DVA incapacity payments replace lost earnings when a service-related condition DVA has accepted stops you working or reduces what you can earn. For your first 45 weeks of incapacity they make up the difference between your normal earnings and what you earn now. After that they're based on 75% to 100% of your normal earnings, depending on how many hours you can work. They're paid under the Military Rehabilitation and Compensation Act 2004 (MRCA) and usually stop at Age Pension age.
Who can get incapacity payments
You may be eligible if you're a current or former member of the permanent forces or reserves, a cadet, an officer or instructor of cadets, or a declared member, and:
- DVA has accepted an injury or disease as related to your service
- a medical certificate shows you're totally or partly unable to work, or to do your ADF service, because of it
- your actual earnings are less than your normal earnings
From 1 July 2026, all new incapacity claims are assessed under the MRCA, even if your conditions were accepted under the Veterans' Entitlements Act (VEA) or the DRCA. If you were receiving DRCA incapacity payments on 30 June 2026, they moved to MRCA payments automatically, and you don't need to claim again.
How incapacity payments are worked out
The payment is the gap between your normal earnings before the injury or illness and your actual earnings now:
- For the first 45 weeks, you receive 100% of the difference.
- After 45 weeks, DVA multiplies your normal earnings by an adjustment percentage and subtracts your actual earnings. The percentage depends on the share of your normal weekly hours you're working.
| Share of normal weekly hours worked | Adjustment percentage after 45 weeks |
|---|---|
| None | 75% |
| 25% or less | 80% |
| More than 25%, up to 50% | 85% |
| More than 50%, up to 75% | 90% |
| More than 75%, below 100% | 95% |
| 100% or more | 100% |
Normal earnings are based on your ADF salary when the incapacity began if you were injured in the permanent forces. If you were injured in the reserves, they're your reserve pay plus your civilian earnings, or your full-time ADF salary if you were on continuous full-time service. If you're self-employed, DVA may look at the type of work you do and what it would cost to employ someone to do it.
Read DVA's policy on the adjustment percentage
What reduces incapacity payments
- The Commonwealth-funded part of any military superannuation you receive, such as a DFRDB or MSBS invalidity pension, reduces incapacity payments dollar for dollar. The part that comes from your own contributions isn't counted.
- Services Australia payments and child support can be affected.
- If you receive a VEA Disability Compensation Payment for the same condition, the rules changed on 1 July 2026. For periods from that date, a payment at the General Rate isn't offset. Above General Rate payments, such as the Special Rate (TPI), Intermediate Rate or Extreme Disablement Adjustment, are offset, but only up to the General Rate for your degree of incapacity.
If the Commonwealth Superannuation Corporation later grants you an invalidity benefit backdated to a period when you were getting incapacity payments, you'll have an overpayment. DVA recovers it from the super arrears before they're paid to you, and it can be large. CSC suggests considering financial advice before you apply for a retrospective invalidity assessment. Read about DFRDB and MSBS invalidity pensions.
How to claim incapacity payments
- Get an initial liability claim accepted for the condition. Read how to make a DVA claim.
- DVA may identify that you're eligible through the needs assessment after it accepts the condition. If not, claim in MyService, which DVA says is quickest, or lodge form D1360, Claim for Incapacity for Service/Work.
- Include medical evidence that you're totally or partly unfit for service or work because of the accepted condition. DVA has a Medical Certification – Ability to Work form your doctor can use.
- Give DVA evidence of your earnings, such as payslips, and your tax file number.
Read DVA's incapacity payments information
What you need to do while you're paid
- Provide current medical certificates when DVA asks, showing whether you're unfit for work, which conditions cause it, any work restrictions, and for how long. Payments stop if you don't.
- Tell DVA about all work and income, including part-time, contract and self-employment and any business involvement, paid or unpaid.
- Tell DVA if you start study, receive other payments or superannuation, change address, or plan to travel or live overseas for more than 3 months.
- Take part in a rehabilitation program if DVA asks. Payments may be suspended if you refuse or don't take part.
- Complete the annual review form (D1352) when DVA sends it.
Payments continue while you're incapacitated, taking part in rehabilitation, earning less than your normal earnings and under Age Pension age. They aren't paid while you're in prison.
Mental health and faster access
If you have an accepted MRCA mental health condition and return to work through a rehabilitation plan, DVA can keep the plan open for up to 12 months. If your symptoms mean you need to cut your hours or stop working, your rehabilitation provider tells DVA and payments restart without a new claim. While a mental health claim is still being assessed, you may be able to get Veteran Payment instead, but not both at once.
