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2010-2011-2012-2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT BILL 2013
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by the authority of the
Minister for Families, Community Services and Indigenous Affairs,
Minister for Disability Reform, the Hon Jenny Macklin MP)
FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT BILL 2013
Amendments to be moved on behalf of the Government
OUTLINE
These amendments add to the Bill two measures affecting families announced in the
2013 Budget package, A More Sustainable Family Payments System.
Replacing the baby bonus - new family payment arrangements for newborns
From 1 March 2014, the baby bonus will no longer be available. In its place, families
who are eligible for family tax benefit Part A, and who are not accessing parental
leave pay, will receive an additional loading on their payments to help with the
upfront costs of having a new baby.
The extra family tax benefit Part A payment will deliver $2,000 for a family's first child
(and for each child in a multiple birth) and $1,000 for second and subsequent
children. It will be paid as an initial instalment of $500, with the remainder rolled into
normal fortnightly payments over a three-month period.
These new arrangements more closely reflect the essential upfront costs of having a
baby and better target assistance now that Australia has a national Paid Parental
Leave scheme.
This measure also makes changes to the work test under the Paid Parental Leave
scheme, making it easier for working mothers with children born close together to
qualify for parental leave pay for subsequent children.
Reducing the claim period for family assistance lump sum claims
Families choosing to wait until the end of the financial year to claim their family tax
benefit or child care benefit entitlement will now have a grace period of one year
instead of two years in which to claim. This change will start for the 2012-13
entitlement year, meaning families will have 12 months from the end of that year
(until 30 June 2014) in which to claim their entitlement.
Families will also have one year in which to lodge their tax returns if they are to
receive the end-of-year family tax benefit supplements, and to meet immunisation
and health check requirements linked to the end-of-year family tax benefit Part A
supplement.
Families will be able to access extensions in special circumstances, similar to
arrangements for tax returns. The changes bring family payment claim periods more
into line with time limits for lodging tax returns before penalties may be imposed, and
with the policy intent of the family assistance program, to assist parents with
day-to-day costs of raising children.
1
Financial impact statement
MEASURE FINANCIAL IMPACT
Replacing the baby bonus - new family Saving of $1.1 billion over five years.
payment arrangements for newborns
Reducing the claim period for family Saving of $562 million over five years.
assistance lump sum claims
2
FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT BILL 2013
Amendments to be moved on behalf of the Government
NOTES ON AMENDMENTS
Abbreviations used in this supplementary explanatory memorandum
Family Assistance Act means the A New Tax System (Family Assistance)
Act 1999
Family Assistance Administration Act means the A New Tax System
(Family Assistance) (Administration) Act 1999
Paid Parental Leave Act means the Paid Parental Leave Act 2010
Amendments (1) to (3) amend clause 2 of the Bill to set out commencement dates
for the new measures added to the Bill. The commencement dates for the new
measures are discussed in the relevant passages below.
Amendment (4) amends the title of existing Schedule 1 to the Bill so it is now titled:
Schedule 1 - Reduction of baby bonus from 1 July 2013. This is to differentiate the
baby bonus measure introduced in existing Schedule 1 from the baby bonus
measure introduced, by amendment (5) below, in new Schedule 2A - Replacement
of baby bonus from 1 March 2014.
Amendments (5) and (6) make consequential amendments to existing Schedule 1
to the Bill in light of the new baby bonus measure.
Amendment (7) inserts after existing Schedule 2 to the Bill new Schedule 2A
(Replacement of baby bonus from 1 March 2014) and new Schedule 2B
(Time periods). Each of these new Schedules is discussed below.
1
New Schedule 2A - Replacement of baby bonus from 1 March 2014
Summary
From 1 March 2014, the baby bonus will no longer be available. In its place, families
who are eligible for family tax benefit Part A, and who are not accessing parental
leave pay, will receive an additional loading on their payments to help with the
upfront costs of having a new baby.
The extra family tax benefit Part A payment will deliver $2,000 for a family's first child
(and for each child in a multiple birth) and $1,000 for second and subsequent
children. It will be paid as an initial instalment of $500, with the remainder rolled into
normal fortnightly payments over a three-month period.
These new arrangements more closely reflect the essential upfront costs of having a
baby and better target assistance now that Australia has a national Paid Parental
Leave scheme.
This measure also makes changes to the work test under the Paid Parental Leave
scheme, making it easier for working mothers with children born close together to
qualify for parental leave pay for subsequent children.
Background
Replacement of baby bonus
Under current legislative arrangements, baby bonus is available to families following
the birth (including stillbirth), entrustment to care or adoption placement of a child.
The current baby bonus rate is $5,000 per eligible child, paid in 13 fortnightly
instalments, and is limited to families whose estimated combined adjusted taxable
income is $75,000 or less in the six months following the birth of the child or the
child's entry into the family's primary care. From 1 July 2013, amendments in
Schedule 1 to this Bill will reduce the rate for second and subsequent children to
$3,000.
From 1 March 2014, baby bonus will be abolished and replaced with an increase to
family tax benefit and a separate stillborn baby payment.
The change to family tax benefit will involve an increase to the family tax benefit
Part A rate for a 13-week period, with a newborn supplement component included in
both the maximum rate (clause 3 of Schedule 1 to the Family Assistance Act),
and the base rate (clause 25 of Schedule 1 to that Act). This will apply to parents, to
families entrusted with the care of a child (for example, foster carers), and to
adopting parents.
There will also be a `newborn upfront amount' of $500, if eligibility for the newborn
supplement is established, so that part of the new assistance is delivered as an
upfront lump sum.
There will also be a separate stillborn baby payment.
