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2002-2003-2004
THE
PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
FAMILY
ASSISTANCE LEGISLATION AMENDMENT (MORE HELP FOR FAMILIES – ONE-OFF
PAYMENTS) BILL
2004
EXPLANATORY
MEMORANDUM
(Circulated
by the authority of the Minister for Family
and Community
Services,
Senator the Hon Kay
Patterson)
FAMILY ASSISTANCE
LEGISLATION AMENDMENT (MORE HELP FOR FAMILIES - ONE-OFF PAYMENTS) BILL
2004
This Bill is the first of two bills giving effect to
the More Help for Families package of measures announced in the 2004 Budget
to provide extra assistance to families.
The
Bill will provide three one-off payments that will generally be paid in
June 2004:
• A one-off payment to
families of $600 per child. Eligibility for the new payment will be linked
to:
- eligibility for family tax benefit Part A
on Budget night 2004 for Centrelink instalment
customers;
- a confirmed entitlement to family tax
benefit Part A on Budget night in respect of the 2002-03 income year for lump
sum claimants through the Australian Taxation Office and Centrelink;
and
- receipt by parents and nominees of dependent
youth allowance for 16-17 year old children on Budget
night.
• A one-off payment of $1000 to
recipients of carer payment on Budget night
2004.
• A one-off payment to recipients
of carer allowance on Budget night, generally payable as an amount of $600 for
each person who attracts carer allowance.
The
Bill also contains provisions to enable an administrative scheme to be
established. In broad terms, the purpose of the administrative scheme will be
to provide payments in circumstances where the statutory one-off payments regime
does not produce an appropriate result. The Minister for Family and Community
Services will determine the details of the scheme by disallowable instrument.
The financial cost of the one-off payments to families
is $2.2b for 2003-04.
The financial cost of
the one-off payments to carers is $255m for 2003-04.
FAMILY ASSISTANCE LEGISLATION AMENDMENT (MORE HELP FOR FAMILIES – ONE-OFF PAYMENTS) BILL 2004
NOTES ON
CLAUSES
Clause 1 sets out how the
Act is to be cited, that is, the Family Assistance Legislation Amendment
(More Help for Families – One-off Payments)
Act 2004.
Clause 2 provides
that the Act commences on Royal
Assent.
Clause 3 provides that each Act
that is specified in a Schedule is amended or repealed as set out in that
Schedule (see notes on following
pages).
This Explanatory Memorandum uses
the following
abbreviations:
• ‘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;
• ‘FTB’ means family
tax benefit;
• ‘YA’ means youth
allowance;
• ‘Social Security
Act’ means the Social Security Act
1991;
• ‘Social Security
Administration Act’ means the Social Security (Administration) Act
1999.
Schedule 1 – One-off payments to
families
This Schedule provides for a one-off payment to families
of $600 per FTB child. Eligibility for the new payment will be linked
to:
• eligibility for FTB Part A on
Budget night 2004 for instalment
customers;
• a confirmed entitlement to FTB
Part A in respect of the 2002-03 income year for lump sum claimants;
and
• receipt by parents and nominees of
dependent youth allowance for 16-17 year old children on Budget night
2004.
In broad terms, this Schedule introduces a new one-off
payment to families, which would be paid as a single lump sum payment, generally
before 30 June 2004. There would not be a claim process attached to
the one-off payment.
An individual who is
entitled to FTB as an instalment claimant on 11 May 2004 would be eligible for a
one-off amount of $600 for each FTB child in respect of whom the individual is
eligible for FTB Part A on Budget night, 11 May 2004. An individual who is paid
YA on behalf of a 16 to 17 year old dependent child for 11 May 2004 would be
eligible for the one-off payment of $600. Finally, an individual would be
eligible for the one-off payment if the individual were entitled to be paid FTB
Part A in respect of a child for a period or periods in the 2002-03 income year
on a past period claim for that income year, but only if not entitled for the
one-off payment as an FTB instalment claimant or an individual paid YA on behalf
of a child.
The new one-off payment to families
would be exempt from tax and would not be taken as income for the purposes of
the social security law.
The new one-off
payment to families would be provided for in the family assistance
law.
