K. Removal of direct deduction rules from partners of compensation recipients
20 September 2001
This proposal provides a more generous treatment for the partner of a compensation recipient. It replaces the current 'dollar for dollar' direct deduction rules for the partner with the income test that applies to other forms of income. 'Dollar for dollar' deductions will continue to apply to the compensation recipient. When the compensation recipient's rate of payment is reduced to $nil because of the 'dollar for dollar' deductions, the excess compensation amount will reduce the partner's rate under the ordinary income test, ie allowing the partner access to existing free areas and taper rates.
Overall this proposal will increase the amount of income support payments and access to concessions made to those couples with low levels of income derived largely (or solely) from compensation payments.
Regular compensation payments for economic loss are paid under all workers' compensation schemes and some motor accident compensation schemes. These payments are generally treated as a 'dollar for dollar' direct deduction against the compensation recipient's and/or their partner's social security pension or allowance. 'Ordinary' income (eg wages) on the other hand, are treated more generously.
Funding: $13.3 million over four years