Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS
AFFAIRS AND OTHER LEGISLATION AMENDMENT (2008 BUDGET AND
OTHER MEASURES) BILL 2008
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Families, Housing, Community Services and Indigenous
Affairs, the Hon Jenny Macklin MP)
FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS
AFFAIRS AND OTHER LEGISLATION AMENDMENT (2008 BUDGET AND
OTHER MEASURES) BILL 2008
OUTLINE
This bill will amend the social security law, the family assistance law and
related Acts to implement certain 2008 Budget measures. It will also make
some minor policy and technical amendments to portfolio legislation.
Income limit on family tax benefit Part B
The bill will establish a $150,000 limit on primary earner income for family tax
benefit Part B and related tax offsets.
Baby bonus
The bill contains four measures relating to baby bonus. An income test for
baby bonus will be introduced from 1 January 2009. There will be provision
for baby bonus to be paid by instalment, rather than by lump sum. The
indexation date for baby bonus will be changed to 1 July each year after the
legislated increase to $5,000 on 1 July 2008. Lastly, eligibility for baby bonus
will be extended to parents who adopt children under the age of 16 and an
adoptive parent will be able to access the full amount of baby bonus, even if it
has been previously paid for the child.
Seniors health card
The bill provides for the collection of tax file numbers as part of a new
compliance regime for the Commonwealth seniors health card (CSHC).
Amendments will allow the Secretary to collect tax file numbers both from
current holders of, and claimants for, CSHCs to ensure eligibility under the
CSHC income test. The Secretary will also be able to cancel holders' cards
or not grant cards to claimants in the event that tax file numbers are not
provided within 28 days of a request (unless certain exceptions apply).
Income management regime
The bill provides for the Secretary and a person to enter voluntarily into an
agreement under which the person agrees to be subject to the income
management regime under Part 3B of the Social Security (Administration) Act
1999 (the voluntary scheme of income management) for the duration of the
agreement. The bill also includes an amendment relating to payment of the
credit balance of a person's income management account upon the death of
the person. This is to ensure that the credit balance is paid to an appropriate
person within the 12 month period provided for under the Act.
Eligibility for partner service pension
Amendments to the Veterans' Entitlements Act 1986 will increase the eligible
age for partner service pension to qualifying age.
Other amendments
The bill will make some minor policy and technical amendments to portfolio
legislation, including to the family assistance law in relation to the 1 July 2008
child support reforms, and to provide a discretion for the Child Support
Agency to deduct child support arrears from Centrelink and Department of
Veterans' Affairs payments at less than the full prescribed amount in cases of
hardship.
Financial impact statement
Total resourcing 2007-08 2008-09 2009-10 2010-11
Income limit on FTB Part B $0.5 m - $112.8 m - $132.4 m - $141.2 m
Baby bonus nil - $52.4 m - $96.5 m - $101.0 m
Seniors health card negligible $4.45 m - $24.3 m - $28 6 m
Child protection Budget $2.0 m $15.0 m nil nil
measure (including income
management regime)
Partner service pension $0.4 m - $4.3 m - $7.7m - $10.4m
Other amendments negligible negligible negligible negligible
Fiscal impact 2007-08 2008-09 2009-10 2010-11
Income limit for tax offsets nil $4.3 m $26.9 m $45.0 m
FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS
AFFAIRS AND OTHER LEGISLATION AMENDMENT (2008 BUDGET AND
OTHER MEASURES) BILL 2008
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, as the Families, Housing,
Community Services and Indigenous Affairs and Other Legislation
Amendment (2008 Budget and Other Measures) Act 2008.
Clause 2 provides a table that sets out the commencement dates of the
various sections in, and Schedules to, the Act.
Clause 3 provides that each Act that is specified in a Schedule is amended or
repealed as set out in that Schedule.
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;
· `Social Security Act' means the Social Security Act 1991;
· `Social Security Administration Act' means the Social Security
(Administration) Act 1999; and
· `Veterans' Entitlements Act' means the Veterans' Entitlements Act
1986.
1
Schedule 1 - Income limit for family tax benefit Part B
Summary
This Schedule will establish a $150,000 limit on primary earner income for
FTB Part B.
The Schedule also applies an income threshold test for entitlement to the
Dependent Spouse Tax Offset, Housekeeper Tax Offset, Child-Housekeeper
Tax Offset, Invalid Relative Tax Offset and Parent/Parent-in-law Tax Offset.
The Schedule provides for an income threshold of $150,000 or less on the
claimant's taxable income for their entitlement to the offsets from 1 July 2008
for the 2008-09 income year and later income years.
