If you are a Veteran, you are no doubt familiar with DVA payouts. Whether you are in the process of making a claim or are already receiving a payout, it’s understandable that you may have ongoing questions related to these.
Not only available to severely impaired Veterans, but DVA payouts also come in many forms with specific eligibility requirements. To learn more about the various payouts handled by the Department of Veterans Affairs and how this relates to you as a Veteran, current or former ADF member, we have prepared this easy-to-follow guide.
Who Can Claim For DVA Payouts?
Payouts from the Department of Veterans Affairs are available to qualifying individuals who have served in the Australian Defence Force. This can refer to both peacetime service and wartime service.
Qualifying service is one aspect used to determine eligibility and, as mentioned above, not all payouts are exclusive to Veterans. As per the DVA – ‘the entitlements available depend on the legislation applicable at the time of service and the type of service you rendered.’
This means that Veterans, current and former members as well as eligible dependants and wholly dependent partners can all claim a DVA payout depending on the specifics of their circumstances and if they meet eligibility criteria.
Types Of Income Support Payments (DVA Payouts)
There are many types of income support supplement for ADF members who have an injury or disease sustained during service. Some DVA payouts are taxable so it is important to know this as well. Payable by the DVA, these include but are not limited to:
Special Rate Disability Pension
The SRDP provides a form of periodic payment to individuals whose capacity to work has been affected due to injury or illness linked with their military service on or after 1 July 2004.
The SRDP is an alternative to incapacity payments and is tax-free and payable indefinitely. It does not cease in line with the commencement of the old-age pension.
While those who receive SRDP do not pay tax on this payment, this compensation can exclude you from receiving other payments such as Family Tax Benefits or Child Support Payments.
Incapacity Payments
Similar to the Special Rate Disability Pension, incapacity payments are intended to lessen the economic loss suffered by those who are unable to work due to illness or injury acquired during their service.
Unlike the SRDP however, incapacity payments cease with the commencement of the old age pension and are taxable.
Permanent Impairment Payments
Also linked to injury or illness acquired during service, a PI payment is more specifically for those whose condition is unlikely to resolve or comes with severe lifestyle restrictions. It is considered differently than other payments and acknowledges that military rehabilitation is unlikely to improve a person’s future capacity to work or live normally. Permanent impairment points will calculate the compensation an injured veteran should receive based on the MRCA for any injury occurring post 1 July 2004.
As a non-economic loss payment, the amount of compensation payable under an approved PI claim is determined by
- An assessment of the individual’s level of physical and/or mental impairment and
- A review of the effect that this impairment has on the individual’s lifestyle
Permanent impairment payments require the claimant to be medically assessed, meet a minimum level of impairment and provide proof of all accepted conditions within the eligibility criteria.
Under the terms of PI compensation, if your condition worsens or leads to the development of other accepted conditions, your level of compensation may change.
Lump Sum Payment Vs Periodic Payment
Some Veterans receiving periodic payments can elect to have their compensation paid as a lump sum payment instead.
There are benefits for both options, however, each comes with specific financial implications that should be discussed before a final decision is made. For example, claims that involve a lump sum payment can affect your eligibility for other DVA payouts or government support payments that assess against financial hardship rules.
How Is A Lump Sum Calculated?
To determine the lump sum payment amount, the DVA will refer to a life expectancy table provided by the Australian Government Actuary. The weekly amount will be multiplied by the number of weeks indicated in the life expectancy table and the resulting figure paid as a lump sum.
Are DVA Payouts Taxable? 
As mentioned briefly above, some DVA payments are taxable and some are tax-free. Often a claimant has no control over the type of payment that is approved under the DVA guidelines.
However, when it comes to incapacity payments and the SRDP you may be asked to choose which payment you prefer. As the SRDP is not taxable, it can seem the more appealing option – to ensure you are making the best financial decision, the DVA recommends claimants seek qualified financial advice. Once a choice is made, it is final.
To better understand the specific tax obligations on PI compensation, a service pension or any additional payment handled by the DVA, you can refer to the DVA’s tax table.
Are DVA Payout Calculators Accurate?
When strict criteria is followed for calculating payments, such as the points awarded in a total impairment rating or lifestyle rating, the calculated amounts can be quite accurate.
You can try to estimate what your DVA payout may be using online estimation tools, however, it is important to that the DVA makes the final determination regarding your payout figure.
Financial Considerations For Those Receiving DVA Payouts
If you are receiving a DVA compensation payment it is important that you understand how this payment can impact your rate of service pension, income support supplement (ISS) or veteran payment.
For ISS purposes, as with many additional payments available to former ADF service members, you will be assessed under the income and assets tests. If you do not meet financial hardship rules due to a compensation payout, your right to other payments or the amount payable can be affected.
The type of payment you receive can also influence your eligibility for other payments available through Centrelink such as Family Tax Benefits, Child Support Payments, education support for eligible young persons and more.
This is yet another reason why you should speak with a FASEA-registered and qualified financial planner. They can help you structure things to your best advantage.
Making The Most Of Your DVA Payout
If growing your money and having the ability to make investments while receiving DVA payouts is important to you, it is essential that you seek professional assistance. While many individuals receiving DVA payouts may feel that their financial future has been compromised, however, this need not be the case.
Just because an injury or illness occurred during your service that has limited your capacity to work, doesn’t mean you cannot create the financial stability you desire. With the help of a qualified financial planner, it is possible to still achieve your financial goals.
Depending on the circumstances, the DVA and ADF both offer reimbursement for the costs involved with seeing a financial planner. This makes it easier for any eligible ADF member or Veteran to get valuable financial planning advice.
Where Can I Find Further Information?
For further information regarding financial advice on DVA payouts, you can speak with our specialist team. We can direct you to where to seek reimbursement for our fees and walk you through the process of how to best utilise your compensation or service pension.
Compensation For Dependents
Should you be an eligible young person or wholly dependent partner claiming compensation due to the allowances in the MRCA, you may receive payments in several ways.
All eligible dependents are entitled to a one-off, tax-free lump sum payment and education assistance under the Military Rehabilitation and Compensation Act Education and Training Scheme (MRCAETS).
Additional benefits may be available in the form of a:
- Weekly periodic payment
- Veteran Gold Card for free medical care and/or
- Fortnightly MRCA Supplement payment
Should the decedent have been receiving a periodic permanent impairment payment, SRDP or incapacity payments immediately before they died, the eligible dependent will be given 12 weeks of these entitlements.
All compensation for dependents is provided in addition to any superannuation or life insurance payments the decedent was entitled to. As with other payments, this compensation can also alter your eligibility for Income Support Payments from Services Australia.
Failure to notify Services Australia about a change in your financial circumstances could see you being overpaid and required to repay the benefits you received in error.
This is why seeking professional financial advice as a dependant is highly recommended. Doing so can help you avoid further stress at an already difficult time.
The National Service Financial Difference
At National Service Financial, we deeply value your ADF service. Owned and run by a former ADF member, we have a unique understanding of the needs of current and former members as well as those of Veterans.
We recognise the importance of finding a qualified financial advisor to support your decision-making and to ensure you are best positioned for a financially secure future. Our genuine and specialised interest in supporting current and former ADF members sets us apart from other financial advisors.
With lengthy experience reviewing DVA payouts and their related financial implications, we help to inform our clients and give them the confidence to make the best decisions regarding their compensation.
Book a date for your financial discovery appointment and take charge of your financial future with National Service Financial. We offer a no-obligation, fee-free initial consultation to help you get started. Call 1300 580 802 today.
