1. Following the hearing of this matter, although the Tribunal had not requested or given leave for further submissions or evidence to be provided, [Mr A] provided a redacted copy of a decision made by the Tribunal in an unrelated matter, along with further written submissions. Although not obliged to do so, this material has been taken into account in making my decision.

1. The statutory provisions relevant to this review are contained in the Social Security Act 1991 (the Act).
2. The issue which arises in this case is how Mr Thorbau's military superannuation pension should be taken into account in calculating his rate of DSP.

1. The qualification criteria for DSP are set out in section 94 of the Act. It is not disputed that at all times relevant to the decision under review, Mr Thorbau satisfied these qualification criteria.
2. A person's rate of DSP is worked out using Pension Rate Calculator A in section 1064 of the Act: section 117 of the Act. If a person's rate of DSP is nil, then DSP is not payable to the person: section 98 of the Act.
3. Under Pension Rate Calculator A, a person's rate of payment of pensions, which includes DSP, must be calculated by applying both an income and an assets test. The lower of the rates calculated under the income test or the assets test is the rate payable to the person.
4. Under the income test, a person's ordinary income that is less than a prescribed amount (called the income free area) does not affect the person's rate of pension. For every dollar of income over the income free area, a person's fortnightly rate of pension is reduced by 50 cents (for a single person) or 25 cents each (for members of a couple). Over a certain income (the income limit) a person's rate of pension is nil.
5. As of 1 July 2023, the income free area for a single person was $204 per fortnight and the income limit $2,332 per fortnight. These limits are indexed periodically, so as at 1 July 2024, the income free area was $212 per fortnight and the income limit $2,444.60 per fortnight.
6. Sections 8 and 9 of the Act set out definitions relevant to the income test. Section 8 of the Act provides that "ordinary income" means income that is not maintenance income or an exempt lump sum. Section 9 of the Act sets out definitions relevant to financial assets and income streams.
7. At all times relevant to the decision under review, Mr Thorbau was in receipt of a fortnightly payment of MilitarySuper from the Military Superannuation and Benefits Scheme.
8. Mr Thorbau's gross fortnightly payment was:
   • $2,115,22, prior to 13 July 2023
   • $2,185.02 from 13 July 2023
   • $2,228.72 from 11 January 2024
   • $2,264.38 from 11 July 2024.
9. Prior to the decision of the Full Federal Court in the matter of Commissioner of Taxation v Douglas [2020] FCAFC 220 (Douglas), military superannuation payments of the nature received by Mr Thorbau fell within the definition in section 9 of the Act of a military defined benefit income stream and were assessed as an asset-test exempt income stream and a defined benefit income stream.
10. Section 1099A of the Act, as at the time Mr Thorbau first applied for DSP, provided that the amount a person was taken to receive from an asset-test exempt income stream that is a defined benefit income stream was the annual payment less the deductible amount. The deductible amount was defined in subsection 9(1) of the Act as "the sum of the amounts that are the tax free components (worked out under Subdivision 307‑C of the Income Tax Assessment Act 1997 or, if applicable, section 307‑125 of the Income Tax (Transitional Provisions) Act 1997) of the payments received from the defined benefit income stream during the year".
11. Based on the pre-Douglas understanding of the nature of military defined benefit income streams, Centrelink accordingly took into account Mr Thorbau's fortnightly MilitarySuper payments as ordinary income pursuant to Division 1C Subdivision B of the Act (less the deductible amount as defined under section 9 of the Act) for the purposes of calculating his rate of DSP.
12. In Douglas, the Court decided that invalidity benefits received pursuant to the Military Superannuation and Benefits Act 1991 (MSB Act) were not, for taxation purposes, a superannuation income stream under the Income Tax Assessment Act 1997 (ITAA) but were a superannuation lump sum. This resulted in a more favourable taxation treatment of military superannuation benefits such as those received by Mr Thorbau.
13. In response to the decision in Douglas, Parliament passed the Social Services and Other Legislation Amendment (Military Invalidity Payments Means Testing) Act 2024 (the Amending Act). The Amending Act was assented to on 30 May 2024 and commenced on 31 May 2024.
14. The amendments to the Act contained in the Amending Act were introduced with the intent to establish a clear legal basis for military superannuation benefits to be subject to means testing, where recipients also sought to access social security benefits. The Amending Act also contained, at section 37, validation provisions that provided that past determinations under section 1099A of the Act treating military superannuation benefits as asset-test exempt income streams in assessing a person's rate of social security payments were valid and effective.
15. Sections 9BB, 1098 and 1099AAA of the Act, as amended post-Douglas, have the effect that amounts received from a military invalidity pension income stream (as defined in subsection 9(1G) of the Act) are treated as an asset-test exempt income stream and are assessed as ordinary income in working out a person's social security benefit.
16. Section 1098 of the Act provides as follows:

(1) For the purpose of working out the annual rate of ordinary income of a person from an asset - test exempt income stream to which this Subdivision applies, the person is taken to receive from that income stream each year the amount worked out under section 1099, 1099A or 1099AAA.

Note: For asset - test exempt income stream see sections 9A, 9B, 9BA and 9BB.