Background
Income limit for FTB Part B
Section 58 of the Family Assistance Act provides that an individual's annual
rate of FTB is calculated in accordance with the Rate Calculator in
Schedule 1. An individual's rate of FTB may comprise Parts A and B. There
are two different rate calculation processes for FTB Part A (Methods 1 and 2),
depending on the individual's circumstances and their family income, and a
separate rate calculation process for FTB Part B.
Part 4 of Schedule 1 to the Family Assistance Act provides the rate
calculation process for FTB Part B.
The rate of FTB Part B for an individual who is not a member of couple is the
sum of the individual's standard rate plus the FTB Part B Supplement. There
is no income test for this group of customers. The relevant provision is
subclause 29(1) of Schedule 1.
If the individual is a member of a couple, then, as a general rule, their FTB
Part B rate is subject to the income test set out in clauses 32 and 33 of
Schedule 1 (subclause 29(2) of Schedule 1 refers). This income test is
applied to the secondary income earner's adjusted taxable income, as
required by subclause 3(2) of Schedule 3 to the Family Assistance Act.
However, different rules apply where a secondary income earner who is a
member of a couple commences paid work for the first time, or returns to paid
work part-way through an income year, following the birth of a child (that is,
where clause 29A of Schedule 1 to the Family Assistance Act applies to the
individual). In these circumstances, for the period of the income year before
the secondary income earner commences or returns to paid work, the
individual's Part B rate is worked out in accordance with subclause 29A(2),
without reference to the income test.
2
Schedule 1 amends the rate calculation rules for FTB Part B to preclude
payment of FTB Part B where the primary income earner in a couple, or sole
parent, earns more than $150,000 in the relevant income year. This income
limit will be indexed on 1 July 2009 and each subsequent 1 July in
accordance with movements in the Consumer Price Index.
These amendments commence on 1 July 2008.
Income limit for related tax offsets
Currently, where taxpayers are eligible for FTB Part B, they are denied
entitlement to the Dependent Spouse Tax Offset, Housekeeper Tax Offset
and Child-Housekeeper Tax Offset. Applying a $150,000 taxable income
threshold test for assessing entitlement to these offsets ensures that those
who are denied eligibility for FTB Part B due to the application of the income
test are not able to circumvent this targeting by claiming the tax offsets.
To maintain consistency in the eligibility criteria for all of the dependency tax
offsets, the $150,000 income threshold will also apply to entitlement to the
Invalid Relative Tax Offset and Parent/Parent-in-law Tax Offset.
These amendments commence on 1 July 2008.
Explanation of the changes
Part 1 - Main amendments
Amendments to the Family Assistance Act
Item 2 inserts new clause 28B into Part 4 of Schedule 1 to the Family
Assistance Act.
New subclause 28B(1) provides an upfront rule that an individual's FTB Part B
rate is nil if the individual's adjusted taxable income is more than $150,000.
This new rule applies despite the existing rules in Subdivisions A and B of
Part 4 that outline the process for calculating an individual's rate of
FTB Part B.
A note at the end of new subclause 28B(1) directs the reader to clause 3 of
Schedule 3 to the Family Assistance Act (as amended by item 3), which deals
with the treatment of adjusted taxable income for members of a couple.
3
New subclause 28B(2) ensures that subclause (1) does not apply to an
individual while the individual or their partner (if any) is receiving a social
security pension, social security benefit, a service pension or an income
support supplement. Subsection 3(1) of the Family Assistance Act provides
definitions for these categories of payment.
New clause 28B is located in new Subdivision AA in Division 1 of Part 4 of
Schedule 1 to the Family Assistance Act.
Subclause 3(2) of Schedule 3 sets out how the concept of `adjusted taxable
income' applies to members of a couple. Currently, subclause 3(2) ensures
that only the adjusted taxable income of the secondary income earner in a
couple is relevant for the purposes of working out an individual's rate of
FTB Part B.
This provision is amended by item 3 to ensure that the adjusted taxable
income of the primary income earner in a couple is taken into account for the
purposes of applying the new income limit on FTB Part B (paragraph (2)(a)
refers). The existing rule is restated in paragraph (b) to ensure that the
adjusted taxable income of the secondary income earner remains relevant for
the purposes of other provisions in Part 4 of Schedule 1 to the Family
Assistance Act.
Where an individual is not a member of a couple, it would be the individual's
adjusted taxable income that would be relevant for the purposes of the new
FTB Part B income limit.
If new clause 28B does not apply to an individual, then the existing rules in
clauses 29 and 29A (as relevant) would provide for the calculation of the
individual's rate of FTB Part B.
Item 1 makes a technical consequential change to paragraph 1(1)(b) of
Schedule 1 to reflect the insertion of new clause 28B.
