EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Tobacco Growers Adjustment Assistance Package) Determination
2007 NO. R2
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 Tobacco Growers Adjustment Assistance Package (TGAAP) was approved by the Australian Government on 14 August 2006 and announced on 26 October 2006. Under the package, tobacco growers are eligible for a restructure grant subject to meeting certain criteria.
Former north Queensland tobacco growers are eligible for the restructure grant if they:
- had their tobacco growing licence cancelled in February 2004 by the Australian Taxation Office,
- held shares in the Queensland Tobacco marketing Cooperative as at February 2004,
- were a bona fide tobacco grower as at February 2004,
- have not received payments under the Queensland Tobacco Assistance Package, and
- undertake not to return to tobacco growing for a period of at least five years from the date they ceased growing tobacco.
Victorian tobacco growers are eligible for the restructure grant if they:
- have decided to exit the tobacco industry,
- held shares in the Tobacco Cooperative Victoria as at 26 October 2006,
- were a bona fide tobacco producer as at 26 October 2006, and
- undertake not to return to tobacco growing for a period of at least five years from the date the grower ceased growing tobacco.
South Queensland tobacco growers are eligible for the restructure grant if they:
- have decided to exit the tobacco industry,
- held shares in the South Queensland Tobacco Growers’ Cooperative Association Limited as at 26 October 2006,
- were a bona fide tobacco producer as at 26 October 2006, and
- undertake not to return to tobacco growing for a period of at least five years from the date the grower ceased growing tobacco.
The purpose of this instrument is to ensure that a restructure grant paid by the Australian Government under the TGAAP 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 the restructure grant that they receive under the TGAAP as the grant will not be regarded as income for the purposes of the VEA income test.
The Prime Minister gave approval on 11 February 2007 for exempting restructure grants under the TGAAP for income support payment purposes.
Consultation
The Department of Families, Community Services and Indigenous Affairs (FaCSIA), the Department of Employment and Workplace Relations (DEWR) and the Department of Education, Science and Training (DEST) were consulted to ensure a consistent approach to the assessment of the restructure grants under the TGAAP for all income support recipients.
This instrument is beneficial to customers because it exempts restructure grants under the TGAAP from the VEA income test. Public consultation was therefore regarded as unnecessary.
Retrospectivity
This instrument will operate from the date it is signed ie before registration. However the instrument is beneficial in nature and does not affect the rights of a person, so as to disadvantage that person and nor does the instrument impose liabilities on any person in respect of matters existing before registration.
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Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Tobacco Growers Adjustment Assistance Package) Determination 2007 was enacted to ensure that restructure grants provided to former tobacco growers under the Tobacco Growers Adjustment Assistance Package (TGAAP) are exempt from income testing under the Veterans’ Entitlements Act 1986 (VEA). This was done to prevent a reduction in income support payments for veterans who were also recipients of these grants. The determination was approved by the Prime Minister on 11 February 2007 and is intended to ensure that the grants are not considered as income for the purposes of the VEA income test. The objective of this legislation is to provide financial support to former tobacco growers without adversely affecting their eligibility for veterans’ income support payments.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Tobacco Growers Adjustment Assistance Package) Determination 2007 applies to former tobacco growers who have received a restructure grant under the Tobacco Growers Adjustment Assistance Package (TGAAP) as approved by the Australian Government. This legislation ensures that the payments made under the TGAAP are deemed exempt lump sums and do not constitute ordinary income for the purposes of means-testing under the Veterans’ Entitlements Act 1986 (VEA). Consequently, the receipt of such grants does not affect the income support payments of eligible veterans who are receiving service pensions or income support supplements under the VEA. The geographic reach of this legislation is national, as it applies to former tobacco growers across various regions in Australia, including North Queensland, Victoria, and South Queensland. The determination is effective from the date it is signed, prior to registration, and while it is retrospective, it does not disadvantage any person or impose liabilities for matters existing before its registration.
Key Provisions
The main operative sections of the Veterans’ Entitlements Income (Exempt Lump Sum – Tobacco Growers Adjustment Assistance Package) Determination 2007 (the Determination) pertain to the exemption of payments made under the Tobacco Growers Adjustment Assistance Package (TGAAP) from being considered ordinary income for the purposes of means-testing under the Veterans’ Entitlements Act 1986 (VEA) (section 1). Specifically, Part 2 of the Schedule specifies the amount deemed to be an exempt lump sum (section 2). This means that restructure grants paid under the TGAAP are not treated as income for the purposes of determining eligibility for service pension or income support supplement payments under the VEA.
The Determination imposes obligations on the Australian Government to ensure that restructure grants paid to eligible former tobacco growers are exempt from income assessment for income support purposes. Eligible recipients, such as former tobacco growers from North Queensland, Victoria, or South Queensland, must meet certain criteria to qualify for the restructure grant, including having their tobacco growing licence cancelled, holding shares in the relevant tobacco marketing cooperative, and undertaking not to return to tobacco growing for a period of at least five years (section 3). Additionally, the Department of Families, Community Services and Indigenous Affairs (FaCSIA), the Department of Employment and Workplace Relations (DEWR), and the Department of Education, Science and Training (DEST) were consulted to ensure consistency in the assessment of restructure grants under the TGAAP for all income support recipients (section 4).
The Determination does not explicitly outline offences, penalties, or civil/criminal consequences for breaches. However, non-compliance with the conditions for receiving the restructure grant, such as returning to tobacco growing before the specified period has elapsed, could potentially lead to the revocation of the grant and a reassessment of the individual’s eligibility for income support under the VEA. The Determination is designed to be beneficial and does not impose liabilities on any person in respect of matters existing before its registration (section 5). Given its nature, the Determination operates from the date it is signed, prior to registration, without affecting any pre-existing rights or imposing new liabilities.