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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
VETERANS' AFFAIRS AND OTHER LEGISLATION AMENDMENT (PENSION REFORM) BILL
2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Veterans' Affairs, the Hon Alan Griffin MP)
VETERANS' AFFAIRS AND OTHER LEGISLATION AMENDMENT (PENSION REFORM) BILL
2009
OUTLINE
This bill gives effect to the Government's Secure and Sustainable Pension
Reform package in respect of eligible veterans and their dependants.
The Bill further provides for the increases to certain payments under the
Veterans' Entitlements Act to compensate low and middle-income households
for the expected increases in the cost of living arising out of the
introduction of the Carbon Pollution Reduction Scheme.
Finally, the bill will make a number of minor amendments to the social
security and aged care Secure and Sustainable Pension Reform measures
enacted earlier this year.
Increased pension and income support supplement
This measure increases the single maximum basic rate of service pension by
$1,560.00 per annum, or $30 per week, on and from 20 September 2009. This
measure also applies an increase to war widow pension and ceiling rate
income support supplement and service pension.
Indexation using the Pensioner and Beneficiary Living Cost Index
This measure allows for the indexation of the maximum basic rate of service
pension to a new index, the Pensioner and Beneficiary Living Cost Index
(PBLCI). This new index will be used to adjust the maximum basic pension
rate where movement in the PBLCI is greater than movement in the CPI for
the relevant indexation period.
Indexation using combined couple benchmark
From 20 March 2010, this measure provides for a new 'combined couple
benchmark', for pension rates, which will be 41.76 per cent of the
annualised Male Total Average Weekly Earnings figure. The maximum basic
rate of service pension that can be paid to a person who is a member of a
couple will be half the maximum combined couple rate of pension. The
single pension will be benchmarked at 66.33 per cent of the combined couple
benchmark, effectively 27.7 per cent of the annualised Male Total Average
Weekly Earnings figure. This will apply to service pensions and,
indirectly through the application of the "pension MBR factor", to most
disability pensions, components of war widow pension and ceiling rate
income support supplement and service pension.
Supplements
In broad terms, these amendments aim to simplify the payments made to
pensioners living in Australia by consolidating a number of smaller
payments and allowances into one 'pension supplement'.
In addition, the amendments will provide for an increase to pension
payments of an estimated $10.10 per week for couples combined and $2.50 per
week for singles.
From 20 September 2009, pharmaceutical allowance and telephone allowance
will be
replaced by "veterans supplement" under the Veterans' Entitlements Act 1986
and
"MRCA supplement" under the Military Rehabilitation and Compensation Act
2004.
Veterans supplement and MRCA supplement will be payable to eligible persons
not in receipt of service pension, income support supplement or an income
support payment under the Social Security Act 1991.
Adjustments because of Carbon Pollution Reduction Scheme
Due to timing discrepancies between the introduction of the Carbon
Pollution Reduction Scheme (CPRS) legislation and this bill, increases to
pensions to compensate recipients of those payments for anticipated
increases in the cost of living as a result of the introduction of the CPRS
could not be accurately drafted.
Accordingly, the amendments in this bill now provide for the necessary
increases and future adjustment of indexation for pensions that could not
be included in the Carbon Pollution Reduction Scheme (Household Assistance)
Bill 2009.
Income tests
The amendments will increase the income test taper rate from 40 cents to
50 cents per dollar of income over the ordinary income free area and remove
the additional income test free area for dependent children from the
calculation of the amount of a person's ordinary income free area.
Transitional arrangements will apply for existing pensioners affected by
the new income test changes to ensure current payment rates are maintained
in real terms, and that those pensioners also benefit from a pension
increase.
Work bonus
This measure introduces a new Work Bonus, which allows for a certain amount
of employment income that is earned, derived or received in an instalment
period by a pensioner who has reached qualifying age to be disregarded for
the purposes of the income test. The Work Bonus will enable pensioners
over qualifying age to keep more of the money they earn through work. This
is a mechanism to support those pensioners who have reached qualifying age
and who wish to undertake some paid work to supplement their pension. It
recognises that continuing employment offers both financial and non-
financial benefits for individual pensioners, and recognises the
contribution that their participation in the workforce can make to the
community.
Pension bonus scheme
The pension bonus scheme, which provides a tax-free lump sum payment to
older Australians who defer claiming service pension or income support
supplement and choose to remain in the workforce, will be closed to new
entrants from
20 September 2009. The scheme will, however, continue to be available to
existing members.
Transitional arrangements
This measure provides for a range of savings and transitional provisions to
allow pensioners who will be affected by changes to the veterans'
entitlements law made by this bill on the date of commencement, to
transition smoothly to the new arrangements.
It ensures that the current entitlements of existing pensioners who would
otherwise be affected by the income test changes, and whose pension would
be reduced, will not be reduced in real terms.
Further, this measure provides a rule for couples, where at least one
member is subject to transitional arrangements, that specifies how the
ordinary income test will apply to a person to determine the rate payable
to their partner.
Pension age for persons other than veterans
Under the Veterans' Entitlements Act, the pension age for persons other
than veterans, will increase for both men and women from 65 to 67 years by
six months every two years commencing on 1 July 2017. This age increase
reflects the increase in qualifying age for age pension under the Social
Security Act and maintains the alignment of these two pension ages between
the two Acts.
Pension age for veterans is not being increased.
Advance payments
Existing arrangements will be improved to make pension advances more
accessible.
Amendments relating to aged care
This minor measure will ensure pensioners are not unintentionally charged
higher aged care fees as result of the pension reform package.
Financial impact statement
Total increase to pension payment:
Increased pension rates on 20 September 2009
Indexation using the Pensioner and Beneficiary Living Cost Index
Indexation using combined couple benchmark
Pension supplement
Veterans supplement
MRCA supplement
Advance payments
Total resourcing - all portfolios
|2009-10 |2010-11 |2011-12 |2012-13 |
|$2,732.80 m |$3,634.40 m |$3,813.10 m |$4,026.00 m |
Income tests:
Taper rate
Income free area
Work bonus
Transitional arrangements
Total resourcing - all portfolios
|2009-10 |2010-11 |2011-12 |2012-13 |
|- $134.0 m |- $284.5 m |- $363.9 m |- $451.3 m |
Pension bonus scheme
Total resourcing - all portfolios
|2009-10 |2010-11 |2011-12 |2012-13 |
|$7.1 m |$5.1 m |- $15.6 m |- $54.5 m |
Pension age for persons other than veterans
Total resourcing - all portfolios
|2009-10 |2010-11 |2011-12 |2012-13 |
|$0.8 m |$0.1 m |$0.4 m |$0.1 m |
NB The above financial impacts include impacts for the Department of
Families, Housing, Community Services and Indigenous Affairs for
amendments enacted in an earlier Act.
Amendments relating to Aged care
No financial impact.
VETERANS' AFFAIRS AND OTHER LEGISLATION AMENDMENT (PENSION REFORM) BILL
2009
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, as the Veterans'
Affairs and Other Legislation Amendment (Pension Reform) Act 2009.
Clause 2 provides a table that sets out the commencement dates of the
various sections in, and Schedules to, the Act.
Clause 3 provides that each Act that is specified in a Schedule is amended
or repealed as set out in that Schedule and any other item in a Schedule
has effect according to its terms.
This explanatory memorandum uses the following abbreviations:
. "CPI" means Consumer Price Index;
. "CSHC" means Commonwealth Seniors Health Card;
. "DFISA" means Defence Force Income Support Allowance paid under Part
VIIAB of the Veterans' Entitlements Act;
. "Income Tax Assessment Act" means the Income Tax Assessment Act 1997;
. "MIA" means maternity immunisation allowance;
. "Military Rehabilitation and Compensation Act" means the Military
Rehabilitation and Compensation Act 2004;
. "MTAWE" means Male Total Average Weekly Earnings;
. "Pension Reform Act" means the Social Security and Other Legislation
Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009;
. "Social Security Act" means the Social Security Act 1991;
. "Social Security Administration Act" means the Social Security
(Administration) Act 1999; and
. "Veterans' Entitlements Act" means the Veterans' Entitlements Act 1986.
. "war widow" includes war widowers and defence widows and widowers.
Schedule 1 - Increased pension and income support supplement
Summary
This measure increases the single maximum basic rate of service pension by
$1,560.00 per annum, or $30 per week, on and from 20 September 2009. This
measure also applies an increase to war widow pension and ceiling rate
income support supplement and service pension.
Background
The increase in the maximum basic rate of single pension responds to a
number of key findings of the Pension Review (undertaken by Dr Jeff Harmer
throughout
2008-09), including:
. single maximum rate pensioners should be a priority for reform. The
existing single maximum rate of pension does not adequately recognise
the costs faced by those wholly reliant on the pension to support
themselves; and
. the relativity of the single maximum rate of pension to the couple
combined maximum rate of pension is too low and should be in the range
of 64 to 67 per cent.
Once the increases in the single maximum basic rate and the new pension
supplement are applied, single maximum rate service pensioners will receive
66.33 per cent of the maximum rate of pension for a couple combined, as
provided for in Schedule 3 to this bill.
The amendments made by this Schedule commence on 20 September 2009.
The Veterans' Entitlements Act provides two types of pensions:
. compensation by way of disability pension to veterans, certain members
of the Defence Force and members of peacekeeping forces and war widow
pension and orphan's pension for their dependants; and
. income support pensions by way of service pension for veterans with
qualifying service and their eligible partners and income support
supplement for war widows.
The Pension Reform measures affect only service pension, income support
supplement and war widow pensions. Currently, war widow pension is based
on the maximum base of rate of single service pension, the [GST] pension
supplement and an additional amount, historically referred to as a
'domestic allowance'.
War widows are also eligible for a means tested income support payment of
ceiling rate income support supplement or service pension. (War widows who
are also veterans in their own right are eligible for ceiling rate service
pension. Non-veteran war widows are eligible for ceiling rate income
support supplement.) Ceiling rate income support supplement and service
pension is assessed under the income and assets tests. War widow pension
is treated as income in calculating the income support supplement rate, but
is excluded in calculating the service pension rate. Generally, the total
rate cannot exceed the ceiling rate, which is currently $4425.20 per annum.
Exceptions to this apply to persons who were either receiving an income
support payment prior to 1 November 1986 at a rate greater than the current
ceiling rate, or whose war widow pension is reduced by compensation under
Part II or IV of the Veterans' Entitlements Act.
The maximum basic rate of service pension and income support supplement is
the same rate and is provided for under the table in SCH6-B1 of Schedule 6.
Generally, for a war widow, the maximum basic rate of income support
supplement or service pension is a notional figure only, as most war widows
can be granted no more than the ceiling rate of service pension or income
support supplement. The maximum basic rate of income support supplement or
service pension is used to make a comparison calculation when determining
the rate of income support supplement or service pension payable to a war
widow. In broad terms, the income and assets reduced rate of service
pension or income support supplement is compared to the ceiling rate of
service pension or income support supplement and the lower or lowest rate
is determined to be the rate of service pension or income support
supplement. Blinded war widows receive the ceiling rate of income support
supplement or service pension.
Schedule 1 increases the single maximum basic rate of service pension by
$1,560.00 per annum, or $30 per week, on and from 20 September 2009. It
also increases the fortnightly rate of war or defence widow or widower
pension by $1,560 per annum plus the 20 September 2009 indexation increase
applied to maximum basic rate service pension, plus the existing GST
pension supplement adjusted on 20 September 2009, plus the existing single
pharmaceutical allowance, plus the domestic allowance adjusted on 20
September 2009. Finally, ceiling rate income support supplement and
service pension is increased by indexation on 20 September 2009, plus the
annual single rate of utilities allowance, CPI adjusted on 20 September
2009, plus the annual single rate of telephone allowance at the increased
rate and CPI adjusted on
20 September 2009 plus $130 per annum.
Parts 1, 2 and 4 of Schedule 1 commence on 20 September 2009. Division 1
of Part 3 of Schedule 1 commences on 20 September 2009. Division 2 of Part
3 of Schedule 1 commences immediately after the commencement of Schedule 4
to the Social Security and Other Legislation Amendment (Pension Reform and
Other 2009 Budget Measures) Act 2009.
Explanation of the items
Part 1 - Main amendments
Amendments to the Veterans' Entitlements Act
Items 1 and 3 make technical amendments to subsection 30(1) and paragraph
30(1)(b) to reflect the minor revision to the format of the components of
war widow pension. For example, paragraph 30(1)(a) is to be expressed as
1/26th of an amount instead of an amount "per fortnight".
Item 2 repeals paragraph 30(1)(a) and substitutes a new paragraph 30(1)(a).
New paragraph 30(1)(a) provides that 1/26th of the amount specified in
column 3 of item 1 of the table in point SCH6-B1of Schedule 6 is to be
applied when calculating the rate of war or defence widow or widowers
pension under subsection 30(1). This is the maximum basic rate of single
service pension and as applied on 20 September 2009, will include the
$1,560 per annum increase plus the scheduled indexation adjustment.
Item 4 repeals paragraph 30(1)(c) and substitutes a new paragraph 30(1)(c).
The new fortnightly rate for the component of war widow pension specified
in paragraph 30(1)(c) is $25.60. This fortnightly amount results from
combining the former GST pension supplement and pharmaceutical allowance.
Pharmaceutical allowance is currently $156 per annum. The former GST
pension supplement is equivalent to the new "pension supplement basic
amount" being provided for in Schedule 4. For a single person, the pension
supplement basic amount of $509.60, as adjusted for indexation on 20
September 2009, is increased by $156 to $665.60.
Item 5 adds a note at the end of section 30(1) to advise that each of the
amounts referred to in paragraphs 30(1)(a), (b) and (c) is subject to
indexation. Paragraph 30(1)(a) is indexed under Division 18 of Part IIB
whilst paragraphs 30(1)(b) and (c) are indexed under section 198.
Item 6 repeals subsection 30(1A). This subsection ensured that the GST
pension supplement was added to a person's amount of war or defence widow
or widower's pension. The GST pension supplement has been subsumed into
the new pension supplement regime.
Item 7 inserts a new section 198FB after section 198FA. New subsection
198FB(1) provides for the $1,560 annual increase to the maximum basic rate
of service pension and income support supplement. On 20 September 2009,
the maximum basic rate specified in column 3 of item 1 of the table in
point SCH6-B1 of Schedule 6 will be adjusted in accordance with section 59C
(CPI), section 59EA (MTAWE) or new section 59EAA (the Pensioner Beneficiary
Living Cost Index). The resultant adjusted annual amount will then be
increased by $1,560.
New subsection 198FB(2) provides for the increase to ceiling rate income
support supplement and service pension. The ceiling rate income support
supplement and service pension is specified in point SCH6-A4 of Schedule 6.
The provision uses a Method statement to work out the new ceiling rate.
The amount worked out under the Method Statement will replace the amount
that would otherwise have been substituted on 20 September 2009 in
accordance with the ceiling rate indexation provisions in section 59LA.
The calculation requires that amounts of utilities allowance and telephone
allowance, both of which are to be repealed in this Bill, be used in the
calculation of the new ceiling rate.
Step 1 of the Method statement requires that the amount substituted under
section 59LA for the amount specified in point SCH6-A4 of Schedule 6 on
20 September 2009, be worked out as usual. It should be noted that the
operation of section 59LA on 20 September 2009 is also affected by item 7
of Schedule 2. Item 7 is a transitional provision to ensure that the
pension MBR factor is calculated as if the amendments made by Part 1 of the
Schedule had not been made. The effect of this is that the pension MBR
factor determined under section 59LA will not be distorted by the statutory
increase to the maximum basic rate of single pension. That is, for the
purposes of section 59LA on 20 September 2009, the "current single pension
MBR amount" is to be calculated as if the statutory increase of $1,560
provided for under new subsection 198FB, had not occurred.
Step 2 of the Method statement requires that the rate of utilities
allowance under column 3 of item 1 of the table in section 118OC be indexed
on 20 September 2009, under section 198E, as if sections 118OC and 198E had
not been repealed by this Bill. The utilities allowance and the associated
indexation provisions are being repealed in this Bill as they are being
replaced by the new pension supplement and veterans supplement described
under Schedule 4 of this Bill.
Step 3 of the Method statement requires that the rate of telephone
allowance under subsection 118SA(1) be indexed on 20 September 2009, under
section 198F, as if subsection 118SA(1) and section 198F had not been
repealed by this Bill. The telephone allowance and the associated
indexation provisions are being repealed in this Bill as they are being
replaced by the new pension supplement and veterans supplement described
under Schedule 4 of this Bill.
Step 4 requires that the amounts in steps 1, 2 and 3 be added together and
then increased by $130.
Step 5 provides for the rounding of the new ceiling rate to the nearest
multiple of $2.60 if necessary.
Part 2 - Related amendments
Item 8 amends the definition of relevant rate in subsection 198(1) by
inserting a reference to paragraph 30(1)(c). This means that paragraph
30(1)(c) will be indexed by CPI under section 198 each March and September.
Items 9 and 10 make technical amendments to repeal note 2 after subsection
198(4).
Item 11 repeals subsections 198(5A), (5D), (6), (7) and (8). These
provisions provided for the adjustment of the amount of war widow pension
specified paragraph 30(1)(a) with reference to both CPI and MTAWE. As this
amount will now be set at equal to the single pension maximum basic rate,
the provisions are no longer required.
Part 3 - Other amendments
Division 1 - Amendments to the Veterans' Entitlements Act
Items 12 to 33 make consequential amendments to the pension bonus scheme
provisions in Part IIIAB of the Veterans' Entitlements Act.
The amendments will ensure that, for the purposes of determining a person's
annual rate of pension, which is used to calculate a person's amount of
pension bonus as at the date of grant of the pension, for a person who
starts to receive a pension on or after 20 September 2009, the person's
annual rate of pension for the purposes of determining the person's pension
bonus will to be determined in accordance with the pension arrangements
that applied before 20 September 2009. This means that the new pension
supplements will not be applied in the determination of a person's annual
rate of pension. Instead, the current pension methodology of a maximum
basic rate or ceiling rate of service pension or income support supplement
and the GST pension supplement will be used to determine a person's annual
rate of pension and subsequently the amount of pension bonus. The pension
bonus calculation will take account of increases in the maximum basic rate
and the former GST pension supplement which is equivalent to the new
pension supplement basic amount.
Items 34 and 35 make minor amendments to section 93J of the Social Security
Act to ensure that a person, whose marital status changes during their
"overall qualifying period" (as defined in section 93F of the Social
Security Act), has their pension bonus calculated by taking into account
the amount for the person in the table in subsection 93H(4), as inserted by
the Social Security and Other Legislation Amendment (Pension Reform and
Other 2009 Budget Measures) Act. A person's "annual notional single
pension rate" or a person's "annual notional partnered pension rate" will
now be the adjusted percentage (as defined in subsection 93J(5)) of the sum
of their maximum basic rate and the amount worked out for the person using
the table in subsection 93H(4).
Part 4 - Application
Part 4 of this Schedule provides for the application of the amendments made
by the Schedule.
Amendments of the Veterans' Entitlements Act
Subitem 36(1) clarifies that the amendments of the Veterans' Entitlements
Act made by this Schedule, with the exception of the amendments in Division
1 of Part 3 of this Schedule, apply for the purpose of working out the
rates of payments for days on or after 20 September 2009, and not before.
Subitem 36(2) makes it clear that section new section 198FB of the
Veterans' Entitlements Act is to be applied in working out the amount
specified in paragraph 30(1)(a) of the Act, as amended by this Schedule)
for 20 September 2009.
Subitem 36(3) specifies that subitem (2) does not limit the application of
new section 198FB.
Subitem 36(4) states that the amendments of the Veterans' Entitlements Act
made by Division 1 of Part 3 of this Schedule apply for the purposes of
working out the amount of pension bonus for a person who starts to receive
a designated pension on or after 20 September 2009.
Subitem 36(5) means that the amount specified in paragraph 30(1)(c) of the
Veterans' Entitlements Act is not to be indexed before 20 March 2010. This
is because the amounts specified in paragraph 30(1)(c) include the
indexation adjustment for
20 September 2009.
A note at the end of subitem 36(5) makes it clear that subitem 36(5) does
not affect the indexation of the rate specified in paragraph 30(1)(a) and
that this rate will be indexed on 20 September 2009.
Amendments of the Social Security Act
Item 37 is an application provision that ensures that the amendments made
to section 93J of the Social Security Act by this bill, apply for the
purposes of working out the amount of pension bonus for a person only where
that person's start day for age pension is on or after 20 September 2009.
This means that section 93J in force prior to the amendments made by this
bill will operate to calculate a pension bonus for a person whose age
pension start day is a day before 20 September 2009.
Schedule 2 - Indexation using the Pensioner and Beneficiary Living Cost
Index
Summary
This measure allows for the indexation of the maximum basic rate of service
pension to a new index, the Pensioner and Beneficiary Living Cost Index
(PBLCI). This new index will be used to adjust the maximum basic pension
rate where movement in the PBLCI is greater than movement in the CPI for
the relevant indexation period.
Background
Currently, the maximum basic rates of service pension are increased in line
with movements in the CPI on 20 March and 20 September of each year to
produce an 'indexed amount'. If, for singles, the indexed amount is lower
than 25 per cent of MTAWE, the indexed amount is increased to at least 25
per cent of MTAWE.
The Australian Statistician is developing a new index, the PBLCI, to
measure specifically changes in the cost of living experienced by pensioner
and beneficiary households. To ensure that pension rates keep up with
increases in the cost of living experienced by pensioners, this index is
being introduced into pension rate calculations in social security law and
to service pension rate calculations by this Schedule, so that movements in
the CPI can be compared to movements in the PBLCI. The maximum basic rate
of service pension will be indexed in line with whichever of these two
indices has increased by a greater amount, before benchmarking to MTAWE.
The amendments made by this Schedule commence on Royal Assent.
Explanation of the items
Amendments to the Veterans' Entitlements Act
Item 1 adds a new paragraph (aa) into section 59. The new paragraph means
that Division 18 of Part IIIB now provides for the indexation of the
maximum basic rate of service pension and income support supplement using
the Pensioner and Beneficiary Living Cost Index (PBLCI).
Item 2 makes an amendment to subsection 59C(2), the purpose of which is to
indicate that step 5 of the method statement in that subsection is subject
to new section 59EAA. In accordance with subsection 59C(2), the rounded
PBLCI amount is compared to the rounded CPI amount.
Item 3 amends the method statement at step 5 to ensure that the indexed
amount can be an amount that is replaced under new section 59EAA.
Item 4 inserts new sections 59EAA, 59EAB and 59EAC into Division 18 of Part
IIIB of the Veterans' Entitlements Act.
New subsection 59EAA(1) provides for the application of section 59EAA. The
amount referred to in item 1 of the table in section 59A is the 'pension
MBR'. This abbreviation refers to all the maximum basic rates of service
pension. Importantly, from the indexation day of 20 March 2010, 'pension
MBR' will only cover partnered rates of service pension (see Schedule 3 to
the bill).
New subsection 59EAA(2) provides for the key function of section 59EAA,
which is to specify that, if a condition is satisfied, the current figure
of a maximum basic rate (that is, the figure as produced after indexation
on the most recent indexation day) is to be replaced with the 'living cost
amount'. The condition that needs to be satisfied is that the indexed
amount worked out under section 59C on an indexation day, but by
disregarding MTAWE benchmarking (under section 59EA), is less than the
living cost amount worked out on that indexation day using the method
statement in the subsection. This will ensure that, in cases where there
is greater positive movement in the PBLCI than in the CPI for a period, the
indexed amount for the current figure will be produced in accordance with
the PBLCI.
The method statement sets out a number of steps. The first step is to use
section 59EAB to work out the living cost indexation factor on the relevant
indexation day. The second step is to work out the 'current figure' (as
defined in subsection 5NA(1) of the Veterans' Entitlements Act) immediately
before the relevant indexation day. This figure will effectively be the
figure as adjusted under Division 18 of Part IIIB on the previous
indexation day and will be, in practice, the actual maximum basic rate of
the relevant social security pension as at the most recent indexation day.
The third step is to multiply the current figure by the living cost
indexation factor to produce a 'provisional living cost amount'. The
fourth step is to use section 59EAC to round off the provisional living
cost amount to produce the 'living cost amount'.
New subsection 59EAB provides for the living cost indexation factor.
Subject to subsection 59EAB(5) and 59EAB(6), the living cost indexation
factor is modelled in subsection 59EAB(1) on the 'indexation factor' in
section 59D of the Veterans' Entitlements Act. The formula divides the
living cost index number for the most recent reference quarter by the
living cost index number for the base quarter. The indexation factor
produced will be a number that expresses the most recent PBLCI number in
terms of a previous PBLCI number (in practice, usually the one produced for
the previous indexation day, assuming constant increases in the living
cost).
Subsections 59EAB(2) and (3) contain definitions for terms used in
section 59EAB. In subsection 59EAB(2), the 'living cost index number' in
relation to a quarter, is the All Groups Pensioner and Beneficiary Living
Cost Index number that is the weighted average of the eight capital cities
and is published by the Australian Statistician in respect of that quarter.
This definition is modelled on the definition of 'index number' in
subsection 5NA(1) of the Veterans' Entitlements Act in order to ensure
consistency in the comparison between the CPI and the PBLCI on indexation
days.
In subsection 59EAB (3), the reference quarter for PBLCI indexation is, if
the indexation day is 20 March, the most recent December quarter before the
indexation day and, if the indexation day is 20 September, the most recent
June quarter before the indexation day.
In subsection 59EAB(4), the base quarter for PBLCI indexation is the June
or December quarter that is a quarter before the reference quarter and has
the highest living cost index number other than the reference quarter.
The rounding rule in subsection 59EAB(5) is modelled on subsection 59D(2),
again, to ensure consistency of comparison between the CPI and the PBLCI.
Subsection 59EAB(6) is modelled on subsection 59D(3) and ensures that, if
the living cost index number for the most recent reference quarter is lower
than the living cost index number for the base quarter (which would produce
an indexation factor that is less than 1), the indexation factor is to be
increased to 1. This will mean that in periods of negative growth in the
PBLCI, pension rates cannot decrease.
Subsections 59EAB(7) and (8) are modelled on subsections 5NA(2) and (3) of
the Veterans' Entitlements Act. These provisions address the possibility
that the Australian Statistician may publish a PBLCI index number for a
quarter to replace a previously published PBLCI index number and the
possibility that the reference base may change at some time in the future.
If a new living cost number is published to replace an already published
one (for example, in the case of error or reassessment by the Australian
Statistician), to ensure that pension rates do not have to be recalculated,
subsection (7) provides that the publication of the later living cost index
number is to be disregarded.
Subsection (8) provides that, if a new reference base is used for the
PBLCI, regard is to be had only to numbers published in terms of the new
base. This is to ensure that numbers published in terms of the new base
cannot be compared to numbers published in terms of an outdated base,
because doing so could produce unintended indexation factors.
New section 59EAC provides for the rounding of the provisional living cost
amount to the nearest multiple of $2.60, rounding up if the provisional
living cost amount is exactly half way between the two nearest multiples of
$2.60.
