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1998—99
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (1999 BUDGET AND OTHER MEASURES) BILL 1999
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator the Hon Jocelyn
Newman,
Minister for Family and Community Services)
ISBN: 0642 408203
FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (1999 BUDGET AND OTHER MEASURES) BILL 1999
OUTLINE AND FINANCIAL IMPACT STATEMENT
This Bill gives effect to measures announced in the
Government’s 1999-2000 Budget and several other measures.
The
legislation involved is the Social Security Act 1991, the A
New Tax System (Family Assistance) (Consequential and Related Measures) Act (No.
2) 1999 and the A New Tax System (Bonuses for Older Australians)
Act 1999.
Schedule 1—Social Security Act 1991
This Schedule amends certain provisions of the Social Security Act
1991 (the Act) to introduce measures announced in the 1999-2000
Budget.
Along with income from currently allowable types of employment,
these amendments provide for income earned from employment in a family business
or farm to be excluded for the purposes of the youth allowance Family Actual
Means Test (FAMT), up to the existing allowable level. There are no financial
implications for these amendments.
Schedule 1 is also concerned
with new income support arrangements for people sharing the care of children.
Part of the amendments deal with the situation where a child is the dependent
child of more than one person and the adults are not members of the same couple
and are sharing the care of the child. In these circumstances, a person who has
caring responsibilities of more than 60% will qualify for parenting payment.
For an adult with between 40% and 60% care of a child, qualification for youth
allowance (YA) or newstart allowance will be subject to a modified activity
test, that is, the person’s obligations in relation to the activity test
will be modified in recognition of the person’s care responsibilities.
The amendments also provide that, in certain circumstances, a child can be
regarded as in the care of a person during absences of up to 8 weeks.
The
financial impact of those amendments is as follows:
2000-2001 $3.326m
(costs)
2001-2002 $1.339m (savings)
2002-2003 $2.237m
(savings)
This Schedule also provides for the extension of the category
of people who can be eligible for a Student Financial Supplement Scheme (SFSS)
loan. This amendment provides that dependent tertiary students will be able to
access a SFSS loan in certain circumstances even though YA is not payable due to
the operation of the assets test. This will be achieved by allowing a 75%
discount in relation to certain assets.
The financial impact of those
amendments is as
follows:
1999-2000 $2.994m
2000-2001 $3.023m
2001-2002 $3.320m
2002-2003 $3.586m
Schedule
1 also amends the Act in order to remove the complex formula that must
currently be applied in calculating the concession available for families where
a sibling is an isolated boarder or a secondary student boarder. Where a person
is such a boarder, the concession allows for an amount to be not included in the
operation of the FAMT. This measure replaces the existing complex formula with
a fixed amount of allowable spending. There are no financial implications for
these amendments.
Schedule 2—A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 2) 1999
Schedule 2 amends the commencement dates for various items
contained in the A New Tax System (Family Assistance) (Consequential and
Related Measures) Act (No. 2) 1999. The amendments deal with the
sharing of information between the joint venture agencies comprising the Family
Assistance Office for the purposes of the transition to, and operation of, the
new Family Assistance arrangements as well as for the purposes of the
administration of the Bonuses for Older Australians measure.
There are no
financial implications from these amendments.
Schedule 3—A New Tax System (Bonuses for Older Australians) Act 1999
These amendments deal with information sharing by the joint venture
agencies which comprise the Family Assistance Office for the purposes of
establishing the bonus payment scheme in the A New Tax System (Bonuses for
Older Australians) Act 1999. These amendments prevent breaches of the
Information Privacy Principles set out in the Privacy Act 1988
when information is shared between the agencies.
There are no financial
implications from these amendments.
FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (1999 BUDGET AND OTHER MEASURES) BILL 1999
NOTES ON CLAUSES
Clause 1—Short title
Clause 1 of the
Family and Community Services Legislation Amendment (1999 Budget and Other
Measures) Act 1999 (the amending Act) sets out how the amending Act is
to be cited.
Clause 2—Commencement
Clause
2 specifies when the various clauses and Schedules of the amending Act are
to commence.
Clause 3—Schedule(s)
Clause
3 provides that, subject to section 2, each Act that is specified in a
Schedule to the amending Act is amended or repealed as set out in the
Schedule.
