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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT
(2008 BUDGET AND OTHER MEASURES) BILL 2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Families, Housing, Community Services and Indigenous Affairs,
the Hon Jenny Macklin MP)
FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT
(2008 BUDGET AND OTHER MEASURES) BILL 2009
OUTLINE
This bill introduces one measure from the 2008 Budget on family tax benefit
and two further non-Budget measures.
Streamlining payment of family tax benefit
From 1 July 2009, the administration of family tax benefit (FTB) will be
streamlined by removing the Australian Taxation Office (ATO) from delivery
of FTB. This will include removal of the option of claiming FTB for a past
period through the ATO. However, individuals will continue to be able to
claim FTB by instalment or FTB for a past period through Centrelink or
Medicare.
Review of income management regime decisions
The bill contains an amendment to the Social Security (Administration)
Act 1999 to enable the Social Security Appeals Tribunal to review a
decision made under Part 3B of that Act relating to a person who is subject
to the Northern Territory income management regime. As a consequence, the
Administrative Appeals Tribunal will also be able to review such a
decision.
Community Development Employment Projects Scheme
The bill contains amendments to the Social Security Act 1991 to implement
part of the Government's announced reforms to the Community Development
Employment Projects (CDEP) program, improving employment participation for
Indigenous Australians. The amendments will provide new CDEP participants,
commencing on or after 1 July 2009, with access to the CDEP program while
receiving income support payments, and will provide for continuing CDEP
participants to continue receiving CDEP wages from CDEP providers and, in
certain circumstances, the CDEP Scheme Participant Supplement.
Financial impact statement
Streamlining payment of family tax benefit
Total resourcing - net impact
|2008-09 |- $19.8 m |
|2009-10 |- $25.0 m |
|2010-11 |- $27.9 m |
|2011-12 |- $28.5 m |
Review of income management regime decisions
Negligible financial impact.
Community Development Employment Projects Scheme
Nil financial impact.
FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT
(2008 BUDGET AND OTHER MEASURES) BILL 2009
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, the Family
Assistance and Other Legislation Amendment (2008 Budget and Other Measures)
Act 2009.
Clause 2 provides a table that sets out the commencement dates of the
various sections in, and Schedules to, the Act.
Clause 3 provides that each Act that is specified in a Schedule is amended
or repealed as set out in that Schedule.
Schedule 1 - Streamlining administration of family tax benefit
Summary
From 1 July 2009, the administration of family tax benefit (FTB) will be
streamlined by removing the Australian Taxation Office (ATO) from delivery
of FTB. This will include removal of the option of claiming FTB for a past
period through the ATO. However, individuals will continue to be able to
claim FTB by instalment or FTB for a past period through Centrelink or
Medicare.
Background
The Family Assistance Office (FAO) was established in July 2000 as a
'virtual office' with a presence in Centrelink customer service centres,
Medicare Australia offices and ATO shopfronts. This partnership is
reflected in the definition of agency in subsection 3(1) of the A New Tax
System (Family Assistance) (Administration) Act 1999 (Family Assistance
Administration Act), which is a concept used in provisions such as section
221 (delegation) and in the definition of officer, which is used in Part 5
of the Family Assistance Administration Act (review and appeals), in Part 6
(confidentiality) and other provisions.
Currently, families can choose to receive their FTB as fortnightly
instalments by making a claim for FTB by instalment through Centrelink or
Medicare Australia. Alternatively, families can choose to claim FTB as a
lump sum following lodgement of the claimant's tax return at the end of the
relevant income year by making a claim for FTB for a past period through
Centrelink or Medicare Australia, or through the ATO at the same time that
the claimant lodges their tax return.
Section 7 of the Family Assistance Administration Act sets out the rules
for claiming FTB. The types of claims that can be made by an individual or
approved care organisation are set out in subsection 7(1). Subsection 7(2)
then provides for the form and manner of a claim for FTB, with the
Secretary having discretion as to the required manner and form of a claim.