Subitem 7(1) provides that these amendments apply in relation to the
2008-09 income year and later income years.
Schedule 4 to the Family Assistance Act provides for the indexation of
specified rates and amounts mentioned in the family assistance law.
On 1 July 2009 and each subsequent 1 July, the $150,000 income limit for
FTB Part B will be indexed in line with movements in the Consumer Price
Index. The relevant amendments are made by items 5 and 6 and the
application provision in subitem 7(2).
Item 4 makes a minor correction to the note after the heading to Schedule 4.
It is section 85 and not section 75 of the Family Assistance Act that should be
referred to in relation to the indexation provisions in Schedule 4.
4
Part 2 - Other amendments
Amendments to the Income Tax Assessment Act 1936 and Medicare Levy Act
1986
Section 159J of the Income Tax Assessment Act 1936 sets out the conditions
under which a taxpayer can claim the Dependent Spouse Tax Offset,
Child-Housekeeper Tax Offset, Invalid Relative Tax Offset and
Parent/Parent-in-law Tax Offset. Section 159L of the Income Tax
Assessment Act 1936 sets out the conditions relevant to the Housekeeper
Tax Offset. These sections set out that, for the Dependent Spouse Tax
Offset, Child-Housekeeper Tax Offset and Housekeeper Tax Offset,
entitlement to the offsets in part depends on the taxpayer or taxpayer's
spouse not being eligible for FTB Part B.
Section 8 of the Medicare Levy Act 1986 identifies who is classed as a
dependant for determining whether a Medicare levy is payable.
Item 8 provides that, where a claimant has an income of more than $150,000,
they will not be entitled to claim the Dependent Spouse Tax Offset,
Child-Housekeeper Tax Offset, Invalid Relative Tax Offset or
Parent/Parent-in-law Tax Offset.
Item 9 provides that, where a claimant has an income of more than $150,000,
they will not be entitled to claim the Housekeeper Tax Offset.
Items 10 and 11 ensure that, where the $150,000 income threshold acts to
deny entitlement to the dependency tax offsets, it does not deny dependant
status for the purposes of the Medical Expenses Tax Offset.
Items 12 to 15 ensure that, where the $150,000 income threshold acts to
deny entitlement to the dependency tax offsets, it does not deny dependant
status for the purposes of the Medicare levy.
Item 16 states that the amendments will take effect from 1 July 2008 for the
2008-09 income year and later income years.
5
Schedule 2 - Baby bonus
Summary
This Schedule contains four measures relating to baby bonus. An income test
for baby bonus will be introduced from 1 January 2009. There will be
provision for baby bonus to be paid by instalment, rather than by lump sum.
The indexation date for baby bonus will be changed to 1 July each year after
the legislated increase to $5,000 on 1 July 2008. Lastly, eligibility for baby
bonus will be extended to parents who adopt children under the age of 16 and
an adoptive parent will be able to access the full amount of baby bonus, even
if it has been previously paid for the child.
Background
In broad terms, baby bonus is currently a one-off payment made on the birth
of a child, or the adoption of a child under the age of two. While there are
some circumstances in which baby bonus is paid in instalments (for example,
all under-18 year olds receive their baby bonus in instalments), the current
general method of payment is as a lump sum payment. The payment is
currently indexed bi-annually (in March and September) in line with
movements in the Consumer Price Index. From the original $3,000 bonus
introduced in 2004, the baby bonus will increase to $5,000 on 1 July 2008.
There are four measures in this Schedule relating to baby bonus. These
measures aim to make baby bonus a simpler and fairer payment that is
directed to those families who need it most.
Income limit for baby bonus
Baby bonus is currently a payment available to eligible individuals without
regard to income.
The first of the baby bonus measures in this bill will introduce an income test.
Under the new income test, families with an estimated adjusted taxable
income of more than $75,000 in the period of six months after the birth of the
child or, in the case of adoption or long-term care arrangements, the period of
six months after the child is entrusted into the family's care, will not be eligible
for baby bonus in respect of the child.
As part of the claim process for baby bonus, families will be asked for an
estimate of their adjusted taxable income for the relevant six-month period.
Estimates provided by claimants will be closely scrutinised against existing
information and verification (such as payslips, previous tax returns and bank
statements) will be sought as necessary. Best efforts will be made to obtain a
reasonable estimate on which eligibility for payment of baby bonus can be
determined.
6
The $75,000 income limit for baby bonus will be indexed on 1 July of each
year in line with movements in the Consumer Price Index, with indexation first
occurring on 1 July 2009.
This limit aims to address community concern about high income families
being eligible for taxpayer-funded family assistance.
