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Loss of Earnings Capacity (LOEC) benefits

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Policy

We’re here to help you get your life back on track after your transport accident.  To help you recover from your transport accident injuries we will pay a loss of earning capacity benefit to a person who has lost their capacity to earn income as a result of their transport accident injuries.

A loss of earning capacity benefit (LOEC benefit) can only be paid after 18 months from the date of the transport accident.  We will continue to pay a loss of earnings benefit if further information is required with regards to determining your LOEC benefit.  LOEC benefit can be paid beyond 3 years if your impairments have been determined over 50% and you have an ongoing reduced capacity for work.

What is a loss of earning capacity?

A loss of ‘earning capacity’ is the difference between your capacity to earn income before your transport accident injury, and your actual capacity to earn income after your transport accident injury. These are referred to as your ‘pre-accident earning capacity’ and ‘post-accident earning capacity’ and are determined to be the weekly amount you had the capacity to earn before and after your transport accident.

Where you have returned to full-time employment your pre and post-accident earning capacity would be the same.  If your post-accident earnings are lower we can make partial payments to a statutory maximum rate, for example in circumstances where you are only capable of undertaking part-time employment.

In determining a loss of earning capacity a number of factors are taken into consideration including:

  • The nature of your injury
  • Your degree of impairment
  • The potential for, and your ability to undertake rehabilitation
  • Your training, skills and experience
  • Your age; and
  • Other employment reasonably available following your transport accident injuries.

How does TAC approve LOEC benefits

To assess your loss of earning capacity benefit the TAC will rely on a range of information in order to assess your capacity such as:

  • TAC Claim Form
  • Wage and salary records – including payments for overtime, shift-work, allowances, bonuses, commissions and salary sacrificed amounts
  • Group certificates
  • Personal income tax returns; and
  • Business taxation records, profit/loss statements and other business records in the case of a self-employed person.

Other factors that may affect your LOEC benefits

There are a number of factors that may affect your ongoing entitlement to an LOEC benefit or vary the amount that is deposited to you.  If your circumstances change, you are required by law to immediately contact us.  Some  common factors that may impact the assessment or ongoing entitlement to an LOEC benefit include:

Leave entitlements
LOEC benefits are payable during a period of leave (for example annual leave) as the benefit is designed to replace the loss of that leave entitlement.

We can also make an LOEC benefit payment to your employer to replace any leave entitlement you may have expended.  In order to reimburse your employer, please complete and return the Authority to Pay Entitlement – Employer form.  

Income from a personal accident insurance policy
Any income payments you receive under a personal accident insurance policy are not deducted from your LOEC benefit payments or taken into consideration in calculation.  

The TAC will not top-up income payments or reimburse a personal accident insurer who has paid income benefits.   

Superannuation, interest and investment income
Lump sum or periodic superannuation payments are not taken into consideration or deducted from your LOEC benefit payments.

We can take into account salary sacrificed amounts into superannuation in the calculation of your LOEC benefit.

Income received as interest from bank accounts or dividends from share investments are not taken into account in calculation of your LOEC benefit.   

Commonwealth debts
The Commonwealth Government is empowered by law to recover amounts you may owe from the TAC.  Accordingly where a department such as Centrelink or the Australian Tax Office serve a debt recovery notice on us, the amount deposited can be garnished to service your debt without your approval or notice.  

Centrelink can recover income support payments (including Newstart, Youth Allowance, etc.) from the TAC.  In circumstances where you are entitled to an LOEC benefit, the TAC is required to notify Centrelink.  Centrelink may issue a Recovery Notice and garnish your LOEC Benefit to reimburse any support payment or any other debt you may have incurred.

Garnishee Orders and Child Maintenance payments may also be remitted to the appropriate agency where you have an existing financial obligation to the Commonwealth Government. 

Supported employment programs
The SEP-UE provision in the Act allows a client with a "severe injury" who participates in a "supported employment program" to earn up to the statutory allowable amount from employment without having his/her LOEC payments affected, i.e. reduced.  For more information please see the Supported Employment Program policy.

Travel or residency overseas
You can continue to receive your LOEC benefit whilst travelling or residing overseas provided you continue to submit a certificate of capacity or equivalent medical certificate detailing your capacity for work covering your absence from Australia.

If you are travelling overseas or permanently reside overseas you may be required to attend examination by an independent medical examiner or provide medical reports in order to continue to receive ongoing LOEC entitlements.

Any benefit paid where you reside overseas will be converted in Australia from Australian dollars into local currency and cover all the charges relating to the conversion before being deposited into your nominated overseas bank account.  We are required by Australian Tax law to apply the ‘non-resident’ tax rate to any payments made.

Review of LOEC benefits

LOEC benefits are payable for a maximum period of 18 months, unless your whole person impairment has been assessed at 50% or more, and you continue to be incapacitated for work. In these circumstances, we can review your ongoing entitlement to total or partial LOEC benefits which may include a reassessment of your impairment rating, once in each 5 year period. You are also able to request that the TAC conduct a review of your ongoing entitlement at any time.

This is known as a 5-yearly review and is conducted when your impairment rating is 50% or more and you continue to receive LOEC benefits and you have a  reduced capacity to earn an income.  The first review usually takes place after impairments have been determined over 50% and you are receiving an LOEC benefit.

In undertaking a review we will take into account:

  • The information available on your claim
  • Any information you can provide regarding your injuries and current capacity to work
  • Annual Statement of Earnings Forms; and
  • Any arranged impairment or independent medical exam1.

When a review has been completed, we will maintain, increase, decrease or cease your LOEC benefits according to the outcome of the review. We may also refer you to a vocational rehabilitation or return to work program to assist in the facilitation of your return to work.  You will be informed in writing of the outcome of any review.

In some circumstances, we may not conduct a 5 yearly review such as when:

  • LOEC rate is an interim rate and a final rate is yet to be determined; or
  • Your degree of impairment has not been finalised but an interim impairment benefit has been paid; or
  • The information on your claim demonstrates that a review is not appropriate or required as it is clear your capacity to earn has not changed
  • Your level of whole person impairment is unlikely to stabilise below 50%

Returning to work

If you are participating in a return to work program that is being funded by the TAC we will restore your LOEC benefit if this program is unsuccessful.  While the program is being undertaken however, your benefit will reduce by the proportionate amount being paid under the program.  For more information please see the Returning to Work policy.


How LOEC benefit is paid for

Once determined the TAC will deposit the LOEC benefit directly into your nominated bank account on a fortnightly basis.  We can only continue to make these deposits where you have submitted, and we have received, an up to date certificate of capacity.

In exceptional circumstances where your regular LOEC benefit deposit is overdue as no certificate has been provided and we are satisfied that you have made every effort to submit the information required to allow for the processing of the payment, we can instruct our financial institution to deposit the funds.  

What cannot be paid or taken into account 

We will not include employer’s compulsory superannuation contribution when establishing earning capacity because this is a compulsory levy on your employer and we cannot make an ongoing contribution to any fund in their place.

While your salary can be structured into a mix of salary and non-salary benefits, we cannot include other employer non-salary benefits when calculating a client’s LOEC rate.

1 The TAC will use the same edition of the AMA Impairment Guides in the review process as previously applied.

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