The discretion as to manner and form in section 7 provides the basis for
claims through the ATO.
A past period claim made through the ATO is dealt with in a similar way to
tax returns, based on a self-assessment approach. This approach to
determining claims differs from claims determined by Centrelink or
Medicare. For the latter claims, additional information or documents may
be sought from the claimant before the claim is determined.
From 1 July 2009, the option of claiming FTB for a past period through the
tax system will be removed. Removing the tax system option for delivery of
FTB payments will simplify the system, reduce duplication in delivery of
the payments, and improve consistency for claimants.
Until the end of 30 June 2008, customers could also choose to anticipate
the future payment of FTB through a reduction of their 'pay as you go'
(PAYG) tax withholdings. These customers could then claim for FTB for a
past period after the end of the relevant income year, whereupon the
claimant's entitlement to FTB would be assessed and offset against any
underpayment of tax due to the reduction of PAYG tax withholdings.
Subsection 10(5) of the Family Assistance Administration Act is a related
provision, which prevents customers from being able to make a past period
claim for FTB during the income year in which they reduced their PAYG tax
withholdings on account of FTB. Instead, they can make such a claim after
the end of that income year, to enable the offsetting arrangements noted in
the previous paragraph. However, this provision has become redundant with
the removal of this FTB delivery option.
Section 14 of the Family Assistance Administration Act applies where an
individual claims FTB for a past period in the previous income year and
provides that the claim cannot be determined until an assessment of the
claimant's taxable income for the past period income year has been
determined under the Income Tax Assessment Act 1936. A similar rule does
not apply in relation to the claimant's partner. This means that a past
period claim can currently be determined on the basis of a claimant's
actual adjusted taxable income (ATI) and an estimate of their partner's
ATI.
The use of a partner's estimated ATI currently enables the lump sum payment
of FTB to be paid to the claimant by the ATO as part of the income tax
assessment notice issued by the ATO for the claimant's income tax return.
However, the removal of payment of FTB by the ATO from 1 July 2009 removes
the need to make the lump sum payment at that time. Instead, it will be
simpler and more efficient to finalise an end of income year lump sum FTB
claim when both the claimant's actual ATI and their partner's actual ATI is
known. This will avoid the need to recalculate the claimant's FTB due to
their partner's actual ATI being different to the estimated amount.
Section 14 is amended by this Schedule so that a claim for FTB for a past
period cannot be determined until an assessment is made of the taxable
income of a claimant's partner (as well as of the claimant).
The amendments made by this Schedule commence on 1 July 2009 with the
exception of item 7, which commences on the day of Royal Assent.
Explanation of the changes
No new past period claims through the ATO
The option of allowing claims for FTB for a past period through the ATO can
be removed using the discretion as to manner and form of a claim for FTB in
section 7 of the Family Assistance Administration Act. However, there are
maintenance income rules in the A New Tax System (Family Assistance)
Act 1999 (Family Assistance Act) that refer to claims made through the ATO,
and various provisions in the Family Assistance Administration Act that
require amendment to remove the ATO from FTB delivery. The relevant
amendments are outlined below.
Family Assistance Act
Maintenance income credit (MIC) balances, including rules around accruals
and depletions, are dealt with in clauses 24A to 24EA of Schedule 1 to the
Family Assistance Act. The amount by which a MIC balance is depleted in
accordance with clause 24E is disregarded in working out the individual's
annualised amount of maintenance income in accordance with paragraph (c) of
step 1 of the method statement in clause 20 of Schedule 1.
Subclause 20(3) of Schedule 1 to the Family Assistance Act ensures that an
individual will not have any arrears of child support disregarded under
paragraph (c) of step 1 of clause 20 for a period in a particular income
year if the person's claim for FTB for that period is a claim made with the
ATO (in a form that has been approved by an officer of the ATO for the
purposes of subsection 7(2) of the Family Assistance Administration Act).
