The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

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.

Act reference: Veterans' Entitlements (Clarke Review) Act 2004 section 13(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

Compensation payments in respect of certain Second World War (WW2) internments:

  • one-off, ex gratia payment of $25,000 received by a person's partner for Australian prisoners of war in Europe during WW2.

Act reference: Social Security and Veterans' Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007 section 10(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.
VEA Disability Compensation Payment (formerly known as disability pension) which is a pension under Part II or IV of the VEA (other than a pension that is payable under section 30 to a dependant of a deceased veteran).

NOT treated as income from 1 January 2022.

See Exemption of certain DVA payments below for further information.

Act reference: SSAct section 8(8)(yia) Excluded amounts-general
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.

Act reference: SSAct section 8(8)(j) Excluded amounts-general

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 or Austudy 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.
Other allowances paid under VEA See 4.3.5.30 Overview of DVA compensation payments.
War widow's or widower's pension (which may continue to be received after re-partnering).

For the recipient:

  • IS treated as income.

A war widow/er cannot receive a social security pension or benefit if their war widow/er's pension was granted after 20 March 1995.

For partner of recipient:

  • IS treated as income.
Bereavement payment NOT treated as income.
Funeral benefit NOT treated as income.
Income support supplement

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) and section 8(8)(znb)

NOT treated as income.

The ES component of a payment from DVA is excluded from the income test.
MRCA permanent impairment payment whether paid weekly or as a lump sum - which is a payment under sections 68, 71, 75 or 80 of the MRCA (permanent impairment)

Not treated as income from 1 January 2022.

Act reference: SSAct section 8(8)(zoa) Excluded amounts-general
MRCA Special Rate Disability Pension under Part 6 of Chapter 4 of the MRCA

Not treated as income from 1 January 2022.

Act reference: SSAct section 8(8)(zob) Excluded amounts-general

Act reference: SSAct section 8(8)(yia) Excluded amounts-general, section 8(8)(zoa) Excluded amounts-general, section 8(8)(zob) Excluded amounts-general, section 8(8)(y) Excluded amounts - general, 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 Overview of DVA compensation payments, 4.3.5.40 About DVA war widow/ers pension, MRCA death benefits, DRCA 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

Jobseeker payment

Special benefit

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.

Parenting payment

Precludes a person from receiving BOTH war widow's or widower's pension and this payment.

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
Jobseeker payment section 614(1) to section 614(2) section 614(3) to section 614(4)
Youth allowance section 552A -
Partner allowance - section 771HI(3)
Austudy payment section 578A -
Age pension section 47(1) to section 47(2) section 47(3) to section 47(6)
Parenting payment section 500S(1) to section 500S(2) section 500S(3) to section 500S(4)
Disability support pension section 103(1) to section 103(2) section 103(3) to section 103(6)
Carer payment section 202(1) to section 202(2) section 202(3) to section 202(6)
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)(y) Excluded amounts - general, 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 Overview of DVA compensation payments, 4.3.5.40 About DVA war widow/ers pension, MRCA death benefits, DRCA 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 MRCA payments

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. If the veteran was assessed at 80 points or more under the MRCA or had been eligible for a Special Rate Disability Pension, the MRCA provides compensation to eligible dependants if the death of the veteran was related to service on or after 1 July 2004.

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

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 the information below under Exemption of certain DVA payments and 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.

Act reference: Veterans' Entitlements Act 1986

Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988

Military Rehabilitation and Compensation Act 2004

Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004, Schedule 3 General consequential amendments - see items 38 and 39

Exemption of certain DVA payments

Social security income test exemptions have been put in place for 4 veterans' compensation payments that were formerly known collectively as Adjusted Disability Pension (ADP). These are:

  • VEA Disability Compensation Payment (formerly known as disability pension) which is a pension under Part II or IV of the VEA (other than a pension that is payable under section 30 to a dependant of a deceased veteran)
  • saved pensions from the precursor to the VEA which are payable because of subsection 4(6) or (8B) of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 (other than a pension payable in respect of a child)
  • MRCA permanent impairment payment, either weekly or lump sum - which is a payment under sections 68, 71, 75 or 80 of the MRCA (permanent impairment), and
  • MRCA Special Rate Disability Pension under Part 6 of Chapter 4 of the MRCA.

This means that from 1 January 2022 these amounts no longer count as income under the social security income test.

As a consequence of these social security income test exemptions, Defence Force Income Support Allowance (DFISA) has been made redundant and is no longer required.

For further information, please see 4.3.5.70 About DVA Defence Force Income Support Allowance (DFISA) prior to 1 January 2022.

Act reference: SSAct section 8(8)(yia) Excluded amounts-general, section 8(8)(yib) Excluded amount-general, section 8(8)(zoa) Excluded amounts-general, section 8(8)(zob) Excluded amounts-general

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