For a claimant who is not a parent of the child to be eligible for baby bonus,
the child must currently be entrusted to their care within 13 weeks of the
child's birth. This period will be extended to 26 weeks to allow greater access
to the payment by foster carers or other longer-term carers, who may take on
care of the child from the birth parent. For this group, the current requirement
that the care of the child by the claimant continues, or is likely to continue, for
at least 13 weeks will also be extended to 26 weeks.
To be eligible for baby bonus, parents and other carers must currently be
eligible for FTB (or otherwise be eligible but for their income) within 13 weeks
of the child's birth or the child being entrusted to the care of an adoptive
parent. This criterion ensures that claimants have care of a child and that the
relevant residency requirements have been met. This period will be extended
to 26 weeks to be consistent with the eligibility conditions for foster and other
long-term carers.
With the introduction of an income test requiring income to be estimated for
the period of 6 months from the child's birth (or the child being entrusted to
the care of an adoptive parent or a long-term carer), the time limit for claiming
is being extended to 52 weeks. Some new parents may initially expect an
income in excess of $75,000 for the six month period but their actual income
may be less than this amount. The extended period for claiming will ensure
that these parents have ample time to test (or re-test) their eligibility for
payment. This provision may also benefit foster carers who assume care of a
child late in the six month period and the small number of parents who
currently omit to claim within 26 weeks.
These amendments commence on 1 January 2009.
Payment of baby bonus by instalments
Under the current rules, baby bonus is generally paid as a lump sum, one-off
payment to an individual who meets the relevant eligibility requirements.
However, baby bonus is paid in 13 equal fortnightly instalments to under-18
year olds and claimants who are subject to the income management regime.
There is also some discretion in the legislation to adopt an alternative
payment arrangement for other claimants. These rules are set out in
section 47 of the Family Assistance Administration Act.
The second baby bonus measure will ensure that claimants are generally paid
their baby bonus entitlement in 13 fortnightly instalments, starting after the
determination granting the claim.
7
From 1 July 2008, the amount of baby bonus will increase to $5,000. This
equates to 13 fortnightly instalments of around $385 per fortnight. Paying
baby bonus in instalments will provide families with financial support and
certainty over an ongoing period.
These amendments commence on 1 January 2009.
Baby bonus indexation
The amount of baby bonus is set out in section 66 of the Family Assistance
Act (currently $4,258 per child). This amount will increase to $5,000 on
1 July 2008 by the operation of Part 4 of Schedule 2 to the Family Assistance
Legislation Amendment (More Help for Families - Increased Payments)
Act 2004.
Section 85 of the Family Assistance Act provides for the indexation of baby
bonus in accordance with Schedule 4 to the Family Assistance Act. Baby
bonus is currently indexed in line with movements in the Consumer Price
Index twice each year, on 20 March and 20 September. Baby bonus is
referenced in item 17A of the indexed and adjusted amounts table in clause 2
of Schedule 4 and the indexation arrangements for baby bonus are set out in
item 17A of the CPI indexation table in clause 3 of Schedule 4.
The third baby bonus measure replaces the existing indexation arrangements
for baby bonus with indexation on 1 July 2009 and on 1 July of each
subsequent year. The amount of baby bonus will be increased to $5,000 on
1 July 2008 and baby bonus will not be indexed on 20 September 2008, nor
on 20 March 2009.
These amendments commence on 1 July 2008.
Eligibility for baby bonus for adopted children
Under the current rules, an individual is eligible for baby bonus for a child if,
as part of the adoption process, the child is entrusted to the care of the
individual by the appropriate authority before the child turns two and the
individual is eligible for FTB for the child within 13 weeks of being entrusted
with care or would be so eligible if the FTB income test were disregarded. In
situations where the child arrives in Australia as part of the process of
adoption, there is the additional requirement that the child is aged under two
when arriving in Australia. The relevant eligibility rules are in subsection 36(5)
of the Family Assistance Act. The individual then has 26 weeks from the time
the child is entrusted into their care or, if the child arrives in Australia as part
of the process of adoption, 26 weeks from the time the child arrives in
Australia, in which to claim baby bonus (subsection 39(2) of the Family
Assistance Administration Act refers).
8
The fourth change will increase the age limit for baby bonus eligibility from two
to 16 years where a child is adopted. Under the new rules, an individual will
be eligible for baby bonus for a child who is aged under 16 at the time that the
child is entrusted to the care of the individual as part of the process of
adoption. The current connection with eligibility for FTB will be retained but
the current 13 week period will become 26 weeks under amendments in this
Schedule. The individual will then have 52 weeks from the time that the child
is entrusted to their care to claim baby bonus for the child under amendments
in this Schedule that extend the timeframe for claiming baby bonus from the
current 26 weeks to 52 weeks.