Item 5 adds additional information to the end of note 2 in point SCH6-B1 of
Schedule 6.
Item 6 is an application provision that ensures that the amendments made to
the Veterans' Entitlements Act by items 2 and 4, apply to the indexation
day of
20 September 2009 and all later indexation days.
Item 7 is a transitional provision dealing with the adjustment of ceiling
rate income support supplement and service pension on 20 September 2009.
The provision specifies that, on 20 September 2009, the adjustment of the
ceiling rate under section 59LA, is to be calculated as if the current
single pension MBR factor on that day were the amount that would have been
the current single pension MBR amount on that day if the amendments made by
Part 1 of Schedule 1 to this Bill had not been made. Without this
provision the pension MBR factor used in the adjustment of ceiling rate
would be distorted as the single rate service pension, which is the basis
for the pension MBR factor, is being increased by $1,560 on 20 September
2009.
Schedule 3 - Indexation using combined couple benchmark
Summary
From 20 March 2010, this measure provides for a new 'combined couple
benchmark', for pension rates, which will be 41.76 per cent of the
annualised Male Total Average Weekly Earnings figure. The maximum basic
rate of service pension that can be paid to a person who is a member of a
couple will be half the maximum combined couple rate of pension. The
single pension will be benchmarked at 66.33 per cent of the combined couple
benchmark, effectively 27.7 per cent of the annualised Male Total Average
Weekly Earnings figure. This will apply to service pensions and,
indirectly through the application of the "pension MBR factor", to most
disability pensions, components of war widow pension and ceiling rate
income support supplement and service pension.
Background
Prior to these amendments, following indexation of the maximum basic rates
for both singles and members of a couple in line with CPI increases,
section 59EA applied to increase the indexed amount for the single maximum
basic rate to 25 per cent of the annualised MTAWE figure, if this figure,
for an indexation day, was greater than the CPI indexed amount. For
members of a couple, their rate was increased proportionately. This
ensured that, the rate of service pension reflected increases in living
standards (as measured by MTAWE), as well as increases in the cost of
living (as measured by CPI).
To ensure that the MTAWE benchmark continues to operate effectively for
pensioners, the benchmark is changing from a single rate of pension
benchmark, to a combined couple rate of pension benchmark. A further
change in this bill to set the maximum single rate of pension to 66.33 per
cent of the maximum combined couple rate of pension ensures that the
maximum single rate of pension will be set at a fixed percentage of the
maximum combined couple rate of pension. This will also ensure that the
$30 a week increase in the maximum basic rate for a single pensioner, as
provided by Schedule 1 to this bill, is preserved under future MTAWE
benchmarking.
The commencement date of this measure is 1 January 2010, which is a date
between the indexation days (see item 1 of the table in section 59B) of
20 September 2009 and 20 March 2010. This will ensure that the amendments
made by this measure will have effect from the indexation day of 20 March
2010 and will not apply to an earlier indexation day.
The amendments made by this Schedule commence on 1 January 2010.
Explanation of the items
Amendments of the Veterans' Entitlements Act
Item 1 changes the description of item 1 in the table in section 59A to
indicate that, as a result of the amendments being made by this measure,
item 1 will now only apply to maximum basic rate for persons who are
partnered.
Item 2 omits the maximum basic rate pension payable to a person who is not
a member of a couple, or is otherwise paid at the single rate, from item 1
of the table in section 59A of the Veterans' Entitlements Act. Only the
rate payable to a person who is a member of a couple remains. This
amendment is made because all single maximum basic rates of service pension
will, from 20 March 2010 be adjusted in accordance with new section 59G,
and therefore need to be listed in a new and separate item in the table in
section 59A.
Item 3 inserts a new item in the table in section 59A to refer to the
single rate that was omitted by item 2. This is to ensure that this rate
can be treated separately from the member of a couple rate and to allow for
reference to be made to the amount by new section 59G. It should be noted
that, although the description of the amount in column 1 of the new item
refers to both service pension and income support supplement, the reference
to a maximum basic rate of income support supplement is a reference to a
notional amount only.
Item 4 repeals the definition of 'category A amount' in subsection 59EA(1).
Before this amendment, a 'category A amount' meant the single maximum
basic rate of service pension.
Item 5 repeals subsection 59EA(2) and replaces it with new
subsections 59EA(2) and (2A). New subsection 59EA(2) will now apply only
to the maximum basic rate of service pension for a person who is partnered.
It provides that, if a category B amount, the partnered amount, is to be
indexed under this Division on an indexation day and 50 per cent of the
combined couple benchmark for that indexation day exceeds the 'indexed
amount', then the indexed amount is to be increased by an amount equal to
the excess and then rounded up to the next highest multiple of $2.60. This
will ensure that the maximum basic rate for a person who is a member of a
couple will be set at half of 41.76 per cent of the annualised MTAWE
figure, which is the 'combined couple benchmark'.
New subsection 59EA(2A) defines 'combined couple benchmark', for an
indexation day, as 41.76 per cent of the annualised MTAWE figure published
by the Australian Statistician for the relevant quarter.
Item 6 inserts new section 59G, which applies to the amounts referred to in
new item 1AAA of the table in section 59A, abbreviated as 'single pension
rate MBR'. It provides that the Veterans' Entitlements Act has effect as
if, on an indexation day of 20 March or 20 September of each year, the
adjusted single pension amount (as defined at step 4 of the method
statement) were substituted for the single pension rate MBR amount. The
effect of this section is to set the rate of single service pension at
66.33 per cent of the maximum combined couple basic rate. The single to
couple ratio of 66.33 per cent is also set in relation to the new pension
supplement as set out in Schedule 4 to this bill.
The rounding rule at step 4 of the method statement in new section 59G
provides that the step 3 amount is to be rounded to the nearest multiple of
$2.60, and uses the words 'rounding up if necessary' in brackets. The
intention of the words 'rounding up if necessary' is to ensure that, when
the step 3 amount is not a multiple of $2.60 but is a multiple of $1.30, it
is to be rounded up as, in this case, it will be necessary to decide
whether to round up or down as both the higher and lower multiple will be
equally near to the step 3 amount.
Item 7 repeals subsections 59LA(1) and (2) and substitutes new subsections
59LA(1) and (2). These subsections are amended to take account of the new
term single pension rate MBR as provided for in new table item 1A in
section 59A.
Item 8 amends the note 2 at the end of point SCH6-B1 of Schedule 6. The
note is amended by the removal of the reference to indexation being "in
line with CPI increases" as the indexation adjustment may also now be
affected by PBLCI.
Schedule 4 -Supplements
Summary
The new pension supplement is intended to simplify the payments made to
certain income support pensioners living in Australia by consolidating a
number of smaller payments and allowances into one 'pension supplement'.
In addition, the amendments will provide for an increase to pension
payments of an estimated $10.10 per week for couples combined and $2.50 per
week for singles.
The new "veterans supplement" and "MRCA supplement" will replace
pharmaceutical allowance and telephone allowance for eligible persons who
do not receive an income support payment under the Veterans' Entitlements
Act or the Social Security Act.
Background
Currently, individuals who are in receipt of a service pension or
income support supplement receive a 'pension supplement' (also known as
the GST supplement) in addition to the base rate of payment. These
individuals may also qualify for additional add-on type payments such
as pharmaceutical allowance, telephone allowance and utilities
allowance.
Furthermore, under the existing provisions, individuals who qualify for
a seniors health card may receive a seniors concession allowance of
$518.80 a year (paid quarterly). Telephone allowance is also payable
to cardholders if they or their partner subscribe to a telephone
service, including the higher rate that applies if they also subscribe
to a home internet connection.
The measures in this Schedule are designed to simplify service pension
payment arrangements. From 20 September 2009, the GST supplement,
pharmaceutical allowance, utilities allowance and telephone allowance (at
the higher internet rate) will be consolidated into the new pension
supplement. Further, increases will be applied to the supplement, with
couples receiving an estimated additional $10.10 per week and singles
receiving an estimated additional $2.50 per week. The pension supplement
will be payable to service pensioners who are Australian residents in
Australia, or temporarily absent from Australia for 13 weeks or less.
The pension supplement will be paid fortnightly, in conjunction with the
base pension. However, from 1 July 2010, pensioners will have greater
choice in how frequently they receive this supplement. Pensioners will be
able to choose to receive around half of the supplement on a quarterly
basis instead of receiving it with their regular fortnightly payments.
It should be noted that recipients of income support supplement will not be
eligible for the pension supplement, other than the quarterly pension
supplement. Income support supplement is only payable to war widows. The
rates of war widow pension and income support supplement were increased
under Schedule 1, to include the former GST supplement, pharmaceutical
allowance, utilities allowance and telephone allowance (at the higher
internet rate).
A new seniors supplement will also be established for seniors health card
holders and Gold card holders. The seniors concession allowance and the
telephone allowance will be consolidated into the new seniors supplement.
The single rate of the seniors supplement will be further increased to
bring it to 66.33 per cent of the rate paid to a combined couple.
The amendments made by Parts 1, 2, 3, 4 and 6 of this Schedule commence on
20 September 2009. Items 5 to 111 and 113 to 206 of this Schedule commence
immediately after the commencement of Schedule 4 to the Social Security and
other Legislation Amendment (Pension Reform and Other 2009 Budget Measures)
Act 2009. Item 112 of this Schedule commences immediately after the
commencement of Schedule 5 to the Social Security and other Legislation
Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009.
However, if that Schedule does not commence, the provision(s) do not
commence at all.
Explanation of the items
Part 1 - Pension supplement
Amendments of the Veterans' Entitlements Act
Item 1 inserts a new section 5GA into Part 1 of the Veterans' Entitlements
Act to provide definitions for the following new payment rates:
. combined couple rate pension supplement,
. combined couple rate of minimum pension supplement,
. minimum pension supplement amount,
. pension supplement basic amount, and
. tax exempt pension supplement.
New subsection 5GA(1) states that the annual rate of the combined couple
rate of pension supplement is $2,199.60. This rate is the sum of the
following, rounded up to the nearest multiple of $5.20:
a) four times the annual rate of utilities allowance paid to a member
of a couple (not an illness separated couple or respite care
couple), as adjusted for indexation on 20 September 2009; and
b) twice the annual rate of telephone allowance that is payable to a
person who is partnered and whose partner is getting telephone
allowance, as adjusted for indexation on 20 September 2009; and
c) twice the annual rate of pharmaceutical allowance for a person who
is partnered; and
d) twice the annual rate of pension supplement basic amount for a
person who is partnered, as adjusted for indexation on 20 September
2009; and
e) if $525.20 exceeds twice the annual rate of utilities allowance for
a person who is a member of a couple - the amount of the excess.
A note is inserted at the end of new subsection 5GA(1) to advise the reader
that the combined couple rate of pension supplement is to be indexed every
six months in accordance with CPI increases. This is provided for in
sections 59B to 59E of the Veterans' Entitlements Act.
A further note is inserted at the end of new subsection 5GA(1) to advise
the reader that the combined couple rate of pension supplement is an annual
rate.
New subsection 5GA(2) states that the annual rate of the combined couple
rate of minimum pension supplement is $1,185.60. This rate is the sum of
the following amounts rounded up to the nearest multiple of $5.20:
a) four times the annual rate of utilities allowance for a person who
is a member of a couple (other than an illness separated couple or
respite care couple), as adjusted for indexation on 20 September
2009; and
b) twice the annual rate of telephone allowance that is payable to a
person who is partnered and whose partner is receiving telephone
allowance, as adjusted for indexation on 20 September 2009.
A note is inserted at the end of new subsection 5GA(2) to remind the reader
that the rate of minimum pension supplement is to be indexed every
six months in accordance with CPI increases. This is provided for in
sections 59B to 59E of the Veterans' Entitlements Act.
A further note is inserted at the end of new subsection 5GA(2) to advise
the reader that the combined couple rate of pension supplement is an annual
rate.
New subsection 5GA(3) states that a person's annual rate of minimum pension
supplement amount is worked out by reference to the combined couple rate of
minimum pension supplement. Accordingly, a person who is not a member of a
couple will have a minimum pension supplement amount that is 66.33 per cent
of the combined couple rate. A person who is a member of a couple will
have a minimum pension supplement amount that is 50 per cent of the
combined couple rate. A person who is a member of an illness separated
couple or respite care couple will receive an amount that is equal to
66.33 per cent of the combined couple rate. That is, the rate for a person
who is a member of an illness separated couple or respite care couple is
equal to the single rate.
A note is inserted at the end of subsection 5GA(3) to advise that a
person's minimum pension supplement amount is an annual rate.
The new subsection 5GA(4) provides for a definition of pension supplement
basic amount. This amount is equivalent to the rate of the former "pension
supplement", which was also known as the "GST supplement". A person's rate
of "pension supplement basic amount" is determined by the person's family
situation. The table sets out the rates applicable to the relevant family
situations.
The first note inserted after the table in subsection 5GA(4) advises that
the amount of pension supplement basic amount will be indexed 6 monthly in
line with CPI increases. New table item 1C in section 59B inserted by
item 176 of this Schedule provides for the indexation of the new pension
supplement basic amount.
The second and last note inserted after the table in subsection 5GA(4)
advises that a person's pension supplement basic amount is an annual rate.
New subsection 5GA(5) sets out, in a table, how to work out the daily rate
of tax-exempt pension supplement for a person who is receiving a service
pension or income support supplement.
The daily amount of tax-exempt pension supplement for a person receiving
service pension is the person's rate of pension supplement amount, less the
person's pension supplement basic amount. As each of the aforementioned
pension supplement rates are expressed as annual rates, the daily rate is
calculated by dividing the result of the subtraction by 364.
The daily amount of tax-exempt pension supplement for a person receiving
income support supplement is the person's minimum pension supplement amount
divided by 364.
A note is inserted after subsection 5GA(5) to advise that the portion of
the person's service pension or income support supplement equal to the tax-
exempt pension supplement is to be exempt from income tax in accordance
with section 52-65 and section 52-70 of the Income Tax Assessment Act.
New subsection 5GA(6) sets out the additional requirements for working out
the tax-exempt pension supplement for a person receiving either, a revised
rate of service pension worked out under subpoint SCH6-A1(4) of Schedule 6,
or a rate of service pension that is worked out under subpoint SCH6-A1(5)
of Schedule 6. These rates of service pension do not have a pension
supplement amount added through the rate calculator. In these
circumstances, new subsection 5GA(5) applies in relation to the person as
if the person had a pension supplement amount equal to what would be the
person's pension supplement amount if the person were receiving service
pension at the rate worked out under subpoint SCH6-A1(4) of Schedule 6 and
that rate of service pension is equal to the provisional rate. A provision
rate of service pension worked out under SCH6-A1(4) had a pension
supplement amount added by the rate calculator.
Item 2 repeals paragraph (1)(aa) of clause 1 of Schedule 6, which refers to
the "GST pension supplement" which is being repealed by this Bill.
Item 3 amends note 1 in subclause 1(1) of Schedule 6 by omitting "rent
assistance and pharmaceutical allowance" and substituting "pension
supplement and rent assistance". This reflects the replacement of
pharmaceutical allowance with pension supplement.
Item 4 repeals clause 4 and substitutes a new clause 4 in Schedule 6.
Clause 4 sets out the order of reduction for service pension or income
support supplement for income tax purposes.
Subclause 4(1) sets out the order of reduction for a person receiving
service pension that is affected by a reduction under any or all of the
following:
. Module E of the Rate calculator, the ordinary/adjusted income
test; or
. Module F of the Rate calculator, the assets test; or
. section 59T, compensation recovery.
In these circumstances, the order of reduction is to be applied in the
following descending order:
1st. all of the rate apart from the pension supplement amount and any
increase
under Module C (rent assistance) of the Rate Calculator;
2nd. the portion of the person's pension supplement amount equal to the
person's
pension supplement basic amount;
3rd. (a) if an election by the person under subsection 60A(1) is in force
- any
remaining portion of the person's pension supplement
amount; or
(b) otherwise - any remaining portion of the person's pension
supplement
amount to the extent to which it exceeds the person's
minimum pension
supplement amount;
4th. the amount of any increase under Module C;
5th. the person's minimum pension supplement amount.
Subclause 4(2) sets out the order of reduction for a person receiving a
revised rate of service pension worked out under subpoint SCH6-A1(4) or a
rate that is worked out under subpoint SCH6-A1(5). In these circumstances,
subclause 4(1) applies to the person and the pension as if:
. paragraphs (1)(a) and (b) of subclause 4(1) were omitted; and
. the person had a pension supplement amount equal to what would
be the person's pension supplement amount if the person were
receiving a provisional rate of service pension worked out
under subpoint SCH6-A1(4).
Subclause 4(3) sets out the order of reduction for a person receiving
income support supplement that is affected by a reduction under any or all
of the following:
. Module E of the Rate calculator, the ordinary/adjusted income
test; or
. Module F of the Rate calculator, the assets test; or
. section 59T, compensation recovery.
In these circumstances, the reduction of a person's rate of income support
supplement is to be applied in the following descending order:
1st. all of the rate apart from any rent assistance increase under
Module C and
the person's minimum pension supplement amount;
2nd. the amount of any rent assistance increase under Module C;
3rd. the person's minimum pension supplement amount.
Subclause 4(3) specifies that if the rate (the main rate) of a person's
service pension or income support supplement is to be reduced as described
in subclause (1) or (2); and there is an election in force under subsection
60A(1) in relation to the payment of quarterly pension supplement, the
person's quarterly pension supplement is reduced to the same extent (if
any) that the component of the main rate that would correspond to the
person's minimum pension supplement amount would be reduced under that
subclause were the election not in force.
Subclause 4(4) states how any reduction is to be applied if, the person's
rate (the main rate) of service pension or income support supplement is
reduced because the person has elected to receive the quarterly pension
supplement. In these circumstances, the person's quarterly pension
supplement is to be reduced to the same extent (if any) that the component
of the main rate that would correspond to the person's minimum pension
supplement amount would be reduced under subclause 4(1) or 4(3) were the
quarterly pension supplement election not in force.
A note at the end of subclause 4(4) advises that the reduction will be
disregarded unless the person's quarterly pension supplement is reduced to
nil.
Items 5 to 8 amend method statements 3, 4, 5 and 6 in point SCH6-A1 to
remove references to Module D - pharmaceutical allowance, which is being
replaced by the new pension supplement or veterans supplement. Module D is
being repealed by item 203 of this Schedule.
Item 9 repeals Module BA in Part 2 of Schedule 6 and substitutes a new
Module BA.
New module BA sets out when the pension supplement amount is payable to an
individual and the rate at which the pension supplement amount is to be
paid with reference to the individual's family circumstances.
New point SCH6-BA1 states that a pension supplement amount is to be added
to a person's maximum basic rate of pension.
New point SCH6-BA2 states that, if a person is in Australia, or is
temporarily absent from Australia for a continuous period of 13 weeks or
less, the amount of pension supplement is to be worked out with reference
to new point SCH6-BA3 or new point SCH6-BA4. New point SCH6-BA3 is used to
work out a person's rate of pension supplement if the individual has made
an election to receive the minimum amount of pension supplement by
quarterly instalment rather than as part of their fortnightly rate of
pension. New point SCH6-BA4 is used to calculate the person's rate of
pension supplement where they have not elected to receive the minimum
amount of pension supplement by quarterly instalment.
New point SCH6-BA3 provides that a person's annual rate of pension
supplement is worked out by reference to the table at the end of the point,
which sets the rate of pension supplement as a percentage of the rate of
combined couple pension supplement. The table provides that a person who
is not a member of a couple receives a rate of pension supplement that is
66.33 per cent of the combined couple rate, and that a person who is
partnered receives a rate of pension supplement that is 50 per cent of the
combined couple rate. Members of illness separated or respite care couples
will receive pension supplement that is equal to 66.33 per cent of the
combined couple rate (that is, the same rate as a single person).
Subpoint SCH6-BA3(b) provides that, where a person is not partnered and the
amount calculated by reference to the table is not a multiple of $2.60,
then the annual rate of pension supplement is to be rounded to the nearest
multiple of $2.60. Where the annual rate of pension supplement for a
single person is not a multiple of $2.60 but is a multiple of $1.30, the
rate is to be rounded up to the nearest multiple of $2.60.
A note is inserted at the end of point SCH6-BA3 to direct the reader to the
definition of combined couple rate of pension supplement as set out in
subsection 5GA(1).
Point SCH6-BA4 applies to determine a person's pension supplement amount
where the person has elected to receive the minimum amount of pension
supplement by quarterly instalment. Point SCH6-BA4 provides that a
person's annual rate of pension supplement is worked out in accordance with
point SCH6-BA3 as if they had not elected to receive the quarterly payment
of minimum pension supplement, then an amount equal to the minimum amount
of pension supplement is subtracted from the result.
Point SCH6-BA5 provides that the annual rate of pension supplement for a
person who is absent from Australia, either permanently or temporarily for
more than 13 weeks, is the rate of pension supplement basic amount that
applies to that individual in their family circumstances.
Part 2 - Quarterly pension supplement and seniors supplement
Amendments of the Veterans' Entitlements Act
Item 10 inserts a new Part IIID into the Veterans' Entitlements Act, after
Part IIIC. New Part IIID provides for the new quarterly pension supplement
which will be payable from 1 July 2010.
New subsection 60(1) states that new Part IIID is to apply to a person if
the person is receiving a service pension or income support supplement (the
main payment) and the person is residing in Australia or is temporarily
absent from Australia for a continuous period not exceeding 13 weeks.
New subsection 60(2) means that, for the purposes of paragraph 60(1)(a), it
does not matter if the rate of the person's main payment would become nil
should they elect under new section 60A, to receive the quarterly pension
supplement. A person may still receive the quarterly pension supplement
even if this results in their fortnightly rate of pension being reduced to
nil.
New subsection 60A(1) provides that a person may notify the Commission, in
such manner or way as is approved by the Commission, that they elect to
receive the minimum pension supplement as a quarterly payment rather than
as part of their fortnightly main payment.
New subsection 60A(2) provides that an election to receive a quarterly
payment comes into force as soon as practicable after it is made.
New subsection 60A(3) states that an election ceases to be in force if the
main payment ceases to be payable to the person.
New subsection 60A(4) provides that a person may notify the Commission, in
such form as is approved by the Commission, that they want to revoke their
election to receive the minimum pension supplement as a quarterly payment
rather than as part of their fortnightly main payment and return to
receiving the minimum amount of pension supplement as part of their
fortnightly payment. New subsection 60A(4) also provides that any such
revocation takes effects as soon as practicable after notification to the
Commission.
New subsection 60A(5) provides that quarterly pension supplement is payable
to a person for each day on which an election is in force.
New section 60B provides for the rate of quarterly pension supplement.
New subsection 60B(1) states that a person's annual rate of quarterly
pension supplement is the rate of minimum pension supplement that is
applicable to the person depending on whether the person is single (or a
member of an illness separated or respite care couple) or a member of a
couple. It should be noted that income support supplement recipients are
not eligible for pension supplement, other than the quarterly pension
supplement.
Subsection 60B(2) provides that a person's daily rate of quarterly pension
supplement is the annual rate of quarterly pension supplement divided by
364.
New subsection 60B(3) provides that the section has effect subject to
subclause 4(3) of Schedule 6.
New subsection 60C(1) provides that quarterly pension supplement is to be
paid by instalments.
New subsection 60C(2) provides that quarterly pension supplement is to be
paid as soon as reasonably practicable on or after the first supplement
test day (the current test day) that follows a day on which the person has
made an election to receive the minimum amount of pension supplement by
quarterly rather than fortnightly payment.
New subsection 60C(3) specifies that the amount of the instalment of
quarterly pension supplement is worked out by multiplying the person's
daily rate of quarterly pension supplement by the number of days during the
test period for which an election subsection 60A(1) by the person is in
force.
New subsection 60C(4) states that if a person is receiving quarterly
pension supplement and, apart from this subsection, the portion of the
instalment of the person's quarterly pension supplement that corresponds to
that day would be reduced under subclause 4(3) of Schedule 6, but not
reduced to a nil amount, then the amount of that portion of the instalment
is not to be reduced under subclause 4(3) of Schedule 6.
New subsection 60C(5) defines supplement test day to mean, 20 March,
20 June, 20 September and 20 December of each year. Subsection 60C(5)
defines test period as being the period:
a) starting on the most recent supplement test day before the
current test day; and
b) ending on the day immediately before the current test day.
Item 11 repeals Part VIIAD of the Veterans' Entitlements Act and
substitutes a new Part VIIAD to provide for the new seniors supplement.
The former Part VIIAD provided for "seniors concession allowance" which is
being replaced with this new "seniors supplement".
Part VIIAD - Seniors supplement
Division 1 - Eligibility
New Division 1 of Part VIIAD sets out the eligibility criteria for the new
seniors supplement.
New subsection 118P(1) provides that an individual is eligible for the
seniors supplement if they are the holder of a seniors health card and the
individual is not receiving any of the following payments:
. service pension;
. income support supplement;
. social security pension or benefit; or
. seniors supplement under the Social Security Act.
New subsection 118P(2) specifies that an individual is eligible for the
seniors supplement if the person is the holder of a gold card and meets the
following additional criteria:
. the person has reached qualifying age; and
. the person is in Australia, or is temporarily absent form
Australia for a period not exceeding 13 weeks; and
. the person is not receiving service pension, income support
supplement, a social security pension or benefit, or seniors
supplement under the Social Security Act.
New subsection 118P(3) defines a gold card to mean a card known as the
Repatriation Health Card-For All Conditions, that evidences a person's
eligibility, under the Veterans' Entitlements Act or the Military
Rehabilitation and Compensation Act, to be provided with treatment for all
injuries or diseases.
New subsection 118PA(1) provides that seniors supplement is payable to a
person for each day that a person is eligible for the payment.
New subsection 118PA(2) qualifies that the seniors supplement is not
payable to an individual for a particular day if that person has elected,
before the day, not to receive the supplement and that election has not
been withdrawn, or if the individual has not provided the details of a bank
account into which the supplement is to be paid.
New Division 2 of Part VIIAD of the Veterans' Entitlements Act sets out the
rate of seniors supplement that will be payable to an individual.
New subsection 118PB(1) of the Veterans' Entitlements Act provides that the
rate of seniors supplement is calculated by using the table at the end of
the section to calculate an amount that is a percentage of the combined
couple rate of minimum pension supplement as determined in new section 5GA.
A person who is not a member of a couple will receive a seniors supplement
that is 66.33 per cent of the combined couple rate of minimum pension
supplement. A person who is partnered will receive 50 per cent of the
combined couple rate of minimum pension supplement. If an individual is a
member of an illness separated couple or respite care couple then the
individual will receive a seniors supplement that is equal to 66.33 per
cent of the combined couple rate of minimum pension supplement (that is,
the same rate as a single person).
New paragraph 118PB(1)(b) states that the rate of seniors supplement for a
person who is not member of a couple is to be rounded to the nearest
multiple of $2.60, where the rate calculated is not already a multiple of
$2.60. In the event that the rate calculated by reference to the table is
a multiple of $1.30, then the person's rate is to be rounded up to the
nearest multiple of $2.60.
