4.3.5.10 How Income from DVA is Assessed

Summary

This topic shows the treatment of DVA payments as income for social security purposes. This topic covers the following matters:

  • income treatment of DVA payments,
  • war widow's or widower's pension multiple entitlement exclusion, and
  • DVA MRCA payments.

Income treatment of DVA payments

The following table lists DVA payments and how they are treated as income for social security purposes.

DVA Payment Treatment for social security purposes
Service pensions for existing recipients in 1973. Is treated as income, if a recipient has maintained their entitlement since 1973 to BOTH:
  • service pension, and
  • social security pension.

Act reference: SSAct section 23(1)-'service pension', section 23(1)-'social security pension'

Service pensions for all recipients since 1973. CANNOT receive social security pension or benefit.

Act reference: SSAct section 23(1)-'social security benefit'

Service pension received by the partner (1.1.P.85) of a social security recipient. NOT treated as income. Social security income support recipients paid the partnered rate.
Ex gratia payment of $25,000 to Australian service personnel and civilians held as prisoners of war by the Japanese between 7 December 1941 and 29 October 1945, or to their widow/er.

Act reference: Compensation (Japanese Internment) Act 2001 section 12(2)

The ex gratia payment is excluded from the income test.

The value of a person's assets is permanently reduced by $25,000.

If a person invests the payment, income from the investment is counted under normal income test rules.

Example: This means if the person invests the money in financial investments the investment will be subject to normal income test deeming rules.

Policy reference: SS Guide 4.3.2.35 Income exempt from assessment - s 8(11) exempt lump sums, 4.6.2.10 General provisions for exempt assets

Ex gratia payment of $25,000 to Australian service personnel held as prisoners of war by the North Koreans between 27 June 1950 and 19 April 1956, or to their surviving partner.

The ex gratia payment is excluded from the income test.

The value of a person's assets is permanently reduced by $25,000.

If a person invests the payment, income from the investment is counted under normal income test rules.

Example: This means if the person invests the money in financial investments the investment will be subject to normal income test deeming rules.

Policy reference: SS Guide 4.3.2.35 Income exempt from assessment - s 8(11) exempt lump sums, 4.6.2.10 General provisions for exempt assets

Compensation payments in respect of certain World War 2 internments:

- one-off, ex gratia payment of $25,000 received by a person's partner for Australian prisoners of war in Europe during World War 2.

The ex gratia payment is excluded from the income test.

The value of a person's assets is permanently reduced by $25,000.

If a person invests the payment, income from the investment is counted under normal income test rules.

Example: This means if the person invests the money in financial investments the investment will be subject to normal income test deeming rules.

Policy reference: SS Guide 4.3.2.35 Income exempt from assessment - s 8(11) exempt lump sums, 4.6.2.10 General provisions for exempt assets

Prisoner of war recognition supplement.

Act reference: SSAct section 8(8) (viiaaa)

Veterans' Entitlements Act 1986 Part VIB

The prisoner of war recognition supplement is excluded from the income test.
DVA Payment Treatment for social security purposes
Disability pensions.

ALL ARE treated as income.

Note: A person may qualify for a payment of DFISA if their income support is reduced because of the assessment of a DVA disability pension as income.

Policy reference: SS Guide 4.3.5.70 About DVA Defence Force Income Support Allowance (DFISA)

Disability pension reduced by 'limitation' period. ACTUAL (net) amount received IS treated as income.

Explanation: The lump sum previously received by the person was 'adequate consideration' for the reduced pension.

Disability pension payments for children.
  • NOT treated as income,
  • DOES NOT affect the additional free area for dependent children (1.1.D.70). Information about the Budget 2009-10 changes to the additional free area for dependent children can be found in 4.2.1.20.
A payment under Veterans' Entitlements Act Part VIIAB (including a payment made under regulations made under that Part), for example, DFISA and DFISA bonus. NOT treated as income.

Policy reference: SS Guide 4.3.5.70 About DVA Defence Force Income Support Allowance (DFISA)

Veterans' Children Education Scheme (VCES): Education Allowance.

For more information about the VCES refer to DVA Education Schemes.

Act reference: Veterans' Entitlements Act 1986 sections 116 to 118

  • The VCES is listed as a prescribed education scheme, SSAct section 5(1). Students receiving the VCES are precluded from receiving YA, Austudy, WA or MAA as the multiple entitlement exclusion would apply.
  • The VCES precludes payment of education allowance under the scheme where the student receives financial support under any Australian Government education assistance, income support or similar schemes.

Example: A child with a disability turns 16 years of age and claims DSP. The VEA precludes payment of both DSP and education allowance. The SSAct does not contain an exclusion for DSP when VCES is paid.

People known to receive VCES benefits should be encouraged to contact the VCES secretary at DVA in their state for information. If the person does not have their VCES benefits terminated, the allowance IS treated as income for income support payments as it is not specifically excluded under the SSAct.

Policy reference: SS Guide 3.1.6.10 General Payability Provisions

Orphan's pension.
  • NOT treated as income.
  • DOES NOT affect the additional free area for dependent children. Information about the Budget 2009-10 changes to the additional free area for dependent children can be found in 4.2.1.20.
Loss of earnings allowance. IS treated as income.
DVA Payment Treatment for social security purposes
Other allowances paid under VEA. See 4.3.5.30 About DVA Disability Pensions.
War widow's or widower's pension (which may continue to be received after re-partnering).