• Acts amended by this Bill are:
A New Tax System (Family Assistance) (Consequential and Related
Measures) Act (No. 2) 1999
A New Tax System (Bonuses for Older
Australians) Act 1999
SCHEDULE 1—SOCIAL SECURITY ACT 1991
1. Summary of proposed changes
This Schedule amends certain provisions of the Social Security Act
1991 (the Act) to introduce measures announced in the 1999
Budget.
Items 1 and 9 extend the circumstances in which certain
income earned through employment can be excluded for the purposes of the youth
allowance Family Actual Means Test (FAMT). In effect, along with income from
currently allowable types of employment, these amendments provide for income
earned from employment in a family business or farm to be excluded, up to the
existing level.
Items 2, 3, 5 and 11 are concerned with new income
support arrangements for people sharing the care of children. Part of the
amendments deal with the situation where a child is the dependent child of more
than one person and the adults are not members of the same couple and are
sharing the care of the child. In these circumstances, a person who has caring
responsibilities of more than 60% will qualify for parenting payment. For an
adult with between 40% and 60% care of a child, qualification for youth
allowance (YA) or newstart allowance (NSA) will be subject to a modified
activity test, that is, the person’s obligations in relation to the
activity test will be modified in recognition of the person’s care
responsibilities.
Item 4 is concerned with the question of what
period of time a child can be absent from an adult and still be regarded as
being in that adult’s care. The amendments will provide that, in certain
circumstances, a child can be absent from an adult for an 8 week period and
still be considered to be in the person’s care. This approach is intended
to remove the potential for customers to lose entitlement to parenting payment
solely on the grounds of a short absence of the child.
Item 6
provides for the extension of the category of people who can eligible for a
Student Financial Supplement Scheme (SFSS) loan. This amendment provides that
dependent tertiary students will be able to access a SFSS loan in certain
circumstances even though YA is not payable due to the operation of the assets
test. This will be achieved by allowing a 75% discount in relation to certain
assets.
Items 7, 8 and 10 amend the Act in order to remove the
complex formula that must currently be applied in calculating the concession
available for families where a sibling is an isolated boarder or a secondary
student boarder. Where a person is such a boarder, the concession allows for an
amount to be not included in the operation of the FAMT. This measure replaces
the existing complex formula with a fixed amount of allowable spending.
2. Background
Items 1 and 9 remove the requirement for a sibling to be in
“independent employment” in order for the sibling’s earnings
to be excluded from the FAMT (ie in relation to earnings up to
$6000).
The FAMT works out the effect (if any) of the actual means of a
person’s family on the person’s rate of YA payment. The FAMT
currently provides that up to $6000 a year of spending and savings derived from
a sibling’s ‘independent employment’ can be excluded from the
actual means test. The definition of ‘independent employment’
effectively means that earnings from employment in the family business or farm
are not included in this concession. This measure proposes to remove the
requirement that the sibling be in ‘independent employment’,
thus extending the allowable types of employment to include employment in a
family business or farm.
Item 4 is concerned with the question of
what period of time a child can be absent from an adult and still be regarded as
being in that adult’s care. Current administrative practice is that,
where a person is receiving parenting payment (PP) in respect of a child and
that child is absent from the person for periods of up to 8 weeks with the
intention of returning to the person, the person is still regarded as having
care of the child for the purposes of the dependent child definition. An
example would be where the parents of a child are separated and, although the
child normally is cared for by parent A, the child is staying with parent B for
the Christmas school holidays and will be returning to A at the end of that
period. In these circumstances, the child is still considered to be a dependent
child of both adults and PP remains payable to A throughout the
period.
This approach is only relevant for PP qualification purposes and
is not intended to apply in relation to other payment types. It is intended to
apply only in circumstances where the child could be regarded as a dependent
child of more than one person. However, it is not intended to apply in cases
where the persons in question are the parents of the child and remain members of
the same couple. It is anticipated that the most common case will be where the
parents of a child (or children) have separated and both parents continue to
have care responsibilities for the child (or children).
