Who is eligible to receive Loss of Earnings (LOE) benefits?
This policy should be read in conjunction with the Loss of Earnings Benefits policy.
The TAC can pay Loss of earnings (LOE) benefits to a client who:
- was an 'earner' and
- suffered a 'loss of earnings' that is the result of or is materially contributed to by the transport accident injuries.
Who is an earner?
An "earner" is a person who at the date of the transport accident is:
- at least 15 years of age, or
- exempt from attending school under s.74G of the Community Services Act (1970) and who has a permit or licence granted under s.13 of the Child Employment Act 2003, and is
- in full-time or part-time employment as an employed or self-employed person,
- at any time during the 8 weeks immediately before the accident, or
- during a period, or periods, equal to at least 13 weeks during the 1 year immediately before the accident, or
- during a period, or periods, equal to at least 26 weeks during the 2 years immediately before the accident, and
- at the date of the accident had not retired permanently from all employment, and
- suffered a loss of earnings that is the result of, or is materially contributed to, by the transport accident injuries. Transport Accident Act 1986 reference: s.3(2)
What if the client was not working at the date of the transport accident, but had made an arrangement to start work soon after the accident?
An "earner" also includes a person who, before the transport accident, entered into an arrangement (whether or not an enforceable contract) to commence, at a particular time and place:
- employment with an employer or other person, or
- a business as a self-employed person.
This might include, for example, a person who was engaged solely in home duties or was unemployed for 2 years or more before the transport accident, but who had entered into a prospective employment arrangement that was due to start shortly after the accident.
How does the TAC assess LOE where the client has prospective employment?
In order to consider a claim for prospective employment the TAC requires:
- proof that the client had an offer before the accident or entered into an arrangement to start his/her own business, e.g. a letter from the prospective employer outlining the details of the position, and
- medical evidence confirming the client's incapacity to commence the position.
What if the person was not working at the date of the transport accident because they were in receipt of accident compensation?
An "earner" may also include a person who, at the time of the transport accident, was receiving:
- TAC loss of earnings benefits (LOE) for a previous transport accident, or
- WorkCover payments or corresponding workers compensation payments under another Commonwealth or State law, or
- compensation payments under the Country Fire Authority Act 1958, the Education and Training Reform Act 2006, the Juries Act 2000, the Police Assistance Compensation Act 1968, the Victorian State Emergency Service Act 1987, or the Emergency Management Act 1986.
Who is not an Earner?
The TAC does not consider an "earner" to include:
- a person who was receiving Loss of Earning Capacity benefits at the time of the transport accident in question, as Loss of Earning Capacity benefits do not constitute earnings, but are compensation for the loss of an asset, i.e. the loss of the capacity to earn, or
- a person who was permanently retired from employment at the date of the transport accident, or
- a person who was assessed as permanently unable to work due to their permanent disability and was receiving the invalid pension or disability benefit from Centrelink at the time of the transport accident.
What does loss of earnings mean?
The loss of earnings incurred by a client refers to the loss incurred or likely to be incurred by the client having regard to:
- the loss of earnings which the person has incurred, and
- the likely loss of future earnings that the client will incur.
Earnings means the amount the TAC considers the person would have received by way of income from personal exertion.
What does income from personal exertion include?
Income earned from personal exertion includes :
- wages, salaries, commission fees, bonuses, pensions, superannuation allowances, retiring gratuities, and any allowances (including the New Enterprise Incentive Scheme allowance) and gratuities received as an employee, or in relation to any services rendered
- the proceeds of a business carried out by a client
- income from a property where that income forms part of a salary of any office or employment of profit held by the client
profit from the sale of a property by a client where the property was acquired by the client for the purpose of profit making by sale, or carrying out any profit making undertaking or scheme.
Income from personal exertion does not include:
- rents or dividends
- interest from investments (however, interest may be considered where a client's principal business is the lending of money or where the interest is received for a debt for providing goods or services as part of a client's business).
Can the TAC pay LOE benefits when a client derives his/her income from a trust?