(2) Sections 1099 and 1099A do not apply if:

(a) the income stream is covered by subsection 9BA(1); or

(b) on the income stream's commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 9BA(1), but the income stream is no longer covered by that subsection

1. Section 1099AAA of the Act provides as follows:

(1) If the asset - test exempt income stream to which this Subdivision applies is a military invalidity pension income stream, the amount that the person is taken to receive from the income stream each year is worked out as follows:

"annual payment" means the amount payable to the person for the year under the income stream.

"special reduction amount" means the sum of the amounts that would be the tax free components, worked out under Subdivision 307 - C of the Income Tax Assessment Act 1997 , of the payments received from the military invalidity pension income stream during the year, if it were assumed that the military invalidity pension income stream is a superannuation income stream within the meaning of that Act.

Cap on special reduction amount

(a) the military invalidity pension income stream:

(i) is an income stream of a kind mentioned in subparagraph 9(1G)(a)(iii); and

(ii) is not an income stream relating to military service; and

(b) apart from this subsection, the special reduction amount under subsection (1) in relation to the income stream for the year would exceed 10% of the amount payable to the person for the year under the income stream;

then that special reduction amount is taken to be an amount equal to 10% of the amount payable to the person for the year under the income stream.

1. Subsection 9(1G) of the Act defines a military invalidity pension income stream as follows:

(1G) An income stream is a military invalidity pension income stream if:

(a) the income stream is:

(i) invalidity pay within the meaning of the Defence Force Retirement and Death Benefits Act 1973 ; or

(ii) an invalidity pension under the superannuation scheme established under the Military Superannuation and Benefits Act 1991 ; or

(iii) an income stream provided under a superannuation scheme and that is covered by an instrument under subsection (3); and

(b) the income stream is not a defined benefit income stream.

1. Mr Thorbau agreed, and I find, that the fortnightly MilitarySuper payments received by him met this definition and were a military invalidity pension income stream. However, [Mr A] submitted that Centrelink, acting on incorrect advice from the Commonwealth Superannuation Corporation (CSC), has erroneously calculated the special reduction amount applicable to Mr Thorbau. In [Mr A's] submission, the special reduction amount in Mr Thorbau's circumstances is the whole amount of his fortnightly military superannuation benefit.
2. It is noted that Mr Thorbau's further submissions refer to a decision of this Tribunal (differently constituted) delivered on 2 July 2025. [Mr A] submitted that that matter involved virtually identical circumstances as Mr Thorbau's matter and as such the decision should be given due regard as a precedent.
3. Decisions of this Tribunal are not binding authority. In any event, the decision provided on Mr Thorbau's behalf does no more than find that the applicant's benefit, in that case, was a military invalidity pension income stream as defined under subsection 9(1G) of the Act. It does not make any findings as to the correct calculation of the special reduction amount under section 1099AAA. It is not disputed in this case that Mr Thorbau's fortnightly MilitarySuper benefit also satisfied the definition of a military invalidity pension income stream under subsection 9(1G) of the Act.
4. In the present case, Centrelink assessed Mr Thorbau's special reduction amount (and prior to the enactment of the amending legislation, his deductible amount) as $0 based on advice from CSC that Mr Thorbau's tax-free component of his fortnightly benefit was $0. This meant that Mr Thorbau's fortnightly rate of DSP was reduced having regard to the whole amount his MilitarySuper benefit.
5. Centrelink's documents contain a schedule provided by CSC dated [in] September 2023 that states that Mr Thorbau's fortnightly benefit does not have any tax-free component or deductible amount as defined by section 9 of the Act. Mr Thorbau submits that this document is incorrect and that CSC have unlawfully provided "false certificates".
6. However, Centrelink's documents also contain various statements provided by CSC to Mr Thorbau that all state that the tax-free component of his fortnightly pension is $0. Those advices go on to note a substantially higher amount as the "Lump sum tax-free component" and explain:

As you are affected by the Federal Court decision, Commissioner of Taxation v Douglas [2020] FCAFC 220, your pension is treated as a super lump sum for tax purposes.

Below are the different components of your benefit for tax purposes. We use this to determine how much is withheld for tax purposes and how we report these payments to the ATO.

1. Essentially the information from CSC confirms that Mr Thorbau's benefit is treated in different ways for different purposes. For the purposes of assessing tax payable under the ITAA, the benefit is to be treated as a superannuation lump sum attracting generous tax concessions. However, under the Act, assessment of income derived from Mr Thorbau's military invalidity pension income stream takes into account a special reduction amount that is, under section 1099AAA, the amounts that would be the tax-free components, if it were assumed that the income stream is a superannuation income stream within the meaning of the ITAA.
2. The Act therefore requires consideration of the taxation treatment of Mr Thorbau's regular payments worked out as if such payments are a superannuation income stream, in order to calculate the special reduction amount. It is on this basis that CSC has consistently advised that Mr Thorbau's tax-free component, if his fortnightly benefit were treated as a superannuation income stream, was and is $0 per fortnight.
3. I accept the evidence contained in CSC's advices to Mr Thorbau and to Centrelink as correctly stating Mr Thorbau's tax-free component is $0. I therefore find that Mr Thorbau's special reduction amount is $0 and the whole amount of Mr Thorbau's fortnightly benefit from MilitarySuper was correctly taken into account by Centrelink as income in assessing his rate of DSP.