Items 2, 3, 5
and 11 are concerned with new income support arrangements for people sharing
the care of children. Under current rules, only one person can qualify for PP
in respect of a child. When adults share care of a child equally, a decision
must be made as to which person will receive PP. On some occasions, it is
arguable that this decision is made on purely arbitrary grounds as both adults
may have similar claims to the payment. Further, if the other adult is
unemployed, they may have to claim NSA or YA and be required to satisfy the
activity test (ie they must be actively seeking work and be willing to undertake
suitable paid work). This means they may have to take up employment that
conflicts with their child care responsibilities. On the other hand, despite
the fact that they do not have full time caring responsibilities, the parent who
receives PP is not obliged to look for work. This current policy approach fails
to recognise that each parent has both caring responsibilities and a workforce
capacity.
Under this initiative, PP will only be payable to a person
sharing the care of a child if, amongst other things, they have more than 60%
care of at least one PP child or have the care of more than one PP child and the
percentage of overall care required exceeds 60% (eg 35% care of two children at
separate times). Adults sharing care of children within a 40% to 60% range will
each be eligible for NSA or YA with a modified activity test and will also have
access to the JET program.
Existing PP recipients sharing care will have
their entitlements protected (this is achieved by item
11).
Item 6 provides for the extension of the category of
people who can eligible for a SFSS loan. The SFSS is essentially a loan scheme
that gives dependent tertiary students the option of borrowing money to help
cover expenses while studying. At present, in order to be eligible for a SFSS
loan, the student must be a person to whom YA, austudy payment or pensioner
education supplement is payable (referred to as a ‘category 1
student’), or to whom YA is not payable only because of the operation of
the parental income test or the FAMT (referred to as a ‘category 2
student’).
Payment of YA is also subject to an assets test. Where
the value of the person’s assets exceed the predetermined limit, YA is not
payable and no SFSS loan would be available. For a dependent person, the value
of the assets of each person who is a family member of the person are taken into
account in working out the value of the assets of the person. A concession
currently exists by which, with certain exceptions, 50% of the value of business
assets is to be disregarded if the person (or his or her partner) is wholly or
mainly engaged in the business and the business is:
(i) owned by the
person; or
(ii) carried on by a partnership of which the person is a member;
or
(iii) carried on by a company of which the person is a member;
or
(iv) carried on by the trustee of a trust in which the person is a
beneficiary.
This measure extends the operation of the SFSS by allowing
dependent tertiary students, whose family assets are over the asset limit,
access to a SFSS loan by:
(i) including in the definition of
“category 2 student”, persons to whom YA is not payable only because
of the operation of the assets test; and
(ii) allowing persons who satisfy
(i) above to receive an SFSS loan where their assets would not preclude payment
of YA if a 75% concession applied instead of the usual 50%.
Items 7, 8
and 10 amend the Act in order to remove the complex formula that must
currently be applied in calculating the concession available for families where
a sibling is an isolated boarder or a secondary student boarder. The FAMT works
out the effect (if any) of the actual means of a person’s family on the
person’s rate of YA payment. Currently under the FAMT, a concession is
available for families where a sibling is an isolated boarder or a secondary
student boarder. In essence, the concession relates to calculating an amount
that, for the purposes of the FAMT, is not included in the actual means of the
person. The assessment process required to apply this concession is complex and
lengthy.
This measure replaces the complex formula with a fixed amount of
allowable spending. If a customer’s sibling is an isolated or secondary
student boarder, he or she will automatically attract the maximum concession
under the FAMT.
3. Explanation of the changes
Item 1 repeals the definition of ‘independent
employment’ as that term will no longer have any
significance.
Items 2 and 3 amend section 500 which deals with
qualification for parenting payment. In effect, item 2 provides that,
where a person shares the care of a child (or children) with another person who
is not the person’s current partner, the person is required to satisfy the
‘immediate responsibility’ test in order to qualify for parenting
payment. Item 3 adds a Note at the end of section 500 which alerts the
reader that, while both members of a couple may be qualified for parenting
payment, it is only possible for one member of the couple to be paid that
payment.
Item 4 substitutes section 500D which deals with the
concept of who is a ‘parenting payment child’ (PP child). In
effect, a child is a PP child of a person if the child has not turned 16 and is
the dependent child of the person. One of the elements relevant to being a
‘dependent child’ of a person is that the child is in the
person’s care. New subsection 500D(2) provides that a child
may still be regarded as being in the care of a person despite an absence of up
to 8 weeks if:
• prior to the start of the period of absence, the
child was in the person’s care; and
• at the end of the period,
it is intended that the child will return to the person’s care.