2
Counting previous PPL period etc. for work test
The Paid Parental Leave scheme commenced on 1 January 2011, and provides
eligible primary carers (usually the mother) of children born or adopted from
1 January 2011 with up to 18 weeks' parental leave pay at the rate of the national
minimum wage. The Paid Parental Leave scheme was extended to introduce a new
payment, called dad and partner pay, for eligible fathers and partners, including
adopting parents and parents in same-sex couples, who are caring for a child born or
adopted from 1 January 2013.
Under the current rules, to be eligible for parental leave pay or dad and partner pay,
a person needs to satisfy a number of different criteria, including the work test.
In the case of parental leave pay, the work test applies by reference to work
undertaken in the work test period, which is the 392 days prior to the day the
claimant becomes the primary carer of the child (in most cases, upon birth of the
child for the birth mother). The test operates similarly for dad and partner pay, where
it applies by reference to work performed prior to the DAPP period. The work test
requires a person to have performed at least 330 hours of qualifying work during a
qualifying period of 295 consecutive days in the 392 days, with no more than a 56-
day gap between two working days. An exception to the work test applies where a
person would have met the work test but for a premature birth or pregnancy-related
complication or illness.
In some cases, where there is short birth spacing between children, or children enter
a family close together, it may be difficult for a person to satisfy the work test for a
subsequent child. For example, a primary claimant may have claimed and received
parental leave pay for a previous child, and will have a PPL period of up to 18 weeks
during which they cannot engage in paid work under eligibility criteria. A previous
PPL period that occurs in the work test period for a new claim cannot currently
contribute to the work test for a new claim for a second or subsequent child.
These measures address this issue by allowing a person to count a day in their
previous PPL period and/or DAPP period towards satisfying the work test for a new
claim.
These amendments apply to PPL periods and DAPP periods taken for a previous
child. Sections 36B and 115CF of the Paid Parental Leave Act already allow a
person to satisfy the work test if they are already eligible for parental leave pay or
dad and partner pay for that same child.
Commencement
The amendments made by new Schedule 2A give effect to these changes, and
commence on 1 March 2014.
3
Explanation of the changes
Part 1 - Newborn supplement for Part A rate of family tax benefit
Amendments to the Family Assistance Act
Newborn upfront payment
Item 2 inserts a new section 58AA into the Family Assistance Act. This new
provision sets out the circumstances in which an individual is entitled to a newborn
upfront payment of family tax benefit in respect of an FTB child and the
circumstances in which the payment cannot be paid.
New subsection 58AA(1) provides that an individual is entitled to be paid, as family
tax benefit, an amount of $500 in respect of an FTB child if an amount of newborn
supplement in respect of that child is added in working out their rate of family tax
benefit Part A.
A note at the end of this provision refers to the reader to new section 24A, which
provides that this $500 amount - the `newborn upfront payment' - is to be paid as a
single lump sum.
However, two members of the same couple cannot each receive the newborn
upfront payment in respect of the same FTB child (new subsection 58AA(2) refers).
New subsection 58AA(3) enables the Minister to prescribe, by legislative instrument,
other circumstances in which the newborn upfront payment cannot be paid.
The instrument would be made under new subclause 35A(12) of Schedule 1 to the
Family Assistance Act (as inserted by item 6).
New subsection 58AA(4) makes it clear that an individual cannot receive more than
one newborn upfront payment of family tax benefit in respect of an FTB child.
Item 1 makes a consequential change by including the new $500 payment in the
definition of family tax benefit.
Newborn supplement
The method statement in clause 3 of Schedule 1 to the Family Assistance Act sets
out the method for calculating an individual's maximum Part A rate. Item 3 ensures
that the individual's newborn supplement is included as a component of their
maximum rate.
Item 4 includes the newborn supplement as another relevant amount in the method
statement in clause 24N, which is then used for the purposes of working out an
individual's maintenance income ceiling for income received by the individual or their
partner in relation to child support.
The method statement in clause 25 of Schedule 1 to the Family Assistance Act sets
out the method for calculating an individual's Part A base rate. Item 5 ensures that
the individual's newborn supplement is included as a component in the calculation of
their base rate.
4
Item 6 inserts a new Division 1A into Part 5 of Schedule 5. This new Division sets
out the circumstances in which an amount of newborn supplement is to be added in
working out an individual's Part A rate (new clause 35A) and how to calculate an
individual's annual amount of newborn supplement (new clause 35B).
New clause 35A deals with eligibility for the newborn supplement.
New subclause 35A(1) provides that an amount of newborn supplement is to be
added for a day in working out an individual's Part A rate, if the individual is eligible
for the newborn supplement on that day. The maximum period of eligibility would be
13 weeks.
There are three broad eligibility categories - parent, child entrusted to care and
adoption.
Parent of child
New subclause 35A(2) sets out the conditions that need to be satisfied for a parent
to be eligible for the newborn supplement.
An individual would be eligible for the newborn supplement for a day in respect of
their FTB child if, on that day, the individual or their partner is a parent of the child,
the child is aged less than one and the individual's Part A rate (including the
newborn supplement but disregarding specified deductions) would be greater than
nil. The day would also need to occur within a period of 13 weeks after these
conditions are first met and before the child's first birthday.
Generally an individual would become eligible for the newborn supplement in the
13-week period following the child's birth. However, an individual who is ineligible for
the newborn supplement in the income year in which the child is born (because their
Part A rate is nil due to income) may become eligible for the newborn supplement in
the next income year (if their Part A rate then exceeds nil because their income is
lower). Eligibility would cease upon the child turning one, even where the 13-week
period has not yet ended.
Finally, if the individual is responsible for registering the child's birth under the law of
a State or Territory, the Secretary must be notified, or become aware, within a
certain time limit, that the birth registration requirement has been met.