Further, the baby bonus will be available for an adopted child, regardless of
whether this payment was previously made to the birth parent or other primary
carer.
This extension to the eligibility rules for baby bonus recognises that, as with a
newborn, an adoptive parent incurs similar set-up costs and may need to
spend periods of time out of the workforce to welcome and settle their child.
These amendments commence on 1 January 2009.
Explanation of the changes
Part 1 - Income limit for baby bonus
Section 36 of the Family Assistance Act sets out the circumstances in which
an individual is eligible for baby bonus in respect of a child.
Subsection 36(2) sets out the eligibility rules that apply where an individual is
a parent of the child. Item 3 inserts new conditions into subsection 36(2) that
have the effect of introducing an income limit on baby bonus. Under these
new conditions, the individual's claim for baby bonus will need to contain an
estimate of the family's adjusted taxable income (individual and partner, if
any, on the day the claim is made) for the period of six months beginning on
the day of the child's birth, and the estimate would need to be $75,000 or less
and accepted as reasonable.
Item 6 includes similar new rules in subsection 36(3), which applies where an
individual who is not a parent of the child has been entrusted with the child's
care. The six month period for which an estimate of income is required
begins on the day the child is entrusted to the care of the individual or the
individual's partner.
Subsection 36(4) sets out the eligibility rules that apply in the case of a
stillborn child. The amendments made by item 8 have a similar effect to
those described above except that the six month period for which an estimate
of income is required begins on the day of the child's delivery.
9
Subsection 36(5) sets out the eligibility rules that apply in the case of
adoption. Again, the amendments made by item 10 have a similar effect to
that described above except that the six month period for which an estimate of
income is required begins on the day on which the child is entrusted to the
care of the individual.
The concept of adjusted taxable income is defined in Schedule 3 to the Family
Assistance Act. However, in Schedule 3, this concept is linked to an income
year and does not contemplate the period of six months relevant for the
purposes of the baby bonus income test. Item 11 inserts new
subsection 36(6) to address this issue. It does so by providing that references
in Schedule 3 to an income year are to be taken as references to six months
for the purposes of the new income limit on baby bonus, and ensures that
subclause 2(2) and clauses 3 and 3A of Schedule 3 are disregarded in
applying the baby bonus income limit. Subclause 2(2) and clause 3A are
applicable only where estimated and actual adjusted taxable income are
reconciled at the end of a tax year (which applies to FTB and child care
benefit). Clause 3 is not relevant as the inclusion of a partner's income will be
covered by the amendments in this Schedule to the eligibility conditions for
baby bonus.
Section 39 of the Family Assistance Act sets out the circumstances in which
an individual is eligible for maternity immunisation allowance.
Subsection 39(3) links eligibility for maternity immunisation allowance for a
stillborn child with eligibility for baby bonus. As the intention is not to income
test maternity immunisation allowance, the connection between eligibility for
these two payments needs to be severed.
Item 13 does this by importing relevant existing eligibility rules for baby bonus
in subsection 36(4) into subsection 39(3). There is no substantive change to
subsection 39(3) as a result of this amendment.
Schedule 4 to the Family Assistance Act provides for the indexation of
specified rates and amounts mentioned in the family assistance law.
On 1 July 2009 and each subsequent 1 July, the income limit for baby bonus
will be indexed in line with movements in the Consumer Price Index. The
relevant amendments are made by items 14 and 15 and the application
provision is in subitem 22(4).
Section 38 of the Family Assistance Administration Act provides the rules on
how to claim baby bonus and maternity immunisation allowance.
Subsection 38(2) sets out the circumstances in which a claim is not effective.
Item 16 inserts a new paragraph (aa) into this provision. A claim for baby
bonus will not be effective unless the claim contains an estimate of the
family's adjusted taxable income (individual and partner, if any, on the day the
claim is made) for the six month period relevant for the purposes of applying
the baby bonus income test.
10
A new provision is also added into section 38 by item 17. New
subsection 38(3) is necessary because new paragraph 38(2)(aa) refers to
adjusted taxable income for a period of six months, whereas Schedule 3 to
the Family Assistance Act, which defines the concept of adjusted taxable
income, refers to an income year. New subsection 38(3) provides that
references in Schedule 3 to an income year are to be taken as references to
six months for the purposes of the claim provision and ensures that
subclause 2(2) and clauses 3 and 3A of Schedule 3 are disregarded.
There are a number of other changes that flow from the introduction of an
income limit for baby bonus based on adjusted taxable income across a six
month period.