A note is inserted at the end of subsection 118PB(1) signposting the reader
to the definition of combined couple rate of minimum pension in
subsection 5GA(1).
New subsection 118PB(2) states that a person's daily rate of seniors
supplement is to be calculated by dividing the annual rate by 364.
New Division 3 of Part VIIAD of the Veterans' Entitlements Act sets out the
payment rules for seniors supplement.
New subsection 118PC(1) states seniors supplement is to be paid by
instalments.
New subsection 118PC(2) provides that seniors supplement is to be paid as
soon as reasonably practicable on or after the first seniors supplement
test day (the current test day) that follows a day on which the person is
eligible for seniors supplement.
New subsection 118PC(3) provides that the amount of an instalment is worked
out by multiplying a person's daily rate by the number of days during the
test period for which the individual was eligible for seniors supplement.
Subsection 118PC(4) defines seniors supplement test day to mean, 20 March,
20 June, 20 September and 20 December of each year. Subsection 118PC(4)
defines test period as being the period:
a) starting on the most recent supplement test day before the
current test day; and
b) ending on the day immediately before the current test day.
Part 3 - Veterans supplement
Amendments of the Veterans' Entitlements Act 1986
Item 12 repeals Part VIIA of the Veterans' Entitlements Act and substitutes
a new Part VIIA to provide for the new veterans supplement.
The new veterans supplement and MRCA supplement are replacing
pharmaceutical allowance and telephone allowance under the Veterans'
Entitlements Act and the Military Rehabilitation and Compensation Act for
persons who were previously eligible for either or both of the allowances
and who do not receive an income support payment under the Social Security
Act or the Veterans' Entitlements Act.
As a consequence of the pension reform measures, pharmaceutical allowance
and telephone allowance are being abolished and replaced with either the
new pension supplement for those in receipt of an income support payment or
the new veterans or MRCA supplement for person who were previously eligible
for the allowance or allowances and who do not receive an income support
payment from either the Department of Veterans' Affairs or Centrelink. For
war widows and wholly dependent partners, the value of the former
pharmaceutical allowance has been added to the rate of war widow pension
payable under, or by reference to, subsection 30(1) of the Veterans'
Entitlements Act. The veterans supplement will replace pharmaceutical and
telephone allowance under the Veterans' Entitlements Act. MRCA supplement
will replace pharmaceutical and telephone allowance under the Military
Rehabilitation and Compensation Act.
New subsection 118A provides for veterans supplement to replace
pharmaceutical allowance for persons who were previously eligible, who are
not a war widow/war widower-pensioner and who do not receive a social
security payment or service pension or income support supplement. New
subsection 118B provides for veterans supplement to replace telephone
allowance for persons who were previously eligible and who do not receive a
social security payment, service pension, income support supplement or
seniors supplement.
Part VIIA - Veterans supplement
Division 1 - Eligibility for veterans supplement
New subsection 118A effectively replaces pharmaceutical allowance with
veterans supplement for person's who are not a war widow/war widower-
pensioner and who are not in receipt of an income support payment under
either the Veterans' Entitlements Act or Social Security Act. Section 118A
effectively retains the entitlement to a fortnightly payment to assist with
the cost of pharmaceuticals to non war widow/war widower-pensioners and non-
income support recipients.
New subsection 118A(1) provides that subject to subsequent subsections in
118A, a person is eligible for veterans supplement under section 118A if
the person is receiving a pension whose rate is specified under subsection
30(2) of the Veterans' Entitlements Act (orphan pension).
New subsection 118A(1) further provides that to subject subsequent
subsections in section 118A, a person is eligible for veterans supplement
under section 118A if the person would have been receiving a pension under
subsection 30(2) of the Veterans' Entitlements Act (orphan pension), but
for subsection 13(7) of the Veterans' Entitlements Act.
Lastly, new subsection 118A(1) provides that, subject to subsequent
subsections in section 118A, a person is eligible for veterans supplement
under section 118A if the person is eligible for pharmaceutical benefits
under the scheme known as the Repatriation Pharmaceutical Benefits Scheme.
A person is eligible for pharmaceutical benefits under the Repatriation
Pharmaceutical Benefits Scheme if the person is the holder of a
Repatriation Health Card - For All Conditions (Gold card), or a
Repatriation Health Card - For Specific Conditions (White card), or a
Repatriation Pharmaceutical Benefits Card (Orange card).
New subsection 118A(2) stipulates that a person is not eligible for
veterans supplement if the person is receiving a social security payment or
service pension or the person is a war widow/war widower-pensioner.
New subsection 118A(3) specifies that a person who leaves Australia
permanently is not eligible for veterans supplement from the day after the
person left Australia.
New subsection 118A(4) provides that a person who leaves Australia
temporarily, but who has been absent for more than 26 weeks, is not
eligible for veterans supplement after the first 26 weeks of absence.
New subsection 118B effectively replaces telephone allowance with veterans
supplement for person's who are not in receipt of an income support payment
under either the Veterans' Entitlements Act or Social Security Act.
Section 118B effectively retains the entitlement to a regular payment to
assist with the cost of a telephone service.
New subsection 118B(1) provides that, subject to subsequent exclusionary
provisions in section 118B, the following categories of persons are
eligible for veterans supplement:
. a person who is eligible for a general rate pension, the rate of which
is specified in subsection 22(4); or
. a person who is eligible for a special rate pension, the rate of which
is specified in section 24; or
. a person who is eligible for pension, the rate of which is increased
under subsection 27(2) by an amount specified in any of items 1 to 8
of the table in subsection 27(1); or
. a person who under qualifying age and who is eligible for a war widow
pension, the rate of which is specified in subsection 30(1).
A note at the end of subsection 118B(1) directs the reader to section 5Q
for a definition of "qualifying age".
New paragraph 118B(2)(a) provides that, subject to subsequent exclusionary
provisions in section 118B, a person is eligible for veterans supplement if
the person is a veteran who rendered eligible war service during World War
1.
New paragraph 118B(2)(b) provides that, subject to subsequent exclusionary
provisions in section 118B, a person is eligible for veterans supplement if
the person is a Commonwealth veteran who rendered continuous full-time
service during World War 1.
New paragraph 118B(2)(c) provides that, subject to subsequent exclusionary
provisions in section 118B, a person is eligible for veterans supplement if
the person is an allied veteran who rendered continuous full-time service
during World War 1.
A note at the end of subsection 118B(2) directs the reader to subsection
5B(1) and (3) for the definition of World War 1.
New subsection 118B(3) stipulates that a person is not eligible for
veterans supplement under section 118B if the person is receiving any of
the following payments:
. a social security payment;
. service pension;
. income support supplement;
. seniors supplement under either the Veterans' Entitlements Act or the
Social Security Act;
. a MRCA supplement under Division 4 of Part 7 of Chapter 4, or Division
5 of Part 2 of Chapter 5 of the Military Rehabilitation and
Compensation Act.
New subsection 118B(4) specifies that if a person leaves Australia
permanently, the person is not eligible for veterans supplement from the
day after the person left Australia.
New subsection 118B(5) states that if a person is temporarily absent from
Australia, and the person's temporary absence is for longer than 26 weeks,
the person is not eligible for veterans supplement after the first 26 weeks
of the absence.
Division 2 - Rate of veterans supplement
New section 118C provides that the rate of veterans supplement applicable
to a person who is eligible under section 118A is $6.00 per fortnight.
A note at the end of new section 118C advises that the amount specified in
section 118C is adjusted annually under section 198F, in line with CPI
increases.
New section 118D provides that the rate of veterans supplement applicable
to a person who is eligible under section 118B is $6.00 per fortnight.
A note at the end of new section 118B advises that the amount specified in
section 118D is adjusted annually under section 198F, in line with CPI
increases.
Item 13 repeals Part VIIB of the Veterans' Entitlements Act. Part VIIB
provided for telephone allowance which is being replaced by veterans
supplement.
Item 14 amends the definition of pension subsection 121(7) by inserting
"veterans supplement under Part VIIA or" after the word "includes".
Section 121 provides for a number of administrative matters relating to the
payment of instalments of pension. The inclusion of veterans supplement in
the definition of "pension" for the purposes of section 121(7) means that
the provisions of section 121 apply to veterans supplement.
Item 15 repeals section 198F and substitutes a new section 198F to provide
for the indexation of veterans supplement.
New subsection 198F(1) states that section 198F applies to the dollar
amount mentioned in section 118C and section 118D.
New subsection 198F(2) sets out the formula to be applied to a dollar
amount mentioned in sections 118C and 118D for an indexation day on which
the indexation factor is greater than one. On any such indexation day, the
amount mentioned in subsections 118C and 118D is to be replaced with an
amount that is worked out by multiplying the "Dollar amount for that
provision on the day before the indexation day" by the "Indexation factor
for the indexation day".
New subsection 198F(3) specifies that the "indexation factor" for an
indexation day is the number worked out in the formula in subsection
198F(3).
New subsection 198F(4) requires that the indexation factor is to be
calculated to three decimal places. New subsection 198F(4) also requires
that the indexation factor is to be increased by 0.001 if the fourth
decimal place of the indexation factor is more than four.
New subsection 198F(4) states that if an amount worked out under subsection
198F(2) is not a multiple of twenty cents, then the amount is to be rounded
down to the nearest multiple of twenty cents.
New subsection 198F(6) provides that, for the purposes of section 198F, an
indexation day is 1 January 2010 and each 1 January of later years.
Part 4 - MRCA supplement
Amendments of the Military Rehabilitation and Compensation Act
Item 16 repeals the heading of Division 4 of Part 7 of Chapter 4 of the
Military Rehabilitation and Compensation Act and substitutes a new heading.
Division 4 - MRCA supplement for members and former members
Item 17 repeals section 220A. Section 220A defined the term telephone
allowance payday. This term is no longer applicable.
Item 18 amends subsection 221(1) by omitting "a telephone allowance" and
substituting "MRCA supplement under this section".
A note in the legislation advises that the heading to section 221 is
altered by omitting "telephone allowance" and substituting "MRCA
supplement".
Items 19 and 23 make technical amendments to the respective paragraphs.
Item 20 repeals paragraph 221(1)(c). Paragraph 221(1)(c) required a person
to have a telephone service connected in Australia in the person's name or
jointly in the person's name and someone else's name. This will no longer
be a requirement for a person to receive MRCA supplement under Division 4.
Item 21 amends the note at the end of subsection 221(1) by omitting the
words "telephone allowance" and substituting "MRCA supplement".
Item 22 amends subsection 221(2) by omitting the words "telephone
allowance" and substituting "MRCA supplement under this section".
Item 24 repeals paragraph 221(2)(c). Paragraph 221(2)(c) required a person
to have a telephone service connected in Australia in the person's name or
jointly in the person's name and someone else's name. This will no longer
be a requirement for a person to receive MRCA supplement under Division 4.
Item 25 amends the note at the end of subsection 221(2) by omitting the
words "telephone allowance" and substituting "MRCA supplement".
Item 26 amends subsection 222(1) to ensure that a person cannot receive
MRCA supplement under section 221 from the day after the person leaves
Australia permanently.
Item 27 amends subsection 222(2) to prevent a person who is temporarily
absent from Australia from receiving MRCA supplement after the first 26
weeks of the absence.
Item 28 amends subsection 222(3) to enable a person to regain eligibility
for MRCA supplement on the later of, the day the person returns to
Australia or the day the person notifies the Commission that the person has
returned to Australia.
Item 29 repeals subsections 222(4) and 222(5) and substitutes a new
subsection 222(4) only. New subsection 222(4) states that even though a
person is eligible for MRCA supplement under section 221(2), the MRCA
supplement is not payable to the person if the person is already receiving
MRCA supplement under subsection 221(1). This is because a person may be
eligible for MRCA supplement under both subsections.
New subsection 222(5) provides that a person is not eligible for MRCA
supplement, if the person is receiving:
a) veterans supplement under section 118B of the Veterans'
Entitlements Act; or
b) telephone allowance under the Social Security Act; or
c) MRCA supplement under Division 5 of Part 2 of Chapter 5.
Paragraph 222(4)(c) is necessary as a person may be eligible for MRCA
supplement under more than one criterion in subsection 221.
Item 30 repeals sections 223 to 225 and substitutes new sections 223 and
224. New section 223 links the rate of MRCA supplement payable under
section 221 to the rate of veterans supplement payable, from time to time,
under section 118D of the Veterans' Entitlements Act. This will ensure the
rate of MRCA supplement remains the same as the rate of veterans supplement
payable under the Veterans' Entitlements Act.
New subsection 224 provides that a person's payment of MRCA supplement
under section 221 is payable to the person on each pension payday on which
the person is eligible for the MRCA supplement and the MRCA supplement is
payable to the person. In this section, "pension payday" has the same
meaning as in the Veterans' Entitlements Act.
Item 31 repeals the heading of Division 5 of Part 2 of Chapter 5 and
substitutes a new heading that reflects the change from "telephone
allowance" to "MRCA supplement".
Division 5 - MRCA supplement for wholly dependent partners
Item 32 repeals section 244A. Section 244A defined the term telephone
allowance payday. This term is no longer applicable.
Item 33 amends section 245 by omitting "a telephone allowance" and
substituting "MRCA supplement under this section".
A note in the legislation advises that the heading to section 245 is
altered by omitting "telephone allowance" and substituting "MRCA
supplement".
Item 34 makes a technical amendment to paragraph 245(b).
Item 35 repeals paragraph 245(c). Paragraph 245(c) required a person to
have a telephone service connected in Australia in the person's name or
jointly in the person's name and someone else's name. This will no longer
be a requirement for a person to receive MRCA supplement under Division 5.
Item 36 amends the note at the end of subsection 245 by omitting the words
"telephone allowance" and substituting "MRCA supplement".
Item 37 amends subsection 246(1) to ensure that a person cannot receive
MRCA supplement under section 245 from the day after the person leaves
Australia permanently.
Item 38 amends subsection 246(2) to prevent a person who is temporarily
absent from Australia from receiving MRCA supplement under section 245,
after the first 26 weeks of the absence.
Item 39 amends subsection 246(3) to enable a person to regain eligibility
for MRCA supplement on the later of, the day the person returns to
Australia, or the day the person notifies the Commission that the person
has returned to Australia.
A note in the legislation advises how the heading to subsection 246(3) is
altered.
Item 40 repeals subsections 246(4) and 246(5) and substitutes a new
subsection 246(4) only. New subsection 246(4) states that even though a
person is eligible for MRCA supplement under section 245, the MRCA
supplement is not payable to the person if the person is already receiving:
d) veterans supplement under section 118B of the Veterans'
Entitlements Act; or
e) telephone allowance under the Social Security Act; or
f) MRCA supplement under Division 4 of Part 7 of Chapter 4.
Paragraph 246(4)(c) is necessary as a person may be eligible for MRCA
supplement under Division 4 of Part 7 of Chapter 4 and this Division.
Item 41 repeals sections 247 to 249 and substitutes new sections 247 and
248. New section 248 links the rate of MRCA supplement payable under
section 245 to the rate of veterans supplement payable, from time to time,
under section 118D of the Veterans' Entitlements Act. This will ensure the
rate of MRCA supplement remains the same as the rate of veterans supplement
payable under the Veterans' Entitlements Act.
New section 248 provides that a person's payment of MRCA supplement under
section 245 is payable to the person on each pension payday on which the
person is eligible for the MRCA supplement and the MRCA supplement is
payable to the person. In this section, "pension payday" has the same
meaning as in the Veterans' Entitlements Act.
Item 42 amends the heading to Division 4 of Part 4 of Chapter 6 and
substitutes a new heading.
Division 4 - MRCA supplement for members, former members and dependants
Item 43 amends section 300 by omitting the words "a pharmaceutical
allowance" and substituting "MRCA supplement under this section".
A note in the legislation advises how the heading to section 300 is
altered.
Item 44 amends the note at the ends of section 300 to advise that section
301 sets out some circumstances when MRCA supplement is not payable.
Item 45 amends subsection 301(1) to ensure that a person cannot receive
MRCA supplement under section 300 from the day after the person leaves
Australia permanently.
A note in the legislation advises how the heading to section 301 is
altered.
Item 46 amends subsection 301(2) to prevent a person who is temporarily
absent from Australia from receiving MRCA supplement under section 300,
after the first 26 weeks of the absence.
Item 47 amends subsection 301(3) to enable a person to regain eligibility
for MRCA supplement on the later of the day the person returns to
Australia, or the day the person notifies the Commission that the person
has returned to Australia.
A note in the legislation advises how the heading to subsection 301(3) is
altered.
Item 48 repeals subsections 301(4) and 301(5) and substitutes a new
subsection 301(4) only. New subsection 301(4) states that even though a
person is eligible for MRCA supplement under section 300, the MRCA
supplement is not payable to the person if the person:
a) is receiving veterans supplement under section 118A of the
Veterans' Entitlements Act; or
b) is receiving pharmaceutical allowance under the Social Security
Act; or
c) is a wholly dependent partner of a deceased member.
Items 49 and 50 amend section 302 to link the rate of MRCA supplement
payable under section 300 to the rate of veterans supplement payable, from
time to time, under section 118C of the Veterans' Entitlements Act. This
will ensure the rate of MRCA supplement remains the same as the rate of
veterans supplement payable under the Veterans' Entitlements Act.
Items 51 and 52 provide that a person's payment of MRCA supplement under
section 300 is payable to the person on each pension payday on which the
person is eligible for the MRCA supplement and the MRCA supplement is
payable to the person. In this section, "pension payday" has the same
meaning as in the Veterans' Entitlements Act.
Item 53 amends the note at the end of section 303 so that it refers to a
payment of "MRCA supplement" and not an "allowance".
Part 5 - Other amendments
Amendments of the Income Tax Assessment Act
Item 54 of the Schedule inserts a new item 12.1 into the table in
section 52-65 of the Income Tax Assessment Act to provide that the new
quarterly pension supplement is exempt from income tax.
Item 55 of the Schedule repeals table item 16A.1 and substitutes a new
table item 16A.1 into the table in section 52-65 of the Income Tax
Assessment Act to provide that the new seniors supplement is exempt from
income tax.
Item 56 repeals table item 18.1 from section 52-65. Table item 18.1 refers
to telephone allowance and is no longer required.
Item 57 repeals table item 20A.1 from section 52-65. Table item 20A.1
refers to utilities allowance and is no longer required.
Item 58 inserts new table item 21A.1 into the table in section 52-65 to
provide that veterans supplement is exempt from income tax.
Item 59 adds a new paragraph (d) at the end of section 52-70. New
paragraph
52-70(d) provides that so much of a payment as is equal to the tax-exempt
pension supplement for the payment is exempt from income tax.
Item 60 of the Schedule repeals table item 12A and inserts a new item 12A
into the table in section 52-75 of the Income Tax Assessment Act to advise
that the new quarterly pension supplement is provided for under Part IIID
of the Veterans' Entitlements Act.
Item 61 of the Schedule inserts a new item 16A into the table in section 52-
75 of the Income Tax Assessment Act to advise that the new seniors
supplement is provided for under Part VIIAD of the Veterans' Entitlements
Act.
Item 62 repeals table item 18 from section 52-75. Table item 18 refers to
telephone allowance and is no longer required.
Item 63 repeals table item 20A from section 52-75. Table item 20A refers
to utilities allowance and is no longer required.
Item 64 inserts new table item 21A into the table in section 52-75. New
table item 21A advises that the new veterans supplement is provided for
under Part VIIA of the Veterans' Entitlements Act.
Items 65 and 66 amend table item 10 of the table in section 52-114 of the
Income Tax Assessment Act and provides that a payment of MRCA supplement
under sections 221, 245 or 300 of the Military Rehabilitation and
Compensation Act, is exempt from income tax.
Item 67 repeals table item 20 from the table in section 52-114. Table item
20 provided for the tax status of pharmaceutical allowance and is no longer
required.
Amendments of the Military Rehabilitation and Compensation Act
Item 68 amends section 3 by replacing the references to telephone allowance
and pharmaceutical allowance with a reference to "veterans supplement".
Items 69 to 71 amend the definition of compensation in subsection 5(1) by
removing "pharmaceutical allowance" and "telephone allowance" from the
definition and adding "MRCA supplement under section 221, 245 or 300" to
the definition.
Items 72 to 78 amend a number of provisions by removing references to
"pharmaceutical allowance" or "telephone allowance" and substituting a
reference to "MRCA supplement".
Amendments of the Social Security Act
Item 79 repeals subparagraph 8(8)(y)(viia) and substitutes a new
subparagraph 8(8)(y)(viia) to remove the reference to utilities allowance
under the Veterans' Entitlements Act and include a reference to the
veterans supplement that is being inserted into the Veterans' Entitlements
Act elsewhere in this bill.
Item 80 omits the words 'seniors concession allowance' from
subparagraph 8(8)(y)(viib) and replaces them with the words 'seniors
supplement'. This is because seniors concession allowance under the
Veterans' Entitlements Act is being replaced with seniors supplement.
Item 81 repeals subsection 44(2) and substitutes a new subsection 44(2)
which provides that an individual's age pension remains payable even though
the rate is nil, where the individual's rate is nil merely because they
have elected to receive the minimum amount of pension supplement on a
quarterly basis.
Item 82 repeals subsection 98(2) and substitutes a new subsection 98(2)
which provides that an individual's disability support pension remains
payable even though the rate is nil, where the individual's rate is nil
merely because they have elected to receive the minimum amount of pension
supplement on a quarterly basis.
Item 83 repeals subsection 148(2) and substitutes a new subsection 148(2)
which provides that an individual's wife pension remains payable even
though the rate is nil, where the individual's rate is nil merely because
they have elected to receive the minimum amount of pension supplement on a
quarterly basis.
Item 84 repeals subsection 199(2) and substitutes a new subsection 199(2)
which provides that an individual's carer payment remains payable even
though the rate is nil, where the individual's rate is nil merely because
they have elected to receive the minimum amount of pension supplement on a
quarterly basis.
Item 85 repeals subsection 316(2) and substitutes a new subsection 316(2)
which provides that an individual's bereavement allowance remains payable
even though the rate is nil, where the individual's rate is nil merely
because they have elected to receive the minimum amount of pension
supplement on a quarterly basis.
Item 86 repeals subsection 364(2) and substitutes a new subsection 364(2)
which provides that an individual's widow B pension remains payable even
though the rate is nil, where the individual's rate is nil merely because
they have elected to receive the minimum amount of pension supplement on a
quarterly basis.
Item 87 omits the words 'or Division 2 of Part VIIA of the Veterans'
Entitlements Act' from paragraph 408CA(2)(b) because the provisions for
payment of advance pharmaceutical allowance are being removed from the
Veterans' Entitlements Act.
Item 88 omits the words 'or Division 2 of Part VIIA of the Veterans'
Entitlements Act' from paragraph 500I(2)(b) because the provisions for
payment of advance pharmaceutical allowance are being removed from the
Veterans' Entitlements Act.
Item 89 repeals subsection 547(2) and substitutes a new subsection 547(2)
which provides that an individual's youth allowance remains payable even
though the rate is nil, where the individual's rate is nil merely because
they have received an advance of pharmaceutical allowance under the social
security law.
Item 90 omits the words 'or Division 2 of Part VIIA of the Veterans'
Entitlements Act' from paragraph 572(2)(b) because the provisions for
payment of advance pharmaceutical allowance are being removed from the
Veterans' Entitlements Act.
Item 91 omits the words 'or Division 2 of Part VIIA of the Veterans'
Entitlements Act' from paragraph 608(2)(b) because the provisions for
payment of advance pharmaceutical allowance are being removed from the
Veterans' Entitlements Act.
Item 92 omits the words 'or Division 2 of Part VIIA of the Veterans'
Entitlements Act' from paragraph 677(2)(b) because the provisions for
payment of advance pharmaceutical allowance are being removed from the
Veterans' Entitlements Act.
Item 93 omits the words 'or Division 2 of Part VIIA of the Veterans'
Entitlements Act' from paragraph 732(2)(b) because the provisions for
payment of advance pharmaceutical allowance are being removed from the
Veterans' Entitlements Act.
Item 94 omits the words 'or Division 2 of Part VIIA of the Veterans'
Entitlements Act' from paragraph 771HC(2)(b) because the provisions for
payment of advance pharmaceutical allowance are being removed from the
Veterans' Entitlements Act.
Item 95 repeals subsection 1061G(2) as the provisions for payment of
advance pharmaceutical allowance are being removed from the Veterans'
Entitlements Act.
Item 96 repeals paragraphs (a) to (c) in the note to section 1061JC as
pharmaceutical allowance will no longer be paid under pension rate
calculators A, B or C.
Item 97 omits the number '1' from subsection 1061JD(1).
Item 98 repeals subsection 1061JD(2) as the provisions for payment of
advance pharmaceutical allowance are being removed from the Veterans'
Entitlements Act.
Item 99 repeals section 1061R and substitutes a new section 1061R to set
out all the circumstances in which telephone allowance is not payable to an
individual.
New paragraph 1061R(a) provides that telephone allowance will not be
payable to an individual who is being paid a rate of pension supplement,
that is greater than the basic amount, as part of their fortnightly
pension.
New paragraph 1061R(b) provides that where an individual qualifies for
payment of telephone allowance by virtue of subsection 1061Q(3C),
subsection 1061Q(3F) or subsection 1061Q(3G), the allowance is not payable
to them if they were being paid pension supplement, above the basic amount,
as part of their fortnightly payment immediately before they qualified for
the payment of telephone allowance under these subsections.
New paragraph 1061R(c) provides that telephone allowance is not payable to
an individual who is receiving the minimum amount of pension supplement by
quarterly instalments rather than as part of their fortnightly rate of
payment.
New paragraph 1061R(d) states that telephone allowance is not payable where
a person is paid seniors supplement under the Social Security Act or the
Veterans' Entitlements Act.
New paragraph 1061R(e) provides that an individual receiving MRCA
supplement in accordance with section 221 or section 245 of the Military
Rehabilitation and Compensation Act will not be paid telephone allowance.
New paragraph 1061R(f) provides that a person receiving veterans supplement
under section 118B of the Veterans Entitlements Act will not be paid
telephone allowance.
New paragraph 1061R(g) states that if a person is a member of a couple
(other than an illness separated, temporarily separated or respite care
couple) and that person's partner is receiving a veterans supplement under
subsection 118B(2), or a determination under subsection 5R(1) of the
Veterans' Entitlements Act then telephone allowance is not payable to that
person.
The intention is that where a person is receiving, or in the case of
paragraph 1061R(b) was receiving, a pension supplement, seniors supplement,
veterans supplement or MRCA supplement, telephone allowance no longer is
payable to that individual. That is because these supplements all include
a component that replaces in full the dollar value of the telephone
allowance.
It is also intended that individuals in receipt of a rate of payment that
is determined under clause 146 of Schedule 1A to the Social Security Act
will no longer be paid telephone allowance.
A new note 1 is inserted at the end of section 1061R to confirm that for
the purposes of subparagraph 1061R(b)(i), subsection 1061Q(3C) and
subsection 1061Q(3G) are to have an extended application and the reader is
signposted to subsections 1061Q(3D), 1061Q(3E) and 1061Q(3H).