The birth registration requirement, as set out in new subclause 35A(3), is that the
birth of the child has been registered in accordance with the relevant law or that the
individual or their partner has applied to register the birth.
5
The time limit for registration of the birth would generally be the end of the first
income year after the income year that includes the last day on which the newborn
supplement could be paid for the child. For example, if the last day the newborn
supplement could be paid for the child was 10 July 2014, the time limit for a parent to
advise of birth registration and still be eligible for the newborn supplement would
generally be 30 June 2016. This time limit coincides with the time limit for a past
period claim. However, if the Secretary grants the individual a special circumstances
extension for lodging an family tax benefit claim in relation to the child and the
relevant income year, the Secretary would also be able to extend the time limit for
meeting the birth registration requirement, but to no later than the end of the second
income year following the income year in which the `last day' occurs
(new subclause 35A(4) refers).
Child entrusted to care
New subclause 35A(5) sets out the conditions that need to be satisfied for an
individual to be eligible for the newborn supplement under the child entrusted to care
category of eligibility.
An individual would be eligible for the newborn supplement for a day in respect of
their FTB child if, on that day, neither the individual or their partner is a parent of the
child but the child has been entrusted to the care of the individual or their partner,
the child is aged less than one and the individual's Part A rate (including the
newborn supplement but disregarding specified deductions) would be greater than
nil. The day would also need to occur within a period of 13 weeks after these
conditions are first met and before the child's first birthday.
However, the individual would not be eligible for any amount of newborn supplement
if the child is not in their care for a period of at least 13 weeks
(new subclause 35A(6) refers).
Adoption
New subclause 35A(7) sets out the conditions that need to be satisfied for an
adoptive parent to be eligible for the newborn supplement.
An individual would be eligible for the newborn supplement for a day in respect of
their FTB child if, on or before that day, the child became entrusted to the care of the
individual or their partner by an authorised party as part of the process of adoption
and the individual's Part A rate (including the newborn supplement, but disregarding
specified deductions) would be greater than nil on the day. The day would also need
to occur within a period of 13 weeks after these conditions are first met and before
the end of the period of 12 months beginning on the day that the child became
entrusted to the care of the individual or their partner.
For adoptive parents, there is no age limit for children to attract the newborn
supplement, apart from the FTB child age limit.
The situations in which an individual cannot be eligible for the newborn supplement
are set out in new subclauses 35A(8), (9) and (10).
6
New subclause 35A(8) ensures that an individual cannot be eligible for a newborn
supplement in respect of their FTB child if parental leave pay is payable at any time
to the individual for that child.
New subclause 35A(9) ensures that an individual cannot be eligible for a newborn
supplement in respect of their FTB child if parental leave pay in respect of that child
is payable to another person who was their partner for at least 13 weeks of the
person's PPL period or, if the person's PPL period was less than 13 weeks,
the whole of the PPL period.
New subclause 35A(10) ensures that the partner of an individual who has been paid
the newborn supplement in respect of an FTB child for 13 weeks cannot also be
eligible for the newborn supplement in respect of that child.
New subclauses 35A(11) and (12) enable the Minister, by legislative instrument,
to prescribe circumstances in which an amount of newborn supplement is not to be
added for one or more days in relation to an individual and an FTB child.
The instrument can also prescribe circumstances in which the related newborn
upfront payment of family tax benefit (under section 58AA) cannot be added.
The circumstances prescribed in the instrument in relation to the individual and their
FTB child must relate to payability of parental leave pay, or the addition of a newborn
supplement to another individual for the same child, or the individual being a
member of a couple or a former member of a couple (new subclause 35A(13)
refers). The instrument may deal with situations where an individual is eligible for
the newborn supplement for less than 13 weeks, because they were partnered to
another person who was paid either parental leave pay or newborn supplement for
the child but separated from that other person before they received the full benefit of
the other payment.
In clause 35A, a parent includes a relationship parent (new subclause 35A(14)
refers).
New clause 35B sets out the annualised rate of newborn supplement for a first or
subsequent child, and in situations of multiple birth or where two or more children are
entrusted to care as part of the same process.
The annualised amount of newborn supplement for a parent in respect of an
FTB child who is the first child born alive to the woman who gave birth is the amount
worked out using the formula:
$1,501.50 x 365/91
The annualised amount of newborn supplement is the same for an individual who is
eligible under the entrusted to care and adoption categories where the child is the
first child that is entrusted to the care of the individual or their partner.
The amount of $1,501.50 is the total amount of newborn supplement that can be
added in respect of a first child in working out the individual's maximum rate or base
rate for the 13-week maximum period of eligibility.
7
This amount of newborn supplement would also apply where two or more children
are born during the same multiple birth, or where two or more children become
entrusted to the care of an individual or their partner as part of the same entrustment
to care process or adoption process.
Otherwise, the amount of newborn supplement for an individual in respect of an
FTB child who is not a first child born or entrusted to the care of a family is worked
out using the formula:
$500.50 x 365/91
The amount of $500.50 is the total amount of newborn supplement that can be
added in respect of a child who is not a first child in working out the individual's
maximum rate or base rate for the 13-week maximum period of eligibility.
The note at the end of new subclause 35B(1) explains that the formula annualises
the newborn supplement because it forms part of the process of working out an
individual's annual rate of family tax benefit. The rate of family tax benefit for a day
is the annual rate divided by 365 (see section 58 of the Family Assistance Act). That
daily rate will only include the newborn supplement for a maximum period of
13 weeks.
Indexation
Clause 2 of Schedule 4 to the Family Assistance Act lists the amounts to be indexed
or adjusted and provides an abbreviation for easy reference. The abbreviation is
then used in clause 3, which sets out how certain amounts are to be indexed in
accordance with the Consumer Price Index.