Explanation of
changes
Amendments to the A New Tax System (Family
Assistance) Act 1999
Item 1
inserts a definition of ‘one-off payment to families’ into
subsection 3(1) of the Family Assistance Act. The one-off payment to families
means a payment to which an individual is entitled under new section
86.
Item 2 inserts a new Part 5 into the
Family Assistance Act. This new Part deals with entitlement to the one-off
payment to families and sets out some rules about how the amount of the one-off
payment to families is to be worked out.
New
section 86 sets out the three circumstances in which an individual is entitled
to the one-off payment to families. New section 87 defines an
‘eligible child’ in relation to each of these
circumstances.
The first circumstance in new
section 86 is where an instalment determination is in force in relation to the
individual under which the individual was entitled to be paid a daily rate of
FTB in respect of 11 May 2004 that included a Part A rate. Each FTB child of
the individual taken into account in determining the individual’s daily
rate in respect of 11 May 2004 is an eligible child.
This rule would also cover individuals who are entitled to
FTB as described above but who have chosen to defer receiving any of their
entitlement under the More Choice for Families (MCFF) initiative until after the
end of the 2003-2004 income year. The MCFF initiative is based on the
underlying legal principle that a person can waive (or defer) their statutory
entitlement to a payment. There are individuals who choose to defer their
entitlement to FTB in order to minimise the risk of overpayment – these
individuals are not actually paid anything in the short term but retain their
statutory entitlement and therefore fall within the first circumstance.
The second circumstance is where the individual is paid
one or more instalments of YA, including an amount in respect of 11 May 2004, on
behalf of a young person (or persons) aged 16 or 17 who is not independent
(within the meaning of Part 3.5 of the Social Security Act). In this situation,
each young person is an eligible child.
The
third circumstance is where a past period determination is in force for the
2002-2003 income year in relation to the individual under which the individual
was entitled to be paid a daily rate of FTB that included a Part A rate at some
point in the 2002-2003 income year. The third circumstance cannot apply if the
first or second applies. Each FTB child of the individual taken into account in
determining the individual’s daily rate on the last day in the 2002-2003
income year that included FTB Part A is an eligible
child.
The amount of the one-off payment for
which an individual is entitled is worked out under new section 88. The amount
is worked out by adding together the amounts applicable under new section 88 for
each eligible child of the individual.
In
general terms, the amount for an eligible child is $600. An individual should
not get more than one amount of $600 for the one child.
Where the individual is entitled to a
percentage of the standard rate of FTB Part A for an eligible child because
there is a percentage determination under subsection 59(1) of the Family
Assistance Act in force, then the amount for the eligible child is that
specified percentage. For example, if an individual is entitled to 100% FTB
Part A on 11 May 2004 for 2 children and 30% of FTB Part A for one child,
the amount of the one-off payment to families for which the individual is
eligible is $600 for each 100% child and $180 for the 30% child.
The amount of the one-off payment to families
can also be affected by a specified percentage due to a blended family
determination under section 28 of the Family Assistance Act (where there is an
instalment or past period determination) or section 29 of the Family Assistance
Act (where there is a past period determination). The amount of the one-off
payment would be reduced to reflect the percentage. For example, if the
individual is eligible for three FTB children on 11 May 2004 and the specified
percentage for each child under section 28 of the Family Assistance Act is 50%,
the individual is eligible for $900 (that is $600 x 50% x
3).
Where there is a percentage determination
under subsection 59(1) of the Family Assistance Act in relation to a particular
child and a section 28 or 29 specified percentage, both percentages are taken
into account in determining the amount of an individual’s one-off payment
to families. The relevant rules are in new subsection 88(4) and (5). The
effect of these rules is best described in an example. If an individual has
100% care of two FTB children, 30% care of one FTB child (due to section 59 of
the Family Assistance Act), plus a specified percentage under section 28 of
50%, the individual is eligible for $690 (that is, 2 x $600 x 50% plus 0.3 x
$600 x 50%).
Amendments to the A New Tax
System (Family Assistance) (Administration) Act
1999
Item 3 inserts a new
Division 4A into Part 3 of the Family Assistance Administration Act.
In accordance with new section 65F, the new
one-off payment to families is to be paid as a single lump sum in an appropriate
manner and on the date that is determined by the Secretary to be the earliest
date on which it is reasonably practicable for the payment to be made to the
individual.