A new note 2 is inserted after note 1 to signpost the reader to the
definitions of member of a couple, illness separated couple, temporarily
separated couple and respite care couple in section 4 of the Social
Security Act.
Note 3 is inserted after new note 2 and reminds the reader that
subsection 118B(2) of the Veterans' Entitlements Act covers certain
categories of World War I veterans.
Note 4 advises the reader that a determination under subsection 5R(1) of
the Veterans' Entitlements Act provides that certain categories of World
War I Australian mariners are eligible for the veterans supplement.
Item 100 repeals the cell in column 2 at table item 4 from
subsection 1061S(1) and substitutes a new cell in column 2 at table item 4.
Section 1061S sets the rate of telephone allowance for telephone
subscribers.
New table item 4 provides that the rate of telephone allowance for a person
who is partnered, whose partner does not receive telephone allowance and
the payability rules in section 1061R would not prevent that partner being
paid telephone allowance, is to be the equivalent of the single rate of
telephone allowance.
Item 101 repeals the cell in column 2 at table item 5 from
subsection 1061S(1) and substitutes a new cell in column 2 at table item 5.
Section 1061S sets the rate of telephone allowance for telephone
subscribers.
New table item 5 provides that the rate of telephone allowance for a person
who is partnered, whose partner does not receive telephone allowance and
the payability rules in section 1061R would not prevent that partner being
paid telephone allowance, is to be the equivalent to half the single rate
of telephone allowance.
Item 102 repeals the cell in column 2 at table item 7 from
subsection 1061S(1) and substitutes a new the cell in column 2 at table
item 7. Section 1061S sets the rate of telephone allowance for telephone
subscribers.
New table item 7 provides that the rate of telephone allowance for a person
who is partnered, whose partner does not receive veterans supplement under
the Veterans' Entitlements Act or MRCA supplement under the Military
Rehabilitation and Compensation Act is to be equivalent to the single rate
of telephone allowance.
Item 103 repeals the cell in column 2 at table item 8 from
subsection 1061S(1) and substitutes a new the cell in column 2 at table
item 8. Section 1061S sets the rate of telephone allowance for telephone
subscribers.
New table item 8 provides that the rate of telephone allowance for a person
who is partnered, whose partner does receive veterans supplement under the
Veterans' Entitlements Act or MRCA supplement under the Military
Rehabilitation and Compensation Act is to be equivalent to half of the
single rate of telephone allowance.
Item 104 repeals table item 4 from subsection 1061SA(1) and substitutes a
new item 4 into the table. Section 1061SA sets the rate of telephone
allowance for telephone and internet subscribers.
New table item 4 provides that the rate of telephone allowance for a person
who is partnered, whose partner does not receive telephone allowance and
the payability rules in section 1061R would not prevent that partner being
paid telephone allowance, is to be the equivalent of the single rate of
telephone allowance.
Item 105 repeals table item 5 from subsection 1061SA(1) and substitutes a
new item 5 into the table. Section 1061SA sets the rate of telephone
allowance for telephone and internet subscribers.
New table item 5 provides that the rate of telephone allowance for a person
who is partnered, whose partner does receive telephone allowance or the
payability rules in section 1061R do prevent that partner being paid
telephone allowance, is to be equivalent to half of the single rate of
telephone allowance.
Item 106 repeals the cell in column 2 at table item 7 from
subsection 1061SA(1) and substitutes a new the cell in column 2 at table
item 7. Section 1061SA sets the rate of telephone (internet) allowance for
individuals who are telephone and internet subscribers.
New table item 7 provides that the rate of telephone (internet) allowance
for a person who is partnered, whose partner does not receive veterans
supplement under the Veterans' Entitlements Act or MRCA supplement under
the Military Rehabilitation and Compensation Act is to be equivalent to the
single rate of telephone allowance.
Item 107 repeals the cell in column 2 at table item 8 from
subsection 1061SA(1) and substitutes a new the cell in column 2 at table
item 8. Section 1061SA sets the rate of telephone (internet) allowance for
individuals who are telephone and internet subscribers.
New table item 8 provides that the rate of telephone (internet) allowance
for a person who is partnered, whose partner does receive veterans
supplement under the Veterans' Entitlements Act or MRCA supplement under
the Military Rehabilitation and Compensation Act is to be equivalent to
half of the single rate of telephone allowance.
Item 108 repeals item 11 from the table in subsection 1061SA(1) as there
will no longer be telephone allowance paid under the Veterans' Entitlements
Act or the Military Rehabilitation and Compensation Act and there is no
longer a need to distinguish between different rates of telephone allowance
that were previously paid under that legislation.
Item 109 omits the reference to item 11 of the table in subsection
1061SA(1) from subsection 1061SA(3).
Item 110 omits the reference to 'seniors concession allowance' in
paragraph 1061TA(2)(b) and substitutes the reference to 'seniors
supplement'. This is because seniors concession allowance under the
Veterans' Entitlements Act is being replaced with seniors supplement.
Item 111 inserts a new subsection 1061VA(2A) after subsection 1061VA(2) to
confirm that an election to receive the minimum amount of pension
supplement on a quarterly, rather than fortnightly, basis will cease to be
in force when that person ceases to be paid the main payment that qualifies
the individual for payment of the pension supplement.
Item 112 omits the reference to 'seniors concession allowance' in
paragraph 1061ZAAZA(2)(ea) and substitutes the reference to 'seniors
supplement'. This is because seniors concession allowance under the
Veterans' Entitlements Act is being replaced with seniors supplement.
Item 113 omits the reference to section 1168 in note 5 after point 1064-A1
and substitutes a reference to section 1173. A note is inserted to advise
the reader that this item fixes an incorrect cross-reference.
Item 114 repeals subparagraph 1064-H1(aa)(ii) and substitutes a new
subparagraph 1064-H1(aa)(ii) which provides that an individual's remote
area allowance remains payable even though their rate of pension is nil,
where the individual's rate of pension is nil merely because they have
elected to receive the minimum amount of pension supplement on a quarterly
basis.
Item 115 repeals subparagraph 1065-E1(aa)(ii) and substitutes a new
subparagraph 1065-E1(aa)(ii) which provides that an individual's remote
area allowance remains payable even though their rate of pension is nil,
where the individual's rate of pension is nil merely because they have
elected to receive the minimum amount of pension supplement on a quarterly
basis.
Item 116 repeals subparagraph 1066-H1(aa)(ii) and substitutes a new
subparagraph 1066-H1(aa)(ii) which provides that an individual's remote
area allowance remains payable even though their rate of pension is nil,
where the individual's rate of pension is nil merely because they have
elected to receive the minimum amount of pension supplement on a quarterly
basis.
Item 117 repeals points 1066A-D2 and 1066A-D3 and substitutes new
points 1066A-D2 and 1066A-D3 to provide that pharmaceutical allowance is
not to be added to a person's maximum basic rate if the person, or their
partner, is in receipt of veterans supplement under the Veterans'
Entitlements Act or MRCA supplement under the Military Rehabilitation and
Compensation Act.
Item 118 repeals paragraph 1066A-D4(a) and substitutes a new
paragraph 1066A-D4(a) which removes the reference to advance pharmaceutical
allowance paid under the Veterans' Entitlements Act as pharmaceutical
allowance will no longer be paid under that Act.
Item 119 repeals point 1066A-D7 as advance pharmaceutical allowance will no
longer be paid under the Veterans' Entitlements Act or the Military
Rehabilitation and Compensation Act.
Item 120 repeals subparagraph 1066A-I1(aa)(ii) and substitutes a new
subparagraph 1066A-I1(aa)(ii) which provides that an individual's remote
area allowance remains payable even though their rate of pension is nil,
where the individual's rate of pension is nil merely because they have
received an advance of pharmaceutical allowance under the Social Security
Act.
Item 121 repeals points 1066B-D2 and 1066B-D3 substitutes new points 1066B-
D2 and 1066B-D3 to provide that pharmaceutical allowance is not to be added
to a person's maximum basic rate if the person, or their partner, is in
receipt of veterans supplement under the Veterans' Entitlements Act or MRCA
supplement under the Military Rehabilitation and Compensation Act.
Item 122 repeals paragraph 1066B-D4(a) and substitutes a new
paragraph 1066B-D4(a) which removes the reference to advance pharmaceutical
allowance paid under the Veterans' Entitlements Act as pharmaceutical
allowance will no longer be paid under that Act.
Item 123 repeals point 1066B-D7 as advance pharmaceutical allowance will no
longer be paid under the Veterans' Entitlements Act or the Military
Rehabilitation and Compensation Act.
Item 124 repeals subparagraph 1066B-F1(aa)(ii) and substitutes a new
subparagraph 1066B-F1(aa)(ii) which provides that an individual's remote
area allowance remains payable even though their rate of pension is nil,
where the individual's rate of pension is nil merely because they have
received an advance of pharmaceutical allowance under the Social Security
Act.
Item 125 repeals point 1067G-C2 and substitutes a new point 1067G-C2 to
provide that pharmaceutical allowance is not to be added to a person's
maximum basic rate if the person, or their partner, is in receipt of
veterans supplement under the Veterans' Entitlements Act or MRCA supplement
under the Military Rehabilitation and Compensation Act.
Item 126 repeals point 1067L-C2 and substitutes a new point 1067L-C2 to
provide that pharmaceutical allowance is not to be added to a person's
maximum basic rate if the person, or their partner, is in receipt of
veterans supplement under the Veterans' Entitlements Act or MRCA supplement
under the Military Rehabilitation and Compensation Act.
Item 127 repeals points 1068-D4 and 1068-D5 and substitutes new points 1068-
D4 and 1068-D5 to provide that pharmaceutical allowance is not to be added
to a person's maximum basic rate if the person, or their partner, is in
receipt of veterans supplement under the Veterans' Entitlements Act or MRCA
supplement under the Military Rehabilitation and Compensation Act.
Item 128 repeals paragraph 1068-D6(a) and substitutes a new paragraph 1068-
D6(a) which removes the reference to advance pharmaceutical allowance paid
under the Veterans' Entitlements Act as pharmaceutical allowance will no
longer be paid under that Act.
Item 129 repeals point 1068-D9 as advance pharmaceutical allowance will no
longer be paid under the Veterans' Entitlements Act or the Military
Rehabilitation and Compensation Act.
Item 130 repeals paragraph 1068-J1(aa) and substitutes a new paragraph 1068-
J1(aa) which provides that an individual's remote area allowance remains
payable even though their rate of benefit is nil, where the individual's
rate of benefit is nil merely because they have received an advance of
pharmaceutical allowance under the Social Security Act or because the
individual's rate of benefit is nil merely because they have elected to
receive the minimum amount of pension supplement on a quarterly basis.
Item 131 repeals point 1068A-C2 and substitutes a new point 1068A-C2 to
provide that pharmaceutical allowance is not to be added to a person's
maximum basic rate if the person is in receipt of veterans supplement under
the Veterans' Entitlements Act or MRCA supplement under the Military
Rehabilitation and Compensation Act.
Item 132 repeals paragraph 1068A-C3(a) and substitutes a new
paragraph 1068A-C3(a) which removes the reference to advance pharmaceutical
allowance paid under the Veterans' Entitlements Act as pharmaceutical
allowance will no longer be paid under that Act.
Item 133 repeals point 1068A-C6 as advance pharmaceutical allowance will no
longer be paid under the Veterans' Entitlements Act or the Military
Rehabilitation and Compensation Act.
Item 134 repeals paragraph 1068A-F1(a) and substitutes a new
paragraph 1068A-F1(a) which provides that an individual's remote area
allowance remains payable even though their rate of pension PP (single) is
nil, where the individual's rate of pension PP (single) is nil merely
because they have received an advance of pharmaceutical allowance under the
Social Security Act or because the individual's rate of pension PP (single)
is nil merely because they have elected to receive the minimum amount of
pension supplement on a quarterly basis.
Item 135 repeals points 1068B-E2 and 1068B-E3 and substitutes new
points 1068B-E2 and 1068B-E3 to provide that pharmaceutical allowance is
not to be added to a person's maximum basic rate if the person, or their
partner, is in receipt of veterans supplement under the Veterans'
Entitlements Act or MRCA supplement under the Military Rehabilitation and
Compensation Act.
Item 136 repeals paragraph 1068B-E4(a) and substitutes a new
paragraph 1068B-E4(a) which removes the reference to advance pharmaceutical
allowance paid under the Veterans' Entitlements Act as advance
pharmaceutical allowance will no longer be paid under that Act.
Item 137 repeals point 1068B-E7 as advance pharmaceutical allowance will no
longer be paid under the Veterans' Entitlements Act or the Military
Rehabilitation and Compensation Act.
Item 138 repeals paragraph 1068B-G1(b) and substitutes a new
paragraph 1068B-G1(b) which provides that an individual's remote area
allowance remains payable even though their rate of benefit PP (partnered)
is nil, where the individual's rate of benefit PP (partnered) is nil merely
because they have received an advance of pharmaceutical allowance under the
Social Security Act or because the individual's rate of benefit PP
(partnered) is nil merely because they have elected to receive the minimum
amount of pension supplement on a quarterly basis.
Item 139 repeals items 55 and 56 in the table at section 1190 and
substitutes new items 55 and 56 into the table. This item removes the
references to telephone allowance paid under the Veterans' Entitlements Act
and the Military Rehabilitation and Compensation Act and substitutes
references to payment of the veterans supplement and MRCA supplement.
Telephone allowance will no longer be paid under the Veterans' Entitlements
Act or Military Rehabilitation and Compensation Act.
Item 140 repeals items 56AG and 56AH in the table at section 1190 and
substitutes new items 56AG and 56AH into the table. This item removes the
references to telephone allowance paid under the Veterans' Entitlements Act
and the Military Rehabilitation and Compensation Act and substitutes
references to payment of the veterans supplement and MRCA supplement.
Telephone allowance will no longer be paid under the Veterans' Entitlements
Act or Military Rehabilitation and Compensation Act.
Item 141 repeals item 56AK from the table at section 1190 as table item 11
in subsection 1061SA has been repealed. There will no longer be telephone
allowance paid under the Veterans' Entitlements Act or the Military
Rehabilitation and Compensation Act and there is no longer a need to
distinguish between different rates of telephone allowance that were
previously paid under that legislation.
Item 142 repeals item 33AAC from the table at subsection 1191(1) as table
item 11 in subsection 1061SA has been repealed. There will no longer be
telephone allowance paid under the Veterans' Entitlements Act or the
Military Rehabilitation and Compensation Act and there is no longer a need
to distinguish between different rates of telephone allowance that were
previously paid under that legislation.
Item 143 omits the reference to section 1168 in subparagraph 1210(1)(b)(ii)
and substitutes a reference to section 1173. A note is inserted to advise
the reader that this item fixes an incorrect cross-reference.
Amendments to the Social Security Administration Act
Item 144 repeals subsection 48C(3) and substitutes a new subsection 48C(3)
to correctly set out the method for calculation of an instalment of
quarterly pension supplement. An individual's quarterly pension supplement
is to be calculated by multiplying the daily rate of quarter pension
supplement by the number of days in the quarter for which a person had
elected to receive the minimum amount of their pension supplement on a
quarterly rather than fortnightly basis.
Item 145 repeals paragraph (k) of the definition of category I welfare
payment in section 123TC and substitutes a new paragraph (k). This item
removes the reference to telephone allowance paid under the Veterans'
Entitlements Act and substitutes a reference to veterans supplement paid
under section 118B of that Act.
Item 146 repeals paragraph (m) of the definition of category I welfare
payment in section 123TC to remove the reference to utilities allowance
paid under the Veterans' Entitlements Act as utilities allowance will no
longer be paid under that Act.
Item 147 omits the words "or VIIA" from paragraph (v) of the definition of
category I welfare payment in section 123TC to remove the reference to
advance pharmaceutical allowance paid under the Veterans' Entitlements Act
as pharmaceutical allowance will no longer be paid under that Act.
Item 148 omits the words "(other than an advance pharmaceutical allowance
in relation to an age pension or a carer payment)" from paragraph (k) of
the definition of a category Q welfare payment as pharmaceutical allowance
will no longer be paid to age pension or carer payment recipients as it has
been incorporated into the pension supplement.
Amendment of the Veterans' Entitlements Act
Items 149 to 156 insert, in alphabetical order, a number of new terms into
the index of definitions in section 5.
Item 157 repeals paragraph 5H(8)(ba) and substitutes a new paragraph to
exempt from the income test, a payment of an instalment of veterans
supplement under Part VIIA of the Veterans' Entitlements Act.
Item 158 repeals paragraph 5H(8)(ga) which referred to utilities allowance.
Utilities allowance is being subsumed into the new pension supplement and
increased rate of income support supplement.
Item 159 amends paragraph 5H(8)(gb) by omitting the words "seniors
concession allowance" and substituting the words "seniors supplement".
Item 160 repeals paragraph 5H(8)(zt) and substitutes a new paragraph to
exempt from the income test, a payment of an instalment of MRCA supplement
under section 221, 245 or 300 of the Military Rehabilitation and
Compensation Act.
Item 161 repeals paragraphs (d) and (e) of the definition of compensation
affected pension in subsection 5NB(1). Pharmaceutical allowance and
telephone allowance will no longer be paid under the Veterans' Entitlements
Act.
Item 162 amends the definition of Australia in subsection 5Q(1).
Item 163 inserts a definition for pension supplement amount in subsection
5Q(1).
Item 164 inserts a definition for quarterly pension supplement in
subsection 5Q(1).
Item 165 repeals the definition of seniors concession allowance in
subsection 5Q(1).
Item 166 inserts a definition for seniors supplement in subsection 5Q(1).
Item 167 repeals the definition of utilities allowance in subsection 5Q(1).
Items 168 to 170 amend subsections 36A(3), 37A(3) and 38A(3) respectively
to reflect that advance pharmaceutical allowance is no longer paid under
the Veterans' Entitlements Act.
Item 171 amends subparagraph 53M(4)(b)(ii) so that, in respect of a partner
who was permanently blind, the rate of the income support supplement is to
be worked out as the sum of the maximum basic rate under point SCH6-B1 and
the partner's pension supplement amount (worked out as if the partner was
receiving a service pension worked out under subpoint SCH6-A1(2) of
Schedule 6).
Item 172 repeals subsection 58A(7) and (8) and substitutes new subsections.
New subsection 58A(7) provides that, under certain circumstances, if apart
from subsection 58A(7), the portion of an instalment corresponding to a day
would be less than the person's minimum daily rate, but more than nil, the
amount of that portion of the instalment is to be increased to the person's
minimum daily rate.
The circumstances under which the portion of an instalment corresponding to
a day is to be increased is if:
. an amount for a particular day of an instalment of service
pension or income support is payable to a person in relation to
a particular day; and
. on that day, the person is residing in Australia and the person
is either, in Australia, or is temporarily absent from
Australia for a continuous period not exceeding 13 weeks; and
. there is no election in force under subsection 60A(1) in
relation to the person.
New subsection 58A(8) provides that the new minimum daily rate for a person
is to be 1/364th of the person's minimum pension supplement amount.
Item 173 makes a technical amendment at the end of section 58K(1).
Item 174 repeals note 2 at the end of section 58K(1).
Item 175 repeals table item 2, the former GST pension supplement, from the
table in section 59A and substitutes new table items 2, 2A and 2B, to be
indexed under Division 18 of Part IIIB. New table item 2 provides for the
new "combined couple rate of pension supplement", abbreviated to "PS rate"
and specified in subsection 5GA(1). New table item 2A provides for the new
"combined couple rate of minimum pension supplement", abbreviated to "PS
minimum rate" and specified in subsection 5GA(2). New table item 2B
provides for the new "pension supplement basic amount", abbreviated to "PS
basic rate" and specified in subsection 5GA(5).
Item 176 repeals table items 18 and 19 from the table in section 59A. The
items referred to "pharmaceutical allowance" and are no longer applicable.
Item 177 adds a new note at the end of section 59A. The note advises that
indexing the PS minimum rate will also result in the indexation of the rate
of quarterly pension supplement in section 60B and the rate of seniors
supplement in section 118PB.
Item 178 repeals table item 1A, the former GST pension supplement, from the
table in subsection 59B(1) and substitutes new table items 1A, 1B and 1C.
The table in section 59B(1) specifies the indexation days, reference
quarter, base quarter and rounding base for the amounts to be indexed under
Division 18 of Part IIIB. New table item 1A provides for the new "combined
couple rate of pension supplement (PS rate). New table item 1B provides
for the new "combined couple rate of minimum pension supplement", (PS
minimum rate). New table item 1C provides for the new "pension supplement
basic amount" (PS basic rate).
Item 179 inserts a new subsection 59C(2AB) before subsection 59C(2A). New
subsection 59C(2AB) specifies that the first indexation of amounts under
items 1A, 1B and 1C of the CPI Indexation Table in subsection 59B(1) is to
occur on
20 March 2010.
Item 180 repeals section 59L that provided for the adjustment of
pharmaceutical allowance. This provision is no longer applicable.
Items 181 and 183 omit the word "allowance" or "allowances" from
subsections 59M(1), (2), (3) and (4) as the allowances referred to are no
longer applicable.
Item 182 repeals paragraphs 59M(1)(g) and (h) which referred to "telephone
allowance" and "advance pharmaceutical allowance" respectively. These
allowances have been replaced by the new pension supplement and the
veterans supplement.
Item 184 repeals paragraph 59Q(7)(b) and substitutes a new paragraph. New
paragraph 59Q(7)(b) provides the formula for to work out the number of
weeks in a person's lump sum preclusion period. The existing formula
required amendment because of the change in the taper rate provided for in
Schedule 6 and the abolition of pharmaceutical allowance in this Schedule.
New paragraph 59Q(7)(b) provides that, where a person has received a lump
sum compensation payment on or after 20 March 1997, the person's lump sum
preclusion period is calculated by the formula. The formula divides 52
times the compensation of the lump sum compensation payment by the total
of twice the sum of the person's maximum basic rate and the amount
applicable to the person in point SCH6-BA3 plus the ordinary free area
limit.
For the purposes of the formula, the "maximum basic rate" means the amount
specified in column 3 of item 1 in Table B in point SCH6-B1.
For the purposes of the formula, the "ordinary free area limit" means the
amount specified in column 3 of item 1 of Table E-1 in point SCH6-E6.
Table E-1 in point SCH6-E6 provides for the ordinary/adjusted income free
area.
For the purposes of the formula, "point SCH6-BA3 amount" means the pension
supplement amount worked out under table item 1 in point SCH6-BA3 for a
person who is not a member of a couple. The amount for a person who is not
a member of a couple is to be applied in the formula regardless of whether
or not the person is a member of a couple and regardless of whether the
table item applies to the person for whom the lump sum preclusion period is
being worked out.
Items 185 and 186 fix incorrect cross references.
Item 187 repeals Part VIIAC of the Veterans' Entitlements Act. Part VIIAC
provided for the payment of utilities allowance which has been subsumed
into the new pension supplement and the increase to income support
supplement.
Item 188 amends the definition of pension in subsection 121(7) by omitting
", loss of earnings allowance under section 108, utilities allowance under
Part VIIAC or seniors concession allowance under Part VIIAD" and
substituting "or loss of earnings allowance under section 108". Utilities
allowance and seniors concession allowance are being replaced with the new
pension supplement and the increase to income support supplement and
seniors supplement.
Item 189 omits the words "seniors concession allowance" and substitutes the
words "seniors supplement" in subsections 122A(1A) and 122A(1C). Seniors
supplement is replacing the seniors concession allowance.
The heading to section 122A is changes by omitting "allowance" and
substituting "supplement".
Item 190 omits the words "the allowance" and substitutes the words "the
supplement" in subsection 122A(1C).
Item 191 omits the words "pension or" and substitutes the words "pension,
supplement or" in the definition of pension in subsection 122A(2).
Item 192 omits "(other than utilities allowance or seniors concession
allowance)" from paragraph (d) of the definition of income payment in
subsection 128A(1).
Item 193 repeals section 198E. 198E provided for the indexation of
utilities allowance and seniors concession allowance, which will no longer
be payable under the Veterans' Entitlements Act.
Item 194 repeals step 3 from method statement 1 in Schedule 6. Step 3
added an amount of pharmaceutical allowance. This step is no longer
applicable as pharmaceutical allowance has been replaced by veterans
supplement.
Item 195 omits from step 4 in method statement 1, the reference to step 3,
omitted in item 192.
Item 196 omits from note 4, at the end of step 11 in method statement 1 of
Schedule 6, the words "(maximum basic rate first, then rent assistance and
finally pharmaceutical allowance)".
Item 197 repeals step 3 from method statement 2.
Item 198 makes a technical amendment to method statement 2.
Item 199 repeals step 3 from method statement 3.
Item 200 repeals step 2 from method statement 4.
Item 201 repeals step 3 from method statement 5.
Item 202 makes a technical amendment to method statement 5.
Item 203 omits from note 4, at the end of step 12 in method statement 5 of
Schedule 6, the words "(maximum basic rate first, then rent assistance and
finally pharmaceutical allowance)".
Item 204 repeals step 2 from method statement 6.
Item 205 repeals module D of the rate calculator in Part 2 of Schedule 6.
Module D provided for an amount of pharmaceutical allowance to be added to
an individual's rate of pension. Module D is no longer required as the
rate of pension supplement incorporates an amount for pharmaceutical
allowance.
Item 206 omits the reference in subparagraph SCH6-G1(1)(a)(ii) to an
advance payment of pharmaceutical allowance under Division 2 of Part VIIA
of the Veterans' Entitlements Act. Part VIIA is being replaced with the
new veterans supplement provisions by Schedule 4 of this Bill.
Part 6 - Application, saving and transitional
Item 207 provides for a transitional rate of pension supplement that will
only apply to the single rate for a limited period starting on
20 September 2009 and ending on
19 March 2010 inclusive.
Subitem 207(1) provides that, for the period between 20 September 2009 and
19 March 2010, the Veterans' Entitlements Act as amended by this Schedule,
applies in accordance with the modifications specified in subitems 208(2)
and 208(3).
Subitem 207(2) provides that subsection 5GA(7) will be inserted at the end
of section 5GA. Subsection 5GA(7) provides for the definition and
calculation of a 'temporary singles' amount' for the pension supplement.
The rate of the temporary singles amount is $1,458.60 per annum, comprised
of the sum of the following components and rounded up to the nearest
multiple of $2.60:
a) the annual rate of utilities allowance for a person who is not a
member of a couple;
b) the annual rate of telephone allowance, at the increased rate for
home internet connection, for a person who is not a member of a
couple;
c) the annual rate of pharmaceutical allowance for a person who is not
a member of a couple;
d) the basic amount of the pension supplement; and
e) $130.
Subitem 207(3) temporarily omits point SCH6-BA3 and temporarily substitutes
a new point SCH6-BA3. Transitional point SCH6-BA3 provides a person who is
partnered receives a rate of pension supplement that is 50 per cent of the
combined couple rate of pension supplement. People who are single, or a
member of an illness separated or respite care couple will receive pension
supplement that is equal to the temporary singles amount.