The
effect of this amendment is to provide a minimum period during which a
temporarily absent child can be regarded as still in a person’s care.
However, it is not intended that the provision would preclude a finding that a
child is still to be regarded as in a person’s care outside of this period
under the operation of the ‘dependent child’ definition. Whether
such a finding is available would depend on the circumstances of the particular
case. This is the purpose of new subsection 500D(3).
Item
5 substitutes section 500E which introduces the immediate responsibility
test. Generally, ‘immediate responsibility’ is intended to refer to
the responsibilities of the adult with whom the child is ‘staying’,
and reflects the fact that it is this adult who will be responsible for dealing
with the immediate requirements of the child. Significantly, the concept
extends to the responsibility for children at times when they are not physically
present with the adult (for example, during school hours or when the children
are visiting relatives or friends). In such cases, the adult still has
immediate responsibility for the children as it is that adult who provides for
the children when they return from school or from visiting relatives or
friends.
New subsection 500E(1) provides that section 500E applies
in relation to a person if the person is sharing the care of a child (or
children) with another person and that other person is not the person’s
current partner.
New subsection 500E(2) sets out how the immediate
responsibility test operates. Where a person satisfies the immediate
responsibility test, that person may be qualified for parenting payment,
provided all other qualification criteria are satisfied. In essence, to satisfy
the test, a person must have caring responsibilities of more than 60% care in
relation to the children referred to in subsection 500E(1).
The first
step is to establish what is referred to as the ‘test period’. This
period cannot exceed 26 weeks. Where the adults who are sharing the care of the
child have a predictable pattern to the care arrangements, then the test period
is the period in which that pattern repeats itself. For example, where, on an
ongoing basis, the child is with one adult for 1 week and is then with the other
adult for 3 weeks, the test period would be 4 weeks because that is the time in
which the pattern repeats itself.
Where there is no predictable pattern,
the period is set at 26 weeks. The commencement date of that 26 week period
will normally the most recent day when the person began, or ceased, to have
immediate responsibility for a child. Paragraph 500E(2)(d) allows the
Secretary to determine another commencement date if the Secretary considers it
appropriate to do so.
The second step is to calculate the amount of time
during the test period that the person has immediate responsibility for at least
one of the children. That time is then divided by the test period and the
outcome is expressed as a percentage. Where that percentage exceeds 60%, the
person satisfies the immediate responsibility test.
Item 6 amends
section 1061ZZA which deals with who may be eligible for a SFSS loan. The
amendments provide for the extension of the category of people who can eligible
for a SFSS loan.
Item 7 repeals the provisions that currently
require the application of a complex formula in calculating the amount (if any)
that may be excluded from the FAMT where money has been spent in boarding a
family member away from home.
Item 8 provides that where money has
been spent in boarding away from home a family member who satisfies one or both
of the following conditions:
(a) the family member qualified for boarding
allowance under the AIC scheme; or
(b) the family member was a secondary
student who was not independent and was required to live away from
home
then an amount of $5274 can be excluded from the operation of the
FAMT for each such family member.
Item 9 omits the reference to
‘independent employment’ in point 1067G-G10 with the effect that
earnings from employment of any nature will be able to be disregarded up to the
existing allowable level.
Item 10 repeals point 1067G-G11 which is
no longer relevant.
Item 11 ensures that existing parenting
payment recipients are not disadvantaged by the introduction of the new
arrangements for people sharing care of children. Those recipients who would be
ineligible under the new provisions will continue to be assessed by having a
provision of similar effect as former section 500E applied to their
circumstances.
SCHEDULE 2—A NEW TAX SYSTEM (FAMILY ASSISTANCE) (CONSEQUENTIAL AND RELATED MATTERS) ACT (No. 2) 1999
1. Summary of proposed changes
These amendments provide for the commencement of information sharing by
the joint venture agencies which comprise the Family Assistance Office (FAO).
Those agencies are the Australian Taxation Office, Centrelink and the Health
Insurance Commission.
2. Background
To ensure a successful and smooth transfer to the new family assistance
arrangements, the joint venture agencies will begin to inform their current
customers of the changes to the family assistance scheme early next year. As
there is the potential for current customers to be in receipt of benefits from
all 3 joint venture agencies, it is proposed to share tax file number (TFN)
information across the agencies to identify shared customers. This will ensure
that only one letter about the new family assistance arrangements is sent to
each customer. This removes the potential for customers to receive 3 letters
from the 3 different agencies which could increase confusion about the new
arrangements.
