Defence Force Income Support Allowance (DFISA) 108-03060000

DFISA was an income support payment paid by the Department of Veterans' Affairs (DVA) to customers whose social security pension or benefit was reduced (including to nil) because of the inclusion of Adjusted Disability Pension from DVA as assessable income.

DFISA was introduced on 20 September 2004 and ceased on 1 January 2022, when Adjusted Disability Pension became exempt income under the Social Security Act 1991. DFISA assessments and payments may still occur for periods prior to 1 January 2022 where the reassessment of an existing customer occurs.

Payments made under other Commonwealth Acts and regulations were not covered by the DFISA legislation however the Veterans' Entitlements (DFISA-like Payment) Regulations 2005 provides for DFISA-like payments. Customers paid under these acts and regulations received DFISA-like payments identical to DFISA payments, rather than DFISA, and unless specified in this document, the term ‘DFISA’ covers ‘DFISA-like’ also. These payments commenced on 20 September 2004 and ceased on 1 January 2022.

Where a customer's Adjusted Disability Pension from DVA affected their partner's rate of social security pension or benefit, the partner may have also been entitled to receive DFISA payments.

DFISA was also paid where there was a reduction in rate because of the inclusion of Adjusted Disability Pension from DVA in the assessment of Lump Sum Bereavement Payment, Pension Bonus Scheme and Home Equity Access Scheme.

There was no claim form or claim process for DFISA. Eligibility was automatically assessed by the Services Australia system for all customers who were paid Adjusted Disability Pension from DVA.

A person's rate of DFISA is equal to the difference between the actual rate of social security pension or benefit the person receives, and their notional rate, which is the rate they would have received if Adjusted Disability Pension from DVA:

• was excluded from income in the assessment of the person's actual rate, but
• included in the calculation of rent assistance (for example, the DVA disability income rent test is applied)

DFISA = notional rate minus actual rate

The amount of DFISA will be automatically recalculated for any rate reassessment for periods before 1 January 2022, and transmission of new DFISA information will be sent to DVA at the end of every business day. This may result in arrears or a debt of DFISA. DVA generally pay DFISA fortnightly on the DVA payday.

A manual DFISA calculation will be needed for customers who are on a manual rate of payment for their pension or benefit, or where the system cannot perform an automatic rate calculation for periods prior to 1 January 2022. Manual DFISA calculations are done by the DVA Clearance Team.

If the customer was being paid their social security pension or benefit under the Assets Test, they are not eligible for DFISA payments as the Adjusted Disability Pension from DVA did not reduce their payment rate. If their assessment method subsequently changes from the Assets Test to the Income Test, the system will automatically calculate whether the customer is entitled to DFISA for past periods.

See Process for information on how to calculate DFISA.

Adjusted Disability Pensions from DVA include the following:

• Disability Compensation Payments paid under Parts II and IV of the Veterans' Entitlements Act (VEA) 1986
• Permanent Impairment payment and Special Rate Disability Pension paid under the Military Rehabilitation and Compensation Act (MRCA) 2004
• Temporary Incapacity Allowance (only payable for periods of incapacity prior to 20 September 2011)
• Dependant's Allowance (only payable for periods prior to 20 September 2009)

Payments affected by the DFISA legislation included:

• ABSTUDY (affected by DFISA-like payments regulations)
• Age Pension
• Austudy
• Bereavement Allowance
• Carer Payment
• Child Care Subsidy
• Community Development Employment Project Scheme Participation Supplement (prior to 30 June 2015)
• Disability Support Pension
• JobSeeker Payment (JSP)
• Newstart Allowance (prior to 20 March 2020)
• Parenting Payment Single
• Parenting Payment Partnered
• Partner Allowance (prior to 1 January 2022)
• Special Benefit
• Widow Allowance (prior to 1 January 2022)
• Widow B Pension (prior to 20 March 2020)
• Wife Pension (prior to 20 March 2020)
• Youth Allowance

Prior to 1 July 2014 the following income support payments were also known as primary payments for the purposes of DFISA-like payments:

• Farm Help Income Support (FHIS)
• Exceptional Circumstances Relief Payment (ECRP)
• Interim Income Support (IIS)
• Sugar Industry Reform Program 2004 - Income Support Payment

These payments were administered by the Department of Agriculture, Fisheries and Forestry, and were superseded by the introduction of Farm Household Allowance (FHA) on 1 July 2014.

The following did not attract DFISA:

• Farm Household Allowance (FHA), as Adjusted Disability Pension from DVA was not included as income for FHA purposes
• Customers paid under the Financial Hardship Guidelines (section 1130 of the Social Security Act 1991)
• Customers paid a pension under the criteria for blindness that is income and assets test free, however their Adjusted Disability Pension from DVA could still affect their partner's entitlement. If the blind customer elected to receive Rent Assistance, their income support payment was income tested and DFISA may have been payable

Where a customer received a taxable income support payment, for example, Age Pension, the DFISA payment was taxable. If a customer received a non-taxable income support payment, for example, Disability Support Pension (under the Age Pension age), the DFISA payment was non-taxable.