The TAC can pay LOE benefits to a client who is an "earner" and derives an income from a trust
(including a family trust or a discretionary trust) when:
- the money is received via wages, a distribution, or direct payment, and
- the money is income from personal exertion, and
- the loss of income is directly related to the accident injuries.
Where a proprietary company is the trustee, any person employed by, or principally working for, the trust is deemed to be an employee under the Accident Compensation Act (1985). The TAC may accept liability where the employee has no WorkCover entitlement.
The TAC will not pay LOE benefits to a client who derives an income from a trust where the money is received via a dividend or loan.
A client may be able to show a loss of earnings where the client receives a bona fide wage or director's fee, in addition to receiving a trust distribution. The client is required to provide evidence in the form of income tax returns from previous years.
Where a sole trader operates as a trustee, any substitute labour costs incurred may be considered in the client's LOE assessment.
What if the client does not incur a loss of earnings at the time of the transport accident, but would be likely to in the future?
The TAC may apply a non-payment period when a loss of earnings cannot be attributed to the transport accident and would have been incurred regardless of the accident.
What is a non-payment period?
A non-payment period is the period of time that a client is not entitled to receive LOE payments because the loss of earnings suffered (if any) is not a result of or materially contributed to by the transport accident injury.
In which circumstances will the TAC apply a non-payment period?
The TAC may apply a non-payment period in the following circumstances:
- termination of employment - if, at the time of the transport accident, the client qualifies as an "earner", but the client's employment would have been terminated irrespective of the transport accident, the TAC will apply a non-payment period by using an estimate of the time it would take to find alternative employment.
- unemployed clients - if, at the time of the transport accident, the client is unemployed but still qualifies as an "earner", a non-payment period will be applied by using an estimate of the time it would take to find a new job.
- pre-accident leave arrangements - if, at the time of the transport accident, the client had scheduled with his/her employer to take leave before the accident, for example:
- maternity/parental leave (including any periods of paid parental leave under the Federal Government scheme).
- compulsory company closures
- leave without pay
then the TAC will apply a non-payment period until the date that the leave was due to end.
Further information on leave entitlements is contained in the section 'What other factors can affect a client's entitlement to LOE benefits?'
When will someone who is already receiving LOE benefits no longer be eligible?
A person currently receiving LOE benefits can become ineligible if they no longer have a transport accident related incapacity to work. For more information, see: How long are Loss of Earnings (LOE) benefits payable for?
What must a client do when he/she has been receiving LOE benefits and then returns to work?
If a client who has been receiving LOE benefits returns to any work, he/she must notify the TAC immediately.
A failure to do so may result in the client being charged with an offence.
Can a client travel overseas whilst receiving ongoing LOE benefits?
A client can travel overseas whilst receiving ongoing LOE benefits. In order for payments of LOE benefits to continue, the client must submit a TAC certificate of capacity or medical certificate detailing the period their work capacity will be affected and this should also cover the period of absence from Australia.
The TAC will accept a medical certificate from overseas if it provides the same information as the TAC certificate of capacity. Please refer to the Certificate of Capacity policy.
What does the TAC expect from a client who is planning to travel overseas?
The TAC expects a client to:
- inform the TAC of his or her departure and return dates in advance
- provide contact details whilst overseas. If this is not possible, the details of a family member/friend in Australia who the TAC can contact in order to contact the client whilst overseas.
If a client is unable to notify the TAC of the above details before departing Australia they should notify the TAC as soon as practical.
How does taking a trip outside of Australia affect a client's entitlement to ongoing LOE benefits?
The TAC is obliged to review a client's entitlement on a regular basis. Where a client's overseas trip is greater than 28 calendar days, the TAC may consider reviewing a client's ongoing entitlement to LOE benefits by asking a client to attend a medical examination:
- before they depart Australia in order to determine the client's current capacity to return to their pre-injury or other suitable employment
- in the country they are visiting or attend a medical examination as soon practical upon their return to Australia in order to determine the client's capacity to return to their pre-injury or other suitable employment.
