Source: http://clik.dva.gov.au/print/book/export/html/16060
Timestamp: 2019-06-26 00:04:21
Document Index: 695803436

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﻿ 9.11.2 General Compensation Recovery Provisions
Home > Compensation and Support Policy Library > Part 9 Principles for Determining Pension Rate > 9.11 Compensation Recovery > 9.11.2 General Compensation Recovery Provisions
[glossary:income support supplement:] [glossary:(:] [4][glossary:ISS:][glossary:):] [4], granted on or after 20 March 1995, including people who were subject to Centrelink's compensation recovery provisions and transferred to DVA ISS.
Payments that are affected by compensation are called compensation affected pensions [5] [glossary:(:]CAP [5][glossary:):].
A compensation affected pension (CAP) includes those regular components that make up the rate of payment based on the Rate Calculator. This includes pension supplement, clean energy supplement [5] and rent assistance. Irregular payments not going towards the calculation of the rate of service pension (eg education entry payment) are not part of the CAP calculation.
The income support payments listed above are only CAPs where the compensation recipient is under pension age [5] or qualifying age [5] in the case of ISS [5]. Once a person turns pension age/qualifying age, the income support payment is no longer a CAP and the compensation recovery rules cease to apply.
Section 5NB(1) [10] VEA
Section 5NB(11) [10] VEA
Section 85(7) [10] VEA
SCH6-A1 [10] VEA
Section 59O [10] VEA
According to subsection 5NB(1) [16] of the VEA a compensation affected pension means:
Qualifying age is defined in section 5Q(1) of the [17]VEA [17]and is equivalent to the pension age for a veteran which is described in section 5QA VEA as:
Last amended: 17 September 2013
Compensation payments directly impacting on Part II or IV pensions or MRCA payments
VEA ? [19]
Any portion of a lump sum or periodic compensation payment that has been taken into account to limit a person's disability pension, war widow(er)s pension, or Military Rehabilitation and Compensation Act 2004 (MRCA) payment, is excluded from the Part IIIC compensation recovery provisions. Any portion of the compensation payment that does not affect the rate of disability pension, war widow(er)s pension or MRCA payment will be assessed under Part IIIC, if the compensation payment is for economic loss.
If compensation affects a person's service pension or income support supplement [5] [glossary:(:]ISS [5][glossary:):] under the Part IIIC compensation recovery rules, and the veteran subsequently applies and has the disability for which the compensation is paid accepted, the effect of the compensation payment under Part IIIC on the pension is adjusted. This may involve recalculating the lump sum preclusion period to account for the reduced compensation amount or adjusting the amount assessed as a periodic payment. Where a person receives a compensation payment and the offsetting of the disability pension, war widow(er)s pension or MRCA payment is less than the amount of compensation paid, then the excess of compensation paid is taken into account under Part IIIC.
Compensation recipient contributions
Part IIIC does not apply to a compensation payment if:
the compensation recipient has made contributions towards the payment (for example by way of insurance premiums), and
the agreement under which the contributions are made does not provide that the amounts that would otherwise be payable under the agreement are to be reduced or are not payable because the recipient is eligible for or receives the [glossary:compensation affected pension:] [glossary:(:] [22][glossary:CAP:][glossary:):] [22], or
the agreement does provide for the amounts to be reduced but the compensation has been calculated without reference to that provision of the agreement.
In determining whether the compensation recipient has made contributions towards the payment, it is not necessary that the compensation recipient makes the payment, for example insurance premiums, directly to the insurer. Where an employer-employee agreement (collectively or individually) provides, as part of an overall package of benefits, for the employer to make payments of income insurance or salary continuance premiums to the insurer on behalf of the employee, that can be accepted as representing a contribution by the employee.
Payments in respect of criminal injury
Part IIIC does not apply to compensation payments made for a personal injury or disease or condition suffered as a result of the commission of an offence.
Compensation paid on death
The compensation recovery provisions only apply to living persons, not estates. Compensation recovery notices can only be served on living persons, or insurers or compensation payers who are liable to pay people, not estates. Therefore while a recovery notice cannot be issued after death, a recovery notice issued prior to the death of the compensation recipient is valid.
In some jurisdictions, compensation payments are paid to the surviving spouse of a deceased worker by the workers' compensation authority (for example the Dust Diseases Board). If the compensation payment is made for non-economic loss, the payment should be assessed as ordinary income. That is, they are not assessed under Part IIIC. If they are made wholly or partly for economic loss the compensation recovery provisions apply.
Compensation paid under the Defence Act 1903
Payments of Severe Injury Adjustment (SIA) or Additional Death Benefit (ADB) under the Defence Act 1903 are excluded from the compensation recovery provisions, as they do not include payments which are wholly or partly in respect of lost earnings or lost capacity to earn.
Compensation as a result of Australian Defence Force activity (other than compensation on respect of continuous full-time service) is exempt from the compensation recovery provisions. 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.