Item 7 inserts references to the newborn supplement and newborn upfront payment
into clause 2, and indicates where the relevant amounts are located.
Item 8 then provides for indexation of these amounts on 1 July in accordance with
the Consumer Price Index.
Under subclause 3(7) of Schedule 4, specified amounts, including the baby bonus
income limit, are not indexed on 1 July of the years 2009 to 2013. Item 9 makes a
consequential amendment to remove the reference to the baby bonus income limit
from subclause 3(7). Because this change commences on 1 March 2014,
the existing provision will ensure that the baby bonus income limit is not indexed on
1 July 2013.
Subclause 3(9) provides that baby bonus is not to be indexed on 1 July of 2012,
2013 or 2014. As this provision is repealed by item 10 from 1 March 2014,
baby bonus will not be indexed on 1 July 2013.
Item 10 also inserts a new subclause 3(9), which ensures that the first indexation of
the newborn supplement and newborn upfront payment will be 1 July 2014.
8
Amendments to the Family Assistance Administration Act
As a general rule, the only way that a person can become entitled to be paid family
tax benefit is to make a claim. Item 12 amends section 5 of the Family Assistance
Administration Act so that a claim is not required for a person to be paid the newborn
upfront payment of family tax benefit, which can occur automatically upon the person
becoming eligible for the newborn supplement. Item 11 makes a technical
consequential amendment.
Item 13 changes the heading to section 24 so that it reflects the subject matter dealt
with by the provision.
Item 14 inserts new section 24A, which provides that the newborn upfront payment
of family tax benefit is to be paid as a single lump sum at such time and in such
manner as the Secretary considers appropriate. Payment of the newborn upfront
payment would be subject to rules which prevent payment of family tax benefit on
the basis of an estimate where relevant tax returns have not been lodged, and also
subject to nominee arrangements and tax-related reductions.
Item 15 inserts a reference to family tax benefit under new section 58AA
(the newborn upfront payment) into the definition of relevant benefit in
section 219TA of the Family Assistance Administration Act. The effect is that the
newborn upfront payment can be paid to a person's nominee if a nominee
arrangement is in place.
Part 2 - Stillborn baby payment
Amendments to the Family Assistance Act
Items 16 to 19 amend definitions in subsection 3(1) of the Family Assistance Act.
These changes are consequential to the repeal of baby bonus and introduction of a
new payment, the stillborn baby payment.
Item 20 inserts a new definition of stillborn baby payment.
Item 21 repeals Division 2 of Part 3 of the Family Assistance Act, which related to
eligibility for baby bonus. A new Division 2 is substituted, which sets out the
eligibility criteria for the stillborn baby payment.
The eligibility criteria for the stillborn baby payment reflects the criteria that applied
for an individual to be eligible for baby bonus in respect of a stillborn child, with some
changes to the income test requirements to reflect other changes in this Schedule
related to family tax benefit.
9
Where an individual has given birth to a stillborn child and the individual is already
eligible for family tax benefit (in respect of another child or other children) on the day
of delivery, or becomes eligible for family tax benefit within 52 weeks beginning on
the day of the child's delivery, the individual meets the income test for the stillborn
baby payment. Otherwise, to meet the income test, the individual's and their
partner's income for the period of six months beginning on the day of the child's
delivery must be less than or equal to $60,000. Items 25, 26 and 27 provide for the
income limit of $60,000 to be indexed from 1 July 2017, consistent with the
recommencement of indexation of other income limits.
New subsection 36(4) provides how the stillborn baby payment interacts with
parental leave pay. It prevents an individual being eligible for the stillborn baby
payment if parental leave pay is payable to the individual, or the individual's partner,
for the child.
Item 22 repeals Division 2 of Part 4 of the Family Assistance Act, which provided for
the amount of baby bonus for an individual. A new Division 2 is substituted, which
sets out the amount of stillborn baby payment for an individual.
The amount of stillborn baby payment is the sum of the amounts of the newborn
supplement and newborn upfront amount defined earlier in the Schedule.
Item 24 repeals subsection85(2), referring to baby bonus. Item 23 is consequential
to item 24.
Amendments to the Family Assistance Administration Act
Items 28 to 30 amend definitions in subsection 3(1) of the Family Assistance
Administration Act. These changes are consequential to the repeal of baby bonus
and introduction of a new payment, the stillborn baby payment.
Items 31 to 40 amend Division 3 of Part 3 of the Family Assistance Administration
Act. The amended Division 3 will provide for the making of claims in relation to the
stillborn baby payment, the determination of those claims, and payment of the
stillborn baby payment where an individual is determined to be entitled. These
provisions broadly reflect the provisions that currently apply to a claim for baby
bonus in respect of a stillborn child.
Item 41 to 44 remove various references to baby bonus and substitute references to
the stillborn baby payment. Item 41 amends subsection 66(1) of the Family
Assistance Administration Act, which provides for the inalienability of payments.
Item 42 amends subsection 71(1), which allows a debt to be raised where a
payment is made and the individual was not entitled to that payment. Item 43
amends subsection 93A(6) of the Family Assistance Administration Act, which
defines the family assistance payments that can be recovered under section 93A
from financial institutions. Item 44 amends the definition of relevant benefit in
section 219TA of the Family Assistance Administration Act, which applies to Part 8B
of the Family Assistance Administration Act, relating to nominees.
10
Amendments to the Income Tax Assessment Act 1997
Items 45 to 47 are consequential amendments to the Income Tax Assessment
Act 1997, resulting from the repeal of baby bonus and the introduction of the stillborn
baby payment. The amendments will preserve the current tax-exempt status of the
baby bonus when replaced by the new stillborn baby payment.