Incapacity payments or the SRDP
If you've left the ADF, have 50 or more impairment points, are under Age Pension age and can't work more than 10 hours a week, DVA may offer the Special Rate Disability Pension instead. The SRDP is tax-free and can continue past Age Pension age, but its offsetting rules mean it can be less than your incapacity payments. The choice can't be reversed, and you must get financial advice first. Read about the SRDP or compare DVA pensions.
If you disagree with a decision
You can apply to the Veterans' Review Board within 12 months of an MRCA decision, then to the Administrative Review Tribunal within 3 months of the Board's decision. Free advocates at ex-service organisations can help. Read about DVA reviews and appeals.
Rules that are easy to miss
Incapacity payments and prison
Incapacity payments and the SRDP stop for any time you're in prison after being convicted of an offence. They aren't affected by remand while you await trial, police custody, home detention, periodic detention, a community service order or court-ordered residential rehab. If a court backdates a sentence to the start of your remand, DVA stops the payments from that backdated date and the payments made in the meantime become a debt. Permanent impairment compensation and your other entitlements keep being paid in prison, and incapacity payments can start again on release if you still can't work.
If DVA asks for your tax file number and you don't provide it, your incapacity payments stop. You get the missed payments back only if you give DVA your TFN within 3 months. After that, payments restart only from the day you provide it. If you've lost your TFN or are still waiting for one, you can meet the request with a declaration and an authority for the ATO to tell DVA the number.
Incapacity payments usually stop at Age Pension age, but there are two exceptions. If your injury or illness started within 2 years of your Age Pension age, DVA can pay up to 104 weeks of incapacity payments in total, even if that runs past Age Pension age (MRCA section 121). The age limit also doesn't apply while you're still an ADF member, including in the inactive or standby reserve.
If your normal earnings are based on full-time ADF pay, DVA adds a loading for the non-salary benefits you had in the ADF. It's $204.77 a week (20 September to 31 December 2026). Your normal earnings can't be less than the national minimum wage for a 38-hour week. If you were hurt during recruit, officer cadet or apprentice training, they're based on the pay you'd have received once you finished training.
Working full time doesn't end your payments on its own. If you were medically discharged and your civilian job pays less than your ADF job did, you're still not working "at the same level", so DVA keeps paying the difference, worked out under the usual formula. The same applies if you can't do shifts, overtime or your old duties. Payments stop when you're back at the same hours and earnings.
If you take sick leave or annual leave from a civilian job because of an accepted condition, DVA can make up that leave through incapacity payments, as long as you have medical evidence that the leave was for that condition. Your employer's Defence Service Sick Leave doesn't stop this. Income protection insurance isn't counted either, so it doesn't reduce your incapacity payments.
Only super you've actually received is counted. If you leave your benefit preserved in DFRDB or MilitarySuper, even after preservation age, your incapacity payments aren't reduced until you take it. If you choose to roll it into a private fund or an account-based pension, DVA treats it as received. After a family law split, only the share you actually get is counted. If DVA used the pre-split amount, ask it to recalculate from the date of the settlement.
If your weekly payment has settled at $287.94 or less, you're past the first 45 weeks and you're working or getting a Commonwealth super pension, you can ask DVA in writing to pay the rest as a lump sum. The lump sum is discounted, so it's much less than the weekly payments would have added up to by Age Pension age, and it's taxed as income. If you later can't work, or your super pension stops, weekly payments can restart. If you choose the SRDP later, part of the lump sum becomes a debt, so get advice first.
Veteran Payment isn't a loan. If your mental health claim is refused, you don't pay it back. If DVA later backdates incapacity payments to a period when you were also getting Veteran Payment, it takes that overlapping amount out of the incapacity arrears only. Veteran Payment paid to your partner is never recovered.
Common questions
Are DVA incapacity payments taxable?
Generally yes. They're taxable when the income they replace was taxable, so you declare them in your tax return and DVA withholds tax. If they replace non-taxable income, such as part-time reserve pay or some deployment allowances, that part isn't taxable. The 2026–27 financial year has 27 fortnightly paydays instead of 26, so DVA warns some people may have too little tax withheld.
Can you work on DVA incapacity payments?
Yes. Your payment is reduced by what you earn, but after 45 weeks the adjustment percentage rises as your hours increase, which DVA says is designed to reward a return to full hours. You must report all earnings to DVA.
Is there a DVA incapacity payment calculator?
No. DVA works out your payment from your normal earnings, actual earnings, hours, superannuation and other payments, so the steps above only show how it's built.
Checked against DVA's website on 25 September 2026.