The note inserted at the end of SCH6-BA3 advises that the definition of
combined couple rate of pension supplement is in subsection 5GA(1).
Item 208 is an application provision that states that Part VIIAD of the
Veterans' Entitlements Act as inserted by this Schedule, applies in
relation to elections made under subsection 60A(1) of the Veterans'
Entitlements Act on or after 1 July 2010. That is, the quarterly pension
supplement will not commence until 1 July 2010.
Subitem 209(1) provides that, despite the repeal of Part VIIAD of the
Veterans' Entitlements Act, those provisions will continue to apply in
relation to the seniors concession allowance test day on 20 September 2009
as if the repeals had not occurred. Holders of a seniors health card and
eligible Gold card holders will receive a final quarterly payment of
seniors concession allowance in respect of the test day
20 September 2009, and will commence receiving seniors supplement on the
following test day, being 20 December 2009.
Subitem 209(2) provides that for the purposes of subitem (1), under which
the final instalment of seniors concession allowance will be paid, section
198E of the Veterans' Entitlements Act, as in force immediately before the
commencement of this item, applies in relation to 20 September 2009.
Section 198E provides for the indexation of seniors concession allowance.
This means that the final instalment of seniors concession allowance will
include the 20 September 2009 indexation adjustment.
Subitem 209(3) provides that despite the repeal of table item 16A.1 in
section 52-65 of the Income Tax Assessment Act (as in force immediately
before the commencement of this item), table item 16A.1 continues to apply
on and after the commencement of this item in relation to payments of
seniors concession allowance made before, on or after that commencement.
The effect of this is that the final instalment of seniors concession
allowance to be made in respect of
20 September 2009 will be exempt from income tax.
Subitem 209(4) provides that despite the repeal of paragraph 8(8)(y)(viib)
of the Social Security Act (as in force immediately before the commencement
of this item), paragraph 8(8)(y)(viib) continues to apply on and after the
commencement of this item in relation to payments of seniors concession
allowance made before, on or after that commencement. The effect of this
is that the final instalment of seniors concession allowance to be made in
respect of 20 September 2009 will be exempt under the social security
income test.
Subitem 209(5) provides that despite the repeal of paragraph 5H(8)(gb) of
the Veterans' Entitlements Act (as in force immediately before the
commencement of this item), paragraph 5H(8)(gb) continues to apply on and
after the commencement of this item in relation to payments of seniors
concession allowance made before, on or after that commencement. The
effect of this is that the final instalment of seniors concession allowance
to be made in respect of 20 September 2009 will be exempt under the
veterans' entitlements income test.
Subitem 209(6) provides that, despite the amendments made by items 187 and
188 of this Schedule, which omit references to 'seniors concession
allowance' from subsections 122A(1A) and (1C), subsection 122A(1C) of the
Veterans' Entitlements Act (as in force immediately before the commencement
of this item) continues to apply on and after that commencement in relation
to payments of seniors concession allowance made before, on or after that
commencement. This means that if a person has not nominated a bank account
for the payment of seniors concession allowance, within the time period
required by the Commission, the seniors concession allowance is not payable
to the person.
Subitem 210(1) provides that, despite the repeal of Part VIIAC of the
Veterans' Entitlements Act, those provisions will continue to apply in
relation to the utilities allowance test day on 20 September 2009 as if the
repeal had not occurred. A final instalment of utilities allowance will be
paid in respect of the test day of 20 September 2009.
Subitem 210(2) provides that for the purposes of subitem (1), under which
the final instalment of utilities allowance will be paid, section 198E of
the Veterans' Entitlements Act, as in force immediately before the
commencement of this item, applies in relation to 20 September 2009.
Section 198E provides for the indexation of utilities allowance. This
means that the final instalment of utilities allowance will include the 20
September 2009 indexation adjustment.
Subitem 210(3) provides that despite the repeal of table item 20A.1 in
section 52-65 of the Income Tax Assessment Act (as in force immediately
before the commencement of this item), table item 20A.1 continues to apply
on and after the commencement of this item in relation to payments of
utilities allowance made before, on or after that commencement. The effect
of this is that the final instalment of utilities allowance be made in
respect of 20 September 2009 will be exempt from income tax.
Subitem 210(4) provides that despite the repeal of paragraph 8(8)(y)(viia)
of the Social Security Act (as in force immediately before the commencement
of this item), paragraph 8(8)(y)(viia) continues to apply on and after the
commencement of this item in relation to payments of utilities allowance
made before, on or after that commencement. The effect of this is that the
final instalment of utilities allowance to be made in respect of 20
September 2009 will be exempt under the social security income test.
Subitem 210(5) states that despite the amendment made by item 144,
paragraph (m) of the definition of category I welfare payment in section
123TC of the Social Security (Administration) Act (as in force immediately
before the commencement of item 144) continues to apply on and after that
commencement in relation to payments of utilities allowance made before, on
or after that commencement.
Subitem 210(6) provides that despite the repeal of paragraph 5H(8)(ga) of
the Veterans' Entitlements Act (as in force immediately before the
commencement of this item), paragraph 5H(8)(ga) continues to apply on and
after the commencement of item 157 in relation to payments of utilities
allowance made before, on or after that commencement. The effect of this
is that the final instalment of utilities allowance to be made in respect
of 20 September 2009 will be exempt under the veterans' entitlements income
test.
Subitem 211(1) provides that, despite the repeal of Part VIIB of the
Veterans' Entitlements Act, those provisions will continue to apply in
relation to the telephone allowance test day on 20 September 2009 as if the
repeal had not occurred. A final instalment of telephone allowance will be
paid in respect of the test day of 20 September 2009.
Subitem 211(2) provides that for the purposes of subitem (1), under which
the final instalment of telephone allowance will be paid, section 198F of
the Veterans' Entitlements Act, as in force immediately before the
commencement of this item, applies in relation to 20 September 2009.
Section 198F provides for the indexation of telephone allowance. This
means that the final instalment of telephone allowance will include the 20
September 2009 indexation adjustment.
Subitem 211(3) provides that despite the repeal of table item 18.1 in
section 52-65 of the Income Tax Assessment Act (as in force immediately
before the commencement of this item), table item 18.1 continues to apply
on and after the commencement of this item in relation to payments of
telephone allowance made before, on or after that commencement. The effect
of this is that the final instalment of telephone allowance be made in
respect of 20 September 2009 will be exempt from income tax.
Subitem 211(4) states that despite the amendment made by item 143,
paragraph (k) of the definition of category I welfare payment in section
123TC of the Social Security (Administration) Act (as in force immediately
before the commencement of item 144) continues to apply on and after that
commencement in relation to payments of telephone allowance made before, on
or after that commencement.
Subitem 211(5) provides that despite the repeal of paragraph 5H(8)(ba) of
the Veterans' Entitlements Act (as in force immediately before the
commencement of this item), paragraph 5H(8)(ba) continues to apply on and
after the commencement of item 155 in relation to payments of telephone
allowance made before, on or after that commencement. The effect of this
is that the final instalment of telephone allowance to be made in respect
of 20 September 2009 will be exempt under the veterans' entitlements income
test.
Subitem 212(1) provides that, despite the repeal of Part VIIA of the
Veterans' Entitlements Act by item 12 of this Schedule, Part VIIA as in
force immediately before the commencement of item 12, continues to apply on
and after that commencement in relation to days occurring before 20
September 2009. This provision takes account of the circumstance whereby
an amount of pharmaceutical allowance will be paid to eligible persons on
the payday of 24 September 2009, in respect of days falling before 20
September 2009on which the person was eligible pharmaceutical allowance.
Subitem 212(2) provides that despite the repeal of table item 12.1 in
section 52-65 of the Income Tax Assessment Act (as in force immediately
before the commencement of this item), table item 12.1 continues to apply
on and after the commencement of this item in relation to payments of
pharmaceutical allowance made before, on or after that commencement. The
effect of this is that the final instalment of pharmaceutical allowance be
made in respect of 20 September 2009 will be exempt from income tax.
Subitem 212(3) states that despite the amendment made by item 98,
subsection 1061JD(2) of the Social Security Act (as in force immediately
before the commencement of item 98) continues to apply on and after that
commencement in relation to payments of pharmaceutical allowance made under
Part VIIA of the Veterans' Entitlements Act made before, on or after that
commencement.
Subitem 212(4) provides that despite the repeal of paragraph 5H(8)(ba) of
the Veterans' Entitlements Act (as in force immediately before the
commencement of this item), paragraph 5H(8)(ba) continues to apply on and
after the commencement of item 155 in relation to payments of
pharmaceutical allowance made before, on or after that commencement.
Subitem 213(1) provides that item 214 applies to a person if the person
receives an instalment of service pension for the pension period that
includes 20 September 2009.
Subitem 213(2) provides that the circumstances under which the amount of a
portion of the instalment is to be increased to a person's minimum daily
rate. The circumstances are if:
a) for a day in that period before 20 September 2009, an amount of
pharmaceutical allowance is added to the person's maximum basic
rate in working out the amount of the instalment; and
b) apart from this item, the portion of the instalment corresponding
to that day would be less than the person's minimum daily rate, but
more than nil.
Subitem 213(3) defines a person's minimum daily rate for the purposes of
item 214 as being 1/364th of the yearly amount of pharmaceutical allowance
added to the person's maximum basic rate in working out that portion of the
instalment.
This item maintains the minimum daily rate based on the rate of
pharmaceutical allowance for the pay day of 24 September 2009 for the days
in the pay period that are before 20 September 2009. Item 170 of this
Schedule, provides for the minimum daily rate for the days in the pay
period that fall on or after 20 September 2009 which will be calculated
using the new minimum pension supplement amount.
Subitem 214(1) provides that, despite the amendment of Division 4 of Part 7
of Chapter 4 and of Division 5 of Part 2 of Chapter 5 of the Military
Rehabilitation and Compensation Act, those Divisions will continue to apply
in relation to the telephone allowance test day on 20 September 2009 as if
the amendments had not occurred. A final instalment of telephone allowance
will be paid in respect of the test day of 20 September 2009.
Subitem 214(2) provides that for the purposes of subitem (1), under which
the final instalment of telephone allowance will be paid, section 198F of
the Veterans' Entitlements Act, as in force immediately before the
commencement of this item, applies in relation to 20 September 2009.
Section 198F provides for the indexation of telephone allowance. This
means that the final instalment of telephone allowance will include the 20
September 2009 indexation adjustment.
Subitem 214(3) states that despite the amendments of Division 4 of Part 4
of Chapter 6 of the Military Rehabilitation and Compensation Act made by
this Schedule, Division 4 of Part 4 of Chapter 6, as in force immediately
before the commencement of this item, continues to apply on and after that
commencement in relation to days occurring before 20 September 2009.
Subitem 214(4) provides that despite the repeal of table items 10 and 20 in
section 52-114 of the Income Tax Assessment Act (as in force immediately
before the commencement of this item), table items 10 and 20 continues to
apply on and after the commencement of this item in relation to payments of
telephone allowance or pharmaceutical allowance made before, on or after
that commencement. The effect of this is that the final payment of
telephone allowance and pharmaceutical allowance will be exempt from income
tax.
Subitem 214(5) makes it clear that section 388, 398, 401, 402 and 403 of
the Military Rehabilitation and Compensation Act apply on and after the
commencement of this item as if a reference in those sections to MRCA
supplement included a reference to telephone allowance.
Subitem 214(6) states that despite the amendment made by item 98,
subsection 1061JD(2) of the Social Security Act (as in force immediately
before the commencement of item 98) continues to apply on and after that
commencement in relation to payments of pharmaceutical allowance made under
the Military Rehabilitation and Compensation Act before, on or after that
commencement.
Subitem 214(7) provides that despite the repeal of paragraph 5H(8)(zt) of
the Veterans' Entitlements Act (as in force immediately before the
commencement of this item), paragraph 5H(8)(zt) continues to apply on and
after the commencement of item 156 in relation to a payment of telephone
allowance or pharmaceutical allowance made before, on or after that
commencement. The effect of this is that the final instalment of telephone
and pharmaceutical allowance to be made in respect of
20 September 2009 will be exempt under the veterans' entitlements income
test.
Division 3 - Social security payments
Item 215 is a saving provision and provides for three discrete provisions.
The first provision states that despite the repeal of table item 22.B-1 in
section 52-10 of the Income Tax Assessment Act any payments of seniors
concession allowance paid before, on or after the commencement of the
Pension Reform Act are to remain exempt from income tax. This provision
ensures that the final payment of seniors concession allowance, to be paid
on the first pay day after 20 September 2009, will retain the same tax
treatment that all previous payments of seniors concession allowance have
had.
The second saving provision ensures that despite the amendments made in the
Pension Reform Act to section 1190 and section 1191 of the Social Security
Act the final payment of seniors concession allowance will be indexed in
accordance with any CPI increases before the payment is made to qualified
individuals.
The third saving provision ensures that, despite amendments made to the
nominee provisions contained in section 123A of the Social Security Act to
remove reference to the seniors concession allowance, the provisions will
continue to apply for the final payment of seniors concession allowance
that is to be paid on the first pay day after 20 September 2009 to
qualified individuals.
Item 216 provides that, despite the amendments to the qualification rules
for utilities allowance, these provisions will continue to apply in
relation to the utilities allowance test day on 20 September 2009 as if the
amendments had not occurred. This is because utilities allowance is paid
in relation to the previous quarter and the test day for payment of this
allowance is 20 September 2009. Accordingly, individuals who would have
been paid utilities allowance with their first usual payment after
20 September 2009 but for these amendments will still receive the last
instalment of utilities allowance on the first payday after
20 September 2009.
It is intended that individuals who receive a rate of pension that is
calculated by reference to clause 146 in Schedule 1A to the Social Security
Act will also receive this payment of utilities allowance.
Item 217 contains a saving provision to ensure that despite amendments made
to the Social Security Act by the Pension Reform Act, and elsewhere in this
Bill, telephone allowance will continue to be payable for the telephone
allowance test day on 20 September 2009 as if the repeals had not occurred.
This is because the telephone allowance is paid in relation to the
previous quarter and the test day for payment of this allowance is
20 September 2009. Accordingly, individuals who would have been paid
telephone allowance with their first usual payment after 20 September 2009
but for these amendments will still receive the last instalment of
telephone allowance on the first payday after 20 September 2009.
It is intended that individuals who receive a rate of pension that is
calculated by reference to clause 146 in Schedule 1A to the Social Security
Act will also receive this payment of telephone allowance.
Item 218 provides that despite amendments to the Social Security Act set
out in this bill and the Pension Reform Act some sections of the Social
Security Act relating to the payment of advance pharmaceutical allowance
will continue to operate where an advance of pharmaceutical allowance has
been granted before, on or after the commencement of the amending
legislation.
That is, where an individual's rate of social security payment would be
reduced to nil because of an advance payment of pharmaceutical allowance
then their social security payment remains payable to them, despite their
rate being nil for that particular instalment. In addition, where an
individual has received an advance payment of pharmaceutical allowance and
this reduces their rate of social security payment to nil, the individual
will still have remote area allowance added to their base rate if they
qualify for that allowance, despite having a nil rate of base payment.
Item 219 provides that if pharmaceutical allowance is added to a person's
daily rate of social security payment for a day in an instalment period
before 20 September 2009, and the person's rate would be less than the
minimum amount of pharmaceutical allowance, but more than nil, then their
daily rate of social security pension is to be increased to the minimum
amount of pharmaceutical allowance for that day. Accordingly, where an
individual's instalment period includes days before 20 September 2009 and
after 19 September 2009 different provisions will apply.
On or after 20 September 2009 there will not be pharmaceutical allowance
added to many pensions as it has been included in the new pension
supplement. However, the rate of payment for days in the instalment period
that are before 20 September 2009, are to include the minimum amount of
pension supplement as the provisions of item 95 of Schedule 4 to the
Pension Reform Act are only to operate with respect to days in the
instalment period that are on or after 20 September 2009.
Schedule 5 - Adjustments because of Carbon Pollution Reduction Scheme
Summary
Due to timing discrepancies between the introduction of the Carbon
Pollution Reduction Scheme (Household Assistance) Bill 2009 and this bill,
it was not possible for the increases to pension payments to be accurately
drafted and included in the earlier bill.
Pensions will be increased to compensate recipients of those payments for
anticipated increases in the cost of living arising out of the introduction
of the Carbon Pollution Reduction Scheme (CPRS).
The amendments proposed in this bill will also remove the legislative
instrument powers that were included in the Carbon Pollution Reduction
Scheme (Household Assistance) Bill 2009 to ensure the Government's
commitments as set out in the White Paper for the Carbon Pollution
Reduction Scheme could be implemented despite the original timing
discrepancy.
Background
In broad terms, this Schedule amends what will become the Carbon Pollution
Reduction Scheme (Household Assistance) Act 2009.
This Schedule provides for increases to pension payments as a result of
expected increases in the living cost index arising from the introduction
of the Carbon Pollution Reduction Scheme. Pensioners will receive an
increase to payments totalling 2.8 per cent over the first two years of the
scheme.
Certain pension rates will be increased by a total of 2.8 per cent over the
first two years of the scheme. This includes a 1 per cent increase from 1
July 2011 and a further 1.8 per cent increase on 1 July 2012, including
upfront indexation.
The 1 per cent increase on 1 July 2011 incorporates a 0.4 per cent
component that represents a bring forward on future CPI increases. The
1.8 per cent increase on 1 July 2012 incorporates a 0.8 per cent component
that represents a bring-forward on future CPI increases. The 0.4 per cent
and the 0.8 per cent figures represent the two expected increases in the
CPI as a result of the Carbon Pollution Reduction Scheme.
This Schedule will commence immediately after the commencement of Part 1 of
Schedule 3 to the Carbon Pollution Reduction Scheme Amendment (Household
Assistance) Act 2009 but, if that Part does not commence, then the
provisions of this Schedule do not commence at all.
Explanation of the items
Part 1 - Main amendments
Amendments to the Veterans' Entitlements Act
Item 1 repeals Division 5 of Part XII and substitutes a new Division 5 of
Part XII. In broad terms, new Division 5 provides rules for increasing
certain payments under the Veterans' Entitlements Act by 2.8 per cent over
two years. The new Division sets out the increases to payments to assist
with the anticipated cost of living increases arising out of the Carbon
Pollution Reduction Scheme.
Subdivision A - Introduction
New subsection 198P(1) sets out that the objects of the Division are to
increase certain amounts that affect the rate at which payments are made to
individuals under the Veterans' Entitlements Act. The increases are to be
provided by way of assistance in respect of expected rises in the cost of
living as a result of the implementation of the Carbon Pollution Reduction
Scheme. This subsection sets out that certain of the following payments
will be increased:
a) disability pensions (as defined in subsection 5Q(1));
b) service pensions; and
c) pensions payable to war widow/war widower-pensioners under Part II
or
IV of the Veterans' Entitlements Act.
Subsection 198P(2) specifies that the second object of the Division is to
adjust the future indexation of CPRS increased payments. The increases
provided in this bill bring forward the increases to the Consumer Price
Index (CPI) that are expected to flow from the introduction of the Carbon
Pollution Reduction Scheme. To avoid duplication of the increases, which
would ordinarily flow to payments after the CPI increase occurs, subsequent
indexation arrangements are to be adjusted.
Subdivision B - Increases in disability pension
New section 198Q uses a table to identify the base amount rates of
disability pension that will receive a CPRS increase. The base amounts are
listed in Column 1 of the table and a brief description of the rate is
provided in column 2 of that table
A note at the end of new section 198Q advises that the base amounts listed
in the table are as indexed or adjusted from time to time under section 198
and 198D, as affected by Subdivision C, if relevant.
New section 198R provides for a 1 per cent increase on 1 July 2011 to each
of the base amounts of those payments set out in the table in section 198Q.
The effect of the section is that, on 1 July 2011, each base amount is
replaced with an amount (the replacement amount) that is worked out by
first calculating the provisional replacement amount and then applying the
rounding rules to that figure.
By virtue of new paragraph 198R(a), the provisional replacement amount is
calculated by determining a figure that is 1 per cent greater than the base
amount.
New paragraph 198R(b) needs to be read in conjunction with the rounding
base specified in column 3 of the table in new section 198Q.
New paragraph 198R(b) provides that, if the provisional replacement amount
(that is, the amount that has been increased by 1 per cent) is a multiple
of the $0.10 cents, then the provisional replacement amount is the
replacement amount. That is, the provisional replacement amount will
become the new rate. If the provisional replacement amount is not a
multiple of $0.10 cents, then it is rounded up or down to the nearest
multiple of $0.10 cents and the resultant amount is the replacement amount.
If the provisional replacement amount is a multiple of $0.05 cents, then
the provisional replacement amount is rounded up to the nearest multiple of
$0.10 cents.
A note is inserted at the end of section 198R to advise the reader that the
1 per cent increase provided for in the section includes a 'brought
forward' increase of 0.4 per cent that represents the expected cost of
living increase arising as a result of the introduction of the Carbon
Pollution Reduction Scheme.
New section 198S provides for a 1.8 per cent increase to each of the base
amounts on 1 July 2012. The effect of the section is that, on 1 July 2012,
each base amount is replaced with an amount (the replacement amount) that
is worked out by first calculating the provisional replacement amount and
then applying rounding rules to that figure.
By virtue of new paragraph 198S(a), the provisional replacement amount is
calculated by determining a figure that is 1.8 per cent greater than the
base amount.
New paragraph 198S(b) needs to be read in conjunction with the rounding
base specified in column 3 of the table in the new section 198Q.
New paragraph 198S(b) provides that, if the provisional replacement amount
(that is, the amount that has been increased by 1 per cent) is a multiple
of the $0.10 cents, then the provisional replacement amount is the
replacement amount. That is, the provisional replacement amount will
become the new rate. If the provisional replacement amount is not a
multiple of $0.10 cents, then it is rounded up or down to the nearest
multiple of $0.10 cents and the resultant amount is the replacement amount.
If the provisional replacement amount is a multiple of $0.05 cents, then
the provisional replacement amount is rounded up to the nearest multiple of
$0.10 cents.
A note is inserted at the end of section 198S to advise the reader that the
1.8 per cent increase provided for in the section includes a 'brought
forward' increase of 0.8 per cent that represents the expected cost of
living increase arising as a result of the introduction of the Carbon
Pollution Reduction Scheme.
Subdivision C - Adjustment of indexation of disability pensions
New section 198T and new section 198TA provide for adjusted indexation to
occur on or after 20 March 2012 of the amounts that were subject to the
increases provided for under new section 198R.
The new subsection 198T(1) provides for special rules around the CPI
indexation on or after 20 March 2012, of amounts of disability pension
specified in table items 1 to 4 of the table in section 198Q. Table items
1- 4 provide for the general rate of disability pension specified in
subsection 22(3), the extreme disablement adjustment rate of disability
pension specified in subsection 22(4), the intermediate rate of disability
pension specified in subsection 23(4) and the special rate of disability
pension specified in subsection 24(4).
By virtue of section 59D of the Veterans' Entitlements Act, the affected
payment rates may be indexed in accordance with CPI, as per the table in
section 59B, by the application of an 'indexation factor'. The CPI
indexation factor is indirectly relevant to the rates provided for in
subsections 22(3) and (4), 23 (4) and 24(4). These amounts are increased
under section 198 by the "pension MBR factor"; that is the proportional
increase that results from the adjustment of service pension with reference
to CPI, the new PBLCI and MTAWE.
New subsection 198T(1) states that, the CPI indexation factor that applies
on or after
20 March 2012, is to be reduced by the brought forward CPI indexation
amount, but that the indexation factor is not to fall below 1.
Note 1 at the end of subsection 198T(1) explains the interrelationship
between the rates specified in subsection 198T(1) and the indexation factor
worked out under section 529C, 59D or 59G.
Note 2 at the end of subsection 198T(1) explains that the pension MBR
factor used to adjust the rates in subsection 198T(1) will be affected by
the reduction to the indexation factor or living cost indexation factor,
whichever is relevant, the reduction of which is to be applied by virtue of
under this section.
Note 3 advises that once the brought forward CPI indexation amount becomes
zero, there will be no further reduction of the factor. That is, the
operation of this section will cease.
An example is also inserted at the end of the new subsection 198T(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198T(2) provides for special rules around the living cost
indexation
of amounts on or after 20 March 2012.
By virtue of section 59EAB of the Veterans' Entitlements Act, payment rates
may be indexed in accordance with a living cost indexation factor, by the
application of an 'indexation factor'. The indexation factor is
indirectly relevant to the rates provided for in subsections 22(3) and (4),
23 (4) and 24(4). These amounts are increased under section 198 by the
"pension MBR factor"; that is the proportional increase that results from
the indexation of service pension with reference to CPI, the new PBLCI and
MTAWE.
New subsection 198T(2) states that, the living cost indexation factor that
applies on or after 20 March 2012, is to be reduced by the brought forward
PBLCI indexation amount, but that the indexation factor is not to fall
below 1.
Note 1 at the end of subsection 198T(2) explains the interrelationship
between the rates specified in subsection 198T(1) and a factor worked out
under section 59C, 59EAB or 59G.
Note 2 at the end of subsection 198T(2) explains that the pension MBR
factor used to adjust the rates in subsection 198T(2) will be affected by
the reduction to the indexation factor or living cost indexation factor,
whichever is relevant, the reduction of which is to be applied by virtue of
this section.
Note 3 advises that once the brought forward PBLCI indexation amount
becomes zero, there will be no further reduction of the factor. That is,
the operation of this section will cease.
An example is also inserted at the end of the new subsection 198T(2) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198T(3) creates a definition of brought forward CPI
indexation amount for the purposes of this section. The "brought forward
CPI indexation amount" is 0.004 less any reduction made under this section
for a previous indexation day.
New subsection 198T(3) also creates a definition of brought forward PBLCI
indexation amount for the purposes of this section. The "brought forward
PBLCI indexation amount" is 0.004 less any reduction made under this
section for a previous indexation day.
Furthermore, new subsection 198T(3) provides that, once either of the
indexation factors has reached zero, then both indexation factors are zero
and the effect of the section will cease. That is, no further reduction of
the indexation factor will occur.
New subsection 198T(4) specifies that section 198T affects the rate of a
payment under the Veterans' Entitlements Act if, an only if, section 198R
affected that rate of payment for the person.
New section 198U provides for special rules around the CPI indexation on or
after 20 March 2012, of amounts of disability pension specified in table
item 5 of the table in section 198Q. Table item 5 relates to rates of
disability pension that are increased by an amount in the table in section
27(1).
By virtue of subsections 198(5) and 198D(5) of the Veterans' Entitlements
Act, the rates in table item 5 of the table in section 198Q are indexed in
accordance with CPI, by the application of an 'indexation factor'.
New subsection 198U(1) states that, the CPI indexation factor that applies
on or after 20 March 2012, is to be reduced by the brought forward CPI
indexation amount, but that the indexation factor is not to fall below 1.