Amendments to the Paid Parental Leave Act 2010
Items 48 to 52 remove references to baby bonus from the Paid Parental Leave Act.
These amendments are consequential amendments to the repeal of baby bonus.
The interaction between the newborn supplement, newborn upfront amount and
stillborn baby payment, which replace the baby bonus, has been described in Parts 1
and 2 above.
Amendments to the Social Security (Administration) Act 1999
Items 53 to 61 are consequential amendments to the income management
provisions in the Social Security (Administration) Act 1999, resulting from the repeal
of baby bonus and introduction of the stillborn baby payment. Consistent with the
treatment of the baby bonus, the stillborn baby payment will be fully income
managed where appropriate.
Part 3 - Counting previous PPL period etc. for work test
Amendments to the Paid Parental Leave Act
Items 62 and 66 amend the guides contained in sections 30 and 115CA of the
Paid Parental Leave Act to highlight the availability of the new measures.
Item 63 is consequential to item 65.
Items 64 and 65 make the substantive amendments to the Paid Parental Leave Act.
Item 64 repeals subsection 34(1) and substitutes a new subsection, which provides
that a person performs qualifying work on a day if at least one of the following
applies on the day:
(a) the person performs at least one hour of paid work;
(b) the person takes a period of paid leave of at least one hour;
(c) the day is in the person's PPL period for a previous child;
(d) the day is in the person's DAPP period for a previous child.
Paragraphs 34(1)(a) and (b) reflect the existing rules. Paragraphs 34(1)(c) and (d)
are new rules, clarifying that a person performs qualifying work on a day if the day is
in a person's previous PPL period or DAPP period.
Item 65 inserts a new section 35A into the Paid Parental Leave Act.
11
New subsection 35A(1) applies if the person does not perform paid work or take paid
leave in their PPL period or DAPP period for a pervious child. In these
circumstances, the person is taken to have performed on that day:
7.6 hours of work, if the day is a week day; and
no hours of work, if the day is a Saturday or Sunday.
New subsection 35A(2) applies where the person has performed at least one hour of
paid work on a day in the person's PPL period or DAPP period for a previous child.
This will apply where a person takes parental leave pay or dad and partner pay at
the same time as performing work for a permissible purpose. In these
circumstances, the person is taken to have performed on that day the greater of:
the hours of work the person would be taken to have performed if
subsection (1) applied; and
the number of hours of paid work performed by the person on that day.
For example, a person may have performed two hours of paid work for a permissible
purpose on a day in their PPL period. In these circumstances, the person will be
taken to have performed 7.6 hours of qualifying work.
The note to subsection 35A(2) clarifies that paid work for a permissible purpose
(such as a keeping in touch day) could be performed during a person's PPL period
or DAPP period for a previous child.
New subsection 35A(3) is similar to subsection 35A(2), but applies where a person
has taken paid leave of at least one hour on a day that falls in the person's
PPL period or DAPP period for a previous child. This will apply where a person
takes parental leave pay or dad and partner pay at the same time as receiving paid
leave from their employer. In these circumstances, a person is taken to have
performed on that day the greater of:
the hours of work the person would be taken to have performed if
subsection (1) applied; and
the number of hours of paid leave taken by the person on that day.
For example, a person may be taking eight hours' leave at half pay. thereby using
four hours of paid leave on a day in their PPL period. In these circumstances,
the person will be taken to have performed 7.6 hours of qualifying work on that day.
Part 4 - Application and transitional provisions
Item 67 sets out the application and transitional provisions for Parts 1 and 2 of this
Schedule.
Subitem 67(1) saves the provisions in the Family Assistance Act and the Family
Assistance Administration Act on and after commencement to the extent they relate
to baby bonus for children who were born or stillborn before 1 March 2014,
or entrusted to care as part of an adoption process before 1 March 2014.
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Subitems 67(2), (3) and (4) provide for provisions relating to eligibility for the
newborn supplement to apply to children who were born on or after 1 March 2014, or
entrusted to care as part of an adoption process on or after 1 March 2014.
Subitem 67(5) is included to avoid doubt. It makes clear that, in determining
whether a child is the first child born alive to a woman, children born alive to the
woman at any time (including before commencement of these amendments)
are taken into account.
Subitem 67(6) is included to avoid doubt. It makes clear that, in determining
whether a child is the first child entrusted to the care of an individual, or the partner
of an individual, children entrusted to the care of the individual or their partner at any
time (including before commencement of these amendments) are taken into account.
Subitem 67(7) provides that paragraph 36(1)(a) of the Family Assistance Act, which
contains the eligibility criteria for the stillborn child payment, applies in relation to a
child born as a stillborn child on or after 1 March 2014.
Subitem 67(8) is included to avoid doubt. It makes clear that, in determining
whether a child is the first stillborn child of a woman, any previous stillborn child of
the woman (including a stillborn child born before commencement of these
amendments) is taken into account.
Subitem 67(9) provides for the continued application of section 52-150 of the
Income Tax Assessment Act 1997 in respect of any payments of baby bonus made,
including payments made after commencement of these amendments. Baby bonus
could be paid after commencement in circumstances provided in subitem 67(1).
Subitem 67(10) provides for the continued income management of baby bonus
payments on and after commencement of these amendments. This includes income
management of any baby bonus paid after commencement. Baby bonus could be
paid after commencement in circumstances provided in subitem 67(1).