As a consequence of ceasing claims for FTB for a past period through the
ATO, item 1 repeals subclause 20(3) of Schedule 1 to the Family Assistance
Act.
Item 13 is a related saving provision. This provision saves the effect of
the current MIC rules in relation to a claim for FTB for a past period
through the ATO made before 1 July 2009.
Family Assistance Administration Act
The FAO partner agencies (Centrelink, Medicare Australia and the ATO) are
mentioned in a number of definitions in subsection 3(1) of the Family
Assistance Administration Act, which are then used in various provisions
throughout the Family Assistance Administration Act.
Subsection 3(1) of the Family Assistance Administration Act defines agency
to include the ATO (paragraph (c) refers). Item 2 repeals paragraph (c) of
this definition.
The head of an agency is defined in subsection 3(1) of the Family
Assistance Administration Act to include, in the case of the ATO, the
Commissioner of Taxation (paragraph (c) refers). Item 3 repeals paragraph
(c) of this definition.
Paragraph (b) of the definition of protected information in subsection 3(1)
of the Family Assistance Administration Act refers to information about a
person obtained by an officer under the family assistance law that is or
was held in the records of the ATO or Medicare Australia. The reference to
the ATO in paragraph (b) of this definition is omitted by item 4.
When the ATO ceases to be involved in the delivery of FTB, there will be no
further family assistance information added by officers of the ATO to their
records (except in relation to pre-1 July 2009 claims). However, existing
family assistance records held by the ATO should remain subject to the
rules regarding confidentiality in Division 2 of Part 6 of the Family
Assistance Administration Act. Item 14 achieves this effect through a
saving provision.
The parties to an SSAT review are specified in section 118 of the Family
Assistance Administration Act. Where the relevant decision under review
was made by an officer of the ATO, then the Commissioner of Taxation is a
party to the review. As the ATO will not be involved in FTB decision
making from 1 July 2009, reference to the ATO in section 118 is omitted by
item 11.
Item 12 is a related saving provision that preserves the effect of the
Family Assistance Administration Act in relation to claims for FTB for a
past period through the ATO that are made before 1 July 2009 and in
relation to decisions made in relation to past period claims by officers of
the ATO. This will allow claims made before 1 July 2009 to be determined
in accordance with the current rules, even though the relevant decisions on
those claims are made after 1 July 2009, and will ensure that decisions on
past period claims through the ATO continue to be reviewable under Part 5
of the Family Assistance Administration Act.
Relationship between past period claims and tax instalment deductions
Family Assistance Administration Act
Subsection 10(5) of the Family Assistance Administration Act restricts an
individual's capacity to claim FTB for a past period where a declaration
was in force under section 15-50 in Schedule 1 to the Taxation
Administration Act 1953 in relation to some or all of the past period and
the claim is made in the income year in which the past period occurs. The
effect is that, where reduced tax instalment withholdings are being made in
lieu of FTB, the individual has to wait until the end of the relevant
income year to make their past period FTB claim.
Until the end of 30 June 2008, customers could choose to anticipate the
future payment of FTB through a reduction of their PAYG tax withholdings.
As this is no longer a delivery option for FTB, subsection 10(5) is
redundant and omitted by item 5.
Past period claims cannot be determined unless actual ATI known
Family Assistance Administration Act
Section 14 of the Family Assistance Administration Act ensures that a claim
for FTB for a past period in the previous income year can be determined
only after the claimant's taxable income has been assessed under the Income
Tax Assessment Act 1936 where the claimant is required to lodge a tax
return for the past period.
Items 6 to 10 extend the scope of section 14 of the Family Assistance
Administration Act to ensure that a past period claim cannot be determined
until the taxable income of the claimant and their partner (at the time of
claim) has been determined under the Income Tax Assessment Act 1936. The
new rules would apply only in relation to the claimant's partner if that
person was also the claimant's partner at any time during the past period
covered by the claim.