Based on medical information received, the TAC may request a client to accept a reasonable offer of rehabilitation or vocational rehabilitation services in Australia. Transport Accident Act 1986 reference: s.71, s.74
Entitlement to ongoing LOE benefits may be affected if a client does not comply with the TAC's request and if the client cannot provide reasonable grounds for being unable to comply, the TAC will:
- suspend LOE payments until such time as the client is able to attend a medical exam arranged by the TAC, or
- discontinue or reduce LOE payments until such time as the client is able to accept a reasonable offer of rehabilitation or vocational rehabilitation services in Australia. Transport Accident Act 1986 reference: s.71, s.74
Is an Australian resident who decides to reside outside of Australia on a permanent basis entitled to LOE benefits?
If an Australian resident decides to permanently live outside of Australia, the TAC will continue to pay LOE benefits provided certificates of capacity or medical certificates from a suitably qualified overseas medical practitioner are submitted on an ongoing basis.
If medical certificates from overseas are used, they must provide the same information as the TAC certificate of capacity. Please refer to the Certificate of Capacity policy.
From time to time, the TAC may arrange for the Australian resident to be medically examined overseas in order for the TAC to determine if the client remains entitled to LOE benefits. Transport Accident Act 1986 reference: s.71
Is an overseas visitor who resides outside of Australia entitled to LOE benefits?
The TAC can pay an overseas visitor who is an 'earner' LOE benefits whilst in Australia and upon returning overseas provided certificates of capacity or medical certificates from a suitably qualified overseas medical practitioner are submitted on an ongoing basis.
If medical certificates from overseas are used, they must provide the same information as the TAC certificate of capacity. Please refer to the Certificate of Capacity policy.
From time to time the TAC may arrange for the overseas visitor to be medically examined overseas in order for the TAC to determine if the client remains entitled to LOE benefits. Transport Accident Act 1986 reference: s.71
How are payments made to clients who are outside of Australia?
The TAC will pay LOE benefits as follows:
- For clients who are permanent Australian residents and are temporarily outside of Australia the TAC will continue to make EFT payments into the client's Australian bank account.
- For clients who are overseas visitors or Australian residents who reside permanently outside of Australia, the TAC will convert the LOE benefits assessed in Australian dollars paid into the currency of the country of destination, and cover all the charges relating to the conversion. The money is converted inside Australia. The TAC is required under Australian taxation law to tax a client who is an overseas resident, or who does not usually live in Australia and is not an Australian resident for taxation purposes, at the 'non resident' tax rate. The TAC will request the client to provide his/her overseas residential or postal address and bank account details including:
- the account number and the name/s of the persons holding the account
- the name and address of the foreign bank, and
- the branch number of the bank (where possible).
Does a driver need to be licensed to be eligible for LOE benefits?
To be eligible for LOE benefits the driver of a motor vehicle needs to be licenced at the time of the accident provided he/she had the capacity to obtain a licence.
When will the TAC consider a client to be licensed?
The TAC will consider a client to be licensed if at the time of the accident they:
- held a current and valid motor vehicle licence, for the class of motor vehicle being driven which was not cancelled or suspended
- had held a licence to drive a motor vehicle of that class, which had expired. However, for accidents on or after 1 March 2001 the licence must not have been expired for more than 3 years before the date of the accident
- had held an interstate or overseas licence to drive a motor vehicle of that class, which ceased to authorise that person to drive under Victorian road law. However, for accidents on or after 1 March 2001 the licence must not have been invalid for more than 3 years before the date of accident
- held a current learner permit for the class of motor vehicle being driven (other than a motorcycle or tractor) with a fully licensed driver sitting next to them
- held a current learner permit, for the class of motor vehicle if it was a motor cycle or tractor
were participating in a motorcycle rider training program for the purposes of obtaining a permit, accredited under the Road Safety Act (1986). Refer to VicRoads web site, and search for "Accredited training & test providers - Motorcycles". Further information on motorcycles can also be obtained in our Road Safety pages.
The TAC will apply the same guidelines listed above to visiting overseas or interstate clients as it does to Victorian residents when determining if the overseas or interstate visitor is deemed to be licensed at the time of the transport accident.
See also "When will the TAC consider a client to be unlicenced?"