Subitem 67(11) preserves current rules that prevent an individual becoming eligible
for parental leave pay where they are entitled to baby bonus. Despite the repeal of
baby bonus, entitlement to baby bonus could still be relevant for determination of
parental leave pay eligibility after commencement of these amendments. Individuals
could have become entitled to baby bonus before commencement. Individuals could
also become entitled to baby bonus after commencement since subitem 67(1)
provides for the continued application of the baby bonus provisions in certain
circumstances. In practice, the current rules that prevent an individual becoming
eligible for parental leave pay where they are entitled to baby bonus only apply in
respect of children who were born or stillborn before 1 March 2014, or entrusted to
care as part of an adoption process before 1 March 2014.
Subitem 67(12) contains definitions of terms used in this item. The terms abbreviate
the names of Acts referred to in this item.
Item 68 sets out application and transitional provisions for Part 3 of this Schedule.
13
Subitem 68(1) clarifies that the amendments made by this Part apply in relation to a
person's eligibility for parental leave pay and dad and partner pay for a child born on
or after 1 March 2014.
Subitem 68(2) clarifies that the following provisions of the Paid Parental Leave Act
apply in relation to this item as if this item were a provision of that Act:
section 275 (which deals with how that Act applies to an adopted child);
section 276 (which deals with how that Act applies to claims made in
exceptional circumstances);
section 277A (which deals with how that Act applies to claims for dad and
partner pay made in prescribed circumstances).
14
New Schedule 2B - Family assistance lump sum payments
Summary
Families choosing to wait until the end of the financial year to claim their family tax
benefit or child care benefit entitlement will now have a grace period of one year
instead of two years in which to claim. This change will start for the 2012-13
entitlement year, meaning families will have 12 months from the end of that year
(until 30 June 2014) in which to claim their entitlement.
Families will also have one year in which to lodge their tax returns if they are to
receive the end-of-year family tax benefit supplements, and to meet immunisation
and health check requirements linked to the end-of-year family tax benefit Part A
supplement.
Families will be able to access extensions in special circumstances, similar to
arrangements for tax returns. The changes bring family payment claim periods more
into line with time limits for lodging tax returns before penalties may be imposed, and
with the policy intent of the family assistance program, to assist parents with
day-to-day costs of raising children.
Background
Currently, families have until the end of the second income (financial) year after the
entitlement year in which to:
make lump sum claims for family tax benefit and child care benefit;
lodge a tax return (if required) to receive top-ups and end-of-year
supplements following reconciliation of income for family tax benefit;
ensure that children have met immunisation and health check requirements
for the end-of-year family tax benefit Part A supplement;
notify of school commencement to become eligible for schoolkids bonus
payments; and
meet claim or tax return lodgement requirements for the single income family
supplement.
This measure reduces the time available for families to complete these tasks to one
income year after the entitlement year. For example, to receive and settle their
family tax benefit for the 2012-13 year, families will have until 30 June 2014 to
complete their paperwork.
Families may be able to access extensions to the one-year period for an additional
year if there are special circumstances, consistent with arrangements in the taxation
system.
15
Explanation of the changes
Part 1 - Amendments
Amendments to the Family Assistance Act
Schoolkids bonus
An individual who is entitled to family tax benefit Part A is also eligible for the
schoolkids bonus on a bonus test day for children in their care who meet the
schoolkids bonus study requirements in sections 35UB and 35UD of the Family
Assistance Act. In addition to meeting the study requirements, the Secretary must
be notified or become aware that the child meets the study requirements before the
end of the second income year after the income year in which the relevant bonus
test day occurs.
Items 1, 2, 3 and 4 reduce these timeframes to the end of the first income year after
the income year in which the bonus test day occurs, or such further period as the
Secretary allows. The Secretary can only allow a further period if there are special
circumstances and the Secretary has allowed the individual a further period in which
to lodge a past period claim for family tax benefit in respect of the child for the
income year in which the bonus test day occurs. The further period must end no
later than the end of the second income year after the income year in which the
bonus test day occurs.
Under section 65B of the Family Assistance Act, if an individual is eligible for a
schoolkids bonus on a bonus test day, then the amount for that day is worked out by
adding together applicable amounts for each eligible child in respect of the individual
for the bonus test day. For an eligible child aged under 16 on the bonus test day,
the secondary school amount can be paid for the child if the study requirements in
subsection 65B(4) apply to the child and the Secretary is notified or becomes aware
that the study requirements are satisfied before the end of the second income year
after the income year in which the test bonus day occurs. Items 13 and 14 reduce
this timeframe, consistent with amendments made by items 1, 2, 3 and 4.
Health check requirement
For families in receipt of income support, payment of the end-of-year family tax
benefit Part A supplement in respect of an FTB child in the income year in which the
child turns four is conditional on the child meeting the health check requirement.
However, the family tax benefit Part A supplement can be paid if, at any time before
the end of the second income year after the income year in which the FTB child
turned four, the Secretary becomes aware of information suggesting that the
FTB child meets or is exempt from the health check requirement, or if there are
special circumstances that make it inappropriate for the requirement to be imposed.
16
Items 5 and 6 reduce the timeframe mentioned to the end of the first income year
after the income year in which the FTB child turned four or such further time as the
Secretary allows. The further period can only be allowed if there are special
circumstances and the Secretary has allowed the individual a further period in which
to lodge a past period claim for family tax benefit in respect of the child for the
income year in which the child turned four. The further period must end no later than
the end of the second income year after the income year in which the FTB child
turned four (see new subsection 61A(2AA), as inserted by item 7).
If a child dies before the end of the second income year after the income year in
which the child turned four, then the health check requirement does not affect
payment of the family tax benefit Part A supplement in relation to the child (see new
subsection 61A(3), as inserted by item 8). That new subsection features a reduced
timeframe to reflect changes made by items 5 to 7.
