pensions or income support supplements under the Veterans’ Entitlements Act 1986 (VEA). This legislative instrument was enacted by the Repatriation Commission, a body established under the VEA, and it specifies that certain amounts received by veterans from market-linked income streams are exempt lump sums, thereby not being considered as ordinary income for the purposes of determining their eligibility for additional benefits. The policy objective is to ensure that veterans who have completed their market-linked income streams are not unfairly disadvantaged in their receipt of income support supplements or service pensions due to the receipt of residual balances.

Scope and Application

The Veterans’ Entitlements Income (Exempt Lump Sum—income received after end of market-linked income stream term) Determination No. R25 of 2004 applies to beneficiaries of a market-linked income stream who are also recipients of a service pension or an income support supplement under the Veterans’ Entitlements Act 1986. This Determination specifies that any residual balance in the account of the market-linked income stream, paid to the beneficiary within 28 days of the end of the income stream’s term, is an exempt lump sum for the purposes of the definition of "ordinary income" under the Act. The determination comes into effect from the date it is signed by the Commission delegate and is intended to provide clarity and certainty regarding the tax treatment of these lump sum payments for eligible veterans. There are no exclusions or exemptions explicitly stated within the Determination itself, though it operates under the broader framework of the Veterans’ Entitlements Act and associated regulations.

Key Provisions

The main operative sections of this determination (sections 2.1.2 and 2.2.1) define what constitutes an exempt lump sum under the Veterans’ Entitlements Act 1986 (VEA). Specifically, an amount or class of amounts received by a beneficiary of a market-linked income stream is considered an exempt lump sum if the beneficiary is also receiving a service pension or income support supplement and the residual balance in the account is paid within 28 days of the end of the market-linked income stream’s term. This exempt lump sum applies from the date it is received. The obligations and requirements imposed by this determination are primarily on the beneficiaries of market-linked income streams and the relevant financial institutions or entities responsible for managing these streams. The beneficiaries must ensure they are receiving a service pension or income support supplement when they receive the residual balance. Financial institutions must adhere to the provisions of clause 3 of Schedule 6 of the Superannuation Industry (Supervision) Regulations 1994, ensuring the residual balance is paid within the specified timeframe. There are no explicit offences, penalties, or civil/criminal consequences outlined in this determination for breaches of its provisions. However, non-compliance with the terms of the market-linked income stream or the Superannuation Industry (Supervision) Regulations 1994 could potentially lead to issues under those respective frameworks. Given the nature of this determination as a legislative instrument, the primary focus is on ensuring that the defined exempt lump sums are correctly identified and applied to maintain the integrity of the veterans' entitlement benefits.