Although DFISA ceased for periods from 1 January 2022, retrospective reassessments of the primary income support payment may create payments of DFISA after that date. All DFISA payments are exempt from the Income Test for all income support payments. However, DFISA is:

• always included in the ordinary Income Test for Low Income Health Care Card (LIC)
• included in the assessment for Commonwealth Seniors Health Care Card (CSHC) only where it is taxable income
• assessed for Family Tax Benefit and CCS purposes only where it is taxable income

When a customer's income precludes entitlement to their income support payment, their pension or benefit is usually rejected or cancelled. Before 1 January 2022, customers who were paid an Adjusted Disability Pension from DVA would have a DFISA calculation done before this occurred. If DFISA was greater than zero, their pension or benefit status was held as Current Zero Rate (CZR-DFISA). These customers were regarded as receiving the pension or benefit for which they qualify and entitled to the associated benefits and concessions relevant to their payment.

CZR-DFISA customers must have continued to qualify for their pension or benefit, and meet the obligations associated with their income support payment.

Under family assistance law, CZR-DFISA customers were taken to be receiving the social security pension or benefit which was supplemented by their DFISA payment. They would therefore be exempt from the FTB Part A income test.

Customers ceased to be CZR-DFISA from 1 January 2022 as Adjusted Disability Pension from DVA was no longer assessed under the income test for income support payments.

DFISA payments for stimulus reporters were calculated and transmitted to DVA when the customer reported their income at the end of every entitlement period up until 1 January 2022. This was to ensure all income was taken into account when DFISA was calculated and reduced the risk of overpayment. DVA paid DFISA retrospectively for the entitlement period.

A zero DFISA rate was then transmitted to DVA at the start of every entitlement (reporting) period.

The Home Equity Access Scheme (HEAS) (known as the Pension Loans Scheme prior to 1 January 2022) allows older Australians and their partners to supplement their income with a government funded loan.

Services Australia pay the loan:

• fortnightly, or
• as an advance payment lump sum

Prior to 1 January 2022, the amount of DFISA decreased the loan amount a person could receive each fortnight. DFISA did not affect the advance payment option, as it only became available from 1 July 2022.

There were instances when a Lump Sum Bereavement Payment, Pension Bonus or Pension Bonus Bereavement Payment was reduced due to the inclusion of an Adjusted Disability Pension from DVA. In these instances a DFISA Lump Sum Bereavement payment, a DFISA Pension Bonus payment or a DFISA Pension Bonus Bereavement Payment was also calculated and transmitted to DVA for payment.

For information on the calculation of these amounts, see the Process page.

Pension customer partnered with an allowance customer, or both pensioners

When a couple includes at least 1 pensioner, their income is combined and then halved to establish their assessable income. Their respective rates are calculated using this income information. These rules remain unchanged with DFISA, meaning half the total combined DVA Adjusted Disability Pension was assessed as income against each customer for periods before 1 January 2022.

For pension/allowance couples with Rent Assistance (RA), the RA is paid to the pension customer. To establish the amount of DFISA payable, the notional rate of pension and notional RA were added together to obtain the pension customer’s total notional rate. The notional RA amount was calculated using the DVA disability income rent test, in which the couple’s combined Adjusted Disability Pension income was halved in order to obtain the RA reduction amount used in the calculation.

Allowance customer partnered with a Parenting Payment customer, another allowance customer, an ABSTUDY customer, or partner not on benefits

When a partner’s ordinary income exceeds the Partner Income Free Area (which is the cut-off point where the partner’s benefit is no longer payable), it reduces the rate of allowance payable to the customer. To calculate the amount of partner excess income to deduct from the customer’s fortnightly payment, the Partner Income Free Area is deducted from the partner's income and multiplied by 0.6. See the Process page for further information.

For the calculation of DFISA, all steps in the calculation of a customer’s rate must be mirrored in a notional rate calculation.

The exceptions to this are the notional partner excess income and notional rent assistance calculations, which require special treatment as described below.

If a customer’s fortnightly allowance was reduced by their partner’s excess income, and the partner also received an Adjusted Disability Pension from DVA before 1 January 2022, the  notional partner excess income  must be included in the customer’s DFISA calculation.

For information on how to calculate notional partner excess income, see the Resources page.

The partner’s Adjusted Disability Pension from DVA excess income must be included in the calculation of notional Rent Assistance (RA) for the customer.

Partner Adjusted Disability Pension from DVA excess income is obtained by subtracting notional partner excess income from the actual partner excess income.

The resulting amount is subtracted from the customer’s notional RA as a final step in the DVA disability income rent test.

For information on how calculate the notional rent assistance rate for a partner with excess income, see the Resources page.

From 20 September 2009 changes to the pension income test were made as a result of the Pension Reform. As part of this reform, transitional rules were put in place to ensure no pension customer was worse off following the introduction of the new income test.

To qualify for their payment to be calculated under the transitional rules, a customer must have been on a relevant pension payment and been payable as at 19 September 2009 and have had no break in entitlement. They will continue to be paid under transitional rules until they are entitled to an equal or higher rate under the new rules implemented on 20 September 2009. Once this occurs, they move to the new income test rules permanently.

The DFISA rate must be included when the comparison is conducted between the rate payable under transitional rules and the rate payable under the new rules (that is, the current income test), as DFISA is part of the total income support payment received by the customer.

These rate comparisons will be made by the system. Where an automatic calculation cannot occur a manual rate calculation will be completed by a Service Officer within the DVA Clearance Team.

• Age Pension
• Bereavement Allowance
• Carer Payment
• Disability Support Pension (except for customers under 21 years who have no affecting income and/or no dependent children)
• Widow B Pension (prior to 20 March 2020)
• Wife Pension (prior to 20 March 2020)