A claim would not be required for
the new one-off payment to families. The entitlement rules for the payment are
such that relevant individuals can be identified by information held in
Centrelink computer systems and without any further reference to the individual
concerned.
Item 4 inserts a reference
to the new one-off payment to families into subsection 66(1) of the Family
Assistance Administration Act, thereby making the new payment inalienable within
the terms of that provision.
Item 5
inserts a reference to the new one-off payment to families into section 70
of the Family Assistance Administration Act. The effect is that an amount paid
by way of one-off payment to families can only be a debt to the extent that a
provision in the Family Assistance Administration Act expressly provides for
it.
Such a provision is new section 71I that is
inserted by item 6. This provision sets out when a one-off payment to
families is a debt.
As a broad principle, a
debt would only arise in relation to the payment of a one-off payment to
families where some or all of the payment was incorrectly paid because a
relevant individual knowingly made a false or misleading statement or knowingly
provided false or misleading information.
Where
an individual is paid a one-off payment because of entitlement to FTB Part A on
Budget night under an instalment determination, the determination is later
changed with the effect that the individual was not so entitled, and a reason
for the determination needing to be changed was that the individual knowingly
made a false or misleading statement or knowingly provided false or misleading
information, then the one-off payment paid is a debt. Similar rules apply where
an individual is paid in excess of the amount of their entitlement to the
one-off payment to families, except that the amount of the debt is the
difference between the amount of one-off payment paid and the amount that should
have been paid.
Where an individual is
paid a one-off payment because of being paid (in accordance with a
determination) one or more instalments of YA that include an amount in respect
of 11 May 2004 on behalf of a 16 to 17 year old who is not independent, the
determination is later changed with the effect that the individual should not
have been paid YA for 11 May 2004, and a reason for the determination needing to
be changed was that the YA customer knowingly made a false or misleading
statement or knowingly provided false or misleading information, then the
one-off payment paid is a debt. Similar rules apply where an individual is paid
in excess of the amount of their entitlement to the one-off payment to families,
except that the amount of the debt is the difference between the amount of
one-off payment paid and the amount that should have been
paid.
Where an individual is paid a one-off
payment because there is a past period determination in force on Budget night
under which the individual is entitled to FTB Part A at some point in the
2002-03 income year, the determination is later changed with the effect that the
individual was not so entitled, and a reason for the determination needing to be
changed was that the individual knowingly made a false or misleading statement
or knowingly provided false or misleading information, then the one-off payment
paid is a debt. Similar rules apply where an individual is paid in excess of
the amount of their entitlement to the one-off payment to families, except that
the amount of the debt is the difference between the amount of one-off payment
paid and the amount that should have been
paid.
Item 7 inserts a reference to the
new one-off payment to families in paragraph 74(a) to cover the situation
where the new one-off payment to families is made by cheque and someone other
than the recipient obtains the value of the cheque without proper
endorsement.
Item 8 inserts a reference
to the new one-off payment to families in paragraph (a) of the definition
of ‘debt’ in subsection 82(3). This ensures that the provisions
relating to debt recovery and non-recovery of debts can apply to debts under new
section 71I as appropriate.
Item 9
inserts a reference to the new one-off payment to families at the end of the
definition of ‘family assistance payment’ in subsection 93A(6).
This would enable a one-off payment to families paid to a financial institution,
to the credit of an account with that institution, to be recovered from the
institution in certain circumstances (eg, where the one-off payment is paid into
an incorrect account).
Item 10 inserts a
reference to the new one-off payment to families in paragraph 106(3)(c). This
amendment ensures that, if the Secretary reviews a decision relating to payment
of the one-off payment to families, the individual affected by the decision is
notified of the outcome of the review.
As a
general rule, an application for review of a decision must be made no later than
52 weeks after the applicant has been notified of the decision. There are
exceptions to this general rule. Items 11 and 12 insert a reference to
the new one-off payment to families into subsection 109D(4) and
paragraph 109D(5)(a) to enable the existing exceptions to apply also to a
decision relating to the payment to a person of a one-off payment to families.
Item 13 inserts a reference to the new
one-off payment to families at the end of the definition of ‘relevant
benefit’ in section 219TA. This would enable the Secretary to appoint a
payment nominee who would be paid the one-off payment to families on behalf of
the entitled individual.
