EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Remote Area Family Day Care Start Up Payment) Determination
Instrument No. R3/2008
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 Remote Area Family Day Care Start Up Payments (a one-off payment of up to $5,000 per recipient) on behalf of the Commonwealth to persons as part of the 2007-08 Federal Budget Child Care Investment Measure. These payments will be made in order to assist that person to undertake required changes to their home or its immediate surrounds in order for them to provide quality child care.
The purpose of this instrument is to ensure that a payment received under the Remote Area Family Day Care Start Up Payment under the 2007-08 Federal Budget Child Care Investment Measure 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 Remote Area 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 24 July 2007 under the social security law.
This instrument is beneficial to pensioners because it exempts from the VEA income test a Remote Area Family Day Care Start Up Payment under the
2007-08 Federal Budget Child Care Investment Measure made by FaHCSIA. Public consultation was therefore seen as unnecessary.
Retrospectivity
FaHCSIA has already exempted Remote Area Family Day Care Start Up Payments. The relevant instrument under the social security law operates from 24 July 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 – Remote Area Family Day Care Start Up Payment) Determination 2008, enacted as Instrument No. R3/2008, addresses a specific gap in the income assessment process for veterans and their partners who receive income support payments. This determination ensures that the Remote Area Family Day Care Start Up Payment, which is a one-off payment up to $5,000 provided by the Commonwealth to assist in setting up family day care services, does not affect the income assessment under the Veterans’ Entitlements Act 1986 (VEA). The policy objective of this instrument is to exempt such payments from the income test, thereby preventing a reduction in the service pension or income support supplement of the recipients. Enacted by the Commonwealth, the instrument was introduced to ensure consistency with a similar measure under the social security law, thus protecting the income support of eligible veterans without the need for public consultation.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Remote Area Family Day Care Start Up Payment) Determination 2008 aims to ensure that certain payments are not considered ordinary income for the purposes of means-testing under the Veterans’ Entitlements Act 1986. Specifically, the Determination classifies Remote Area Family Day Care Start Up Payments as exempt lump sums, thereby exempting them from the income assessment of the person’s or their partner’s service pension or income support supplement. This legislative instrument applies to individuals who receive these payments, which are intended to assist with modifications to a person's home to provide quality child care. The payments are made by the Department of Families, Housing, Community Services and Indigenous Affairs as part of the 2007-08 Federal Budget Child Care Investment Measure. The Determination ensures that pensioners will not have their income support payments reduced due to the receipt of these start-up payments. This instrument is effective from the same date as a similar instrument under the social security law, which operates from 24 July 2007.
Key Provisions
The Veterans' Entitlements Income (Exempt Lump Sum – Remote Area Family Day Care Start Up Payment) Determination (Instrument No. R3/2008) plays a pivotal role under the Veterans’ Entitlements Act 1986 (VEA), specifically addressing the nature of certain payments that veterans and their partners may receive. Section 5H(12)(c) of the VEA sets the framework for deeming specific payments as exempt lump sums, thereby excluding them from the means-testing process. The Determination explicitly states that the specified payment, as detailed in Part 2 of the Schedule, is an exempt lump sum under the definition of 'ordinary income' in subsection 5H(1) of the VEA. This means that the Remote Area Family Day Care Start Up Payment, which is a one-off payment of up to $5,000, will not be considered as income when assessing the eligibility for service pensions or income support supplements.
This legislation imposes certain obligations on the parties involved. The Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) is tasked with administering these payments to eligible individuals as part of the 2007-08 Federal Budget Child Care Investment Measure. These payments are intended to support individuals in making necessary changes to their homes to provide quality child care. The Determination ensures that these payments are not treated as ordinary income for the purposes of the VEA, thus safeguarding the income support payments of the recipients. Additionally, the Department has coordinated closely with FaHCSIA to ensure consistency in the application of this instrument with a similar instrument under social security law, which operates from 24 July 2007.
The Determination also delineates the consequences of non-compliance with its provisions. While the document does not specify explicit criminal or civil penalties for breaching its terms, it is clear that any misuse of the designated exempt lump sum could lead to inaccurate assessments of income support eligibility under the VEA. This could result in improper payments or the withholding of rightful income support from veterans and their partners. The Determination’s primary goal is to protect the financial stability of recipients by ensuring that these specific payments do not negatively impact their entitlement to service pensions or income support supplements. The absence of public consultation underscores the Determination’s reliance on established processes and its alignment with similar legislative measures, ensuring the payments are appropriately managed and benefits are correctly distributed.