For the recipient:

IS treated as income if:

  • multiple entitlement exclusion does not apply, or
  • income support supplement not paid.

For partner of recipient:

IS treated as income.

Bereavement payment. NOT treated as income.
Funeral benefit. NOT treated as income.
Income support supplement (ISS).

For the recipient:

CANNOT receive social security income support payment.

Explanation: Since 20 March 1995 a war widow or widower does not have the opportunity to choose between social security payment and ISS (4.3.5.40).

For the partner of the recipient:

NOT treated as income, because it is excluded as income (amendment to SSAct 8(8)(y) Royal Assent 6 September 2002)

Adequate means of support pension (AMS). IS treated as income.
Adequate means of support pension (AMS) payment to a disability pensioner's invalid child. IS treated as income.
ES paid by DVA.

Act reference: SSAct section 8(8)(yha), 8(8)(znb)

NOT treated as income.

The ES component of a payment from DVA is excluded from the income test.

Act reference: SSAct section 8(8) Excluded amounts - general, see (y), section 23(1)-'income support payment'

Veterans' Entitlements Act 1986

Policy reference: SS Guide 4.3.5.20 About DVA Service Pensions, 4.3.5.30 About DVA Disability Pensions, 4.3.5.40 About DVA War Widow/ers Pension, MRCA Death Benefits, SRCA Death Benefits & ISS, 4.3.5.50 About DVA Adequate Means of Support Pension & DVA Orphan's Pension, 4.4.1.30 Scope of Deeming

War widow's or widower's pension multiple entitlement exclusions

The following table explains the multiple entitlement exclusions that apply to war widow's or widower's pension and social security payments.

Payment Explanation

Mature age allowance

Newstart allowance

Sickness allowance

Special benefit

Bereavement allowance

Precludes a person from receiving BOTH war widow's or widower's pension and these payments. DVA must be advised of any amount paid after the grant of a war widow's or widower's pension.

A person can, however, receive both if they:

  • received social security benefit before 1/11/86, and
  • have been continuously receiving war widow's or widower's pension since before 1/11/86.

Widow B pension

Parenting payment

Precludes a person from receiving BOTH war widow's or widower's pension and these payments.

The following table gives SSAct references for service pension and war widow's or widower's pension.

Payment Service pension War widow's or widower's pension
Newstart allowance section 614(1) to 614(2) section 614(3) to 614(4)
Youth allowance section 552A -
Partner allowance   section 771HI(3)
Mature age allowance section 660XCF(1) to 660XCF(2) section 660XCF(3) to 660 XCF(4)
Austudy payment section 578A -
Age pension section 47(1) to 47(2) section 47(3) to 47(6)
Wife pension section 151(1) to 151(2) section 151(3) to 151(6)
Widow B pension section 368(1) to 368(2) section 368(3)
Bereavement allowance section 321(1) to 321(2) section 321(3) to 321(4)
Parenting payment section 500S(1) to 500S(2) section 500S(3) to 500S(4)
Disability support pension section 103(1) to 103(2) section 103(3) to 103(6)
Carer payment section 202(1) to 202(2) section 202(3) to 202(6)
Sickness allowance section 686(1) to 686(2) section 686(3) to 686(4)
Telephone allowance section 1061R section 1061R
Seniors health card section 1061ZG -

Information about changes to the pension income test in the Budget 2009-10 can be found in 4.2.1.10.

Act reference: SSAct section 8(8) Excluded amounts - general, see (y), section 23(1)-'social security payment'

Veterans' Entitlements Act 1986

Policy reference: SS Guide 4.3.5.20 About DVA Service Pensions, 4.3.5.30 About DVA Disability Pensions, 4.3.5.40 About DVA War Widow/ers Pension, MRCA Death Benefits, SRCA Death Benefits & ISS, 4.3.5.50 About DVA Adequate Means of Support Pension & DVA Orphan's Pension, 4.4.1.30 Scope of Deeming

DVA Military Rehabilitation and Compensation Act 2004 (MRCA)

The Military Rehabilitation and Compensation Scheme (MRCS) commenced on 1 July 2004. This scheme is administered through DVA to meet the needs of all Australian Defence Force (ADF) members and their families in the event of injury or death as a result of service on or after 1 July 2004. It also provides compensation to their eligible dependants if their death is related to service on or after 1 July 2004, if they were entitled to maximum permanent impairment compensation or had been eligible for a Special Rate Disability Pension.

Note: Before 1 July 2004 ADF members and their families were covered by the Safety, Rehabilitation and Compensation Act 1988 (SRCA).

Multiple entitlement exclusions also apply under the MRCA. These were added to the SSAct in the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004.

For information about the MRCS, the effects of MRCA on the VEA and how MRCA payments are assessed under the SSAct, see 4.3.5.60 About DVA Compensation Payments. Information about changes to the pension income test in the Budget 2009-10 can be found in 4.2.1.10.

Last reviewed: 2 January 2015