Amendments to the Income Tax Assessment Act
1936
A taxpayer’s
dependants’ Separate Net Income (SNI) is used to determine the
taxpayer’s eligibility to certain dependant offsets. SNI is income and
other specified amounts earned, derived or received, less certain expenses
incurred in earning that income. Payments such as carer allowance, child care
benefit and FTB are not included as part of SNI. As it is not intended that the
one-off payment to families, nor a payment to families under the scheme
determined under Schedule 3 to this Bill, form part of SNI, items 14 and
15 make necessary amendments to the Income Tax Assessment Act
1936.
Amendments to the Income Tax
Assessment Act 1997
The new one-off
payment to families, and a payment made under the scheme determined under
Schedule 3 to this Bill, will be exempt from tax. Amendments are made to
section 52-150 to achieve this effect (items 17
and 18).
A consequential amendment is
also made to the table in section 11-15 to add in references to the new one-off
payment to families and a payment made under the scheme determined under
Schedule 3 to this Bill (item
16).
Social Security Act
1991
Item 19 inserts new
paragraphs 8(8)(jaa) and (jab) into the Social Security Act. These new
paragraphs ensure that the new one-off payment to families, and a payment made
under the arrangements determined under Schedule 3 to this Bill, do not count as
income for the purposes of the social security law. The opportunity is also
taken to clarify that family assistance payments more generally are not income
for the purposes of the social security law.
Schedule 2 – One-off payments to
carers
This Schedule provides for a one-off payment of $1000 to
recipients of carer payment on Budget night 2004. It also provides for a
one-off payment to recipients of carer allowance on Budget night 2004. Where
the carer is the only person who is being paid carer allowance in respect of the
care receiver (or care receivers), the one-off payment will be $600 in respect
of each care receiver (or in respect of the care receivers in relevant cases).
Where carer allowance is shared in relation to a care receiver (or care
receivers), the $600 will be shared on the same basis as the payment(s) of carer
allowance is shared.
In broad terms, this Schedule introduces a new one-off
payment to carers, which would be paid as a lump sum payment, generally before
30 June 2004. There would not be a claim process attached to the
one-off payment.
A person who receives an
instalment of carer payment for a period that includes 11 May 2004
will be entitled to a one-off payment of $1000. Subject to certain
qualifications, a person will be entitled to $600 in respect of each care
receiver in relation to whom the person receives an instalment of carer
allowance for a period that includes 11 May 2004. Where the care of
the care receiver is shared, the $600 will also be shared. Where qualification
for carer allowance depends on the person providing care for two disabled
children, the payment will also be $600. The one-off payment to carers will be
exempt from tax.
Explanation of
changes
Item 1 inserts new Part 2.5A into the Social
Security Act.
New section 247 provides that a
person is qualified for a one-off payment if the person has been paid an
instalment of carer payment and the instalment period includes
11 May 2004. The Note to this provision makes it clear that a person
can qualify for this one-off payment as well as the one-off payment that is
available in respect of carer allowance.
New
section 248 provides that the amount of the one-off payment is $1000. The Note
to the provision makes it clear that the maximum available to a person is $1000
regardless of the number of people in relation to whom the qualified person
provides care.
Item 2 inserts new Part
2.19A into the Social Security Act.
New section
992N sets out the criteria to be satisfied in order for a person to qualified
for a one-off payment to carers (carer allowance related). In effect,
there are two requirements that need to be met in respect of one or more
instalments of carer allowance that have been paid to the person. The first
requirement is that the instalment of carer allowance was in respect of a period
that includes 11 May 2004. The second requirement is that the
operation of clause 16 or 17 of Schedule 2 to the Social Security Administration
Act (which deal with ‘backdating’) must not be the reason that the
instalment covered 11 May 2004.
The
effect of subsection 992N(2) is that each instalment which meets both the
requirements of subsection (1) is a ‘qualifying
instalment’.
The Note to the provision
makes it clear that a person can qualify for this one-off payment as well as the
one-off payment that is available in respect of carer
payment.
The broad operation of the scheme is
that a qualified person will receive payment in respect of each ‘eligible
care receiver’ in relation to the person. The concept of who is an
‘eligible care receiver’ is dealt with in new section 992O.
