Treatment of periodic compensation payments 117-03010000

Periodic payments for a defined period may be treated as:

• a direct deduction (that is, dollar for dollar) or
• as ordinary income.

Treat any excess over the customer's maximum basic rate as ordinary income for the partner.

Ongoing periodic payments are paid in regular instalments over a period. Periodic payments can be paid as a lump sum payment for a period in the past or no specific period.

Lump sum paid as redemption of periodic payments (no fixed period)

Assess an amount as a lump sum if it is paid without reference to a fixed period.

Lump sum paid solely as arrears of periodic payment (fixed period)

Some compensation schemes allow compensation payers to convert their liability and pay arrears of periodic payments for a fixed period. Assess under the compensation provisions as paid during the period they represent.

Lump sum including arrears or advances of periodic payments and other components

Arrears or advances of periodic payments may be included in a lump sum settlement with other compensation components such as:

• pain and suffering
• medical costs
• interest

Do not separate the periodic payment components to calculate their individual effects under the Social Security Act. Assess the entire settlement as a lump sum.

The only exception is arrears of periodic payments with interest only. Assess this under the compensation provisions as paid during the time it represents.

Treat payments from sickness and accident insurance policies as other ordinary income when the customer has:

• paid or contributed to the premium and
• there is no offset clause or an offset clause that is not invoked against a social security payment

Do not treat income protection policies attached to superannuation policies as compensation. See Assessing superannuation and Recording other income on the Other Income (OIN) screen.

Payments from a Salary Continuance Scheme can be treated as compensation or ordinary unearned income. If the claimant opts out of the scheme and this:

• results in a salary/wage increase, the payment is treated as ordinary unearned income
• does not result in a salary/wage increase, treat the payment as compensation

Injured workers who have exhausted all paid personal leave and have submitted their invalidity retirement request can receive pre-assessment payments.

These payments, paid by way of a lump sum or paid periodically, are assessed under the compensation rules.