A note advises that once the "brought forward CPI indexation amount"
becomes zero, there will be no further reduction of the factor. That is,
the operation of this section will cease.
An example is also inserted at the end of the new subsection 198TA(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198U(2) creates a definition of "brought forward CPI
indexation amount" for the purposes of this section. The "brought forward
CPI indexation amount" is 0.004 less any reduction made under this
subsection 198TA(1) for a previous indexation day.
New subsection 198U(3) specifies that section 198TA affects the rate of a
payment under the Veterans' Entitlements Act if, an only if, section 198R
affected that rate of payment for the person.
New section 198V and new section 198W provide for further adjusted
indexation to occur on or after 20 March 2013, of the base amounts that
were subject to the increases provided for under new section 198S.
New subsection 198V(1) provides for special rules around the CPI indexation
on or after 20 March 2013, of amounts of disability pension specified in
table items 1 to 4 of the table in section 198Q. Table items 1- 4 provide
for the general rate of disability pension specified in subsection 22(3),
the extreme disablement adjustment rate of disability pension specified in
subsection 22(4), the intermediate rate of disability pension specified in
subsection 23(4) and the special rate of disability pension specified in
subsection 24(4).
By virtue of section 59D of the Veterans' Entitlements Act, the affected
payment rates may be indexed in accordance with CPI, as per the table in
section 59B, by the application of an 'indexation factor'. The CPI
indexation factor is indirectly relevant to the rates provided for in
subsections 22(3) and (4), 23 (4) and 24(4). These amounts are increased
under section 198 by the "pension MBR factor"; that is the proportional
increase that results from the adjustment of service pension with reference
to CPI, the new PBLCI and MTAWE.
New subsection 198V(1) states that, the CPI indexation factor that applies
on or after
20 March 2013, is to be reduced by the brought forward CPI indexation
amount, but that the indexation factor is not to fall below 1.
Note 1 at the end of subsection 198V(1) explains the interrelationship
between the rates specified in subsection 198V(1) and a factor worked out
under section 59C, 59D or 59G.
Note 2 at the end of subsection 198V(1) explains that the pension MBR
factor used to adjust the rates in subsection 198V(1) will be affected by
the reduction to the indexation factor or living cost indexation factor,
whichever is relevant, the reduction of which is to be applied by virtue of
this section.
Note 3 advises that once the brought forward CPI indexation amount becomes
zero, there will be no further reduction of the factor. That is, the
operation of this section will cease.
An example is also inserted at the end of the new subsection 198V(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198V(2) provides for special rules around the living cost
indexation
of amounts on or after 20 March 2013.
By virtue of section 59EAB of the Veterans' Entitlements Act, payment rates
may be indexed in accordance with a living cost indexation factor, by the
application of an 'indexation factor'. The indexation factor is
indirectly relevant to the rates provided for in subsections 22(3) and (4),
23 (4) and 24(4). These amounts are increased under section 198 by the
"pension MBR factor"; that is the proportional increase that results from
the indexation of service pension with reference to CPI, the new PBLCI and
MTAWE.
New subsection 198V(2) states that, the living cost indexation factor that
applies on or after 20 March 2013, is to be reduced by the brought forward
PBLCI indexation amount, but that the indexation factor is not to fall
below 1.
Note 1 at the end of subsection 198V(2) explains the interrelationship
between the rates specified in subsection 198U(2) and a factor worked out
under section 59C, 59EAB or 59G.
Note 2 at the end of subsection 198V(2) explains that the pension MBR
factor used to adjust the rates in subsection 198V(2) will be affected by
the reduction to the indexation factor or living cost indexation factor,
whichever is relevant, the reduction of which is to be applied by virtue of
this section.
Note 3 advises that once the brought forward PBLCI indexation amount
becomes zero, there will be no further reduction of the factor. That is,
the operation of this section will cease.
An example is also inserted at the end of the new subsection 198U(2) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198V(3) creates a definition of brought forward CPI
indexation amount for the purposes of this section. The "brought forward
CPI indexation amount" is 0.008 less any reduction made under this section
for a previous indexation day.
New subsection 198V(3) also creates a definition of PBLCI brought forward
indexation amount for the purposes of this section. The PBLCI brought
forward indexation amount is 0.008 less any reduction made under this
section for a previous indexation day.
Furthermore, new subsection 198V(3) provides that, once either of the
indexation factors has reached zero, then both indexation factors are zero
and the effect of the section will cease. That is, no further reduction of
the indexation factor will occur.
New subsection 198V(4) specifies that section 198V affects the rate of a
payment under the Veterans' Entitlements Act if, and only if, section 198S
affected that rate of payment for the person
New section 198W provides for special rules around the CPI indexation on or
after 20 March 2013, of amounts of disability pension specified in table
item 5 of the table in section 198Q. Table item 5 relates to rates of
disability pension that are increased by an amount in the table in section
27(1).
By virtue of subsections 198(5) and 198D(5) of the Veterans' Entitlements
Act, the rates in item 5 of the table in section 198Q are indexed in
accordance with CPI, by the application of an 'indexation factor'.
New subsection 198W(1) states that, the CPI indexation factor that applies
on or after 20 March 2013 is to be reduced by the brought forward CPI
indexation amount, but that the indexation factor is not to fall below 1.
A note advises that once the brought forward CPI indexation amount becomes
zero, there will be no further reduction of the factor. That is, the
operation of this section will cease.
An example is also inserted at the end of the new subsection 198UA(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198WA(2) creates a definition of brought forward CPI
indexation amount for the purposes of this section. The "brought forward
CPI indexation amount" is 0.008 less any reduction made under this
subsection 198UA(1) for a previous indexation day.
New subsection 198W(3) specifies that section 198UA affects the rate of a
payment under the Veterans' Entitlements Act if, an only if, section 198S
affected that rate of payment for the person.
Subdivision D - Increases in certain persons' service pension relating to 1
July 2011
New subsection 198X(1) states that this subdivision applies to a person if,
on or after
1 July 2011, the person is receiving service pension and the person is not
a war widow/war widower pensioner and the person's pension supplement
amount is more than the person's pension supplement basic amount.
New subsection 198X(2) makes it clear that the subdivision does not apply
to a war widow/war widower-pensioner who is receiving service pension. War
widow/war widower-pensioners will receive their CPRS increase through the
war widow pension payable under subsection 30(1) of the Veterans'
Entitlements Act.
A note at the end of subsection 198X(2) advises that this subdivision does
not affect (directly or indirectly) on or after 1 July 2011:
. the rate of service pension of a war widow/war widower-pensioner; or
. the rate of a person's income support supplement; or
. the minimum pension supplement amount of a person who is a war
widow/war widower-pensioner.
New paragraph 198Y(1)(a) provides that on 1 July 2011, the rate of pension
supplement, for a person receiving more than the basic amount of pension
supplement will increase by the 'CPRS amount' which is defined in
subsection 198W(3).
New paragraph 198Y(b) provides that where the increase provided for in
paragraph 198Y(1)(a) produces an amount that is not a multiple of $2.60
then the amount will be rounded to the nearest multiple of $2.60. Where
the result is not a multiple of $2.60 but is a multiple of $1.30 the amount
is to be rounded up to the nearest multiple of $2.60.
New paragraph 198Y(2)(a) provides that on 1 July 2011, a person's rate of
minimum amount of pension supplement will increase by the 'CPRS amount'
which is defined in subsection 198Y(3).
New paragraph 198Y(2)(b), provides that where the increase provided for in
paragraph 198Y(2)(a) produces an amount that is not a multiple of $2.60
then the amount will be rounded to the nearest multiple of $2.60. Where
the result is not a multiple of $2.60 but is a multiple of $1.30 the amount
is to be rounded up to the nearest multiple of $2.60.
Subsection 198Y(3) provides that, the "CPRS" amount' for a person who
receives a service pension to which this subdivision applies, is the sum of
the following amounts:
a) 1 per cent of the person's maximum basic rate of service
pension; and
b) 1 per cent of the person's pension supplement basic amount.
A note is inserted at the end of section 198Y to advise the reader that the
1 per cent increase includes the estimated cost of living increase of
0.4 per cent for the 2011-12 financial year that has been brought forward
and that future indexation will be adjusted to avoid duplication of this
brought forward amount.
New section 198Z provides for special rules around indexation of some
amounts on or after 20 March 2012.
By virtue of section 59D of the Veterans' Entitlements Act, payment rates
are indexed in accordance with CPI, as per the table in section 59B, by the
application of an 'indexation factor'. The indexation factor is applied on
20 March and 20 September each year.
New subsection 198Z(1) states that, for the indexation factors that apply
to a person's maximum base rate of pension and the pension supplement
minimum amount after 20 March 2012, the indexation factor is to be reduced
by the brought forward CPI indexation amount, but that the indexation
factor is not to fall below 1.
Note 1 at the end of subsection 198Z (1) confirms that the PS minimum rate
is the amount as increased under subsection 198W(2).
A second note is inserted at the end of the new subsection 198Z(1) to state
that, once the "brought forward CPI indexation amount" equals zero, there
is no further reduction of the indexation factor.
An example is also inserted at the end of the new subsection 198Z(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198Z(2) provides that where there is an adjustment to
indexation in accordance with subsection 198X(1) then the rate used to work
out a person's pension supplement amount is to be reduced by the same
dollar value as the reduction in the person's minimum pension supplement
amount.
A method statement is inserted in subsection 198Z(2) that sets out how the
reduction to the pension supplement is to be determined.
Step 1 is to work out the minimum pension supplement amount for the
individual after application of the adjusted indexation in accordance
with subsection 198X(1).
Step 2 is to work out what would have been the person's minimum
pension supplement amount for that day if the adjustment to indexation
in subsection 198X(1) had not occurred.
Step 3 is to subtract step 1 from step 2.
Step 4 is to subtract the result of step 3 from what would have been,
apart from this subsection, the person's pension supplement amount.
Step 5 is to round the result of step 4 to the nearest multiple of
$2.60, rounding up if the result of step 4 is not a multiple of $2.60,
but is a multiple of $1.30.
Note 1 states that the amount in step 1 is the amount worked out from the
pension supplement minimum amount as adjusted under subsection 198X(1).
Note 2 provides that the amount in step 2 is the amount as increased under
subsection 198W(2) and as indexed under subsection 59C, but without the
adjustment of indexation as provided for in subsection 198X(1).
Note 3 states that for step 4 the amount is as increased under subsection
198W(1) and as indexed under subsection 59C.
By virtue of section 59EAB of the Veterans' Entitlements Act, payment rates
may be indexed in accordance with PBLCI, by the application of an
'indexation factor'. The indexation factor is applied on 20 March and
20 September each year.
New subsection 198Z(3) states that, for the indexation factors that apply
after
20 March 2012, the indexation factor is to be reduced by the brought
forward PBLCI indexation amount, but that the indexation factor is not to
fall below 1.
A note is inserted at the end of the new subsection 198Z(3) to state that,
once the "brought forward PBLCI indexation amount" equals zero, there is no
further reduction of the indexation factor.
An example is also inserted at the end of the new subsection 198Z(3) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198Z(4) creates a definition of brought forward CPI
indexation amount for the purposes of this section. The "brought forward
CPI indexation amount" is 0.004 less any reduction made under this section
for a previous indexation day.
New subsection 198Z(4) also creates a definition of brought forward PBLCI
indexation amount for the purposes of this section. The "brought forward
PBLCI indexation amount" is 0.004 less any reduction made under this
section for a previous indexation day.
Subdivision E - Increases in certain person's service pension relating to
1 July 2012
New section 198ZA sets out the payments to which subdivision E of Division
5 of Part XII will apply. Subsection 198ZA(1) states that the increases in
payments, and adjustment of indexation, provided for in this subdivision
will apply where the person is receiving service pension and the person is
not a war widow/war widower- pensioner and the person's pension supplement
amount is more than the person's pension supplement basic amount.
New subsection 198ZA(2) makes it clear that the subdivision does not apply
to a war widow/war widower-pensioner who is receiving service pension. War
widow/war widower-pensioners receiving service pension will receive their
CPRS increase through the war widow pension payable under section 30(1) of
the Veterans' Entitlements Act.
A note at the end of subsection 198ZA(2) advises that this Subdivision does
not affect the following payments (directly or indirectly) on or after 1
July 2012:
. the rate of service pension of a war widow/war widower-pensioner; or
. the rate of a person's income support supplement; or
. the minimum pension supplement amount of a person who is a war
widow/war widower-pensioner.
New paragraph 198ZB(1)(a) provides that, on 1 July 2012, the rate of
pension supplement, for a person receiving more than the basic amount of
pension supplement will increase by the 'CPRS amount' which is defined in
subsection 198Z(3).
New paragraph 198ZB(1)(b) provides that where the increase provided for in
paragraph 198Z(1)(a) produces an amount that is not a multiple of $2.60
then the amount will be rounded to the nearest multiple of $2.60. Where
the result is not a multiple of $2.60 but is a multiple of $1.30 the amount
is to be rounded up to the nearest multiple of $2.60.
New paragraph 198ZB(2)(a) provides that, on 1 July 2012, a person's rate of
minimum amount of pension supplement will increase by the 'CPRS amount'
which is defined in subsection 198ZB(3)
New paragraph 198ZB(2)(b), provides that where the increase provided for in
paragraph 198ZB(2)(a) produces an amount that is not a multiple of $2.60
then the amount will be rounded to the nearest multiple of $2.60. Where
the result is not a multiple of $2.60 but is a multiple of $1.30 the amount
is to be rounded up to the nearest multiple of $2.60.
Paragraph 198ZB(3) provides that, the 'CPRS amount' for a person who
receives a service pension to which this subdivision applies, is the sum of
the following amounts:
a) 1.8 per cent of the person's maximum basic rate of service
pension; and
b) 1.8 per cent of the person's pension supplement basic amount.
A note is inserted at the end of section 198ZB to advise the reader that
the 1.8 per cent increase includes the estimated cost of living increase of
0.8 per cent for the 2012-13 financial year that has been brought forward
and that future indexation will be adjusted to avoid duplication of this
brought forward amount.
New section 198ZC provides for special rules around indexation of some
amounts on or after 20 March 2013.
By virtue of section 59D of the Veterans' Entitlements Act, payment rates
are indexed in accordance with CPI, as per the table in section 59B, by the
application of an 'indexation factor'. The indexation factor is applied on
20 March and 20 September each year.
New subsection 198ZC(1) states that, for the indexation factors that apply
to a person's maximum base rate of pension and the pension supplement
minimum amount after 20 March 2013, the indexation factor is to be reduced
by the brought forward CPI indexation amount, but that the indexation
factor is not to fall below 1.
Note 1 at the end of subsection 198ZC(1) confirms that the PS minimum rate
is the amount as increased under subsection 198ZB(2).
A second note is inserted at the end of the new subsection 198ZC(1) to
state that, once the brought forward indexation amount equals zero, there
is no further reduction of the indexation factor.
An example is also inserted at the end of the new subsection 198ZC(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198ZC(2) provides that where there is an adjustment to
indexation in accordance with subsection 198ZC(1), then the rate used to
work out a person's pension supplement amount is to be reduced by the same
dollar value as the reduction in the person's minimum pension supplement
amount.
A method statement is inserted in subsection 198ZC(2) that sets out how the
reduction to the pension supplement is to be determined.
Step 1 is to work out the minimum pension supplement amount for the
individual after application of the adjusted indexation in accordance
with subsection 198ZB(1).
Step 2 is to work out what would have been the person's minimum
pension supplement amount for that day if the adjustment to indexation
in subsection 198ZB(1) had not occurred.
Step 3 is to subtract step 1 from step 2.
Step 4 is to subtract the result of step 3 from what would have been,
apart from this subsection, the person's pension supplement amount.
Step 5 is to round the result of step 4 to the nearest multiple of
$2.60, rounding up if the result of step 4 is not a multiple of $2.60,
but is a multiple of $1.30.
Note 1 states that the amount in step 1 is the amount worked out from the
pension supplement minimum amount as adjusted under subsection 198ZC(1).
Note 2 provides that the amount in step 2 is the amount as increased under
subsection 198Z(2) and as indexed under subsection 59C, but without the
adjustment of indexation as provided for in subsection 198ZC(1).
Note 3 states that for step 4 the amount is as increased under subsection
198ZB(1) and as indexed under subsection 59C.
By virtue of section 59EAB of the Veterans' Entitlements Act, payment rates
may be indexed in accordance with PBLCI, by the application of an
'indexation factor'. The indexation factor is applied on 20 March and
20 September each year.
New subsection 198ZC(3) states that, for the indexation factors that apply
after
20 March 2013, the indexation factor is to be reduced by the brought
forward PBLCI indexation amount, but that the indexation factor is not to
fall below 1.
A note is inserted at the end of the new subsection 198ZC(3) to state that,
once the "brought forward PBLCI indexation amount" equals zero, there is no
further reduction of the indexation factor.
An example is also inserted at the end of the new subsection 198ZC(3) to
provide the reader with a clear picture of how the adjustment of the
indexation provisions will apply.
New subsection 198ZC(4) creates a definition of brought forward CPI
indexation amount for the purposes of this section. The "brought forward
CPI indexation amount" is 0.008 less any reduction made under this section
for a previous indexation day.
New subsection 198ZC(4) also creates a definition of PBLCI brought forward
indexation amount for the purposes of this section. The PBLCI brought
forward indexation amount is 0.008 less any reduction made under this
section for a previous indexation day.
Subdivision F - Increases in pension payable to war widow/war widower-
pensioners
New section 198ZD applies the CPRS increase on 1 July 2011, to the amount
specified in paragraph 30(1)(b) of the Veterans' Entitlements Act.
Paragraph 30(1)(b) provides the amount of the component of war widow
pension known as the 'domestic allowance'.
New paragraph 198ZD(a) states that the amount specified in paragraph
30(1)(b) of the Veterans' Entitlements Act is to be increased by 1 per cent
of the sum of the following amounts:
a) the amount worked out on 1 July 2011, under paragraph 30(1)(a);
plus
b) the amount specified in paragraph 30(1)(b) on 1 July 2011,
apart from this section; plus
c) the amount specified in paragraph 30(1)(c) as at 1 July 2011.
New paragraph 198ZD(b) requires that if the result of paragraph 198ZD(a) is
not a multiple of ten cents, the resulting amount is to be rounded up or
down to the nearest multiple of ten cents. New paragraph 198ZD(b) further
requires that if the resulting amount is a multiple of 5 cents, the amount
is to be rounded up.
A note is inserted at the end of section 198ZD to advise the reader that
the 1 per cent increase includes the estimated cost of living increase of
0.4 per cent for the 2011-12 financial year that has been brought forward
and that future indexation will be adjusted to avoid duplication of this
brought forward amount.
New section 198ZE provides for special rules around indexation of war widow
pension on or after 20 March 2012.
By virtue of section 59D of the Veterans' Entitlements Act, the amount in
paragraph 30(1)(b) may be indirectly indexed in accordance with CPI, as per
the table in section 59B, by the application of an 'indexation factor'.
The amount in paragraph 30(1)(b) is increased under subsection 198(8A) by
the "pension MBR factor"; that is the proportional increase that results
from the indexation of service pension with reference to CPI, the new PBLCI
and MTAWE.
New subsection 198ZE(1) states that, for the CPI indexation factor that
applies, including indirectly, to the amount specified in paragraph
30(1)(b) on or after
20 March 2012, the indexation factor is to be reduced by the brought
forward CPI indexation amount, but that the indexation factor is not to
fall below 1.
Note 1 at the end of subsection 198ZE(1) explains the interrelationship
between the rates specified paragraph 30(1)(b) of the Veterans'
Entitlements Act and a factor worked out under section 59D of the Veterans'
Entitlements Act.
Note 2 at the end of subsection 198ZE(1) explains that the pension MBR
factor used to adjust the rate specified in paragraph 30(1)(b) will be
affected by the reduction to the indexation factor or living cost
indexation factor, whichever is relevant, the reduction of which is to be
applied by virtue of this section.
Note 3 advises that once the "brought forward CPI indexation amount"
becomes zero, there will be no further reduction of the factor. That is,
the operation of this section will cease.
An example is also inserted at the end of the new subsection 198ZE(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198ZE(2) states that, for the living cost indexation factor
that applies on or after 20 March 2012, the indexation factor is to be
reduced by the brought forward PBLCI indexation amount, but that the
indexation factor is not to fall below 1.
Note 1 at the end of subsection 198ZE(2) explains the interrelationship
between the rates specified paragraph 30(1)(b) of the Veterans'
Entitlements Act and a factor worked out under section 59C, 59EAB or 59G of
the Veterans' Entitlements Act.
Note 2 at the end of subsection 198ZE(2) explains that the pension MBR
factor used to adjust the rate specified in paragraph 30(1)(b) will be
affected by the reduction to the indexation factor or living cost
indexation factor, whichever is relevant, the reduction of which is to be
applied by virtue of this section.
Note 3 advises that once the brought forward PBLCI indexation amount
becomes zero, there will be no further reduction of the factor. That is,
the operation of this section will cease.
An example is also inserted at the end of the new subsection 198ZE(2) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198ZE(3) creates a definition of brought forward CPI
indexation amount for the purposes of this section. The "brought forward
CPI indexation amount" is 0.004 less any reduction made under this section
for a previous indexation day.
New subsection 198ZE(3) also creates a definition of brought forward PBLCI
indexation amount for the purposes of this section. The "brought forward
PBLCI indexation amount" is 0.004 less any reduction made under this
section for a previous indexation day.
New subsection 198ZE(4) states that section 198ZC applies if, and only if,
the person's rate of war widow pension is affected by section 198ZB.
New paragraph 198ZF(a) states that the amount specified in paragraph
30(1)(b) of the Veterans' Entitlements Act is to be increased, on 1 July
2012, by 1.8 per cent of the sum of the following amounts:
a) the amount worked out on 1 July 2012, under paragraph 30(1)(a);
plus
b) the amount specified in paragraph 30(1)(b) on 1 July 2012,
apart from this section; plus
c) the amount specified in paragraph 30(1)(c) as at 1 July 2012.
New paragraph 198ZF(b) requires that if the result of paragraph 198ZF(a) is
not a multiple of ten cents, the resulting amount is to be rounded up or
down to the nearest multiple of ten cents. New paragraph 198ZF(b) further
requires that if the resulting amount is a multiple of 5 cents, the amount
is to be rounded up.
A note is inserted at the end of section 198ZF to advise the reader that
the 1.8 per cent increase includes the estimated cost of living increase of
0.8 per cent for the 2012-13 financial year that has been brought forward
and that future indexation will be adjusted to avoid duplication of this
brought forward amount.
New section 198ZG provides for special rules around indexation of war widow
pension on or after 20 March 2013.
By virtue of section 59D of the Veterans' Entitlements Act, the amount in
paragraph 30(1)(b) may be indirectly indexed in accordance with CPI, as per
the table in section 59B, by the application of an 'indexation factor'.
The amount in paragraph 30(1)(b) is increased under subsection 198(8A) by
the "pension MBR factor"; that is the proportional increase that results
from the indexation of service pension with reference to CPI, the new PBLCI
and MTAWE.
New subsection 198ZG(1) states that, for the CPI indexation factor that
applies, including indirectly, to the amount specified in paragraph
30(1)(b) on or after
20 March 2013, the indexation factor is to be reduced by the brought
forward CPI indexation amount, but that the indexation factor is not to
fall below 1.
Note 1 at the end of subsection 198ZG(1) explains the interrelationship
between the rates specified paragraph 30(1)(b) of the Veterans'
Entitlements Act and a factor worked out under section 59C, 59D or 59G of
the Veterans' Entitlements Act.
Note 2 at the end of subsection 198ZG(1) explains that the pension MBR
factor used to adjust the rate specified in paragraph 30(1)(b) will be
affected by the reduction to the indexation factor or living cost
indexation factor, whichever is relevant, the reduction of which is to be
applied by virtue of this section.
Note 3 advises that once the brought forward CPI indexation amount becomes
zero, there will be no further reduction of the factor. That is, the
operation of this section will cease.
An example is also inserted at the end of the new subsection 198ZG(1) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198ZG(2) states that, for the living cost indexation factor
that applies on or after 20 March 2013, the indexation factor is to be
reduced by the brought forward PBLCI indexation amount, but that the
indexation factor is not to fall below 1.
Note 1 at the end of subsection 198ZG(2) explains the interrelationship
between the rates specified paragraph 30(1)(b) of the Veterans'
Entitlements Act and a factor worked out under section 59C, 59EAB or 59G of
the Veterans' Entitlements Act.
Note 2 at the end of subsection 198ZG(2) explains that the pension MBR
factor used to adjust the rate specified in paragraph 30(1)(b) will be
affected by the reduction to the indexation factor or living cost
indexation factor, whichever is relevant, the reduction of which is to be
applied by virtue of this section.
Note 3 advises that once the "brought forward PBLCI indexation amount"
becomes zero, there will be no further reduction of the factor. That is,
the operation of this section will cease.
An example is also inserted at the end of the new subsection 198ZG(2) to
provide a clear picture of how the adjustment of the indexation provisions
will apply.
New subsection 198ZG(3) creates a definition of brought forward CPI
indexation amount for the purposes of this section. The "brought forward
CPI indexation amount" is 0.008 less any reduction made under this section
for a previous indexation day.
New subsection 198ZG(3) also creates a definition of brought forward PBLCI
indexation amount for the purposes of this section. The "brought forward
PBLCI indexation amount" is 0.008 less any reduction made under this
section for a previous indexation day.
New subsection 198ZG(4) states that section 198ZG applies if, and only if,
the person's rate of war widow pension is affected by section 198ZD.
Item 2 inserts a new clause 34A after clause 34 in Schedule 5 of the VEA.
New subclause 34A(1) provides that new clause 34 will apply to an
individual if; clause 30 in Schedule 5 affects the rate at which a person
is paid a service pension, and subclause 31(1) or (2) is relevant to the
person.
That is, clause 34A will apply to people who receive a "transitional" rate
and who are resident in Australia and in Australia or temporarily absent
from Australia.
Subclause 34A(2) sets out the purpose of the clause, which is to provide
for increases to a person's rate of service pension to account for the cost
of living increases that are expected to arise as a result of the Carbon
Pollution Reduction Scheme.
This outcome is achieved by providing for increases in the amount of
pension payable to an individual and for adjustment to future indexation of
payments to prevent possible duplication of indexation.
Paragraph 34A(3)(a) provides that on 1 July 2011 the rate of service
pension payable to a person by virtue of subparagraph 30(4)(a)(i) will
increase by the "CPRS amount" as defined in subsection 198Y(3).
Paragraph 34A(3)(b) provides that if the amount calculated in accordance
with paragraph 34A(3)(a) does not result in a multiple of $2.60, then the
amount is rounded to the nearest multiple of $2.60. If the amount
calculated is not a multiple of $2.60 but is a multiple of $1.30 then the
amount is rounded up to the nearest multiple of $2.60.
The "CPRS amount" is defined in subsection 198Y(3) as being the sum of:
. 1 per cent of the maximum basic rate of payment for someone who is
receiving a payment calculated in accordance with Pension Rate
Calculator A; and
. 1 per cent of the basic amount of pension supplement for that person
as defined in subsection 20A(5).