Under amended subsection 14(1), a claim for FTB for a past period that
falls in an income year that is one of the two income years before the one
in which the claim is made, where either or both of new subsections 14(2)
and (3) apply, can be determined only when the relevant assessments have
been made.
The two-year rule referred to in new subsection 14(1) is consistent with
the timeframe for claiming FTB for a past period and addresses an oversight
in the existing provision.
New subsection 14(2) applies if the claimant is required to lodge a tax
return and, at the time the claim is made, an assessment has not been made
under the Income Tax Assessment Act 1936 of the tax payable on the
claimant's taxable income for the past period.
New subsection 14(3) applies where, at the time the claim is made, the
claimant has a partner who was their partner at any time during the past
period, the partner is required to lodge a tax return and, at the time the
claim is made, an assessment has not been made under the Income Tax
Assessment Act 1936 of the tax payable on the partner's taxable income for
the past period.
Item 15 is an application provision, which provides that the amendments to
section 14 of the Family Assistance Administration Act made by items 6, 8,
9 and 10 apply in relation to claims for FTB for a past period falling in
2009-10 or a later income year.
Item 16 is an application provision for the amendment made by item 7. This
amendment applies in relation to claims made on or after commencement
(Royal Assent).
Schedule 2 - Review of income management regime decisions
Summary
This Schedule contains an amendment to the Social Security (Administration)
Act 1999 (Social Security Administration Act) to enable the Social Security
Appeals Tribunal (the SSAT) to review a decision made under Part 3B of that
Act relating to a person who is subject to the Northern Territory income
management regime. As a consequence, the Administrative Appeals Tribunal
(the AAT) will also be able to review such a decision.
Background
The Northern Territory national emergency response (the NT NER) was
announced on 21 June 2007 by the former Australian Government. A package
of legislation in support of the NT NER was passed by the Australian
Parliament in August 2007. That package included the Social Security and
Other Legislation Amendment (Welfare Payment Reform) Act 2007 (the Welfare
Payment Reform Act), which introduced new Part 3B into the Social Security
Administration Act.
Part 3B of the Social Security Administration Act establishes an income
management regime for recipients of certain welfare payments. If a person
is subject to the income management regime, the Secretary will deduct
amounts from the person's relevant welfare payments and credit equivalent
amounts to the person's income management account. The Secretary may then
debit amounts from the person's income management account for the purpose
of taking actions directed to meeting the priority needs of the person or
his or her dependants.
A person is subject to the income management regime only if certain
conditions set out in Division 2 of Part 3B are satisfied in relation to
the person. Section 123UB (the NT NER income management measure), in
Division 2, provides for the income management regime to apply to a person
who, amongst other things, has been physically present overnight in a
specified Northern Territory area.
The amendments made to the Social Security Administration Act by the
Welfare Payment Reform Act expressly prevented merits review, by the SSAT,
of a decision made under Part 3B in relation to a person who is subject to
the income management regime under the NT NER income management measure.
As a consequence of this limitation on review by the SSAT, no application
could be made for merits review through the AAT in relation to such a
decision. (Section 179 of the Social Security Administration Act provides
that an application can be made to the AAT only for review of a decision
that has been considered by the SSAT.)
In June 2008, the Australian Government convened a Board (the Review Board)
to examine evidence, assess the overall progress of the NT NER and
recommend any required changes to improve each measure.
The Review Board delivered its report on 13 October 2008. Amongst other
recommendations about welfare reform and the income management regime, the
report recommended that all welfare recipients subject to income management
should have access to the full range of merits review.
On 23 October 2008, in response to this recommendation of the Review Board,
the Minister for Families, Housing, Community Services and Indigenous
Affairs, the Hon Jenny Macklin MP, announced that the Government would
legislate in the first half of 2009 to ensure that people subject to the
income management regime in the Northern Territory have access to the full
range of appeal mechanisms, including through the SSAT and the AAT.
The amendments made by this Schedule commence on Royal Assent.