In the case of eligibility under subsection 36(3), there is a requirement that a
child is entrusted to the care of the individual or their partner within 13 weeks
of birth. This period will be extended to 26 weeks to allow greater access to
the payment by foster carers or other longer-term carers, who may take on
care of the child from the birth parent. For this group, the current requirement
that the care of the child by the claimant continues, or is likely to continue, for
at least 13 weeks will also be extended to 26 weeks. Further, a common
requirement across all categories of eligibility for baby bonus in section 36 of
the Family Assistance Act is the requirement for the individual to be eligible
for FTB (disregarding the income test for FTB) within the specified 13 week
period. This period will be extended to 26 weeks to be consistent with the 6
month period for the new income test for baby bonus and with the eligibility
conditions for foster and other long-term carers.
The rules in section 41 of the Family Assistance Administration Act that
enable the determination of a claim for baby bonus to be deferred in certain
circumstances also reference the period of 13 weeks in connection with
eligibility for baby bonus. A consequential amendment will be made to extend
that period also to 26 weeks to reflect the amendments noted above.
Items 1, 5, 7 and 9 replace existing references to 13 weeks in section 36 of
the Family Assistance Act with references to 26 weeks.
Items 20 and 21 replace existing references to 13 weeks in section 41 of the
Family Assistance Administration Act with references to 26 weeks.
Under subsection 39(2) of the Family Assistance Administration Act, a claim
for baby bonus is not effective if it is made more than 26 weeks after the birth
of the child or, in the case of adoption, of the child being entrusted to the care
of the claimant. There is discretion to extend the 26 week period in
prescribed circumstances.
11
With the introduction of an income test requiring income to be estimated for
the period of six months from the child's birth (or the child being entrusted to
the care of an adoptive parent), the time limit for claiming will be extended to
52 weeks. Some new parents may initially expect an income in excess of
$75,000 for the 6 month period but their actual income may be less than this
amount. The extended period for claiming will ensure that these parents have
ample time to test (or re-test) their eligibility for payment. This provision may
also benefit foster carers who assume care of a child late in the six month
period and the small number of parents who currently omit to claim within
26 weeks.
There is a similar timeframe for claiming baby bonus where an eligible
individual dies, there remains an unpaid amount of baby bonus, and another
individual wishes to be eligible for that unpaid amount. In these
circumstances, the claim must be made within 26 weeks after the death of the
eligible individual. The relevant timeframe is in section 38 of the Family
Assistance Act. This will also be extended to 52 weeks to be consistent with
the extended claim period noted above.
A parent is required to meet the birth registration requirement as a condition
of eligibility under subsection 36(2) of the Family Assistance Act. The birth
registration requirement can be satisfied if, among other things, the Secretary
is notified or becomes aware, within 26 weeks of the child's birth, that the
individual has applied to have the child's birth registered in accordance with
the law. There is discretion to extend the 26 week period in prescribed
circumstances. Again, to be consistent with the extension of the period which
an individual has to claim from 26 weeks to 52 weeks after the child's birth, a
claimant will also have 52 weeks in which to notify that they have applied to
register the birth of their child.
Items 2, 4 and 12 replace existing references to 26 weeks in
subsections 36(2) and (2A) and subparagraph 38(e)(i) of the Family
Assistance Act with references to 52 weeks.
Items 18 and 19 replace existing references to 26 weeks in subsections 39(2)
and (3) and in the heading to subsection 39(3) of the Family Assistance
Administration Act with references to 52 weeks.
Item 22 outlines how these amendments will apply.
The amendments made by items 1 to 11 and 16 to 21 apply in relation to
children born on or after 1 January 2009 where the amendments relate to
eligibility of a parent for baby bonus under subsection 36(2) of the Family
Assistance Act. Insofar as these amendments relate to eligibility for baby
bonus for a stillborn child under subsection 36(4), the amendments apply in
relation to children delivered on or after 1 January 2009. Insofar as these
amendments relate to eligibility for baby bonus of an individual who is
entrusted with the care of a child under subsection 36(3), or for an adopted
child under subsection 36(5), the amendments apply in relation to children
entrusted to care on or after 1 January 2009.
12
The amendment made by item 12 (timeframe for claiming any unpaid baby
bonus where an eligible individual dies) applies to an individual if the
individual who died was eligible for baby bonus under the new baby bonus
eligibility rules.
The amendment made by item 13 (eligibility rule for maternity immunisation
allowance for a stillborn child) applies in relation to children delivered on or
after 1 January 2009.
The amendment made by item 15, providing for the indexation of the income
limit for baby bonus, applies on 1 July 2009 and each subsequent 1 July.