The available discretion to treat the whole or part of a compensation payment as not having made for the purposes of the compensation recovery provisions should be exercised, where compensation is paid in respect of ADF Reserve activity other than for continuous full-time service.
However, any compensation payments made in respect of an inability to attend the usual (civilian) workplace (including any such payments paid by the Defence Force) are not exempt and should be treated as compensation.
Assessment under income and assets tests
VEA ? [25]
Any compensation payments that are not assessable under the recovery provisions will be assessed as ordinary income, unless specifically exempted under subsection 5H(8).
Section 5NB(5) [10] VEA
Section 5NB(6) [10] VEA
Chapter 9.10 [27]
Section 5NB(4) [10] VEA
Section 5NB(6A) [10] VEA
Section 6B [10] VEA
Section 59ZL [10] VEA
Subsection 5H (8) [10] VEA
Person required to take reasonable action to obtain compensation
is receiving, or eligible for a [glossary:compensation affected pension:] [glossary:(:] [22][glossary:CAP:][glossary:):] [22], and
the person or the person's partner:
is entitled to claim compensation for economic loss, and
has not taken reasonable action to claim or obtain the compensation,
then the Commission may require the person or the person's partner to take action to claim the compensation. If the Commission does require the person or the person's partner to take reasonable action to claim or obtain the compensation then the pension is not payable to the person until they meet these requirements.
The person is considered to have taken reasonable action if they:
lodge a claim with the employer or insurer,
engage a solicitor to commence legal proceedings, or
seek legal advice as to whether a claim for compensation can be successfully pursued.
Even if a person may, in the Commission's opinion, be entitled to compensation, the Commission may not require a person to claim or receive compensation. Depending on the full circumstances of each case, acceptable reasons for a person not claiming compensation are:
there is no enforceable claim for compensation,
the veteran uses their statutory right contained in subsection 43(1) of the Safety, Rehabilitation and Compensation Act 1988 (SRCA) to apply to Comcare to request that a future amount of Military Compensation & Rehabilitation Scheme (MCRS) payment be forgone in favour of a payment under Part II [10] VEA or Part IV [10] VEA,
the accident occurred many years ago and is now statute barred,
legal proceedings are required but the veteran or partner cannot afford to engage a solicitor and is not qualified for legal aid,
the injuries sustained will not result in the person or partner suffering a loss of wages, salary or loss of earning capacity, or
there is a question of significant contributory negligence. This may occur where the person or partner caused their own injury, for example the person was intoxicated whilst on duty.
In any of these situations, the pensioner's claims must be verified before the Commission's discretion to require the person to pursue compensation is not applied.
Section 59P [10] VEA
Effect of the special circumstances provisions
The special circumstances provisions apply to treat the whole or part of a compensation payment as not having been made or not liable to be made for the purposes of Part IIIC. Generally, the provisions are applied to a lump sum compensation payment with the result that all, or part, of a preclusion period is reduced. All or part of a periodic compensation payment can also be disregarded. This may also reduce, or negate altogether, any associated pension overpayment.
When a specific amount cannot be determined
The decision to apply the special circumstances provisions may be made in terms of a reduction in the actual duration of the preclusion period. This would be relevant where there are a number of mitigating factors in the decision and it is not possible to determine any specific amount to be disregarded.
Disregarding part of a compensation lump sum
The special circumstances provisions can also be applied to treat a specific amount of the compensation payment as having not been made. This would be relevant where it is reasonable to disregard part of a compensation lump sum, but not all of it. In this case, the amount specified is deducted from the original compensation lump sum and the 50% rule applied to the amended amount to give the new compensation part of the lump sum.
Applying special circumstances to reduce a periodic payment
The special circumstances provisions may also be applied to reduce all or part of a periodic payment of compensation.
When to apply special circumstances
The decision to apply the special circumstances provisions should be based on a holistic view of an individual's circumstances, ie the decision would not usually be based on just one factor but a combination of factors. The special circumstances provisions should only be applied in unusual, unforeseen and exceptional circumstances. This means in situations where the compensation provisions could lead, or have led to extreme hardship or created an inequitable, unjust or unreasonable situation.
When special circumstances should generally not be applied
Each case must be examined on its own merits but as a general rule, special circumstances would not usually be applied where:
the person has sufficient liquid assets to support themselves, and their family if applicable, for the duration of the preclusion period, or
the person acquired realisable assets after the person was advised of the preclusion period, and there is no impediment to the realisation of those assets, or
the person's periodic compensation payments are reduced due to the effects of taxation laws, and this is the only grounds for consideration.
When special circumstances should never be applied
Special circumstances should never be applied in the following situation if the:
delegate does not agree with the legislation. This is contrary to the intention of Parliament and is illegal, or
sole factor is that the person or their partner's reason for receiving a compensation affected pension [5] was different to the reason the compensation was paid.
Source URL (modified on 14/10/2014 - 11:10am): http://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/911-compensation-recovery/9112-general-compensation-recovery-provisions
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