How are LOEC benefits assessed?

This policy must be read in conjunction with the Loss of Earning Capacity (LOEC) Benefits policy.

How is the benefit calculated, if the person has no capacity to work?

Total loss of earnings capacity

When a client who is an earner, has no capacity to work 18 months after the date of the accident, because of their injuries the TAC will pay the greater of either:

  • 80% of the client's weekly pre-accident earning capacity; or
  • if the client has no dependants, the prescribed weekly minimum amount applicable at the time; or
  • if the client has dependants, the prescribed minimum weekly amount plus prescribed amounts that vary according to the number of dependants of the client applicable at the time

However under the Transport Accident Act, a client's weekly LOEC benefit cannot be greater than the prescribed weekly maximum amount; or 100% of the earner's pre-accident earning capacity. If the LOEC amount is greater than these two amounts, then the TAC will pay the lesser of these two amounts.

For the prescribed weekly minimum and maximum amounts under the Act please refer to the TAC's indexed statutory amounts.

Transport Accident Act 1986 reference: s.49(2) and s.49(3) 

How is the benefit calculated, if the client has some capacity to work?

Partial LOEC

When a client who is an earner has either returned to some work or has some capacity to work 18 months after the date of a transport accident, the TAC will pay the greater of either:

  • 85% of the difference between the amount of the client's pre-accident earning capacity and amount of the client's post-accident earning capacity; or
  • if the client has no dependants, the prescribed weekly minimum amount applicable at the time, less the amount of the client's post accident earning capacity; or
  • if the client has dependants, the prescribed weekly minimum amount plus amounts for one or more dependants, applicable at the time, less the amount of the client's post accident earning capacity

However under the Transport Accident Act, the weekly LOEC benefit cannot be greater than:

  • the prescribed weekly maximum amount, less the post accident earning capacity; or
  • 100% of the earner's pre-accident earning capacity, less the post accident earning capacity. If the LOEC amount is greater than these two amounts, then the TAC will pay the lesser of these two amounts.

For the prescribed weekly minimum and maximum amounts under the Act please refer to the TAC's indexed statutory amounts.

Transport Accident Act 1986 reference: s.50(2) and s.50(3) 

How is LOEC assessed if the client is a minor?

The TAC will assess the earning capacity of a minor who turns 18 after the date of the transport accident taking into account their education, training, skills, and experience. In a small number of cases where the TAC is unable to determine a loss of earning capacity based on these factors the TAC is required to assess the earning capacity of a minor who turns 18 after the date of the transport accident at 80% of the Victorian Average Weekly Earnings.

Transport Accident Act 1986 reference: s.49(5) and s.49(5A)  

How is LOEC assessed if the client is a non-earner?

In cases where a client is not an "earner", the TAC assesses a "non-earner's" level of earning capacity having regard to the period/s of time the person had worked and earned income before the accident. Once the pre-accident earning capacity is determined a prescribed formula is applied, which fixes the amount of pre-accident earning capacity and applies a reduction in the amount based on the assessment of an amount of time, in years that the client would likely to be out of work based on their pre-accident employment history. Refer also to the question who is eligible?, in this policy.

Transport Accident Act 1986 reference: s.51 

What is the client entitled to if they have a loss of earning capacity after resuming work?

If a client returns to work, but is unable to continue working because of their transport accident injury the TAC will consider reinstating the client's LOEC entitlement. In circumstances where the client has returned to work at a higher rate of pay than their assessed pre-accident earning capacity, the TAC will assess the client's LOEC entitlement using his/her higher rate of pay where the client:

  • was previously in receipt of LOEC benefits; and
  • returns to a higher paying job after the transport accident; and
  • requires additional time off work as a result of their transport accident injuries.

Transport Accident Act 1986 reference: s.50A 

Are LOEC benefits taxed?

The TAC does not withhold tax instalments from weekly LOEC benefit payments, as the Australian Taxation Office (ATO) does not consider they constitute assessable income. The TAC will not issue a statement of earnings for LOEC benefits. Refer also to the policy for taxation of no-fault compensation.

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