Part 2 - Payment of baby bonus by instalments
Section 38 of the Family Assistance Act applies where an individual who is
eligible for baby bonus dies before receiving their full entitlement (either as a
single payment or instalments) and enables another individual to be eligible
for the unpaid amount of baby bonus. Paragraph 38(c)(ii) currently refers to
those provisions in section 47 that provide for the payment of baby bonus by
instalment.
Item 23 repeals references in paragraph 38(c)(ii) to subsections 47(1A), (2)
and (3), which are repealed by item 26. Instead, references to the new
instalment provisions for baby bonus are inserted.
Section 47 of the Family Assistance Administration Act sets out how baby
bonus and maternity immunisation allowance are paid.
As a general rule, if an individual is entitled to be paid baby bonus or
maternity immunisation allowance, the payment must be paid to the individual
(as a single payment) at such time as the Secretary considers appropriate
and into a bank account. This rule is in subsection 47(1). Item 25 amends
subsection 47(1) so that it only applies in relation to payment of maternity
immunisation allowance. The heading to subsection 47(1) is also amended
by a note at the end of item 25 so that the heading refers only to maternity
immunisation allowance.
New subsections 47(1AA) and (1AB), inserted by item 24, set out the rules for
payment of the baby bonus.
New subsection 47(1AA), ensures that, where a claimant is entitled to be paid
baby bonus, their baby bonus is paid in 13 equal fortnightly instalments,
starting after the first instalment period that ends after the claim is granted,
and to the credit of a bank account nominated and maintained by the
claimant.
The concept of `instalment period' is currently defined in subsection 47(9) and
will be relevant for the purposes of new subsection 47(1AA).
13
New subsection 47(1AB), enables a claimant to be paid their instalments of
baby bonus in a manner other than by direct credit to the claimant's bank
account. A different manner of payment might be relevant in special or
unusual circumstances.
Subsections 47(1A) to (3A) of the Family Assistance Administration Act
currently set out the circumstances in which baby bonus can be, or is to be,
paid in instalments. These provisions become redundant with the insertion of
new subsection 47(1AA) and are repealed by item 26.
Subsection 47(4) provides flexibility to change the day on which instalment
periods begin. A consequential amendment is made to this provision by
item 27 to repeal references made redundant by item 26 and to refer to new
subsection 47(1AA).
New subsection 47(4A) is inserted by item 28. This new provision can apply
where baby bonus is `apportioned' between eligible individuals because a
decision has been made under paragraph 37(3)(b) of the Family Assistance
Act that it is appropriate to do so. In this situation, new subsection 47(4A)
provides some flexibility to allow a different payment arrangement to that set
out in new subsection 47(1AA). It is envisaged that this provision would apply
where there is a change of care for the child in the 26 week period following
the child's birth. As the new carer will be entitled to a portion of the normal
baby bonus amount ($5,000 at 1 July 2008), this amount will not be required
to be paid in 13 equal fortnightly instalments. Instead, the number of
instalments and amounts paid will be consistent with the lower apportioned
amount. For example, a new carer is entitled to 20 per cent, or $1,000. This
would be paid as two instalments of $384.62 (the normal instalment amount),
and the third (or last) instalment will be $230.76 (for a total of $1,000).
This new provision will also allow for a different payment arrangement where
a child is stillborn or has died. This will enable a lump sum payment to be
made.
Subsection 47(5) currently provides a broad discretion for the Secretary to
determine an alternative method of payment of baby bonus and maternity
immunisation allowance. Items 29 to 31 make consequential changes to
subsection 47(5) so that this provision can apply only in relation to maternity
immunisation allowance.
Subsection 47(6) currently enables an instalment of baby bonus to be paid on
an earlier day where payment cannot be made on the usual day. This might
occur where the instalment is due to be paid on a public holiday. This issue
also potentially exists for payment of instalments of baby bonus under new
subsection 47(1AA). Accordingly, item 32 amends subsection 47(6) so that it
can apply to instalments of baby bonus under new subsection 47(1AA) and
repeals obsolete references.
14
Section 66 of the Family Assistance Administration Act ensures that certain
family assistance payments are inalienable. Item 33 omits the reference to
subsection 47(2) from paragraph 66(2)(a). This reference becomes obsolete
with the repeal of subsection 47(2) by item 26.
The application and transitional rules for the amendments are set out in
item 34.
