DVA Permanent Impairment: Lump Sum or Weekly Payments?

When DVA determines your permanent impairment, your compensation is set as a weekly amount. Under the MRCA you can keep it that way, or convert some or all of it to a lump sum. It is one of the few DVA decisions you cannot take back, and you have six months to make it.

This is Part 4 of our five-part DVA assessment series. Part 3 covered the lifestyle rating. This part covers what you do once the numbers are set.

How the weekly amount is set

Your impairment points and lifestyle rating give a compensation factor from GARP M, between 0 and 1. That factor is multiplied by the maximum weekly amount, which is $447.39 from 1 July 2026 and is indexed every 1 July. At 80 or more impairment points you receive the full amount. Warlike and non-warlike service share one table, and peacetime service has its own table with lower factors.

Permanent impairment compensation is tax-free, whether you take it weekly or as a lump sum.

How a lump sum is worked out

A lump sum is your weekly amount multiplied by an actuarial factor for your age, from DVA's conversion tables. The younger you are when you convert, the larger the factor, because the weekly payments it replaces would otherwise run for longer.

How much you can convert depends on the size of your weekly amount compared with the maximum. Under 10% of the maximum, you can convert the whole amount. Between 10% and 20%, you can convert 50% or 100%. Above 20%, you can convert 25%, 50%, 75% or 100%. The conversion factors are approved by the Australian Government Actuary, and your determination letter sets out the options open to you.

The six-month window

You have six months from your determination letter to tell DVA you want a lump sum. If you want to keep the weekly payments, you do not need to do anything. Once you choose a lump sum, the choice is final.

Paid advice at 50 points or more

If you have 50 or more impairment points, DVA will reimburse the cost of financial and legal advice about your choice, up to a capped amount. The decision is permanent, so the advice is worth getting. Ask DVA for the current cap before you book.

Things to weigh up

• Weekly payments keep coming and are indexed every 1 July. A lump sum is fixed on the day you convert.
• A lump sum gives you capital now, for example to clear a mortgage or adapt your home. Weekly payments give you steady income that cannot be spent in one go.
• Your age changes the numbers. The conversion factor falls as you get older.
• Centrelink treats PI compensation differently for different tests. It is not counted as income under the social security income test, but it can count under the assets test, so a lump sum sitting in the bank may affect a means-tested payment.
• For Family Tax Benefit and the Child Care Subsidy, PI compensation is included in your adjusted taxable income.

There is no answer that suits everyone. The right choice depends on your age, your debts, your other income and how you manage money, which is exactly why DVA pays for advice at 50 points or more.

The extra lump sum for eligible young persons

If you have 80 or more impairment points, DVA also pays an additional lump sum for each eligible young person who depends on you: a child under 16, or aged 16 to 25 in full-time study and not working full time. From 1 July 2026 it is $115,175.42 for each eligible young person, and it can now be split between each of their primary carers.

Frequently asked questions

Should I take the DVA lump sum or weekly payments?

It depends on your age, debts, other income and how you manage money. Weekly payments are indexed every year; a lump sum is fixed when you convert. If you have 50 or more impairment points, DVA will reimburse financial and legal advice, up to a cap, before you decide.

How long do I have to choose a DVA lump sum?

Six months from your determination letter. If you want to keep weekly payments, you do not need to do anything. A choice to take a lump sum cannot be undone.

Is DVA permanent impairment compensation taxed?

No. Permanent impairment compensation is tax-free, whether you take it weekly or as a lump sum. You still report it on your tax return as a tax-free benefit at question IT3, not as taxable income.

Does a DVA lump sum affect my Centrelink payment?

PI compensation is not counted as income under the social security income test, but it can count under the assets test, so money you hold from a lump sum may affect a means-tested payment. It is also included in adjusted taxable income for Family Tax Benefit and the Child Care Subsidy.