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1998-1999-2000-2001
THE PARLIAMENT OF
THE COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
FAMILY AND
COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION
AMENDMENT
(FURTHER ASSISTANCE FOR OLDER AUSTRALIANS) BILL
2001
EXPLANATORY
MEMORANDUM
(Circulated by authority of the
Minister for Family and Community Services, Senator the Hon Amanda
Vanstone)
ISBN: 0642 458154
FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS
LEGISLATION AMENDMENT
(FURTHER ASSISTANCE FOR OLDER AUSTRALIANS)
BILL 2001
OUTLINE AND FINANCIAL IMPACT
STATEMENT
The Family and Community Services and Veterans’ Affairs Legislation
Amendment (Further Assistance for Older Australians) Bill 2001 forms a part of
the measures announced in the 2001-2002 Budget to give effect to the
Government’s appreciation and acknowledgment of the contribution made by
older Australians to society.
The Bill:
• amends the
Social Security Act 1991 to exempt superannuation from the social
security means test for people aged between 55 and age pension age, from
1 July 2001;
• amends the Social Security Act 1991
and the Veterans’ Entitlements Act 1986 to extend
the telephone allowance to holders of seniors health cards, from
1 September 2001; and
• amends the Social Security
Act 1991 and the Veterans’ Entitlements Act 1986 to
increase the income limits under which a person may qualify for the seniors
health card, from 1 September 2001.
This beneficial measure, to commence on 1 July 2001, provides for the
exemption of superannuation assets from the social security means test for
people aged between 55 and age pension age.
This responds to a
recommendation made in the report of a recent parliamentary inquiry into issues
concerning mature aged workers (the “Nelson Report”). It is
consistent with directions for the mature aged unemployed contained in the
Australians Working Together initiative, to promote active engagement of
mature age unemployed.
It is estimated that some 55,000 people will
benefit from this measure either through an increase in the rate of their social
security pension or benefit or through becoming entitled to receive a social
security pension or benefit.
Date of effect:
1 July
2001
Financial Impact:
The additional costs of exempting
superannuation from the social security means test for people aged between 55
and age pension age are as follows:
2001-02 2002-03 2003-04 2004-05
$m $m $m $m
Measure Administered 85.0 86.7 88.4 90.2 Departmental
4.2 1.7 1.7 1.7
Total 89.2 88.4 90.1 91.9
2001-02 2002-03 2003-04 2004-05
$m $m $m $m
Measure Administered
9.6 10.5 11.5 12.5 Departmental 0.1 0.1 0.1
0.1
Total
9.7 10.6 11.6 12.6
This beneficial measure provides for seniors health card holders to be
able to receive a telephone allowance - currently $17.20 per quarter (for both
singles and couples) and paid in January, March, July and September - if they
are a telephone subscriber.
Previously, only social security and service
pensioners, certain social security beneficiaries and certain veterans could
receive telephone allowance. As a result of the measure, self-funded retirees
of age pension age who qualify for a seniors health card will be able to claim
telephone allowance.
Date of effect:
1 September
2001
Financial Impact:
The additional costs of extending
telephone allowance to holders of seniors health cards are as follows:
2001-02 2002-03 2003-04 2004-05
$m $m $m $m
Measure Administered 22.5 23.0 23.7 24.2 Departmental
8.2 0.8 0.8 0.8
Total 30.7 23.8 24.5 25.0
2001-02 2002-03 2003-04 2004-05
$m $m $m $m
Measure Administered
4.0 4.1 4.1 4.2 Departmental 3.2 0.1 0.1
0.1
Total 7.2 4.2 4.2 4.3
This beneficial measure increases the allowable income limits for the
seniors health card to $50,000 for single people and $80,000 for
couples.
Date of effect:
1 September
2001
Financial Impact:
The additional costs of increasing
the allowable income limits for the seniors health card are as follows:
2001-02 2002-03 2003-04 2004-05
$m $m $m $m
Measure Administered
0.0 0.0 0.0 0.0 Departmental 1.5 0.0 0.0
0.0
Total 1.5 0.0 0.0 0.0
The costs are negligible.
2001-02 2002-03 2003-04 2004-05
$m $m $m $m
Measure Administered 22.5 24.7 27.0 29.3 Departmental
0.0 0.0 0.0
0.0
Total 22.5 24.7 27.0 29.3
FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS
LEGISLATION AMENDMENT
(FURTHER ASSISTANCE FOR OLDER AUSTRALIANS)
BILL 2001
This clause specifies that the short title of the Bill, when enacted,
will be the Family and Community Services and Veterans’ Affairs
Legislation (Further Assistance for Older Australians)
Act 2001.
