On 1 July some veterans on DFRDB/MSBS Invalidity Pensions who upon application, have had their taxation adjusted to the correct lower rate, i.e. the rate that applies to civilians with similar invalidity payments. This adjustment followed work from a number of successful private rulings from the Australian Tax Office (ATO).
Through a Facebook Group, many veterans sought to apply the findings of these private rulings to Comsuper. These were successful and the law was applied correctly, though it appeared, very reluctantly.
Apparently, following representations from ComSuper (which is supposed to be looking after members), and as part of the sustainable superannuation push, the government introduced changes to the law which removed the avenue that allowed injured Veterans to have their Invalidity payments taxed correctly from 1 July 2017. The Government calls it a “loophole”, however this legislation has been available for many years.
Those veterans currently affected have already been notified by Comsuper of the changes to their tax as of 1 July. For most, it means a loss of several hundred dollars a fortnight, for some over a thousand dollars a fortnight. This affects several hundred veterans who have fought the battle and had the law applied correctly. It obviously had potential to the thousands on currently on Class A and Class B pensions that met criteria where they are highly unlikely to be employed in their current fields of experience/expertise.
If you did not previously apply to Comsuper to have the Private Rulings applied to your Comsuper invalidity payment, this taxation change does not affect you.
To make little of the changes because “it currently only affects a few hundred veterans” shows scant regard for the large impact such changes will have on those veterans and families affected. How do people suddenly cope with a loss of $500 a week, when the veteran is totally incapacitated and cannot work due to service caused injury and the wife just gave up her job to be the carer.?
Then, to imply that they are getting away with something they really should not have, because it is a “loophole” is morally repugnant.
It can be argued that the legislation which has been repealed actually isn’t needed; and what is needed is the Government to apply the law as it stands to Injured Veterans invalidity payments through MSBS/DFRDB. That said, the matter is rather complex legally and can be related to other issues concerning ComSuper reporting, Family Court decisions and of course the ATO. There are several possible ways to address this and related issues in the longer term.
DFWA (and ADSO) are consulting with others in the ESO and Defence Community. This consultation includes the Facebook Groups who have lead on this and have been doing tremendous work supporting veterans, young and old, and their families on these and related issues. It is hoped that this will lead to collaborative and mutually agreed approach to the issues. This will take a bit of time as it is complex, legal advice will be sought and we are all volunteers!
In the meantime, we strongly support a petition (petition EN0242) concerning this matter which is circulating at the moment. It adversely affects several hundred veterans very badly and will hit them next month. Going forward, thousands of injured Veterans could finally have the same taxation treatment for their invalidity payments as civilians do. They deserve your support. Please sign.
NOTE: THIS ISSUE IS NOT RELATED TO THE TAX FREE STATUS OF DVA PENSIONS: THEY ARE NOT AFFECTED BY THESE CHANGES TO THE LAW..