Paragraph 34A(4)(a) provides that on 1 July 2012 the rate of pension
payable to a person by virtue of subparagraph 30(4)(a)(i) will increase by
the "CPRS amount" as defined in subsection 198ZB(3).
Paragraph 34A(4)(b) provides that if the amount calculated in accordance
with paragraph 34A(4)(a) does not result in a multiple of $2.60, then the
amount is rounded to the nearest multiple of $2.60. If the amount
calculated is not a multiple of $2.60 but is a multiple of $1.30 then the
amount is rounded up to the nearest multiple of $2.60.
The "CPRS amount" is defined in subsection 198ZB(3) as being the sum of:
. 1.8 per cent of the maximum basic rate of payment for someone who is
receiving a payment calculated in accordance with Pension Rate
Calculator A; and
. 1.8 per cent of the basic amount of pension supplement for that person
as defined in subsection 20A(5).
The increases provided for in subclause 34A(3) and subclause 34A(4) include
estimated cost of living increases of 0.4 per cent and 0.8 per cent
respectively which have been brought forward.
Subclause 34A(5) provides that where a person's payment rate would
ordinarily be increased in line with CPI those increases will be adjusted
commencing on 20 March 2012 to avoid duplication of indexation.
Subclause 31A(6) provides that the references in subsections 198Z(2) and
198ZC(2) to the "PS rate" will also apply to the amounts described
subparagraph 30(4)(a)(i) of Schedule 5 for the purposes of the special
rules for indexation which will apply on or after 20 March 2012 and 20
March 2013.
The Note to subclause 34A(6) refers to the role of the provisions of clause
34 in determining the component of the transitional rate of service pension
or income support supplement that is to be treated as the pension
supplement.
Subclause 34A(7) provides that the following provisions are not to be taken
into account in determining a person's rate of pension under clause 30 or
the application of the income and assets test to a person's rate of pension
as applied by clause 34;
. Subsection 198Y(1);
. Paragraph 198Z(1)(a) ;
. Subsection 198Z(3);
. Subsection 198ZB(1);
. Paragraphs 198ZB(1)(a);
. Subsection 198ZC(3).
Part 2 - Related amendments
Item 3 adds a note to the end of subsection 59D(3) to advise that on or
after
20 March 2012 and 20 March 2013, the factor may be reduced by Division 5 of
Part XII.
Item 4 adds a note to the end of subsection 59EAB(1) to advise that on or
after
20 March 2012 and 20 March 2013, the factor may be reduced by Division 5 of
Part XII.
Item 5 adds a note to the end of subsection 59D(3) to advise that on or
after
20 March 2012 and 20 March 2013, the factor may be reduced by Division 5 of
Part XII.
Item 6 adds a note to the end of subsection 59D(3) to advise that on or
after
20 March 2012 and 20 March 2013, the factor may be reduced by Division 5 of
Part XII.
Schedule 6 - Income tests
Summary
The amendments will increase the income test taper rate from 40 cents to
50 cents per dollar of income over the ordinary income free area and remove
the additional income test free area for dependent children from the
calculation of the amount of a person's ordinary income free area.
Transitional arrangements will apply for existing pensioners affected by
the new income test changes to ensure current payment rates are maintained
in real terms, and that those pensioners also benefit from a pension
increase.
Background
As part of the Government's Secure and Sustainable Pension Reforms package,
the income test for pensions will be tightened from 20 September 2009, to
ensure the pension system is sustainable in the longer term, and that
increases can be targeted to those most in need. Transitional arrangements
will apply for existing pensioners affected by the new income test changes
to ensure current payment rates are maintained in real terms, and that
those pensioners also benefit from a pension increase.
Under the Veterans' Entitlements Act, for the purpose of calculating a
person's annual rate of service pension or income support supplement,
'ordinary income' is assessed under the income test.
In order to work out the effect of a person's ordinary income on the
person's maximum pension rate, the person's annual amount of ordinary
income is calculated to determine whether the maximum rate of pension is
payable to the person. If a person's ordinary income exceeds the ordinary
income free area (that is, the amount of ordinary income that a person can
have without any deductions being made from the person's maximum rate of
pension), the person's pension is reduced by a specified amount for each
dollar of income over the free area. This is known as the income test
taper rate. Currently, the specified amount of the taper rate is 40 cents
for each dollar of income over the free area. As part of the measures
relating to the changes to the income test, the income test taper rate will
increase to 50 cents for each dollar of income over the free area. In
other words, a person's pension will be reduced by 50 cents for each dollar
of ordinary income over the income test free area.
In order to bring certain social security and veterans' entitlements income
support pensions into line with other social security payments, including
allowances and family assistance, the additional income test free area for
dependent children will also be removed. Currently, the amount of a
person's ordinary income free area comprises a basic free area (based on
whether the person is single or partnered) and an additional specified
amount for each dependent child of the person. The changes to the income
test will mean that the additional income test threshold (free area) for
each dependent child of the person will no longer form part of the
calculation of a person's ordinary income free area.
The amendments made by this Schedule commence on 20 September 2009.
Explanation of the items
Part 1 - Taper rate
Amendments of the Veterans' Entitlements Act
This part of Schedule 6 contains amendments to increase the taper rate for
each dollar of income over the ordinary income free area, thereby reducing
a person's pension if the person's ordinary income exceeds the ordinary
income free area.
Item 1 repeals the current figure of '0.4' in step 6 of the method
statement in point SCH6-C14B and substitutes a new figure of '0.5', which
will have the effect of reducing the amount of a person's maximum rate of
payment by 50 cents for each dollar of income over the ordinary income free
area. This method statement is used to work out the effect of a person's
disability pension on their rate of rent assistance.
Item 2 repeals the current figure of '0.4' in the formula in subpoint SCH6-
E11 and substitutes a new figure of '0.5', which will have the effect of
reducing the amount of a person's maximum rate of payment by 50 cents for
each dollar of income over the ordinary income free area. This formula is
part of the ordinary/adjusted income test.
Part 2 - Income free area
Division 1 - Main amendments
Amendments of the Veterans' Entitlements Act
This Part of Schedule 4 contains amendments to the income test threshold
(free area), which removes the additional amount for each dependent child
that is added to a person's basic free area.
Item 3 amends subsection 53E(2) by omitting the words "plus (if the veteran
has a dependent child or dependent children) the amount in, or worked out
in accordance with, column 5 of that item for each dependent child". This
effectively removes the reference to any additional reduction per year for
each dependent child or children provided for in column 5 of the table in
section 53E.
Item 4 repeals columns 5 and 6 from table in subsection 53E(2). This
removes the additional reduction per year for each dependent child or
children.
Item 5 repeals note 2 in subsection 53E(2) which referred to a definition
for dependent child.
Item 6 repeals subsection 53E(2A) which provided that a child receiving
youth allowance was considered to be a dependent child.
Item 7 makes a technical amendment to step 2 of the method statement in
point SCH6-E2 of Schedule 6.
Item 8 amends point SCH6-E6 of Schedule 6 by omitting the words "plus an
additional corresponding amount in column 5 for each dependent child of the
person".
This effectively removes the reference to any additional reduction per year
for each dependent child or children provided for in column 5 of the table
in section point SCH6-E6.
Item 9 repeals columns 5 and 6 from table E-1 in point SCH6-E6. This
removes the additional reduction per year for each dependent child or
children from the ordinary/adjusted income test.
Item 10 repeals note 2 in point SCH6-E6 which is now redundant.
Item 11 repeals points SCH6-E7, SCH6-E8, SCH6-E10 and SCH6-E12 of Schedule
6. These points related to the additional free area for dependent children
and are no longer applicable.
Division 2 - Consequential amendments
Amendments of the Veterans' Entitlements Act
Item 12 repeals table item 10 from subsection 59B(1). This table item
provided for the indexation of the IARL dependent child add-on which is no
longer applicable.
Items 13 and 14 amend the method statement in subsection 59C(2). Step 5 no
longer needs to cater for an amount that is indexed under table item 10 in
section 59B(1), so the method statement can be simplified. This is
achieved by step 3 resulting in the provisional indexed amount and the
omission of step 4.
Item 15 repeals subsection 59C(2AA) which is no longer applicable.
Item 16 makes a technical amendment to note 1 in subsection 59E(1).
Item 17 repeals the example in subclause 3(3) of Schedule 6 and substitutes
an example that refers to the second point, instead of the eighth point
which is no longer applicable.
Part 3 - Application of amendments
This part of Schedule 4 contains the application provisions for the
amendments to the Social Security Act.
Amendments of the Veterans' Entitlements Act
Item 18 is an application provision to provide that, for the purposes of
working out the rates of payments for days on or after 20 September 2009,
the amendments made to the Veterans' Entitlements Act by this Schedule
apply.
Schedule 7 - Work bonus
Summary
This Schedule introduces a new Work Bonus into the veterans' entitlements
law, which allows for a certain amount of employment income that is earned,
derived or received in a pension period by a person, who is of qualifying
age and is in receipt of service pension or income support supplement, to
be disregarded for the purposes of the ordinary income or adjusted income
tests.
For each pension period of fourteen days, the amount that is to be
disregarded is 50 per cent of $500 where the person earns more than $500 in
the pension period, or 50 per cent of the person's total employment income
for a period, where the person earns less than $500 in the pension period.
The Work Bonus will enable service pensioners and income support supplement
recipients over qualifying age to keep more of the money that they earn
through work. This is a mechanism to support those service pensioners or
income support supplement recipients of qualifying age who wish to
undertake some paid work to supplement their service pension or income
support supplement.
The benefit provided by the Work Bonus recognises that continuing
employment can be important because of both the financial and non-financial
benefits for individual service pensioners and income support supplement
recipients, and for the contribution that their participation in the
workforce can make to the community.
Background
Employment income is income received for any form of paid employment,
including full time, permanent part-time, seasonal, contract or casual
work. It will include normal wages and also overtime, penalty rates,
incentive payments and other employment-related payments.
Where a person receives a gift or a non-cash benefit instead of money for
work performed, the value of the gift or benefit is assessed in the same
way as money received. This means that the money value of work-related
benefits (such as a car, or assistance with health insurance payments) is
calculated and then added to the person's gross income.
If a person sacrifices some of his or her earnings (for example, to
increase superannuation contributions), the sacrificed amounts are still
assessed as part of the income of the person. It is the gross income from
wages and earnings that is counted for pension purposes, with the gross
income being the total amount earned before tax and personal deductions are
taken out.
The wages and earnings from employment are added to any other sources of
income a person may have (such as deemed income on any financial assets) to
calculate the total amount of ordinary or adjusted income of the person.
A person can earn a certain amount of income before the rate of pension is
affected under the ordinary or adjusted income test. This amount is known
as the income free area, with income above that resulting in the
fortnightly rate of pension being reduced.
A number of provisions affect the meaning of "ordinary income", with the
result that some amounts that would otherwise be considered as "ordinary
income" are able to be excluded from the application of the income test or
otherwise treated in a special way.
Some of these provisions are sections 46 (general meaning of ordinary
income), 46B and 46C (business income), sections 46D to 46M (deemed income
from financial assets) and provisions in Division 4 of Part IIIB (income
from income streams).
The amendments made by this Schedule commence on 20 September 2009.
Explanation of the items
Amendments of the Veterans' Entitlements Act
Item 1 amends note 2 to section 46 to include a reference to new "section
46AA (work bonus)" (as inserted by item 2 of this Schedule). Note 2 to
section 46 refers the reader to the various provisions of Part IIIB that
affect the determination of the amount of a person's ordinary income.
Item 2 inserts new Division 1A (containing the new work bonus provisions,
sections 46AA and 46AB) into Part IIIB.
New subsection 46AA(1) specifies that the new section applies to a person
if the person's rate of service pension or income support supplement is
calculated in accordance with the Rate Calculator and the person has
reached qualifying age as defined in section 5Q.
New subsection 46AA(2) provides a rule for working out how much employment
income can be disregarded by the ordinary/ adjusted income test in Module E
of the Rate Calculator.
Subsection 46AA(2) applies to circumstances where a person's employment
income for an instalment period is greater than or equal to the "income
concession amount". In those circumstances, employment income for that
period, equivalent to 50 per cent of the income concession amount, is not
ordinary income for the purposes of the ordinary/ adjusted income test in
Module E of the Rate Calculator.
New subsection 46AA(3) applies in the circumstances where a person's
employment income for an instalment period is less than the "income
concession amount". In those circumstances, 50 per cent of the employment
income for that period is not ordinary income for the purposes of the
ordinary/ adjusted income test in Module E of the Rate Calculator.
New subsection 46AA(4) defines the "income concession amount" for the
purposes of new section 46AA as being $500. This means that, as a result
of the application of new section 46AA for pension periods where the income
concession is applicable, up to $250 of employment income can be
disregarded as "ordinary income" for the purposes of Module E of the Rate
Calculator.
The purpose of new subsection 46AA(5) is to clarify how new section 46AA
relates to point SCH6-E3 of the Rate Calculator. For members of the same
couple, it is intended that the provisions in 46AA(1) to (4) are applied to
each individually to reduce the total amount of "ordinary income" that is
taken into account for the relevant ordinary/ adjusted income test.
The reduced "ordinary income" amounts for each member of the couple are
then added together under point SCH6-E3 and divided by two to determine
each member's total ordinary income that is to be subject to the ordinary/
adjusted income test.
The following two examples are based on the examples provided underneath
new subsection 46AA(5):
Example 1
David and Amy are members of a couple and are both in receipt of
service pension. In a pension period, David earns $50 and Amy earns
$500 of employment income. For David, $25 is disregarded and, for
Amy, $250 is disregarded. Assuming that neither member of the couple
has any other income for that period, the total amount of ordinary
income that is taken into account for each of them for that period,
after applying the rule in point SCH6-E3, is $137.50.
Example 2
Ian and Simone are members of a couple and are both in receipt of
service pension. In a pension period, Ian earns no employment income
and Simone earns $1,000 of employment income. For Ian, no income is
disregarded and, for Simone, $250 is disregarded. Assuming that
neither member of the couple has any other income for that period, the
total amount of ordinary income that is taken into account for each of
them for that period, after applying the rule in point SCH6-E3 is
$375.
New subsection 46AA(6) is applicable in the circumstances where an amount
of employment income is earned by an invalidity service pensioner who under
section 115G is a participant in the Veterans' Vocational Rehabilitation
Scheme (VVRS).
The VVRS scheme assists veterans to find or continue in suitable employment
which helps eligible veterans, with or without a disability, who need
special assistance to obtain or hold suitable paid employment.
Subsections 115G(1) and (2) provides that invalidity service pensioners who
participate in the scheme will continue to be subject to the income and
assets tests but will receive a concession of up to 50% of the gross
earnings from employment not taken into account under the income test for
the invalidity service pension for a period of up to seven years.
New subsection 46AA(6) provides the income concession provided under
subsections 46AA(2) or (3) will not be applicable where the amount of the
concession available to the invalidity service pensioner under subsections
115G(1) and (2) is greater than the income concession available under
subsections 46AA(2) or (3).
New section 46AB defines "employment income" for the purposes of new
section 46AA.
This term is the basis for the new work bonus concession, with ordinary
income amounts defined as being "employment income" being beneficial for a
person over qualifying age and in receipt of a service pension or income
support supplement.
New subsection 46AB(1) provides that the "employment income" of a person is
ordinary income from remunerative work undertaken by the person as an
employee in an employee/employer relationship.
The income may be earned, derived or received by the person or it may be
income that the VEA takes the person to have earned, derived or received.
For example, if a person has disposed of an amount of income in certain
circumstances, Division 7 of Part IIIB has the effect of taking a person's
ordinary income to include the amount. Such income may be employment income
of the person.
The definition includes but is not limited to payments such as salary,
wages, commissions and employment -related fringe benefits. Other types of
payment, for which the concession under the income test would be
inappropriate, are specifically excluded.
The payments that are specifically excluded are: income from
superannuation, certain compensation payments related to the person's
inability to work, leave payments, employment termination payments and
comparable foreign pensions.
New subsection 46AB(2) defines a "leave payment" for the purposes of
paragraph 46AB(1)(e) as including payments made in respect of sick leave,
annual leave, maternity leave or long service leave.
New paragraph 46AB(2)(b) provides that a leave payment can be made as a
lump sum, in a series of regular payments, or in any other manner.
New paragraph 46AB(2)(c) provides that a leave payment will also be taken
to have been made to a person if it is paid to another person for any of
the following reasons:
. at the direction of the person or a court; or
. on behalf of the person; or
. for the benefit of the person; or
. if the person waives or assigns his or her right to the payment.
Item 3 amends section 115G by inserting new subsection 115G(4). Section
115G is applicable to invalidity service pensioners who participate in the
Veterans' Vocational Rehabilitation Scheme (VVRS).
The VVRS is a voluntary scheme to assist veterans to find or continue in
suitable employment which helps eligible veterans, with or without a
disability, who need special assistance to obtain or hold suitable paid
employment.
Subsection 115G(1) provides that invalidity service pensioners who
participate in the scheme will continue to be subject to the income and
assets tests but will receive a concession with 50% of the gross earnings
from employment not taken into account under the income test for the
invalidity service pension for the first two years.
Subsection 115G(2) provides that in the following five years, the
concession applicable to that 50% of gross earnings from employment is
progressively taken into account, at a rate of 5% every six months. After
seven years no concession will be applicable and eligibility for the
invalidity service pension will cease as the person will no longer be
regarded as permanently incapacitated for work.
New subsection 115G(4) provides that subsections 115G(1) and (2) will not
be applicable in the circumstances where the amount of income to be
excluded will be less than or equal to the amount of income disregarded
under the provisions of new subsections 46AA(2) or (3).
Item 4 amends point SCH6-E2 by inserting new paragraph (aa) to note 2 to
step 6 of the method statement referring to the work bonus provision in new
section 46AA.
Step 6 of the method statement in point SCH6-E2 refers to the reduction in
a person's ordinary/ adjusted income for the excess of ordinary/ adjusted
income as determined under point SCH6-E11.
Note 2 to Step 6 refers to those provisions that may affect the
determination of the amount of a person's ordinary/ adjusted income.
Item 5 is an application provision, which clarifies that new section 46AA
applies to a pension period that includes 20 September 2009 (the
commencement date of the measure) and later pension periods.
Schedule 8 - Pension bonus scheme
Summary
Under this Schedule, the pension bonus scheme, which provides a tax-free
lump sum payment to older Australians who defer claiming service pension or
income support supplement and choose to remain in the workforce, will be
closed to new entrants from 20 September 2009. The scheme will, however,
continue to be available to existing members.
Background
The pension bonus scheme was introduced on 1 July 1998. It provides an
incentive for older Australians to defer claiming age or partner service
pension or income support supplement and instead remain in the workforce.
The scheme pays a tax-free lump sum to members when they eventually claim
and receive age or partner service pension or income support supplement.
The Pension Review (undertaken by Dr Jeff Harmer) found that the scheme is
complex and not meeting its objective of encouraging workforce
participation.
The amendments made by this Schedule commence on the day on which they
receive Royal Assent.
Explanation of the items
Amendments of the Veterans' Entitlements Act
Item 1 inserts new subsection 45TI(1A) and (1B) after current
subsection 45TI(1). Current subsection 45TI(1) provides that if a person
applies for registration as a member of the pension bonus scheme, the
Commission must register the applicant as a member of the pension bonus
scheme. New subsection 45TI(1A) provides that despite the rule in
subsection 45TI(1), the Commission must not register a person as a member
of the pension bonus scheme if the person's special date of eligibility for
a designated pension occurs on or after 20 September 2009. (A person's
special date of eligibility is determined by the date on which the person
becomes eligible for the designated pension, see section 45TB).
New subsection 45TI(1B) provides that, for the purposes of
subsection 45TI(1A), subsections 45TB(4) and (5) apply in a way
corresponding to the way in which they apply for the purposes of Part
IIIAB. Current subsection 45TB(4) provides that, for the purposes of Part
IIIAB, a person's special date of eligibility for a designated pension is
to be worked out on the assumption that being in Australia and being an
Australian resident were additional eligibility criteria for the designated
pension. Current 45TB(5) provides that, if a person would have two or more
special dates of eligibility for the designated pension, only the first
date is to be counted. The effect of new subsection 45TI(1B) is that the
Commission must not register a person as a member of the pension bonus
scheme if the person becomes an Australian resident on or after
20 September 2009.
Item 2 provides that the amendments made by item 1 apply in relation to
applications for registration that are made on or after the commencement of
that item. The item is to commence on Royal Assent. The effect is that,
for applications made before the commencement of this item by persons whose
special date of eligibility is on or after 20 September 2009, the
Commission cannot refuse registration based on proposed
subsection 45TI(1A). However, a person cannot apply for registration as a
member of the pension bonus scheme any earlier than 13 weeks prior to their
special date of eligibility for the designated pension, in accordance with
subsection 45TH(1). Upon commencement of the item, the Commission cannot
accept applications for registration from persons whose special date of
eligibility is on or after 20 September 2009.
If a person's special date of eligibility for the designated pension occurs
before 20 September 2009, they may still be able to lodge an application as
a member of the pension bonus scheme on or after 20 September 2009, in some
circumstances. Applications for registration within 13 weeks after the
date of qualification for the age pension will continue to be accepted in
accordance with subsection 45TH(1). The discretion for the Commission to
accept applications lodged after 13 weeks from the date of qualification
for the age pension, if the criteria set out in subsection 45TH(4) are met,
will continue.
Existing members of the pension bonus scheme will continue to accrue
entitlements under existing rules.
Schedule 9 - Transitional arrangements
Summary
This Schedule contains a range of transitional provisions to allow
veterans' affairs pensioners, who will be affected by changes to the VEA
made by this bill on the date of commencement, to transition smoothly to
the new arrangements.
The measures included in this Schedule ensure that the current entitlements
of existing veterans' affairs pensioners who would otherwise be affected by
the income test changes made by the bill, and whose pension would be
reduced, will be maintained in real terms.
Further, this measure provides a rule for members of a couple, where at
least one member is subject to transitional arrangements, that specifies
how the ordinary income or adjusted test will apply to a person to
determine the rate payable to their partner.
Background
Most existing pensioners, including all maximum rate pensioners, will
immediately have higher rates of pension under the measures included in
this bill. However, because of the changes that are being made by this
bill to the ordinary and adjusted income tests in Module E of the Rate
Calculator in order to better target pensions to those most in need,
arrangements are required to ensure a smooth transition to payments under
the new pension reform measures.
Existing part-rate pensioners will transition to the new arrangements at
the point the new arrangements provide a higher rate of pension.
Pensioners who are in Australia, or are temporarily absent from Australia,
and whose rate of pension is determined by the transitional arrangements,
will also receive an increase in their maximum payment rate of $10.10 per
week (as a person in receipt of a single rate or as a combined couple).
The amendments made by this Schedule commence on 20 September 2009.
Explanation of the items
Part 1 - Amendments of the Veterans Entitlements Act
Item 1 in Part 1 adds a number of transitional provisions to new Part 5 at
the end of Schedule 5 of the VEA.
New clause 30 provides for the determination of the transitional rates of
service pension and income support supplement that will be applicable on or
after
20 September 2009. The transitional rules are intended to ensure that no
person's service pension or income support supplement rate will decrease
because of the changes being made to the ordinary and adjusted income tests
by various measures in this bill.
Subclause 30(1) specifies that clause 30 is applicable to those persons
who, on 19 September 2009, are in receipt of a service pension or income
support supplement or one of the following payments under the Social
Security Act:
. age pension
. disability support pension;
. wife pension;
. carer payment;
. bereavement allowance;
. widow B pension;
. special needs pension
Paragraph 30(1)(b) provides that clause 30 can continue to apply to a
person so long as they are continuously receive one of the listed payments,
even if they transfer between a number of those pensions or otherwise stop
receiving one and start receiving another without a gap of a day or more
between the cessation of one payment and the commencement of another listed
payment.
Subclause 30(2) provides that clause 30 has the effect of working out the
rate of a service pension or income support supplement on a "relevant day"
that is after 19 September 2009, if the rate is calculated under subpoints
SCH6-A1(2), (3), (4) or (6) of the Rate Calculator.
Subclause 30(3) sets out a comparison between the rate of service pension
that would be payable to a person in accordance with the transitional
provisions and the rate of service pension that would be payable to that
person as if the transitional arrangements had not been enacted.
It provides that a person's "provisional payment rate" (for the purposes of
the method statements in subpoints SCH6-A1(2), (3) and (4) of the Rate
Calculator as specified at subclause 30(2)) is taken to be the amount
worked out under the transitional arrangements in subclause (4) if the
total of is greater than what the total of the person's "provisional
payment rate" would be without the operation of the transitional provision.
The effect of subclause 30(3) is to ensure that, if a person's rate of
service pension would be higher as worked out in accordance with the pre-20
September 2009 income test rules and, as based on the pre-20 September
maximum basic rates (plus an amount of $10.10 for singles or $5.05 for
members of a couple) their rate can be worked out under subclause 30(4) and
not under the rules that would apply apart from the transitional
arrangements.
Subclause 30(4) provides for the amount to be substituted in the method
statement in subpoint SCH6A1(2) as the "provisional payment rate" that has
been determined under the transitional provisions. The transitional rate
will be substituted when clause 30 is applicable and the conditions in
subclause 30(3) have been met.
The subclause 30(4) reference to the "provisional payment rate "in the
subpoint SCH6-A1(2) method statement is relevant to all three of the method
statements used to determine the rate of service pension in subpoints SCH6-
A(2), (3) and (4) as the subpoint SCH6-A1(3) and (4) method statements use
as the starting amounts, service pension rates that are determined under
the subpoint SCH6-A1(2) method statement.
Subclause 30(4) provides that the substituted "provisional payment rate" in
subpoint SCH6-A1(2) will be the maximum payment rate, calculated as the sum
of:
. the transitional rate determined under the relevant method statement
in either subclause 31(1), (2), (3) or (4); plus
. rent assistance as payable under Module C of the Rate Calculator.
The resulting sum is reduced (where subclauses 31(1) or (2) are applicable)
by the amount of the pension supplement payable to the person that is
payable as the quarterly pension supplement.
Subclause 30(4) also provides that in the determination of the "provisional
payment rate" the income and assets tests are applied on the assumption
that the ordinary and adjusted income test changes made by Schedules 6 and
7 to this bill have not been made.
The Notes to subclause 30(4) include references to the circumstances in
which the method statements in subclauses 31(1), (2), (3) and (4) will be
applicable.
Note 6 to subclause 30(4) provides that the transitional rates of service
pension determined under subclause 31(1), (2), (3) and (4) are to be
indexed for CPI adjustments under Subdivision B of Division 18 of Part IIIB
on and after 20 March 2010.
Subclause 30(5) sets out a comparison between the rate of income support
supplement that would be payable to a person in accordance with the
transitional provisions and the rate of income support supplement that
would be payable to that person as if the transitional arrangements had not
been enacted. The increased ceiling rate is applicable to both amounts for
the purposes of the comparison.