This clause specifies that:
• clauses 1, 2 and 3 of the Bill
commence on Royal Assent;
• Schedule 1 commences on 1 July 2001;
and
• Schedules 2 and 3 commence on 1 September
2001.
Clause 3 – Schedules
This clause gives
effect to the Schedules to the Bill.
Schedule 1 - Beneficial treatment of superannuation assets for people aged between 55 and pension age
Summary of proposed changes
As the Social Security Act 1991 (the Social Security Act)
currently stands, the provisions operate so that a person below age pension age
(in the Social Security Act referred to as “pension age”) has their
superannuation assets assessed under the social security means test if they have
received income support payments for a total period of 39 weeks after
turning 55.
This Schedule amends the Social Security Act to provide for the exemption of superannuation assets from the social security means test for all people aged between 55 and age pension age.
The social security means test treatment of superannuation assets of
people under 55 years of age or who have reached age pension age is not affected
by this measure.
Explanation of the changes
Clause 2 provides that the amendments commence on 1 July
2001.
Subsection 8(1) of the Social Security Act contains a definition of
“income” for the purposes of the Social Security Act. The
definition excludes certain amounts by reference to specified subsections of
section 8.
Subsection 8(7A) provides the general rule that a return on a
person’s investment in a superannuation fund, an approved deposit fund, a
deferred annuity or an ATO small superannuation account is not income for the
purposes of the Social Security Act if the person has not either reached pension
age or started to receive a pension or an annuity out of the relevant fund.
However, subsection 8(7A) is subject to subsection 8(7B).
Subsection
8(7B) modifies this exclusion, by stating that subsection 8(7A) does not exclude
a return on a person’s investment if the person is between 55 and age
pension age and has received income support for a total of 39 weeks since
turning 55.
As returns on superannuation investments held by all people
below age pension age are now to be excluded, subsection 8(7B) is no longer
relevant and is to be repealed. The rule currently set out in subsection 8(7A)
is to be maintained but relocated in subsection 8(8) that sets out a list of
amounts excluded from income from the social security means
test.
Items 2 and 3 provide for this. Item 1 is
consequential to the amendments made by Item 2.
Section 9 of the
Social Security Act contains certain definitions that are relevant to the
concept of “investment income”. Subsection 9(1B) provides specific
guidance in relation to “managed investments”. The notes to
paragraphs 9(1B)(d), (e), (f) and (g) refer the reader to provisions in
subsection 9(1C) that apply to exclude certain investments from the definition
of managed investments (and, therefore, from the operation of extended deeming)
to persons who have not reached age pension age and are not “prescribed
pre-pension age persons”. Since the effect of the amendments made by the
Schedule is to remove the restriction in relation to anyone under age pension
age, Items 4, 5, 6 and 7 amend the notes to paragraphs 9(1B)(d), (e), (f)
and (g), respectively, to reflect this.
For similar reasons, Items 8,
9, 10 and 11 amend paragraphs 9(1C)(a), (b), (c) and (ca),
respectively.
Item 12 omits a note to subsection 9(1C) that is no
longer necessary because of the effect of the amendments made by the
Schedule.
Item 13 repeals the definition of “prescribed
pre-pension age person”, as it is no longer necessary. It is no longer
necessary because all people aged between 55 and age pension age are now to be
treated in the same way.
Section 1096 provides for how income is to be
assessed when a person makes a withdrawal from a superannuation fund, an
approved deposit fund, a deferred annuity or an immediate annuity prior to the
person reaching age pension age and does not roll the amount over. In such a
case, one fifty-second of the assessable growth component of the withdrawn
(realised) amount is attributed to them as ordinary income each week for 12
months commencing from the day on which the withdrawal is made. Although this
section does not apply for a person below age pension age who has turned 55 and
been in receipt of income support for a total of 39 weeks or more, it does apply
to other people between 55 and age pension age.
Item 14 amends
paragraph 1096(aa) so that the rule set out in section 1096 (which will now
become subsection 1096(1) because of the amendment made by Item 16) will
not now apply to anyone between 55 and age pension age. This is necessary to
achieve the full exemption of superannuation assets from the means test for all
people between age 55 and age pension age.
Item 15 repeals the
notes to section 1096 as they are no longer necessary because of the effect of
the amendments made by the Schedule.
Item 16 inserts new
subsection 1096(2) to deal with the situation if a person makes a withdrawal
from a superannuation fund, an approved deposit fund, a deferred annuity or an
immediate annuity in the 12 months prior to the person turning 55. The new
subsection makes it clear that if this occurs, then from the week in which the
person turns 55, the rule set out in subsection 1096(1) will no longer apply to
them (that is, even if the 12 month attribution period has not ended).
