EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Payments to former residents in South Australian State care) Determination
Instrument No. R10/2011
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 (collectively referred to as “income support payment”).
Background
On 29 January 2010, the State of South Australia announced a scheme, to make ex-gratia payments under the Victims of Crime Act 2001 for individuals who, as children, were abused while in State care.
The purpose of this instrument is to ensure that an ex-gratia payment made by the State of South Australia under the Victims of Crime Act 2001 to individuals who have suffered sexual abuse as children while they were in State care, 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 payment under the VEA will not have their payment reduced because of receiving an ex gratia payment as the ex gratia 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 ex gratia payments made under the Victims of Crime Act 2001 from the VEA income test. Public consultation was therefore regarded as unnecessary.
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Payments to former residents in South Australian State care) Determination 2011 was enacted to address the need for ensuring that ex-gratia payments made by the State of South Australia to former residents who suffered abuse in State care are exempt from being considered as ordinary income under the Veterans’ Entitlements Act 1986 (VEA). This was introduced in response to the South Australian scheme announced on 29 January 2010, which involved ex-gratia payments under the Victims of Crime Act 2001 for those who were abused as children in State care. The purpose of this determination is to prevent the reduction of income support payments under the VEA for recipients who receive such ex-gratia payments. The policy objective is to ensure that these payments do not affect the income assessment for veterans receiving service pensions or income support supplements. The instrument was developed through consultation between the Department and the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), and public consultation was deemed unnecessary due to its direct benefit to the affected individuals.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Payments to former residents in South Australian State care) Determination 2011 applies to individuals who have received ex-gratia payments under the Victims of Crime Act 2001 from the State of South Australia. These payments are specifically for individuals who suffered sexual abuse as children while they were in State care. The Act ensures that such payments are considered exempt lump sums for the purposes of means-testing under the Veterans’ Entitlements Act 1986. This means that recipients of income support payments, such as a service pension or an income support supplement, will not have their payments reduced as a result of receiving these ex-gratia payments. The geographic reach of this Act is limited to the Commonwealth of Australia, specifically targeting individuals who were in State care in South Australia and now receive income support payments under the VEA. No exclusions, exemptions, or thresholds are specified in the text, and the instrument is intended to align with a similar instrument under the social security law, as confirmed through consultation between relevant departments.
Key Provisions
The primary operative sections of the Determination (F2011L00179) clarify that specific payments made under the Victims of Crime Act 2001 by the State of South Australia to former residents who suffered abuse while in State care are considered exempt lump sums under the Veterans’ Entitlements Act 1986 (VEA). This means that such payments will not be counted as ordinary income for the purposes of means-testing for veterans’ income support payments, as outlined in subsection 5H(12)(c) of the VEA (paragraph 1). The specific amount that qualifies as an exempt lump sum is detailed in Part 2 of the Schedule to the Determination (paragraph 2).
The Act imposes obligations on the relevant parties, including the requirement for the Department to ensure that the payments made under the Victims of Crime Act 2001 are recognised as exempt lump sums. This involves ensuring that these payments do not affect the income assessment of individuals receiving income support payments under the VEA, such as service pensions or income support supplements (paragraph 3). The Department has coordinated closely with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to align this Determination with similar provisions under social security law (paragraph 4).
Breaches of the provisions of this Determination could potentially lead to improper classification of the payments, thereby affecting the income support payments of veterans or their partners. While the Determination does not explicitly detail specific offences, penalties, or consequences for non-compliance, any failure to adhere to the provisions could result in the affected individuals facing incorrect income assessments, which could have significant implications for their entitlement to income support payments (paragraph 5). The maximum penalties for such breaches, if applicable under other sections of the VEA or associated legislation, would need to be considered in the context of broader regulatory frameworks.