The Interim Report from the Royal Commission into Defence and Veteran Suicide recommends “that the Australian Government should, without delay, implement legislative reforms to simplify and harmonise the veteran entitlement system.” This is the Interim Report Number One Priority.
Now is not the time to introduce legislation which entrenches different treatment and leaves some disabled veterans paying more tax on their invalidity benefits than others. The draft Treasury Laws Amendment Bill 2022: Taxation of Military Superannuation Benefits embeds different tax treatment regimes for veterans depending on when they started receiving payments and the scheme.
Veterans with the same date of enlistment, same employment and pay, same length of service and with the same disability, and receiving the same Invalidity Benefit payment under the same superannuation scheme, can be taxed differently. Veterans whose Invalidity Benefits payments commenced on or after 20 September 2007 receive more favourable taxation treatment than those whose payments started prior to that date.
However, there is an exception to that. Those Veterans covered under the newer ADF Cover introduced in 2016 are also not eligible for the same favourable taxation treatment of Invalidity Benefits as their mates serving beside them and who are in the earlier super schemes. Most of these Veterans would be unaware of this. Some may have even chosen to change to the new scheme, without being informed of this significant difference.
Can this different tax treatment of Veterans on the same Invalidity Benefits really be justified?
The proposed legislation should be amended so that the favourable tax treatment afforded to Veterans whose Invalidity Benefits started on or after 20 September 2007, are extended to Veterans whose payments from the same super schemes started prior to that date, and also extended to the contemporary Veterans receiving the same Invalidity Benefits under ADF Cover.
DFWA urges the government take this opportunity to simplify and harmonise the tax treatment of Veterans’ Invalidity Benefits now … and not entrench the differences and difficulties which cause the adverse effects on Veterans’ mental health, as highlighted by the Royal Commission.
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