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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
| | | |
| |Veterans' Affairs Legislation Amendment | |
| |(Budget Measures) Bill 2009 | |
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Veterans' Affairs,
The Honourable Alan Griffin MP)
Table of Contents
Outline and Financial Impact
............................................................. ii
1. Short Title
.................................................................
......................... iii
2. Commencement
.................................................................
................ iii
3. Schedule(s)
.................................................................
....................... iii
Schedule 1 - Amendments
Part 1- Deposit of certain payments into foreign bank accounts
................... 1
Part 2 - Amendments relating to insurance
........................................................... 4
Part 3 - Provisions relating to dependants' pensions
............................................ 7
VETERANS' AFFAIRS LEGISLATION AMENDMENT
(BUDGET MEASURES) BILL 2009
OUTLINE AND FINANCIAL IMPACT
Outline
The Bill will give effect to three Veterans' Affairs portfolio 2009 Budget
measures. The measures will:
. provide for the payment of Veterans' Affairs pensions and allowances
into overseas bank accounts;
. extend eligibility for Defence Service Homes Insurance to persons
eligible under the Defence Home Ownership Assistance Scheme Act 2008;
and
. cease payment of the majority of Dependants' Pensions.
Financial Impact Statement
Payments into overseas bank accounts
Financial Impact 2009-10 $0.2 m
2010-11 $0.1 m
2011-12 $0.1 m
2012-13 $0.1 m
Defence Service Homes Insurance
Financial Impact 2009-10 - $0.2 m
2010-11 - $0.2 m
2011-12 - $0.3 m
2012-13 - $0.3 m
Dependants' Pension
Financial Impact 2009-10 $5.3 m
2010-11 - $2.2 m
2011-12 - $2.0 m
2012-13 - $1.9 m
Veterans' Affairs Legislation Amendment
(Budget Measures) Bill 2009
|Short Title | |
| |Clause 1 sets out how the Act is to be cited. |
|Commencement | |
| |Clause 2 provides that the Act commences on the day after |
| |it receives the Royal Assent. |
|Schedules | |
| |Clause 3 provides that each Act that is specified in a |
| |Schedule to this Act is amended or repealed as set out in |
| |the applicable items in the Schedule concerned, and any |
| |other item in a Schedule to this Act has effect according |
| |to its terms. |
Schedule 1 - Amendments
Part 1 - Deposit of certain payments into foreign bank accounts
Overview
Part 1 of Schedule 1 will enable certain Veterans' Affairs pensions,
allowances and other pecuniary benefits to be paid into an account with a
bank or similar financial institution that is outside Australia.
Background
Under existing arrangements, persons residing permanently outside Australia
who are in receipt of pensions and other payments under the VEA or MRCA are
required to have an account in Australia with a bank or financial
institution into which Veterans' Affairs payments can be made.
Veterans' Affairs payments that may be paid to persons permanently residing
overseas are:
. service pension payable under Part III of the VEA,
. income support supplement payable under Part IIIA of the VEA;
. Defence Force Income Support Allowance (DFISA) payable under Part
VIIAB;
. disability, war widow/er and orphan pensions payable under Parts II
and IV of the VEA;
. certain allowances payable under Part VI of the VEA; and
. compensation payments under MRCA.
This measure will improve the economic and social welfare of pensioners
residing overseas by enabling them to have their Veterans' Affairs payments
made directly into their account with a bank or similar financial
institution that is outside Australia. This measure will align the
Department of Veterans' Affairs policy on payment to overseas bank accounts
with other Commonwealth Government agencies, including Centrelink and the
Child Support Agency.
Explanation of the changes
The changes made by Part 1 of Schedule 1 will enable the Repatriation
Commission to make arrangements for the payment of pensions, allowances or
other pecuniary benefits, payable under the VEA or the MRCA, to be paid
into an account with a bank or similar financial institution that is
outside Australia.
Explanation of the items
Military Rehabilitation and Compensation Act 2004
Item 1 amends subsection 430(1) of the MRCA by omitting the words "an
account with a bank" and substituting the words:
"an account with:
a) a bank; or
b) if the person is physically outside Australia, a foreign
corporation that takes money on deposit."