Immunisation requirements
Section 61B of the Family Assistance Act sets out similar rules, which make payment
of the family tax benefit Part A supplement for an FTB child in the income years in
which the child turns one, two or five conditional on the child meeting the
immunisation requirements. However, the family tax benefit Part A supplement can
be paid if, at any time before the end of the second income year after the income
year in which the FTB child turned one, two or five, the Secretary becomes aware of
information or is satisfied that the FTB child meets the immunisation requirements.
Items 9 and 10 reduce the timeframe mentioned in each of paragraphs 61B(3)(a)
and (b) to the end of the first income year after the income year in which the
FTB child turned one, two or five (as relevant) or such further time as the Secretary
allows. The further period can only be allowed if there are special circumstances
and the Secretary has allowed the individual a further period in which to lodge a past
period claim for family tax benefit in respect of the child for the income year in which
the child turned one, two or five (as relevant). The further period must end no later
than the end of the second income year after the income year in which the FTB child
turned one, two or five (see new subsection 61B(3A), as inserted by item 11).
If a child dies before the end of the second income year after the income year in
which the child turned one, two or five, then the immunisation requirements do not
affect payment of the family tax benefit Part A supplement in respect of the child
(see new subsection 61B(4), as inserted by item 12. That new subsection features
a reduced timeframe to reflect changes made by items 9 to 11.
17
Amendments to the Family Assistance Administration Act
Item 15 amends paragraph 10(2)(b) of the Family Assistance Administration Act,
which limits the period for making a claim for family tax benefit.
New paragraph 10(2)(b) generally requires a claim to be made before the end of the
first income year after the income year containing the period to which the claim
relates. However, the Secretary may allow a further period for lodging the claim if
the Secretary is satisfied that special circumstances prevented the claimant from
lodging their claim within the standard timeframe. Item 16 inserts new
subsection 10(2A), which limits the further period that the Secretary can allow. The
further period must end no later than the end of the second income year after the
income year containing the period to which the claim relates.
Item 17 inserts new section 14A, which provides that a claim for family tax benefit for
a past period in an income year (the past period income year) is taken never to have
been made if the claimant and/or their partner are required to lodge tax return(s) for
the past period income year, but do not do so before the periods specified in that
section. The claim will be taken never to have been made if tax returns are not
lodged before the end of the first income year after the past period income year,
or within such further period allowed by the Secretary in special circumstances that
prevented the tax payer from lodging their tax return before the end of that first
income year. The further period must end no later than the end of the second
income year after the past period income year.
Items 18 to 21 amend section 28 of the Family Assistance Administration Act.
Current section 28 provides for the variation of instalment and past period
entitlement determinations where tax returns have not been lodged by the end of the
income year after the entitlement year. In these circumstances, the family tax benefit
claimant's entitlement is varied to nil under subsection 28(2) or (6) due to
non-lodgement of required tax returns. If a relevant individual's actual income
subsequently becomes known after relevant tax returns are lodged and income tax
assessments are made, the claimant's family tax benefit entitlement is recalculated
under subsection 28(3), or, if the claimant and partner separate within a set period
after the determination is varied under subsection 28(2) or (6), it is recalculated
under subsection 28(4).
Under the new rules, if the recalculated amount exceeds the amount the claimant
was entitled to before the variation to nil, a top-up amount would generally not be
payable because an income tax return was not lodged before the end of the first
income year following the entitlement year. A top-up payment can only be paid if
special circumstances prevented the claimant or their partner, or both, lodging their
tax returns before the end of the first income year, and if the tax return is lodged
within the further period allowed by the Secretary.
Item 18 repeals paragraph 28(3)(c) of the Family Assistance Administration Act and
substitutes a new paragraph 28(3)(c).
If special circumstances prevented the claimant or their partner, or both, lodging their
tax returns before the end of the first income year, new paragraph 28(3)(c) allows a
top-up to be paid, provided the claimant and their partner have lodged their tax
returns within the timeframe that applies to them.
18
Item 19 amends paragraph 28(4)(a), and item 20 repeals and substitutes a new
paragraph 28(4)(c), of the Family Assistance Administration Act.
Subsection 28(4) as so amended would apply where a debt is raised under
section 28 in circumstances where the claimant's partner has not lodged their tax
return before the end of the first income year after the entitlement year and the
Secretary allows a further period for the partner to lodge their tax return. If the
claimant separates from the partner before the end of the further period allowed for
their partner to lodge their tax return, new paragraph 28(4)(c) would allow the
claimant to receive a top-up, provided they have lodged their own tax return within
the timeframe that applies to them.
Item 21 amends subsection 28(5) of the Family Assistance Administration Act. This
amendment is consequential to amendments to subsection 28(4) above. As a result
of those amendments, subsection 28(5) would only apply where the claimant is
entitled to be paid the recalculated amount.
The family tax benefit reconciliation conditions outlined in Subdivision D of Division 1
of Part 3 are essentially the triggers for the process known as income reconciliation.
During a financial year, a family will base their entitlement for family tax benefit on an
estimate of their income for that year. After the end of the financial year, once the
family meets their tax return requirements, their family tax benefit entitlements based
on estimated and actual income are compared (reconciled), and the family's
entitlement to the end-of-year family tax benefit supplements is also taken into
account at this time. The reconciliation provisions set out when reconciliation occurs
in particular circumstances (for example, when the individual is and remains a
member of a couple). These provisions establish a relevant reconciliation time that
is then the trigger for the reconciliation review (and payment of the end-of-year
supplements).
Items 22 to 36 amend the family tax benefit reconciliation conditions in the Family
Assistance Administration Act. The amendments reflect changes to the timeframe
for lodging tax returns, and make some minor technical amendments to correct some
pre-existing gaps in those provisions.