As the A New Tax System (Family Assistance)
(Consequential and Related Measures) Act (No. 2) 1999 (the C&RM 2
Act) is not due to commence until 1 July 2000, TFN information cannot
be shared between the agencies prior to that date. These amendments amend the
commencement provision in the C&RM 2 Act to allow the agencies to share TFN
information before 1 July 2000.
3. Explanation of the changes
Items 1, 2 and 3 provide for the commencement dates of items 22,
66, 67 and 67A of Schedule 10. These amendments will allow TFN information to
be used by the FAO from the earlier of 1 January 2000 or the day on
which the Family and Community Services Legislation Amendment (1999 Budget
and Other Measures) Act 1999 receives Royal Assent.
New
subsections 2(6B) and (6C) are contingent commencement provisions for
item 67 and new item 67A of Schedule 10 of the C&RM 2 Act. The
Superannuation (Unclaimed Money and Lost Members) Consequential and
Transitional Bill 1999 (the Super Bill) makes amendments to TFN
provisions which make the amendment at item 67 inoperative if the Super
Bill receives Royal Assent before the commencement of item 67. Item 2,
in combination with item 5, ensures that the amendment will remain
operative even if the Super Bill, which is currently before Parliament, receives
Royal Assent before item 67 commences.
Item 4 amends item 22
of Schedule 10 of the C&RM 2 Act. It extends the application of the
amendments made to section 202 of the Income Tax Assessment Act
1936 to include section 5 of the A New Tax System (Family
Assistance) (Consequential and Related Measures) Act (No. 1) 1999 (the
C&RM 1 Act). That latter section deals with the disclosure of information
for the transitional purposes in respect of the C&RM 1 Act, the C&RM 2
Act, the A New Tax System (Family Assistance) Act 1999 and the
A New Tax System (Family Assistance) (Administration) Act 1999.
Section 5 operates to ensure that the Information Privacy Principles in the
Privacy Act 1988 are not breached when information is shared
between agencies during the transition to the new Family Assistance
arrangements. The amendments to item 22 will ensure that TFNs are able to be
used for the purposes of administering the new family assistance arrangements as
well as the transition to those arrangements.
Item 5 inserts new
item 67A into Schedule 10 of the C&RM 2 Act. Current item 67, which amends
the Taxation Administration Act 1953, allows officers of the joint
venture agencies, family assistance claimants and recognised tax advisers to
record, use or disclose TFNs for the purposes of administering or complying with
obligations under the new family assistance scheme. It is intended to commence
on the earlier of 1 January 2000 or the day on which the Family
and Community Services Legislation Amendment (1999 Budget and Other Measures)
Act 1999 receives Royal Assent. However, as stated above, amendments
contained in the Super Bill could mean that item 67 would become inoperative.
Accordingly, this item provides a contingent provision (ie item 67A) which
ensures the intended effect of item 67 is achieved irrespective of the passage
of the Super Bill.
SCHEDULE 3—A NEW TAX SYSTEM (BONUSES FOR OLDER AUSTRALIANS) ACT 1999
1. Summary of proposed changes
These amendments provide for the commencement of information sharing by
the joint venture agencies which comprise the Family Assistance Office (FAO) for
the purposes of establishing the bonus payment scheme in the A New Tax
System (Bonuses for Older Australians) Act 1999 (the Bonuses
Act).
2. Background
To ensure a successful and smooth transfer to the new family assistance
arrangements, the joint venture agencies will begin to inform their current
customers of the changes to the family assistance scheme early next year. As
there is the potential for current customers to be in receipt of benefits from
all 3 joint venture agencies, it is proposed to share tax file number (TFN)
information across the agencies to identify shared customers. This will ensure
that only one letter about the new family assistance arrangements is sent to
each customer. This removes the potential for customers to receive 3 letters
from the 3 different agencies which could increase confusion about the new
arrangements.
3. Explanation of the changes
Item 1 gives legal authority to the use or disclosure of
information about a person where that occurs for the purposes of the
establishment of the bonus payment system in the Bonuses Act. This is intended
to prevent breaches of the Information Privacy Principles set out in the
Privacy Act 1988.