Item 1 will enable the Commission to direct that the whole or part of a
person's compensation is to be paid, at the intervals that the Commission
specifies, to the credit of an account of an overseas bank or foreign
corporation that takes money on deposit.
Item 2 amend the definition of account in subsection 430(4) of the MRCA by
repealing the definition and substituting a new definition to take account
of the new arrangements that will enable compensation payments to be
credited to an account with an overseas bank or an account with a foreign
corporation that takes money on deposit.
Veterans' Entitlements Act 1986
Item 3 amends the note at the end of section 58C of the VEA to include a
reference to a "foreign corporation that takes money on deposit".
Item 4 amends subsection 58F of the VEA by omitting the words "an account
with a bank" and substituting the words:
"an account with:
c) a bank; or
d) if the person is physically outside Australia, a foreign
corporation that takes money on deposit."
Item 4 will enable the Commission to direct that the whole or part of a
person's pension is to be paid, at the intervals that the Commission
specifies, to the credit of an account with an overseas bank or an account
with a foreign corporation that takes money on deposit.
Item 5 makes a technical amendment to paragraph 118PB(2)(c) so that the
provision refers to "an account" instead of "a bank account".
Item 6 amends the note at the end of subsection 122(4) by omitting the
words "with a bank".
Item 7 amends subsection 122A(1) by omitting the words "an account with a
bank" and substituting the words:
"an account with:
e) a bank; or
f) if the pensioner is physically outside Australia, a foreign
corporation that takes money on deposit."
Item 7 will enable the Commission to direct that the whole or part of the
amount of pension or allowance is to be paid, at such intervals as the
Commission directs, to the credit of an account with an overseas bank or an
account with a foreign corporation that takes money on deposit. The
account, nominated by the pensioner, may be an account maintained by the
pensioner, either alone or jointly or in common with another person.
Item 8 inserts a new subsection 122A(1AA) after subsection 122A(1). New
subsection 122A(1AA) provides that if the Commission gives a direction
under subsection 122A(1), the pension is payable in accordance with the
direction. This amendment maintains the effect of existing subsection
122A(1) which previously provided that the payment is to be made
according to the Commission direction.
Item 9 makes a technical amendment to subsection 122A(1B).
Item 10 repeals section 122C and substitutes a new subsection 122C. New
subsection 122C provides that if a pension, allowance or other pecuniary
benefit under the VEA, other than a pension or allowance to which section
58A applies, is payable to a person who is physically outside Australia,
then the pension, allowance or other pecuniary benefit may be paid in the
manner and in the instalments determined by the Commission.
Pensions or allowances to which section 58A applies are excluded from this
provision because section 58L applies in relation to these payments.
Commencement
Clause 2 provides that the amendments in Part 1 commence on the day after
the Act receives Royal Assent.
Part 2 - Amendments relating to insurance
Overview
This Part amends the Defence Service Homes Act 1918 and extends
eligibility for the Defence Service Homes Insurance Scheme to persons
eligible under the Defence Home Ownership Assistance Scheme Act 2008.
Background
Under the Defence Service Homes Act 1918, eligible persons may obtain
building insurance through the Defence Service Homes Insurance Scheme for
their home, right of residence in a retirement village, land, building
materials and home improvements. Currently, persons eligible to access
the Defence Service Homes Insurance Scheme are Australian veterans,
members or peacekeepers (or widows or widowers of any of these persons)
who qualify for:
benefits under the Veterans' Entitlements Act 1986;
a Defence Service Homes loan under the Defence Service Homes Act 1918,
(whether a loan is used or not or even if the loan has been paid out); or
a person who has a Defence HomeOwner Scheme loan under the Defence Force
(Home Loans Assistance) Act 1990.
The Department of Defence established a new home loan subsidy scheme under
the Defence Force Home Ownership Assistance Scheme Act 2008. The Defence
Force Home Ownership Assistance Scheme is available to eligible current
and former members of the Australian Defence Force who have served on or
after 1 July 2008 and who have completed sufficient Australian Defence
Force service.
An estimated 7,500 Australian Defence Force and Reserve members will gain
access to Defence Service Homes Insurance.
