EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Superannuation Co-contribution Amounts) Determination 2016
EMPOWERING PROVISION
Paragraph 5H(12)(c) of the Veterans’ Entitlements Act 1986 (VEA).
PURPOSE
The attached instrument (2015 No.R69) revokes and remakes Instrument no R7/2006 dated 8 February 2006 for the purposes of the sunsetting exercise. On 1 April 2016 the instrument will “sunset” (expire) unless re-made.
Subsection 26(1B) of the Legislative Instruments Act 2003 provides that the requirement for an explanatory statement to explain the purpose and operation of an instrument may be met by an explanation that the instrument replaces a specified earlier legislative instrument or a specified provision of an earlier legislative instrument and is the same in substance as the specified instrument or provision.
The Department of Veterans’ Affairs (DVA) has reviewed the instrument and found that it is still required. Accordingly, the instrument has been re-made and aside from updating and streamlining is the same in substance as the instrument it replaces.
The attached instrument is known as an “exempt lump sum instrument”. An amount determined in this instrument to be an exempt lump sum means it is not assessed as income for means-tested pensions.
Exempt lump sums tend to be payments made as compensation or to alleviate hardship and it would be unfair to indirectly reduce them by reducing the amount of pension a person receives.
The Superannuation (Government Co-contribution for Low Income Earners) Act 2003 provides for the payment of a Government superannuation co-contribution to qualifying low-income earners who made eligible personal superannuation contributions from 1 July 2003. To qualify a person must have an annual income below the higher co-contribution income threshold, be making eligible personal superannuation contributions and have employer-supported superannuation.
The attached instrument provides for the exemption of superannuation co-contribution amounts from the income assessment of the person’s or the person’s partner’s service pension or income support supplement and therefore, exempt the payments from the means test and ensure that the amount is not treated as income.
CONSULTATION
There has been no consultation because the instrument is being re-made in essentially the same form and benefits are not being affected. Consultation was considered unnecessary.
RETROSPECTIVITY
None.
DOCUMENTS INCORPORATED-BY-REFERENCE
No.
REGULATORY BURDEN
This instrument does not impose a regulatory impact on business, community organisations or individuals, and, as such, has nil or minor regulatory impact
HUMAN RIGHTS STATEMENT
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
The attached legislative instrument does engage an applicable right or freedom. It relates to the Right to Social Security contained in article 9 of the International Covenant on Economic Social and Cultural Rights
The Right to Social Security is engaged and promoted by the attached instrument in that the instrument re-makes an instrument that ensure the superannuation co-contribution amounts are not treated as income for the purposes of the means-test for certain pensions, thereby maintaining the level of pension a person receives.
Under the VEA certain pensions are subject to a means-test which assesses the income and assets of the pensioner to determine the level of pension the person is entitled to. Where a pensioner receives the exempt lump sum in question, prima facie the payment is ordinary income and would be assessed in the means test for the pension which could result in a reduced pension.
However, under subsection 5H(12)(c) of the VEA, payments such as superannuation co-contribution amounts can be exempted from the means-test. This provision has been utilised in the attached instrument to exempt the relevant amount from the means test.
Conclusion
The attached legislative instrument is considered to be compatible with the human right to social security because it ensures certain pensions are maintained at their existing levels and are not unfairly reduced by the payment of the superannuation co-contribution amounts.
Mark Harrigan
Assistant Secretary, as delegate of The Repatriation Commission
Rule-Maker
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Superannuation Co-contribution Amounts) Determination 2016 was enacted to address a gap in the treatment of superannuation co-contribution amounts for veterans receiving means-tested pensions. This determination, which updates an earlier instrument from 2006, ensures that superannuation co-contributions do not affect the income assessment for certain pensions and income support supplements. By exempting these contributions from the means test, the determination maintains the level of pension payments, thus aligning with the policy objective of providing financial stability to veterans. The instrument was re-made by the Department of Veterans’ Affairs to comply with the sunsetting provisions of the Legislative Instruments Act 2003, ensuring continuity in the exemption of these specific payments from the means test for veterans’ pensions.
This determination engages the right to social security by ensuring that superannuation co-contribution amounts do not unfairly reduce pension payments for veterans, thereby upholding their entitlement to a stable income. The re-making of this instrument reflects the commitment to maintaining the integrity of the pension system while supporting low-income earners through government co-contributions. The re-made instrument retains the same substantive benefits as its predecessor, with no changes to the exemption criteria or the regulatory impact, ensuring that the rights and entitlements of veterans remain protected.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Superannuation Co-contribution Amounts) Determination 2016 applies to veterans and their partners who receive service pensions or income support supplements under the Veterans’ Entitlements Act 1986. Specifically, it targets the exemption of superannuation co-contribution amounts from the income assessment of these pensions and supplements. This exemption ensures that such amounts are not treated as income for the purposes of the means test, thereby preventing any unfair reduction in pension entitlements. The instrument applies nationally across Australia and is administered by the Department of Veterans’ Affairs. Notably, the determination does not impose any regulatory burden on businesses, community organisations, or individuals. Furthermore, the instrument engages with the human right to social security by ensuring that certain pensions are maintained at their existing levels, thus protecting the financial stability of eligible veterans and their partners.
Key Provisions
The Veterans’ Entitlements Income (Exempt Lump Sum – Superannuation Co-contribution Amounts) Determination 2016 primarily operates under section 5H(12)(c) of the Veterans’ Entitlements Act 1986 (VEA). This legislation ensures that certain superannuation co-contribution amounts are exempt from the means test for veterans' pensions. This means that these payments are not assessed as income for the purposes of determining the level of pension a veteran or their partner receives. The determination applies to superannuation co-contribution amounts made to low-income earners under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003.
This Act imposes certain obligations on the Department of Veterans’ Affairs (DVA) and veterans. The DVA must ensure that the instrument is maintained and updated as necessary, which has been done in this case to keep the instrument in effect. Veterans and their partners who receive service pensions or income support supplements must declare any superannuation co-contribution amounts to the DVA to ensure these amounts are not incorrectly assessed as income. Failure to do so could result in an over or underpayment of pension benefits.
The determination itself does not explicitly outline offences or penalties for non-compliance with its provisions. However, under the VEA and the Superannuation (Government Co-contribution for Low Income Earners) Act 2003, there are potential civil and criminal penalties for providing false or misleading information to the DVA. Such penalties could include fines or imprisonment, depending on the severity and intent behind the non-compliance. Ensuring accurate reporting and compliance with these legislative instruments is crucial to avoid any adverse consequences.