Subsection (1) essentially provides for the general rule that, where providing
care to a person gives rise to a qualifying instalment of carer allowance, that
person is an ‘eligible care receiver’ in relation to the qualified
person. However, there are situations where a person’s qualification for
an instalment of carer allowance arises on account of the care the person
provides for two disabled children (subsection 953(2) of the Social Security
Act). Accordingly, subsection (2) qualifies the general rule by providing
that, where subsection 953(2) applies in relation to the qualifying instalment,
the two disabled children are treated as a single ‘eligible care
receiver’.
New section 992P is concerned
with working out the amount of the one-off payment. Subsection (1) provides
that the amount is worked out by adding together the amounts applicable for each
eligible care receiver. Subsection (2) provides that the applicable amount
for an eligible receiver is $600 unless subsection (3) applies. Subsection (3)
is concerned with situations where 2 people are qualified for carer allowance
because they share the care of a care receiver (or care receivers). In those
circumstances, the social security law provides for the Secretary to make a
written determination specifying the share of carer allowance that each of the
two people is to receive. The effect of subsection (3) is that, where the
qualifying instalment was paid on the basis of a determination as to a
particular share of carer allowance, the amount applicable for an eligible care
receiver in relation to a qualified person is that same share of
$600.
Item 3 inserts new section
1223ABA, which deals with debts arising in respect of one-off payments to
carers. In very broad terms, a one-off payment (or part of a one-off payment)
will be a debt where it is established that the recipient knowingly made a false
or misleading statement (or provided false information) and, if the true
circumstances had been known, the determination in relation to the relevant
instalment (which gave rise to the qualification for the one-off payment) would
not have been made.
As a person can qualify for
more than one amount of $600 (or part of $600) under the proposal relating to
carer allowance, subsection (5) provides for debts to arise in circumstances
similar to those contemplated in subsection (4) but which are in respect of
amounts less than the full amount of the one-off payment (carer allowance
related).
Item 4 inserts new section
12AA into the Social Security Administration Act. It provides that a claim is
not required in order to be paid either of the payments provided for by this
Schedule.
Item 5 inserts reference to
the two new one-off payments into the existing definition of ‘lump sum
benefit’ contained in the Social Security Administration
Act.
Item 6 inserts new section 47B. In
broad terms, it provides that the Secretary must pay the payments provided for
by this Schedule on the date that the Secretary determines is the earliest
reasonably practicable date on which to do so. The manner of payment is that
manner which the Secretary considers is appropriate.
A taxpayer’s dependants’ Separate Net
Income (SNI) is used to determine the taxpayer’s eligibility to certain
dependant offsets. SNI is income and other specified amounts earned, derived or
received, less certain expenses incurred in earning that income. Payments such
as carer allowance, child care benefit and FTB are not included as part of SNI.
As it is not intended that the one-off payments to carers form part of SNI,
items 7 and 8 make necessary amendments to the Income Tax Assessment
Act 1936.
Schedule 3 – Administrative scheme
for one-off payments to families and carers
This Schedule contains provisions to enable an
administrative scheme to be established. In broad terms, the purpose of the
administrative scheme will be to provide payments in circumstances where the
statutory one-off payments regime provided for in Schedules 1 and 2 does not
produce an appropriate result in relation to circumstances that occur in the
2003-04 income year. The Minister for Family and Community Services will
determine the details of the scheme by disallowable instrument.
This Schedule enables an administrative scheme to be
established alongside the statutory one-off payment scheme.
Explanation of
changes
Item 1 provides for the establishment of an
administrative scheme by the Minister for Family and Community Services, under
which one-off lump sum payments can be made to families and carers in specified
circumstances. The purpose of the scheme is to provide payments in
circumstances where the statutory one-off payments regime does not produce an
appropriate result in relation to circumstances that occur in the 2003-4 income
year.
The details of the administrative scheme
(including such matters as eligibility, amount of the payment and administrative
matters) would be set out in a disallowable
instrument.
Payments under the administrative
scheme would not be made after
30 June 2007.
Payments under the
administrative scheme would be made out of the Consolidated Revenue Fund (in
accordance with subitem 1(6)).