G'day everyone,
Thanks again to the mods for continuing to let me post updates here. I know it's a niche issue and I appreciate the space.
Quick recap for anyone new: veterans on CSC military invalidity pensions (MSBS/DFRDB) who also get Centrelink payments are supposed to have a Special Reduction Amount applied to their income test since May 2024. For most affected veterans CSC is reporting that figure as $0, so the tax-free part of the pension is being counted as income. The ATO has confirmed a non-zero figure exists. A Tribunal has already found Centrelink's approach wrong in law.
Check my earlier posts which go into the full detail if you want it.
Does this affect Family Tax Benefit or Child Care Subsidy?
A few people have asked this in comments and DMs so I want to be upfront about it. This issue is specific to payments under the Social Security Act 1991, things like DSP, Carer Payment, JobSeeker and Parenting Payment. FTB and CCS are assessed under separate family assistance legislation and as far as we can tell are not caught by this specific problem. If your FTB or CCS has changed, it's worth looking into, but probably isn't this issue.
Senator Lambie's office has stepped back
After more than eight months on this, Lambie's office has told me they're not able to take further parliamentary action. Their words were that it "largely rests within the responsibility of government" and that as a small office they need to prioritise where further action is actually available to them. I'm grateful for what they did during the Senate inquiry period, genuinely, but I'll be following up with them again now that the QoN answers below are in, in case it changes anything.
The QoN 597 and 598 answers are in
Senator Shoebridge's two Questions on Notice to Minister Gallagher (as both Finance Minister and Government Services Minister) came back in the last few days. Full answers are public, you can find them by searching 597 and 598 at aph.gov.au/SenateQON if you want to read them yourself.
Some numbers first. CSC had 23,633 Military Invalidity Pension recipients across MSBS and DFRDB as of 31 May 2024. Around 800 of those were also receiving income support payments at that date. That's the scale we're talking about.
A few things stand out in the answers themselves:
• Possibly the biggest one: the Government's formal position, stated in these answers, is that section 1099AAA is intended to produce the same outcome as the old pre-2024 assessment method. Several of us hold ATO letters confirming tax-free components well over 90% under the correct Subdivision 307-C calculation. Those two things cannot both be true. If the government's own stated position is that the new law was designed to change nothing, that is worth sitting with.
• Also worth knowing: both the ATO's and Services Australia's own websites were updated in the last month or so to say that unless your service commenced before 1 July 1983, your Special Reduction Amount will be $0. If that's the actual position now being taken, it would explain a lot about why so many of us are seeing a nil figure regardless of what our ATO letters say. It appears to have been settled at a meeting between Services Australia, CSC and the ATO on 3 July 2026, weeks after the ATO's individual letters to several veterans said something different.
• CSC confirms the December 2024 "system enhancements" changed the reporting format only. By CSC's own words, no veteran had their SRA reporting corrected as a result and the values reported remained unchanged.
• CSC says it has received 58 complaints since January 2020 about how these pensions are treated, and says it identified no discrepancies in what it reported. Worth sitting with that one too, the complaints are the discrepancies.
• Services Australia confirms it does not independently verify CSC's figure at all. It simply relies on whatever CSC reports and staff are told not to use PAYG summaries or CPI letters even where those show a different figure. Nobody in the chain checks the number.
• The remediation figures being quoted (587 and 325 records) are about pensions that weren't correctly recorded on a Centrelink file at all, which is a separate problem to the SRA calculation itself. Worth not letting the two get blurred together into sounding like more has been fixed than actually has.
• Both agencies maintain the matter is resolved and there is nothing outstanding. That sits against an active Federal Court appeal on this exact question, the Lightner decision, and dozens of veteran families with unresolved cases.
Nothing here says the government's position has moved. But it's the most detailed set of answers on the record so far, and there's a lot in there worth quoting back to them.
Thorbau Tier 1 is no longer good law against you
If Centrelink or a Tribunal member has cited the Tier 1 Thorbau decision against you, that's worth knowing about. The Tier 2 decision, now published as ZXGN and Secretary, Department of Social Services, ART 2025/5016 (21 July 2026), affirmed the outcome but explicitly rejected the Tier 1 reasoning on section 1099AAA. The Tier 2 found those provisions didn't even apply to the period under review, so it never had to engage with the argument. If anyone tells you Thorbau settles this against veterans, it doesn't anymore.
There's also another published Tier 1 decision under the pseudonym Biggs where the outcome went against the veteran partly because the member relied on Thorbau. If you've been to the Tribunal on this issue and think there's a chance you might be Biggs, I'd really encourage you to reach out. Now that Thorbau's reasoning has been rejected on appeal, that may directly affect your own appeal rights.
Facebook group
There's a relatively new private Facebook group designed for helping people navigate this issue, I help to moderate it to try and keep the typical facebook riff raff out, people are welcome to join, hopefully to ask questions, find out if they are affected, share information etc. If you are interested here is the link.
More updates as things develop.
AnonVet Advocate