Lawyers for the former 1st Field Regiment soldier have vowed to appeal the ''extreme decision'', which they say shuts the door on victims of sex crimes in the military being fully compensated for their injuries.

The case could have implications for future compensation claims of the waves of victims coming forward to Defence Abuse Response Taskforce.

The ex-serviceman, who cannot be named for legal reasons, was an 18-year-old recruit to the Brisbane-based regiment when he and a fellow newcomer were set upon by five of their ''comrades'' during field exercises in the Hunter Valley in April 1990. The sexual assault, described at the time as an ''initiation ceremony'', left the victim with internal injuries that have prevented him leading a full working life ever since and his attackers were all convicted of assault or sexual assaults.

The soldier was discharged from the army in 1992 and was awarded $110,000 in compensation for his physical and psychological injuries in 1999.

In 2010 he lodged a claim with the Military Rehabilitation and Compensation Commission for post-traumatic stress disorder arising from the abuse in 1990.

The commission accepted that it was liable for the man's condition but decided that since he had already received ''common law'' damages of $110,000 he would get nothing from the workers' compensation scheme.

On appeal, the AAT sitting in Hobart backed the commission's decision with senior tribunal member Ann Cunningham finding the ex-soldier had forfeited his right to workers' compensation.

''It is unlikely that Parliament intended that an applicant could effectively 'double-dip' by claiming damages from the Commonwealth both at common law and under the [Safety Rehabilitation and Compensation] Act,'' Ms Cunningham wrote.

''In this case the applicant received the maximum compensation payable at common law.

''It cannot have been the intent of the legislation to allow an applicant to make an election to sue at common law, receive the maximum amount of damages payable and then have the option to make another claim against the Commonwealth for further impairments arising from the same event.''

But the victim's lawyer Greg Isolani said he was already preparing papers to go to the Federal Court and appeal the tribunal's ''extreme'' application of the law.

''It cuts across the basic tenets of workers' compensation of having an injury assessed and compensation paid if and when it manifests,'' Mr Isolani said.

''This is not a case of us trying to 'double dip' as he was never compensated for PTSD in the first place.''

The Melbourne-based lawyer said the case had implications for other military victims who sought compensation and then developed psychological illnesses later in life.

''It means that even like in our case when you lodge a claim for a new injury, say PTSD, the fact you received an 'all in' lump sum payment means you then cannot receive further compensation for the permanent damage for new injury - even though you were never really compensated for it in the first place,'' Mr Isolani said.