As
the amendments made by the Schedule commence on 1 July 2001, this means that a
person who has turned 55 and who, in the absence of the amendments made by the
Schedule would have “serving” the 12 month attribution period, will
immediately cease to be subject to the attribution on 1 July
2001.
Section 1118 provides that certain assets are to be disregarded for
the purposes of calculating the value of a person’s assets.
Item
17 inserts new paragraph 1118(1)(f) to provide that the value of a
person’s assets in a superannuation fund, an approved deposit fund, a
deferred annuity or an ATO small superannuation account is to be disregarded
until such time as the person reaches age pension age or starts to receive a
pension or annuity out of the fund.
This replaces the current rule set
out in section 1118A that also provides that the value of such assets are to be
disregarded until a person becomes a “prescribed pre-pension age
person”, that is, has turned 55 and been in receipt of income support for
a total of 39 weeks or more.
Summary of proposed changes
This measure provides for holders of seniors health cards to be able to
receive a telephone allowance if they are a telephone subscriber. The allowance
is currently $17.20 per quarter (for both singles and couples) and paid in
January, March, July and September.
Previously, only social security and
service pensioners, certain social security beneficiaries and certain veterans
could receive telephone allowance. As a result of the measure, self-funded
retirees of age pension age who qualify for a seniors health card will be able
to claim telephone allowance.
Explanation of the changes
Clause 2 provides that the amendments commence on 1 September 2001.
Section 1061Q sets out the qualification criteria for telephone
allowance.
Item 1 inserts new subsection 1061Q(4A) to give effect
to the Government’s decision to extend the provision of telephone
allowance to holders of seniors health cards.
Apart from being a
telephone subscriber (already defined in subsection 1061Q(5)), the person must
meet one of two alternatives.
The first alternative is that the person
must currently be the holder of a seniors health card.
The second
alternative applies where a person is temporarily absent from Australia for a
continuous period not exceeding 26 weeks and was the holder of a seniors
health card immediately before leaving Australia. The current position is that
telephone allowance is portable for 26 weeks, that is, a person may be
outside Australia temporarily for up to 26 weeks before it ceases to be
payable to the person. However, a person ceases to be the holder of a seniors
health card once they leave Australia. The drafting of the second alternative
gives effect to the intention that telephone allowance be portable for up to 26
weeks for all telephone allowance recipients who leave Australia
temporarily.
Subsection 1061S(1) provides that the rate of telephone
allowance payable to a person is to be worked out using the Table set out in
that subsection.
Items 2, 3, 4, and 5 modify the Table to take
account of the decision to extend telephone allowance to holders of seniors
health cards.
Item 6 inserts new subsection 1061S(3A). The new
subsection ensures that for the purposes of working out a person’s
situation and subsequently, the rate of telephone allowance payable to them, if
a person’s partner is temporarily absent from Australia for a continuous
period not exceeding 26 weeks and was the holder of a seniors health card
immediately before leaving Australia, the partner is still taken to be a holder
of a seniors health card.
Section 48 provides for the payment of telephone allowance. However, the
current provision presumes that a recipient of telephone allowance is also
receiving a social security periodic payment, for example, age pension, so that
the quarterly payment of telephone allowance is paid on the person’s
social security periodic payment payday on or after one of four specified
dates.
By contrast, a holder of a seniors health card does not receive
any social security periodic payments.
Accordingly, Item 7 amends
the definition of “telephone allowance payday” in subsection
48(4).
As a result, holders of seniors health cards to whom telephone
allowance is to be paid will receive a quarterly instalment on 1 January, 20
March, 1 July and 20 September each year (or the next working day after any of
those four dates).
Items 8 to 10 make similar amendments to the Veterans’
Entitlements Act to extend telephone allowance to people who are holders of
senior health cards under that Act.
Summary of proposed changes
This measure increases the income limits for the seniors health card to
$50,000 for single people and $80,000 for couples, from 1 September
2001.
Explanation of the changes
Clause 2 provides that the amendments commence on 1 September
2001.
One of the qualification criteria for the seniors health card under the Social Security Act is that a person must satisfy the seniors health card taxable income test. Essentially, a person’s taxable income (as adjusted for the person’s fringe benefits, target foreign income and net rental property loss) must be less than the income limits that apply to the person.
The income limits depend on a person’s family circumstances and are set
out in the Table in Point 1071-12.
The Table is to be amended by Item 1 to take account of the
Government’s decision to increase the income
limits.
Veterans’ Entitlements Act
1986
Amendments mirroring those made to the Social Security Act
are made by Item 2 to section 118ZAA-11 of the Veterans’
Entitlements Act so as to increase the income limits for the seniors health card
under that Act.