Explanation of the changes
The changes made by Part 2 of Schedule 1 will extend eligibility for the
Defence Service Homes Insurance Scheme to persons eligible for assistance
under the Defence Home Ownership Assistance Scheme Act 2008. It should
be noted that the eligible person need not have accessed a subsidised
loan under the Defence Home Ownership Assistance Scheme Act 2008, the
person need only be eligible under the new Scheme.
Explanation of the items
Defence Service Homes Act 1918
Item 11 inserts a new section 38CAA after section 38CA. Paragraph
38CAA(1)(a) of new section 38CAA provides that the Commonwealth may
undertake insurance of, or in relation to, a house if the person is
eligible under the Defence Force Home Ownership Assistance Scheme Act
2008 and the person has an interest in the house.
Paragraph 38CAA(1)(b) of new subsection 38CAA provides that the
Commonwealth may undertake insurance of , or in relation to, building
materials on the site of a house, being materials used in the building
of, or otherwise in relation to a house, if the person is eligible under
the Defence Force Home Ownership Assistance Scheme Act 2008 and the
person has an interest in the house.
Paragraph 38CAA(1)(c) of new subsection 38CAA provides that the
Commonwealth may undertake insurance of, or in relation to, any permanent
improvement of a structural kind that has been made to a house mentioned
in paragraph 38CAA (1)(a), or that has been constructed on land on which
such a house is built, and any building materials on the site of, and
used in the building of, or in relation to such an improvement, if the
person is eligible under the Defence Force Home Ownership Assistance
Scheme Act 2008 and the person has an interest in the house.
New subsection 38CAA(2) provides that the Commonwealth may undertake
insurance against risks related to the land on which a house mentioned in
paragraph 38CAA(1)(a) is built, or on which a house mentioned in
paragraph 38CAA(1)(b) is being, or is to be built.
New subsection 38CAA(3) states that the terms eligible and house have the
same respective meanings as in the Defence Force Home Ownership
Assistance Scheme Act 2008.
Item 12 inserts a new subsection 38EAA after section 38EA. As provided by
new subsection 38EAA(1), new section 38EAA applies if the Commonwealth
has undertaken insurance under section 38CAA in relation to a house and
the person ceases to be eligible for insurance under the Defence Service
Homes Insurance Scheme.
Subsection 38EAA(2) provides that, if this section applies, the insurance
undertaken in relation to the house does not cease to have effect when
the person ceases to be eligible. Furthermore, the Secretary must give
reasonable notice in writing to each person having an interest in the
house that the insurance will cease to have effect on a day specified in
the notice. The Secretary does not need to send such a notice if the
insurance has already ceased to have effect for some other reason.
In accordance with new subsection 38EAA(3), if the Secretary gives a
notice under subsection 38EAA(2), the insurance ceases to have effect on
the day specified in the notice unless it has already ceased to have
effect.
Under new subsection 38EAA, if section 38EAA applies because a person dies
and the person is survived by a widow or widower, the Secretary must be
satisfied that the widow or widower is not eligible before the Secretary
issues a notice under paragraph 38EAA(2)(b) in relation to the house.
New subsection 38EAA(5) states that the terms eligible and house have the
same respective meanings as in the Defence Force Home Ownership
Assistance Scheme Act 2008.
Commencement
Clause 2 provides that the amendments in Part 1commence on the day after
the Act receives Royal Assent.
Part 3 - Provisions relating to dependants' pensions
Overview
Part 3 of Schedule 1 will cease payment of the majority of dependants'
pensions and will provide for a lump sum payment to the existing
recipients.
Background
Under previous Repatriation legislation, if a veteran or member was
receiving disability pension for incapacity, in certain circumstances, the
veteran or member's dependants were also eligible for a dependants' pension
in respect of the veteran or member. Furthermore, upon the death of a
veteran, certain dependants other than the partner or child of the veteran
or member may have been eligible for a dependants' pension. Depending on
the circumstances, a dependant could include the veteran or member's family
members such as parents, siblings or grandparents.
The amendments to Repatriation legislation made by the Repatriation
Legislation Amendment Act 1985 prevented future grants of dependants'
pension to the dependants of living veterans or members or to dependants of
deceased veterans or members, other than to an eligible partner or child.