Explanation of the changes
Item 1 amends section 144 of the Social Security Administration Act.
Section 144 contains a list of decisions that the SSAT cannot review.
Existing paragraph (ka) in that list refers to a decision under Part 3B of
the Social Security Administration Act that relates to a person who is
subject to the income management regime under section 123UB. Item 1
removes existing paragraph (ka) from the list in section 144.
Item 2 clarifies that paragraph 144(ka) of the Social Security
Administration Act (as in force immediately before the amendment made to it
by this Schedule) continues to apply in relation to relevant decisions made
under Part 3B of the Social Security Administration Act before the
commencement of item 2 (before Royal Assent).
Schedule 3 - Community Development Employment Projects Scheme
Summary
This Schedule contains amendments to the Social Security Act 1991 (Social
Security Act) to implement part of the Government's announced reforms to
the Community Development Employment Projects (CDEP) program, improving
employment participation for Indigenous Australians. The amendments will
provide new CDEP participants, commencing on or after 1 July 2009, with
access to the CDEP program while receiving income support payments, and
will provide for continuing CDEP participants to continue receiving CDEP
wages from CDEP providers and, in certain circumstances, the CDEP Scheme
Participant Supplement.
Background
On 19 December 2008, the Minister for Families, Housing, Community Services
and Indigenous Affairs, the Hon Jenny Macklin MP, announced that the
Government would implement reforms to the CDEP program on 1 July 2009.
The announcement stated that, as part of the reforms, incentives and
participation requirements of CDEP participants and other Indigenous job-
seekers would be aligned.
It was announced that there would be continuing CDEP participants until
30 June 2011 (that is, those participants commencing the CDEP program
before 1 July 2009) and new CDEP participants (that is, those participants
commencing the CDEP program on or after 1 July 2009).
Part 3.15A of the Social Security Act reduces a person's social security
entitlement when a person is a CDEP Scheme participant and provides, in
certain circumstances, for entitlement to the CDEP Scheme Participant
Supplement for a person who is a CDEP Scheme participant.
In view of the operation of Part 3.15A, amendments are required to
distinguish between new CDEP participants (who will receive income support)
and continuing CDEP participants (who will receive CDEP wages from CDEP
providers and, in certain circumstances, the CDEP Scheme Participant
Supplement).
Section 1188B of the Social Security Act defines a CDEP Scheme participant.
For the purpose of implementing the reforms, the definition in section
1188B needs to be amended to exclude new CDEP participants.
The amendments will mean that new CDEP participants will be able to receive
income support payments, but they will not be able to receive the CDEP
Scheme Participant Supplement. The amendments will allow continuing CDEP
participants to receive CDEP wages from CDEP providers and the CDEP Scheme
Participant Supplement until 30 June 2011, when continuing participants
will transfer to income support.
The amendments made by this Schedule will commence on 1 July 2009.
Explanation of the changes
Item 1 repeals subsections 1188B(1) and (2) of the Social Security Act and
substitutes a new subsection 1188B(1).
Subsection 1188B(1) currently prescribes when a person is, or is taken to
have been, a CDEP Scheme participant on or after 20 March 1999. Subsection
1188B(2) currently states when subsection (1) does not apply.
The new subsection 1188B(1) prescribes when a person is a CDEP Scheme
participant on or after 1 July 2009. This applies if the person was,
immediately before that date, receiving a CDEP Scheme payment under an
agreement mentioned in the definition of CDEP Scheme provider in subsection
23(1) of the Social Security Act, and is entitled to be paid such a payment
for a day on or after that date (in essence, a continuing CDEP
participant). The operation of the new subsection in conjunction with such
an agreement that will be in force on 1 July 2011 will automatically result
in continuing CDEP participants being transferred onto income support.
Subsection 1188B(3) of the Social Security Act, containing definitions for
the current subsections 1188B(1) and (2), will become redundant and is
therefore repealed by item 2.