4.13.1.25 Treatment of Specific Compensatory Type Payments

This topic

This topic contains general information on the following:

  • treatment of 'approved' personal care support schemes,
  • treatment of F-111 ex gratia payments,
  • compensation paid where the compensation claimant has died,
  • deceased dependant payments,
  • compensation for war injuries,
  • treatment of Military Compensation Special Rate Disability Pension safety net payment, and
  • compensation as a result of Australian Defence Force Reserve activity.

Treatment of approved personal care support schemes

Personal care payments paid alone are not compensation because they do not relate to earnings loss or capacity to earn. Personal care payments are ordinary income except where exempted.

There are a number of personal care support schemes that have been exempted under SSAct section 35A. However, 2 of these approved personal care support schemes are provided by the following 2 compensation authorities:

  • Tasmanian Motor Accident Insurance Board (MAIB) (Future Care Payments), and
  • Vic Transport Accident Commission (TAC) (Attendant Care Service, and Post Acute Service).

These payments have been exempted from being treated as ordinary income.

However, personal care payments made as part of periodic compensation payments and lump sum compensation payments that contain amounts for earnings loss or capacity to earn remain part of the compensation payment and are subject to the compensation provisions.

Act reference: SSAct section 35A Personal Care Support, section 8(8) Excluded amounts-general - see (zi), Part 3.14 Compensation recovery, section 17 Compensation recovery definitions

Policy reference: SS Guide 4.3.2.31 Income Exempt from Assessment - Specifically Approved, 1.1.C.240 Compensation, 1.1.E.10 Economic loss compensation, 4.13 Compensation

Treatment of F-111 ex gratia payments

Lump sum ex gratia payments will be made to up to 700 maintenance workers and contractors who were exposed to toxic chemicals while desealing and/or resealing F-111 fuel tanks for the Australian Defence Force between the years 1973 and 2000.

These payments do not contain any economic loss and are not paid for a personal injury and as such are not compensation for the purpose of the SSAct.

A determination has been made to exempt these payments from assessment for income test purposes. It will count under the assets test if it is invested in an assessable asset, as would be any income derived from its investment.

Act reference: SSAct section 17(2) Compensation, section 8(11) An amount received by a person is an exempt lump sum if….

Policy reference: SS Guide 4.3.2.35 Income Exempt from Assessment - s 8(11) Exempt Lump Sums

Compensation paid where the compensation claimant has died

In some situations, compensation claims may survive the death of the compensation claimant. If this is the case the payment is usually made to the deceased estate.

Compensation notices can only be served on living persons or insurers who are liable to pay people, not estates.

However if a valid notice has been issued prior to the death of a compensation claimant the compensation recovery provisions DO apply for a settlement of either a lump sum or periodic payment.

If a valid notice has NOT been issued prior to the death of a compensation claimant the compensation recovery provisions DO NOT apply.

Where the compensation provisions do not apply, debt recovery may proceed against the deceased's estate under SSAct Chapter 5.

In some cases the compensation may be held in a statutory trust for the deceased person's dependants. Any interest paid on funds held by the statutory body MAY affect the dependent's entitlement to a pension or benefit.

Act reference: SSAct Part 3.14 Compensation recovery, Chapter 5 Overpayments and debt recovery

Policy reference: SS Guide 6.4.1 Compensation Recovery in Specific Circumstances

Deceased dependant payments

A statutory body usually holds, on behalf of the deceased person's dependants, awards of worker's compensation or damages made after the person's death. Any interest paid on funds held by the statutory body MAY affect the dependent's entitlement to a pension or benefit.

In some jurisdictions, pensions are paid to the surviving partner of a deceased worker by the workers' compensation authority and transport accident authorities. These pensions while compensatory in nature are not regarded as compensation and should be assessed as ordinary unearned income for the recipient.

Some schemes provide for a calculation of a minimum rate taking into account the children in the care of the surviving partner (e.g. Victorian Transport Accident Commission's Surviving Partner Periodical Payments). Despite this rate calculation the payment is still made for the surviving partner and not for or in respect of the children.

Some schemes may make specific provision for a lump sum payment or pension to be paid for or in respect of children who were formerly dependant on the deceased (e.g. Comcare). These payments may be made to the children's carer who is usually the surviving partner. As these payments are made in respect of the children, they are NOT treated as income for social security purposes. However, they affect the child income deductions for those children.

Example: The Dust Diseases Board pays a widow a lump sum payment for a period in the past and then pays ongoing periodic payments. The lump sum is assessed as per 4.13.1.20 and the ongoing periodic payment is treated as ordinary income.

Act reference: SSAct section 1064 Rate of age, disability support, wife pensions and CP (people who are not blind), section 1068A Rate of parenting payment-pension PP (single), section 8(8) Excluded amounts-general

Policy reference: SS Guide 4.13.1.20 Assessment of Compensatory Type Payments, 4.2.1.20 Additional Free Area for Dependent Children, 6.4.1 Compensation Recovery in Specific Circumstances

Compensation for war injuries

Compensation payments for civil construction corps, civil defence workers and civilians who suffered war injuries ARE treated as income for social security purposes. However, some one-off ex gratia payments to prisoners of war or their partners are exempted under section 8(11) and are NOT assessed as income. See paragraph 'Compensation/compensatory payments assessed as ordinary unearned income' in 4.13.1.20.

Act reference: SSAct section 8(11) An amount received by a person is an exempt lump sum if…

Policy reference: SS Guide 4.13.1.20 Assessment of Compensatory Type Payments, 4.3.2.35 Income Exempt from Assessment - s 8(11) Exempt Lump Sums

Treatment of Military Compensation Special Rate Disability Pension safety net payment

The Special Rate Disability Pension safety net payment (SRDP) under the Military Rehabilitation and Compensation Act 2004 (MRCA) will be paid from 1 July 2004. The amount of SRDP payable is assessed as ordinary (unearned) income rather than compensation.

Policy reference: SS Guide 4.3.5 Income from DVA

Compensation as a result of Australian Defence Force Reserve activity

Compensation as a result of Australian Defence Force Reserve activity (other than compensation in respect of continuous full-time service) is exempt from the provisions of Part 3.14. This is irrespective of whether or not the compensation recipient, or their partner, was in receipt of a CAP at the time of the compensable event. It is also exempt income for the purposes of the ordinary income test.

However, any compensation payments made in respect of an inability to attend the usual workplace (including any such payments paid by the Defence Force) are NOT exempt and should be treated as compensation.

Act reference: SSAct section 8(8)(w) Excluded amounts-general, Part 3.14 Compensation recovery

Policy reference: SS Guide 4.3.2 Income Exempt from Assessment

Last reviewed: 21 September 2015