Child care benefit
Items 37 and 38 amend subsection 49J(2) of the Family Assistance Administration
Act, to change the period available for making a claim for child care benefit. These
changes reflect changes to timeframes for lodging claims for family tax benefit made
by items 15 and 16.
Single income family supplement
Items 39 and 40 amend subsection 65KD(2) of the Family Assistance Administration
Act, to change the period available for making a claim for single income family
supplement. These changes reflect changes to timeframes for lodging claims for
family tax benefit made by items 15 and 16, and changes to timeframes for lodging
claims for child care benefit made by items 37 and 38.
19
Item 41 amends the period for lodging tax returns in paragraph 65KI(2)(b) of the
Family Assistance Administration Act. Item 42 makes a similar amendment to
paragraph 65KI(3)(c). Section 65KI restricts determination of claims for single
income family supplement where the claimant has not lodged their tax return within
the period specified in paragraph (2)(b) or their partner has not lodged their tax
return within the period specified in paragraph (3)(c). For the claim to be
determined, tax returns must generally be lodged before the end of the first income
year after the income year containing the period to which the claim relates.
However, the Secretary may allow a further period for the claimant or their partner to
lodge a tax return if the Secretary is satisfied that special circumstances prevented
lodgement of the tax return within the standard timeframe. Item 43 limits the further
period that the Secretary may allow for lodgement of tax returns. The further period
must end no later than the end of the second income year after the income year
containing the period to which the claim relates.
Item 44 amends the period for lodging tax returns in paragraph 65KP(3)(a) of the
Family Assistance Administration Act. Item 45 makes a similar amendment to
subparagraph 65KP(3)(b)(iii). Subsection 65KP(3) applies to prevent an individual
who is not required to lodge a claim for single income family supplement from being
paid the single income family supplement where the individual has not lodged their
tax return within the period specified in paragraph (3)(a), or where the individual's
partner has not lodged their tax return within the period specified in
subparagraph (3)(b)(iii).
For payment to be made, tax returns must generally be lodged before the end of the
first income year after the income year containing the period to which the payment
relates. However, the Secretary may allow a further period for the individual or their
partner to lodge their tax return if the Secretary is satisfied that special
circumstances prevented lodgement of the tax return within the standard timeframe.
Item 46 limits the further period that the Secretary may allow for lodgement of tax
returns. The further period must end no later than the end of the second income
year after the income year containing the period to which the claim relates.
Other changes related to family tax benefit
Item 47 amends paragraph 95(4A)(a) of the Family Assistance Administration Act.
Currently, debts arising under subsection 28(2) or (6) of the Family Assistance
Administration Act (as a result of non-lodgement of tax returns) can be written off
where the claimant and their partner separate after the end of the second income
year after the cancellation income year. Consistent with the new general time limit
for the lodgement of tax returns, debts arising under subsection 95(4A) can now be
written off where the claimant and their partner separate after the end of the income
year after the cancellation income year.
20
Items 48, 50 and 52 amend subparagraphs 107(3A)(b)(i), 109D(4)(d)(iii)
and 109E(3)(d)(iii) of the Family Assistance Administration Act. These provisions
ensure that, where a child meets the health check requirement in section 61A of the
Family Assistance Act after reconciliation occurs or after the general 52-week review
time limit, the family tax benefit Part A supplement can still be paid for the child.
The periods referred to in those subparagraphs are amended to reflect the change
made by item 5 to the period referred to in paragraph 61A(2A)(a) of the Family
Assistance Act.
Items 49, 51 and 53 amend subparagraphs 107(3C)(b)(i), 109D(4)(f)(iii)
and 109E(3)(f)(iii) of the Family Assistance Administration Act. These provisions
relate to the immunisation requirement in section 61B of the Family Assistance Act,
and have similar effect to subparagraphs 107(3A)(b)(i), 109D(4)(d)(iii)
and 109E(3)(d)(iii) relating to the health check requirement. The amendments made
by items 49, 51 and 53 reflect the change made by item 9 to the period referred to in
paragraph 61B(3)(a) of the Family Assistance Act.
Part 2 - Application provisions
Item 54 provides how the amendments relating to the schoolkids bonus apply.
The amendments made by items 1, 2, 13 and 14 apply in relation to bonus test days
on or after 1 January 2013. For entitlement relating to bonus test days of
1 January 2013 and 30 June 2013, individuals would generally have until
30 June 2014 to meet the notification requirements. The amendments made by
items 3 and 4 apply to bonus test days occurring on or after commencement.
Item 55 provides for the application of amendments relating to the health check and
immunisation requirements for family tax benefit. The amendments apply where the
child turns the relevant age in relation the 2012-13 income year or a later income
year. Only family tax benefit entitlement for the 2012-13 and later income years is
affected. For entitlement relating to the 2012-13 income year, individuals have until
30 June 2014 to meet the health check and immunisation requirements.
Item 56 provides for the application of amendments relating to the lodgement of
claims and tax returns for family tax benefit. Family tax benefit entitlement for the
2012-13 and later income years is affected. For entitlement relating to the 2012-13
income year, individuals have until 30 June 2014 to lodge their claims and tax
returns.
Item 57 provides for the application of amendments relating to lodgement of claims
for child care benefit. Child care benefit entitlement for the 2012-13 and later income
years is affected. For entitlement relating to the 2012-13 income year, individuals
have until 30 June 2014 to lodge their claims.
Item 58 provides for the application of amendments relating to lodgement of claims
and tax returns for the single income family supplement. Entitlement for the 2012-13
and later income years is affected. For entitlement relating to the 2012-13 income
year, individuals have until 30 June 2014 to lodge their claims and tax returns.
21
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