While the amendments provided that no future grants of dependants' pension
were to be made, other than to an eligible partner or child of a deceased
veteran or member, section 66 of the Repatriation Legislation Amendment Act
1985 saved existing recipients' entitlement to the pension.
Upon the enactment of the Veterans' Entitlements Act 1986, the saved status
of dependants' pensioners under section 66 of the Repatriation Legislation
Amendment Act 1985 was continued under section 4 of the Veterans'
Entitlements (Transitional Provisions and Consequential Amendments) Act
1986. Subsection 4 of the Veterans' Entitlements (Transitional Provisions
and Consequential Amendments) Act 1986 was subsequently amended to save
the entitlement to dependants' pension for persons whose rate had been
reduced to nil, at the time the relevant provisions were repealed, due to
compensation offsetting arrangements.
Dependants' pensions are exempt from income tax.
It should be noted that pensions granted on the grounds of the person being
without adequate means of support are not part of this measure. Without
adequate means of support pensions will continue to be payable to entitled
persons under section 4 of the Veterans' Entitlements (Transitional
Provisions and Consequential Amendments) Act 1986.
It should be further noted that pensions payable to eligible orphans and
war widows and war widowers of deceased veterans and members are not
included in this measure.
Explanation of the changes
The changes to the Veterans' Entitlements Act 1986 made by Part 3 of
Schedule 1 will cease the person's entitlement to the pension and provide
for a lump sum payment of dependants' pension (excluding without adequate
means of support dependants' pension). The lump sum payment will be
equivalent to three years worth of pension (78 fortnights). A person's
entitlement to an affected dependants' pension will cease on and from 22
September 2009. It is anticipated that the lump sum payment will be made
on 24 September 2009. The lump sum payment will be exempt from income
tax.
Explanation of the items
Income Tax Assessment Act 1997
Item 13 amends the section 11-15 of the Income Tax Assessment Act 1997 by
inserting, in alphabetical order, a 'lump sum payment under section 198N
of the Veterans' Entitlements Act 1986'.
Item 14 amends subsection 52-65(1D) of the Income Tax Assessment Act 1997
by inserting a new subsection 52-65(1E). New subsection 52-65(1E)
provides that a lump sum payment under section 198N of the Veterans'
Entitlements Act 1986 is exempt from income tax.
Veterans' Entitlements Act 1986
Item 15 inserts new subsection 198N after section 198M.
New subsection 198N(1) provides that section 198N applies if, because of
subsection 4(6) or 4(8B) of the Veterans' Entitlements (Transitional
Provisions and Consequential Amendments) Act 1986, a dependants' pension is
payable to the person, including a pension whose rate has been reduced to
nil. A rate may be reduced to nil in accordance with the compensation
offsetting rules in Division 5A of Part II or Division 4 of Part IV.
New subsection 198N(2) provides that despite section 4 of the Veterans'
Entitlements (Transitional Provisions and Consequential Amendments) Act
1986, the dependants' pension is not payable to the person on or after 22
September 2009. This provision ceases the persons entitlement to the
pension including a person whose rate has been reduced to nil.
New subsection 198N(3) provides that:
. following the cessation of entitlement to dependants' pension, the person
is entitled to a lump sum payment; and
. the lump sum payment is to be equivalent to 3 years (or 78 fortnights)
worth of the ceased pension; and
. the lump sum payment is to be paid on or after 24 September 2009; and
. the lump sum payment is to be calculated according to the rate at which
the person's last payment of pension was made.
New subsection 198N(4) states that subsections 198N(2) and 198N(3),
ceasing the payment of dependants' pensions and providing for the lump
sum payment, do not apply to a person if the person is being paid a
dependants' pension on the basis that the person was, at the time section
66 of the Repatriation Legislation Amendment Act 1985 came into force,
without adequate means of support. This provision makes it clear that
the payment of dependants' pensions granted on the basis that the person
was without adequate means of support are not being ceased and will
continue to be paid, and a person receiving a pension because the person
was without adequate means of support is not entitled to a lump sum
payment of pension.
Commencement
Clause 2 provides that the amendments in Part 3 of Schedule 1 commence on
the day after the Act receives Royal Assent.