The Australian Government is introducing the most significant overhaul of veterans’ compensation legislation in decades.

From 1 July 2026, the new Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) reforms will fundamentally reshape how veterans bring claims for compensation and rehabilitation through the Department of Veterans’ Affairs (DVA).

While the reforms are being promoted as a simplification of the current system, many veterans and advocates are asking an important question:

What will happen to a veteran’s ability to bring a common law negligence claim against the Commonwealth?

The answer is complex – and for some veterans, particularly those with historical abuse, psychiatric injury or unlodged claims, the changes may have significant legal consequences.

This article explains:

• what the incoming reforms are;
• how the Military Rehabilitation and Compensation Act 2004 (Cth) (MRCA) is changing;
• how MRCA affects common law rights; and,
• what veterans should consider before lodging either a DVA claim or a negligence claim.

What Is Changing?

Australia currently operates under three major veterans’ compensation schemes:

From 1 July 2026, the Government intends to move to a largely single-scheme model centred around MRCA.

In practical terms new claims will be assessed under MRCA, the VEA and DRCA will close to new compensation claims and MRCA will become the dominant compensation framework for future veterans’ claims.

The reforms are intended to:

• simplify the claims process;
• reduce inconsistencies between schemes;
• improve rehabilitation support; and
• respond to recommendations made by the Royal Commission into Defence and Veteran Suicide.

Why MRCA Matters for Common Law Claims

MRCA is not simply a compensation scheme.

It is also a statutory framework designed to significantly limit civil claims against the Commonwealth.

Unlike ordinary negligence litigation, MRCA operates as a no-fault compensation system. Veterans may receive:

• medical treatment;
• incapacity payments;
• rehabilitation;
• permanent impairment compensation; and
• death benefits,

without needing to prove negligence.

In exchange, the legislation restricts a veteran’s ability to sue the Commonwealth for damages relating to the same injury.

This is commonly referred to as the “common law bar”.

The MRCA Common Law Bar

The key provision is section 388 of MRCA.

Broadly speaking, the section provides that where compensation is payable under MRCA for an injury, disease or death, a person cannot recover damages from the Commonwealth in relation to that same condition.

In practical terms, this means many claims involving:

• unsafe systems of work;
• training accidents;
• psychiatric injury;
• bullying and harassment;
• exposure injuries; and
• service-related negligence,

may be barred if the injury falls within MRCA coverage.

Importantly, the legislation focuses on whether compensation is “payable”, not merely whether compensation was actually received. That distinction can have major consequences.

Why the 2026 Reforms Matter

The incoming reforms do not necessarily create a brand new common law bar. However, they expand the reach and dominance of the MRCA framework.

Historically, some veterans fell under VEA or DRCA, where the interaction between statutory compensation and civil claims could differ depending on:

• date of service;
• date of injury;
• operational status; and
• legislative coverage.

From 1 July 2026, future claims will increasingly be funnelled into MRCA.

As a result MRCA’s restrictions on common law damages are likely to become the dominant legal framework for veterans going forward.

This is one reason why you should be currently reviewing:

• unlodged claims;
• historical injuries;
• psychiatric injury matters; and
• potential negligence claims before the reforms commence.

Historical Abuse Claims: A More Complex Area

One of the more complex areas of personal injury claims concerns historical abuse claims, an area that Donaldson Law has over nine years of experience in.

This includes matters involving:

• sexual abuse;
• institutional abuse;
• systemic bullying;
• assault;
• hazing; or
• serious misconduct occurring during military service.

These cases are often legally different from ordinary service injury claims and other personal injury claims.

What Veterans Should Consider Before Lodging a Claim

The interaction between DVA claims and negligence claims can be extremely technical. Veterans should obtain legal advice before making assumptions about:

• whether a common law claim is available;
• whether a DVA claim may affect future litigation rights; or
• how statutory compensation could interact with damages.

Some of the key issues include:

• which legislative scheme applies;
• when the injury legally occurred;
• whether compensation may already be “payable”;
• whether the claim involves intentional wrongdoing;
• limitation periods;
• offsetting and repayment provisions; and
• transitional rights before the 2026 reforms commence.

The Importance of Early Advice

The 2026 reforms are likely to reshape the legal landscape for veterans’ claims for many years to come.

For veterans who are uncertain of their rights to compensation through the MRCA scheme or at common law it is important to obtain advice before assuming that rights will remain unchanged after 1 July 2026.

The interaction between MRCA and common law damages is already one of the most complex areas of veterans’ compensation law. The incoming reforms are likely to make those issues even more significant.

Need Advice About a DVA or Negligence Claim?

If you are a current or former ADF member and are unsure how the upcoming reforms may affect your rights, obtaining early legal advice is critical. The team at Donaldson Law can assist you with advice on your individual circumstances, your available claim options and guide you towards an outcome that is best suited to you.

Contact our office today on (07) 4580 0900, email us at enquiries@donaldsonlaw.com.au or visit our website to book an appointment with our team.