EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Murray-Darling Basin Small Block Irrigators Grant) Determination
Instrument No. R8/2009
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 attached 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 Murray-Darling Basin Small Block Irrigators Grant is a one-off payment to eligible irrigators on blocks of 15 hectares or less. The grant is part of an exit package to assist small block irrigators to remain in the community while selling their water entitlements to the Commonwealth, and to leave irrigation farming for at least five years.
The Grant is part of the Water for the Future plan. The maximum value of the grant is $150,000 for irrigators with net assets of $350,000 or less. The grant is taxable and tapers by $2 for every $3 over the asset limit with no grant payable where net assets of $575,000 are reached. Funding is only available to irrigators who own no more than 15 hectares of farm land and sell all their water entitlement to the Commonwealth.
Irrigators or partners of irrigators who have previously received a Government
Re-establishment or Exit Type Grant are ineligible for the Murray-Darling Basin Small Block Irrigators Grant.
The effect of this instrument is that people who are in receipt of an income support payment under the VEA will not have their income support payment reduced because of receiving a Murray-Darling Basin Small Block Irrigators Grant (or part thereof).
Consultation
In the interest of consistency of approach, the Department has worked closely with the Department of Families, Housing, Community Service 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 relevant instrument under social security law operates from 16 December 2008.
The attached instrument is beneficial to eligible Department of Veterans’ Affairs income support recipients because it exempts a Murray-Darling Basin Small Irrigators Grant from the VEA income test. Public consultation was therefore seen as unnecessary.
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Murray-Darling Basin Small Block Irrigators Grant) Determination Instrument No. R8/2009 was enacted in 2009 to address the issue of means-testing for veterans receiving income support payments who also receive the Murray-Darling Basin Small Block Irrigators Grant. This determination was made under paragraph 5H(12)(c) of the Veterans’ Entitlements Act 1986 (VEA) by the Parliament of Australia. The policy objective is to ensure that eligible veterans who receive this grant, which is intended to assist small-block irrigators in transitioning out of irrigation farming, are not subject to a reduction in their income support payments due to the receipt of this grant. By deeming the grant an exempt lump sum, the determination protects the income of eligible veterans and aligns the approach with similar measures under social security law.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Murray-Darling Basin Small Block Irrigators Grant) Determination, which is governed by Instrument No. R8/2009, outlines the conditions under which a Murray-Darling Basin Small Block Irrigators Grant is considered an exempt lump sum under the Veterans’ Entitlements Act 1986 (VEA). This determination ensures that recipients of service pensions or income support supplements under the VEA will not have their payments reduced as a result of receiving this grant. This applies specifically to veterans or their partners who own small irrigation blocks of 15 hectares or less and are selling their water entitlements to the Commonwealth. The grant is designed to help these small-scale irrigators exit the industry and is part of the Water for the Future plan, with a maximum value of $150,000 for those with net assets of $350,000 or less. The grant decreases by $2 for every $3 over the asset limit, with no grant payable once net assets reach $575,000. The instrument does not apply to those who have previously received a Government Re-establishment or Exit Type Grant. The scope of this determination is closely aligned with a similar instrument under social security law, ensuring a consistent approach in the application and effect of these grants across different support systems.
Key Provisions
The Veterans’ Entitlements Income (Exempt Lump Sum – Murray-Darling Basin Small Block Irrigators Grant) Determination 2009 (Instrument No. R8/2009) outlines specific provisions for the exemption of a one-off payment, the Murray-Darling Basin Small Block Irrigators Grant, from ordinary income for means-testing under the Veterans’ Entitlements Act 1986 (VEA) (section 1). This determination specifies that the grant, which is part of a broader Water for the Future plan, is exempt from the income assessment for the purposes of service pension or income support supplement (section 1). The determination explicitly states that the grant amount specified in Part 2 of the Schedule is deemed an exempt lump sum under the definition of ‘ordinary income’ in subsection 5H(1) of the VEA (section 1).
The obligations imposed by this determination primarily concern eligibility and the conditions under which the grant can be received. To be eligible, an irrigator must own no more than 15 hectares of farm land and sell all their water entitlement to the Commonwealth. Additionally, individuals or their partners who have previously received a Government Re-establishment or Exit Type Grant are ineligible for this particular grant (section 1). The grant is designed as a one-off payment to assist eligible small block irrigators in selling their water entitlements to the Commonwealth and leaving irrigation farming for at least five years. The maximum value of the grant is set at $150,000 for those with net assets of $350,000 or less, tapering by $2 for every $3 over the asset limit and becoming null when net assets reach $575,000 (section 1).
There are no specific offences or penalties outlined in the determination itself. However, the context of the VEA and the general legal framework within which this determination operates implies that any breach of the conditions or misuse of the grant could lead to civil or criminal consequences. For instance, under the VEA, there may be provisions for the recovery of payments made in error or under false pretences, which could result in financial penalties or other legal actions. Furthermore, if the grant is used to circumvent the intent of the VEA, it could lead to administrative penalties or sanctions against the individual or entity involved. The maximum penalties would depend on the specific nature of the breach and the applicable provisions of the VEA or other relevant legislation.