It provides that a person's "provisional payment rate" (for the purposes of
the method statement in subpoint SCH6-A1(6) of the Rate Calculator as
specified at subclause 30(2)) is taken to be the transitional rate worked
out under the transitional arrangements in subclause 30(6) if the total is
greater than what the total of the person's "provisional payment rate"
would be without the operation of the transitional provision.
The effect of subclause 30(5) is to ensure that, if a person's rate of
income support supplement would be higher as worked out in accordance with
the pre-20 September 2009 income test rules and, as based on the pre-20
September 2009 maximum basic rates (plus an amount of $10.10 for singles or
$5.05 for members of a couple) their rate can be worked out under subclause
30(6) and not under the rules that would apply apart from the transitional
arrangements.
Subclause 30(6) provides for the substitution in the method statement in
subpoint SCH6A1(6) of the "provisional payment rate" and the "increased
rate" that are determined under the transitional provisions. The
transitional rates will be substituted when clause 30 is applicable and the
conditions in subclause 30(3) have been met.
Subclause 30(6) provides that the substituted "provisional payment rate" in
subpoint SCH6-A1(6) will be the maximum payment rate, calculated as the sum
of:
. the transitional rate determined under the relevant method statement
in either subclause 32(1) or (2); plus
. rent assistance as payable under Module C of the Rate Calculator.
The resulting sum is reduced by the amount of the pension supplement
payable to the person that is payable as the quarterly pension supplement.
Subclause 30(6) also provides that in the determination of the "provisional
payment rate" the income and assets tests are applied on the assumption
that the ordinary and adjusted income test changes made by Schedules 6 and
7 to this bill have not been made.
Subclause 30(6) also provides that the amount to be substituted in the
method statement in subpoint SCH6-A1(6) as the transitional "increased
rate" will be determined under new subclause 32(3).
The Notes to subclause 30(6) include references to the circumstances in
which the method statements in subclauses 32(1) and (2) will be applicable.
Note 4 to subclause 30(6) provides that the transitional rates of income
support supplement determined under subclause 32(1) and (2) are to be
indexed for CPI adjustments under Subdivision B of Division 18 of Part IIIB
on and after 20 March 2010.
Note 5 to subclause 30(6) provides that the transitional "increased rate"
referred to in paragraph 30(6)(c) is affected by indexation as the
components of the transitional "increased rate" are indexed.
The intention of subclause 30(7) is to ensure that, once a person's rate of
payment is higher, or the same, as determined otherwise than in accordance
with the transitional arrangements in Schedule 5 under the VEA or under the
social security law, then that person's payment can never again be
determined in accordance with the transitional arrangements.
New subclause 30(8) provides an exception to the rule in subclause 30(7).
The purpose of the subclause is to ensure that a person, who is a member of
a couple (but not a member of a respite care couple), who benefits from the
transitional arrangements in Schedule 5 of the VEA and subsequently meets
the condition in paragraph 30(7)(a), (b) or (c) for the first time in
respite care, can resume benefitting from the transitional arrangements as
soon as they are no longer a member of a respite care couple.
Clause 31 contains the method statements for determining the transitional
rate of service pension and the other components that are included in the
maximum payment rate referred to in subsection 30(4).
The amount in subclause 31(1) is the transitional rate of service pension
for a person who:
a) is not a member of a couple, or is otherwise paid at a single rate of
pension because they are a member of an illness separated couple or a
member of a respite care couple;
b) is residing in Australia; and
c) either is in Australia or is temporarily absent from Australia for a
continuous period not exceeding 13 weeks.
The method statement in subclause 31(1), provides for the calculation of
the transitional rate by reference to a number of payment components as
they would have existed if it were assumed that the amendments made by the
Veterans' Affairs and Other Legislation Amendment (Pension Reform) Act 2009
(should it be enacted) had not been made.
The purpose in step 1 of calculating the amount by reference to components
that would have been payable if not for these amendments is to ensure that
no existing service pensioner will receive a lower amount of pension,
telephone allowance and utilities allowance than they would have otherwise
received on 20 September 2009 had the VEA not been amended.
The effect of steps 2 and 3 is to add to the amount determined under step1
an amount that is at least $525.20 per annum. This will ensure that those
persons to whom this amount applies and whose rate is determined by the
transitional arrangements will receive an increase in their maximum payment
rate of at least $10.10 per week.
The amount in subclause 31(2) is the transitional rate of service pension
for a person who:
a) is a member of a couple, but who is not a member of an illness
separated couple or respite care couple;
b) is residing in Australia; and
c) either is in Australia or is temporarily absent from Australia for a
continuous period not exceeding 13 weeks.
The method statement in subclause 31(2) provides for the calculation of the
transitional rate by reference to a number of payment components as they
would have existed if it were assumed that the amendments made by the
Veterans' Affairs and Other Legislation Amendment (Pension Reform) Act 2009
(should it be enacted) had not been made.
The purpose in step 1 of calculating the amount by reference to components
that would have been payable if not for these amendments is to ensure that
no existing service pensioner will receive a lower amount of pension,
telephone allowance and utilities allowance than they would have otherwise
received on 20 September 2009 had the VEA not been amended.
The effect of steps 2 and 3 is to add to the amount determined under step 1
an amount that is at least $262.60 per annum. This will ensure that those
persons to whom this amount applies and whose rate is determined by the
transitional arrangements will receive an increase in their maximum payment
rate of at least $5.05 per week.
The amount in subclause 31(3) is the transitional rate of service pension
for a person who is not a member of a couple, or is otherwise paid at a
single rate of pension because they are a member of an illness separated
couple or a member of a respite care couple but is not otherwise covered by
subclause 31(1) (because they are not residing in Australia or because they
have been absent from Australia for more than 13 weeks continuously).
The method statement in subclause 31(3) provides for the calculation of the
transitional rate by reference to the maximum basic rate of service pension
payable if the amendments made by the Veterans' Affairs and Other
Legislation Amendment (Pension Reform) Act 2009 (should it be enacted) had
not been made; and the pension supplement that would be payable to the
person had the amendments not been made.
This amount does not include components to reflect utilities allowance and
telephone allowance as those allowances are not payable to a person who is
overseas and has been for more than 13 weeks.
The amount in subclause 31(4) is the transitional rate of service pension
for a person who is a member of a couple, but who is not a member of an
illness separated couple or respite care couple and is not otherwise
covered by subclause 31(2) (because they are not residing in Australia or
because they have been absent from Australia for more than 13 weeks
continuously).
The method statement in subclause 31(4) provides for the calculation of the
transitional rate by reference to the maximum basic rate of service pension
payable if the amendments made by the Veterans' Affairs and Other
Legislation Amendment (Pension Reform) Act 2009 (should it be enacted) had
not been made; and the pension supplement that would be payable to the
person had the amendments not been made.
Clause 32 contains the method statements for determining the transitional
rate of service pension and pension supplement that are included in the
maximum payment rate referred to in subclause 30(6). It also includes a
method statement to determine the transitional "increased rate" referred to
in subclause 30(6) that will be substituted into the Rate Calculator.
The amount in subclause 32(1) is the transitional rate of service pension
for a person who:
d) is not a member of a couple, or is otherwise paid at a single rate of
pension because they are a member of an illness separated couple or a
member of a respite care couple;
e) is residing in Australia; and
f) either is in Australia or is temporarily absent from Australia for a
continuous period not exceeding 13 weeks.
The method statement in subclause 32(1), provides for the calculation of
the transitional rate by reference to the maximum basic rate of service
pension and the pension supplement if it were assumed that the amendments
made by the Veterans' Affairs and Other Legislation Amendment (Pension
Reform) Act 2009 (should it be enacted) had not been made.
The inclusion in the method statement of the amounts that would have been
payable if not for these amendments is to ensure that no existing income
support supplement recipient will receive a lower amount of income support
supplement than they would have otherwise received on 20 September 2009 had
the VEA not been amended.
The amount in subclause 32(2) is the transitional rate of service pension
for a person who:
g) is a member of a couple, but who is not a member of an illness
separated couple or respite care couple;
h) is residing in Australia; and
i) either is in Australia or is temporarily absent from Australia for a
continuous period not exceeding 13 weeks.
The method statement in subclause 32(2), provides for the calculation of
the transitional rate by reference to the maximum basic rate of service
pension and the pension supplement if it were assumed that the amendments
made by the Veterans' Affairs and Other Legislation Amendment (Pension
Reform) Act 2009 (should it be enacted) had not been made.
The inclusion in the method statement of the amounts that would have been
payable if not for these amendments is to ensure that no existing income
support supplement recipient will receive a lower amount of income support
supplement than they would have otherwise received on 20 September 2009 had
the VEA not been amended.
The method statement in subclause 32(3), provides for the calculation of
the transitional "increased rate" (as specified in paragraph 30(6)(c)),
calculated as the sum of:
. the current ceiling rate (as set out in Module A of the Rate
Calculator); plus
. rent assistance as payable under Module C of the Rate Calculator.
The resulting sum is reduced by the amount of the pension supplement
payable to the person that is payable as the quarterly pension supplement.
Clause 33 deals with how to treat the income of members of a couple where
at least one member has their rate affected by the operation of clause 30.
New clause 33 provides that, in working out the amount payable to person A
(the "partner") it should be assumed that the service pension or income
support supplement payable to person B (the "person") is payable at the
rate at which it would have been payable as if clause 30 had not been
enacted.
This means that, before applying the rule at point SCH6-E3 for a person, it
should be assumed that the person's partner's rate was determined by
reference to the income test rules that apply apart from the transitional
arrangements in Part 5, Schedule 5, of the VEA. Centrally, this will mean
that the benefit of the Work Bonus measure will be able to flow from one
member of a couple to the other notwithstanding whether or not a person's
rate is determined by the transitional arrangements.
Clause 34 provides for some payment and tax consequences of receiving a
rate of pension affected by clause 30. Subclause 34(1) is an application
provision that states that clause 34 applies if clause 30 affects the rate
at which a service pension or income support supplement is payable to a
person. This means that, if, because of that clause, a person's
provisional annual payment rate is replaced under subclause 30(3) or 30(5),
clause 34 will apply to that person.
Subclause 34(2) states the purpose of the clause, which is to ensure that
the rate of pension for a person to whom the clause applies is treated the
same for income tax purposes as if the person's rate had not been affected
by clause 30. Centrally, this will mean that an amount equivalent to the
maximum basic rate and pension supplement as at 20 March 2009, as indexed
to the CPI, will be subject to income tax, while the remainder will be
exempt.
Subclause 34(3) achieves this purpose by deeming that the VEA applies as if
an amount described in subparagraphs 30(4)(a)(i) or 30(6)(a)(i) (as
affected by any indexation) were an amount of pension supplement. One
consequence of this subclause is that the subparagraphs 30(4)(a)(i) or
30(6)(a)(i) amounts will be deemed to be the full pension supplement in the
context of determining the "tax-exempt pension supplement" as set out in
subsection 5GA(5) as inserted by Schedule 4 to this bill.
As a result, the tax-exempt component of that amount will be worked out by
subtracting the pension supplement basic amount (as affected by the deeming
rule in subclause 34(4)) from the overall subparagraphs 30(4)(a)(i) and
30(6)(a)(i) amounts according to subsection 5GA(5) as inserted by Schedule
4. Another consequence of this provision will be that all of the rules
relevant to a person's minimum pension supplement amount, including the
amount and the possibility of an election under section 60A (as inserted by
Schedule 4 to this bill) will apply for people to whom clause 34 applies.
Subclause 34(4) provides that the amounts in the table in subsection
5GA(4), as inserted by Schedule 4 to this bill, are to be replaced by
different amounts. This is done to ensure that the definition of "tax-
exempt pension supplement" will apply to ensure that only amounts
equivalent to the maximum basic rate and pension supplement as at 20 March
2009, and indexed to the CPI, are taken to be a person's "pension
supplement basic amount" for the purposes of applying subsection 5GA(5) for
people whose rates are affected by clause 30.
Part 2 - Related amendments
Items 2 and 3 add new notes "4A" to the end of subpoints SCH6-A1(2) and
SCH6-A1(6) (which contain the method statements relevant to calculating the
rate, for a person, of service pension or income support supplement) to
indicate that clause 30 of Schedule 5 can operate to deem a person's
provisional annual payment rate to be an amount that is different to what
their provisional annual payment rate would otherwise be.
Items 4 and 5 add two new items to the tables at section 59A and 59B of the
VEA, which refers to the amounts at subparagraphs 30(4)(a)(i) and
30(6)(a)(i). The new items refer to the "Maximum transitional service
pension rates" and the Maximum transitional income support supplement
rates". The new item numbers are 23 and 24 (for section 59A) and 14 and 15
(for section 59B).
The effect of these amendments is that the amounts in subclauses 31(1) to
(4) and subclauses 32(1) and (2) will be indexed to the CPI on 20 March and
20 September of each year from 20 March 2010 onwards.
Part 3 - Other amendments
The amendments in Part 3 of Schedule 9 of the bill make minor amendments to
the operation of the transitional arrangements as inserted into the social
security law by Schedule 10 of the Social Security and Other Legislation
Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009. They
have two key functions.
The first is to ensure that, if a person, who is benefitting from the
transitional arrangements under the VEA, moves, without a break of a day or
more, from a service pension or income support supplement paid under the
VEA to a social security pension covered by the transitional arrangements
introduced by Schedule 10 of the Social Security and Other Legislation
Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009, then
that person is eligible to benefit from the transitional arrangements in
Schedule 1A of the Social Security Act 1991.
The second is to ensure that a person does not lose the benefit of the
transitional arrangements as a result of becoming a member of a "respite
care couple" (as defined in section 4 of the Social Security Act) on a day
following a day where the person had, as a member of a couple (but not a
member of a respite care couple), benefited from the transitional
arrangements.
This will enable a person to resume being paid in accordance with the
transitional arrangements, introduced by Schedule 10 of the Social Security
and Other Legislation Amendment (Pension Reform and Other 2009 Budget
Measures) Act 2009, in circumstances where they, after spending a period as
a member of a respite care couple, would receive a higher rate of pension
in accordance with the transitional arrangements.
Items 6 to 9 make amendments to the list of payments in subclause 146(1) of
Schedule 1A of the Social Security Act 1991 to add service pension (except
carer service pension) and income support supplement, paid under the VEA.
Item 10 amends subclause 146(2) of Schedule 1A of the Social Security Act
1991 to clarify that the purpose of the clause is limited to working out
the rate of the social security pensions described in paragraph (1)(a) (and
not for the payments listed in that paragraph paid under the VEA).
Item 11 adds a note to indicate that, in the case of doubt, clause 146 has
no bearing on a person's entitlement or qualification for a social security
pension.
Item 12 replaces subclause 146(5) as inserted by the Social Security and
Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures)
Act 2009. The purpose of new subclause 146(5) is to ensure that, once a
person's rate of payment is higher, or the same, as determined otherwise
than in accordance with the transitional arrangements, whether under the
social security law or under the VEA, then that person's payment can never
again be determined in accordance with the transitional arrangements.
New subclause 146(5A) provides an exception to the rule in subclause
146(5). The purpose of the subclause is to ensure that a person, who is a
member of a couple (but not a member of a respite care couple), who
benefits from the transitional arrangements in Schedule 1A of the Social
Security Act and subsequently meets the condition in paragraph 146(5)(a),
(b) or (c) for the first time in respite care, can resume benefitting from
the transitional arrangements as soon as they are no longer a member of a
respite care couple.
Schedule 10 - Pension age for persons other than veterans
Summary
Under the Veterans' Entitlements Act, the pension age for persons other
than veterans, will increase for both men and women from 65 to 67 years by
six months every two years commencing on 1 July 2017. This age increase
reflects the increase in qualifying age for age pension under the Social
Security Act and maintains the alignment of these two pension ages between
the two Acts.
Background
Under the Veterans' Entitlements Act, the pension age for persons other
than veterans is aligned with the pension age for age pension under the
Social Security Act. Currently, the pension age for persons other than
veterans is 65 years for men and 63.5 years for women. The pension age for
non-veteran females is progressively increasing and will align with the non-
veteran male pension age (that is, 65 years) on 1 July 2013.
This measure provides for an increase in the pension age for persons other
than veterans, in relation to both men and women, from 65 to 67 years.
This increase in pension age will be achieved gradually by increasing the
pension age for persons other than veterans by six months every two years,
starting on 1 July 2017 and ending on 1 January 2024. The effect of this
Schedule is that this latest increase to pension age does not apply to
people born before 1 July 1952.
The amendments made by this Schedule commence on the day on which they
receive Royal Assent.
Explanation of the changes
Amendments of the Veterans' Entitlements Act
Item 1 repeals subsection 5QB(2) and substitutes a new subsection (2). New
subsection 5QB(2) provides that a man, other than a veteran, born during
the period specified in column 2 of the Table reaches pension age when he
turns the age specified in column 3 of the relevant item. This means that:
|A man born during the period: |will turn age pension age|
| |at: |
|On or before 30 June 1952 |65 years* |
|1 July 1952 to 31 December |65 years and 6 months |
|1953 | |
|1 January 1954 to 30 June 1955|66 years |
|1 July 1955 to 31 December |66 years and 6 months |
|1956 | |
|On or after 1 January 1957 |67 years |
* No increase in age pension age for this group.
Item 2 repeals subsection 5QB(5) and substitutes a new subsection (5). New
subsection 5QB(5) provides that a woman, other than a veteran, born during
the period specified in column 2 of the Table reaches pension age when she
turns the age specified in column 3 of the relevant item. This means that:
|A woman born during the |will turn age pension age|
|period: |at: |
|1 January 1949 to 30 June 1952|65 years* |
|1 July 1952 to 31 December |65 years and 6 months |
|1953 | |
|1 January 1954 to 30 June 1955|66 years |
|1 July 1955 to 31 December |66 years and 6 months |
|1956 | |
|On or after 1 January 1957 |67 years |
* No increase in age pension age for this group.
Schedule 11 - Advance payments
Summary
This Schedule improves existing arrangements in relation to advance
payments, to enable veterans' affairs pensioners to have greater access to
advances of pensions and income support supplement.
Background
As part of the Government's Secure and Sustainable Pension Reforms package,
existing arrangements in relation to advances will be improved, to enable
veterans' affairs pensioners to have greater access to advances of pension
and income support supplement payments, through increases in the maximum
and minimum allowable advance and in the number of advances available in a
year.
The VEA provides for veterans' affairs pensioners to apply for an advance
payment of their pension or income support supplement. The primary
objective of advance payments is to make payments more flexible to the
needs of veterans' affairs pensioners to help them meet unexpected
expenses.
An advance payment is not an additional payment, but is a lump sum pre-
payment of pension or income support supplement that is recovered from the
pensioner.
This Schedule increases, with effect from 1 July 2010, the maximum and
minimum advance payment amounts and ensures that the maximum and minimum
amount will be increased in line with increases in the rate of service
pension.
In addition, the measure will also enable veterans' affairs pensioners to
be able to access multiple advances up to the maximum advance amount. This
means that veterans' affairs pensioners are no longer limited to one
advance in any twelve month period.
The provisions contained in this Schedule apply to service pensioners,
disability pensioners, war widow and widower pensioners and income support
supplement recipients.
The amendments made by this Schedule commence on 1 July 2010.
Explanation of the items
Amendments of the Veterans' Entitlements Act
Item 1 inserts a listing of the definition of the term "advance payment
eligible amount" and its subsection 5Q(1) location in the section 5 index
of definitions.
Item 2 inserts in subsection 5Q(1) a definition of "advance payment
eligible amount" for a person. Under paragraph (a) of the definition, if a
person is receiving a service pension which is worked out under subpoint
SCH6-A1(2) of the Rate Calculator, the advance payment eligible amount for
a person is the sum of the person's maximum basic rate plus the amount (if
any) of the person's pension supplement amount less the person's minimum
pension supplement amount.
Under paragraph (b) of the definition, if a person is receiving any other
payment which is payable in advance, the amount of the person's advance
payment eligible amount is worked out under paragraph (a) above, as if the
person was receiving a service pension as worked out under subpoint SCH6-
A1(2) of the Rate Calculator.
Items 3 and 4 amend section 79B. Section 79B sets out the conditions of
eligibility for an advance payment.
A minor amendment to paragraph 79B(1)(b) (item 3) to insert the words "is
made" clarifies the reference to the application for an advance payment
being lodged with the Department of Veterans' Affairs as required under
section 79E in accordance with the provisions of section 5T.
Item 4 repeals and substitutes subsection 79B(2).
New subsection 79B(2) provides for the rules under which a person will not
be eligible for an advance payment. A person is not eligible for an
advance payment if:
. the maximum amount of the advance payment to which the person is
entitled under Division 5 of Part IVA is less than one week's worth of
the person's advance payment eligible amount; or
. the amount of an advance payment under Part IVA or Part 2.22 of the
Social Security Act 1991, which a person has received in full (whether
as a single lump sum or in instalments), more than 12 months ago has
not been fully repaid; or
. the person owes a debt to the Commonwealth (regardless of whether the
debt arises under this Act or not) that is recoverable by deductions
under section 205 or section 205A.
Rounding under paragraph 79B(2)(a) is to the nearest cent (rounding
0.5 cents upwards).
Note 1 at the end of subsection 79B(2) signposts that paragraph (a) of
subsection 79B(2) does not preclude an advance payment being paid in
instalments of less than the amount worked out under that paragraph.
Note 2 directs the reader to the definition of "advance payment eligible
amount" in subsection 5Q(1).
Item 5 repeal and substitutes Division 5 of Part IVA with the insertion of
new section 79K. New section 79K provides the rules for working out the
amount of an advance payment.
Subsection 79K(1) provides that the amount of the advance payment is the
smaller of either:
. the amount of the advance payment sought; or
. the maximum amount of advance payment that is payable to the person as
worked out under the method statement.
The subsection 79K(1)method statement provides the rules for determining
the maximum amount of the advance payment on a step by step basis.
Step 1 calculates an amount that is equal to 3 weeks worth of the person's
"advance payment eligible amount" as defined in subsection 5Q(1).
Step 2 calculates an amount that is equal to the annual rate of the
person's "pension" (defined in section 79A to include pensions payable
under Parts II, III and IV and income support supplement payable under Part
IIIA) that was payable on the last payday before the application for the
advance payment was made (disregarding any additional amounts paid by way
of remote area allowance and so much of the person's pension supplement
amount (if any) that is equal to the person's "minimum pension supplement
amount".
Step 3 provides for a comparison between the result of step 1 and:
. if the pension is a service pension or income support supplement,
7.5% of the result of step 2; or
. for all other advances, 13 times the fortnightly rate of pension.
Step 4 provides that the sum of:
. each advance payment (if any) of a person's pension that may have
previously been paid to the person during any of the 13 fortnights
immediately before the application for the current advance payment was
made; and
. each other advance payment (if any) of pension that was paid to the
person that has not been fully repaid;
is to be subtracted from the smaller of the amounts compared at step 3.
Step 5 provides that the result of the calculation made under step 4 is the
maximum amount of advance payment that is payable to the person (rounded to
the nearest cent with the rounding 0.5 cents upwards).
Note 1 at the end of section 79K signposts that the amount of the advance
payment must be more than the minimum eligible amount for the person which
is provided by paragraph 79B(2)(a).
Note 2 directs the reader to the definition of "advance payment eligible
amount" in subsection 5Q(1).
Currently, subsection 79B(2) provides that a person in receipt of a pension
cannot receive more than one advance of pension in a 12 month period. The
effect of section 79K is to remove this requirement - the nature of the
method statement allows a person to receive multiple advance payments,
subject to each advance exceeding the minimum advance amount. The total
amount advanced in a 13 fortnight period can be up to three weeks' worth of
the maximum basic rate applicable to the person.
Item 6 provides an application provision to the effect that the amendments
made by this Schedule apply in relation to applications for an advance
payment which are lodged on or after 1 July 2010.
Schedule 12 - Amendments relating to aged care
Summary
This measure will ensure that pensioners are not charged higher aged care
fees than intended.
Background
This Schedule amends the Aged Care Act 1997 to implement the 2009 Budget
measure Secure and sustainable pensions - residential aged care.
On 20 September 2009, the Australian Government is increasing the rate of
the basic age pension and introducing a new pension supplement to ensure
that older Australians receive enough income to keep pace with the cost of
living.
The new pension supplement will include amounts equivalent to the old
pharmaceutical allowance, pensioner supplement, telephone allowance and
utilities allowance. The telephone and utilities allowances, which now
form the "minimum pension supplement", were previously not counted as part
of a recipient's income support payment or ordinary income and therefore
were not included in the total assessable income calculation for aged care
fee purposes. The whole of the new pension supplement will be included in
the recipient's income support payment.
People in residential aged care make a contribution to the cost of their
care through payment of a fee to the residential aged care service
provider. This fee is referred to in the Aged Care Act 1997 as the daily
income tested reduction, but is also commonly known as the income tested
fee. The maximum amount of daily income tested reduction paid by the
resident is set out in the Aged Care Act 1997 and is directly linked to the
total assessable income amount of the resident (which currently includes
the total amount of income support payment).
This Schedule makes consequential changes to the section in the Aged Care
Act 1997 that calculates the amount of a resident's total assessable
income. These changes ensure that the amount of the resident's minimum
pension supplement, or equivalent, is excluded from the calculation of the
resident's total assessable income. The minimum pension supplement is
comprised of the previous utilities and telephone allowances. These
changes will maintain the current calculation of a resident's total
assessable income amount.
Explanation of the items
Part 1 - Main amendment
Items 1 to 3 amend paragraphs 44-24(2)(a), 44-24(3)(a) and 44-24(4)(a).
Currently, subsections 44-24(2), (3) and (4) of the Aged Care Act 1997
describe what can be included in the total assessable income calculations
for certain residents.
From 20 September 2009, the entire amount of the new pension supplement
will be included in the amount of a resident's income support payment.
However it is not intended for the amount of a resident's total assessable
income to change.
Whilst most pensioners will receive the minimum pension supplement amount
as part of their income support payment, some resident's will receive an
amount that is equivalent as part of their basic pension or income support
supplement.
These items ensure that resident's receiving the minimum pension
supplement, or equivalent amount, will have that amount excluded from their
total assessable income calculation.
In accordance with item 5, these items apply to the calculation of total
assessable income for certain residents in receipt of an income support
payment in respect of a day that is on or after 20 September 2009.
Item 4 inserts a new subsection 44-24(4A) after subsection 44-24(4). From
20 September 2009, most residents will receive the minimum pension
supplement or equivalent amount. However, some income support recipients
will not receive the minimum pension supplement amount.
This item ensures that residents that do not receive the minimum pension
supplement, or equivalent amount, will not receive the exclusion in items 1-
3.
In accordance with item 5, this item applies to the calculation of total
assessable income for certain residents in receipt of an income support
payment in respect of a day that is on or after 20 September 2009.
Item 5 is an application provision. This item makes it clear that the
amendments made by items 1 to 4 apply in relation to the calculation of the
total assessable income amounts under subsection 44-24(2), (3) and (4) for
a day that is on or after 20 September 2009.