The new instalment rules for payment of baby bonus will apply in relation to
children born on or after 1 January 2009 where a parent is entitled to baby
bonus because of eligibility under subsection 36(2) of the Family Assistance
Act, or where an individual who is not a parent has been entrusted with the
care of the child and is eligible under subsection 36(3). In the case of a
stillborn child (eligibility under subsection 36(4) of the Family Assistance Act),
the new rules will apply in relation to children delivered on or after
1 January 2009. For adopted children (eligibility under subsection 36(5)), the
new rules will apply in relation to children entrusted to care on or after
1 January 2009.
Where an individual is eligible for baby bonus under section 38 of the Family
Assistance Act because an individual who was eligible for baby bonus died
before being paid their entitlement, then the new rules will apply if they would
have applied to the person who died.
Part 3 - Baby bonus indexation
Item 17A of the CPI indexation table in subclause 3(1) of Schedule 4 to the
Family Assistance Act provides for the indexation of baby bonus on 20 March
and 20 September of each year.
Item 35 repeals item 17A and replaces it with a new indexation arrangement
for baby bonus. Under this new arrangement, baby bonus will be subject to
CPI indexation on 1 July (column 2) on the basis of a December reference
quarter (column 3) and base quarter being the highest December quarter
before the reference quarter (but not earlier than the December quarter in
2007) and with a rounding base of $1.00. Indexation under this new
arrangement will first occur on 1 July 2009 and then each subsequent 1 July
(item 36 refers).
Part 4 - Eligibility for baby bonus for adopted children
Subsection 36(5) of the Family Assistance Act sets out the circumstances in
which an adoptive parent is eligible for baby bonus.
Paragraph 36(5)(b) requires the child to be under two at the time the child is
entrusted to the care of the adoptive parent by the appropriate authority.
Item 37 amends this provision to increase the age limit from under two to
under 16.
15
Under existing paragraph 36(5)(ba), if the child arrives in Australia as part of
the process of adoption, there is the additional requirement that the child is
aged under two when arriving in Australia. Paragraph 36(5)(ba) is repealed
by item 38.
Item 43 makes consequential amendments to subsection 39(2) of the Family
Assistance Administration Act to take account of the repeal of
paragraph 36(5)(ba). Under subsection 39(2), as amended by this Schedule,
an adoptive parent will have up to 52 weeks from the time the child is
entrusted to their care in which to claim baby bonus.
Section 37 of the Family Assistance Act provides the general rule that only
one individual is eligible for baby bonus in respect of a child (see
subsections 37(1) and (2)). However, there is capacity for baby bonus to be
apportioned between two or more eligible individuals where it is appropriate to
do so (subsection 37(3) refers). Subsection 37(4) ensures that members of
the same couple cannot both be eligible for baby bonus for the same child.
Section 66 of the Family Assistance Act sets the amount of baby bonus for a
child, while acknowledging the possibility of that amount being apportioned
between two or more eligible individuals.
The amendments made to these provisions by items 39 to 42 will ensure that
the full amount of baby bonus can be paid to an adoptive parent (where
eligibility arises under subsection 36(5) of the Family Assistance Act), even if
baby bonus has already been paid to a parent or other primary carer.
Items 39 and 40 amend subsections 37(1), (2) and (3) so that these
provisions do not apply to an adoptive parent who is eligible for baby bonus
under subsection 36(5) of the Family Assistance Act. However, the rule in
subsection 37(4) that prevents members of the same couple from both being
eligible for baby bonus for the same child continues to apply across all
categories of eligibility for baby bonus. The amendment made by item 41
makes this clear.
Item 42 makes a consequential amendment to subsection 66(1).
The amendments made by items 37, 38 and 43 apply in relation to children
entrusted to care on or after 1 January 2009 (the application provision in
item 44 refers).
16
Schedule 3 - Seniors health card
Summary
This Schedule provides for the collection of tax file numbers (TFNs) as part of
a new compliance regime for the Commonwealth seniors health card (CSHC).
Amendments will allow the Secretary (or delegate) to collect TFNs both from
current holders of, and claimants for, CSHCs to ensure eligibility under the
CSHC income test. The Secretary (or delegate) will also be able to cancel
holders' cards or not grant cards to claimants in the event that TFNs are not
provided within 28 days of a request (unless certain exceptions apply).
Background
The CSHC is designed to assist self-funded retirees of age pension or service
pension age with living costs, by allowing access to certain products and
services at a concessional rate. To be eligible for a CSHC, while a person
must be of age or service pension age, they must not be receiving an income
support payment. Eligibility for a CSHC is also conditional upon an income
test. There is currently no mechanism to determine ongoing eligibility for the
CSHC. The purpose of this measure is to provide the Secretary with the
ability to ensure that holders and claimants comply with the CSHC income
test.
These amendments commence on 1 September 2008.
Explanation of the changes
Amendments to the Data-matching Program (Assistance and Tax)
Act 1990
Item 1 amends the definition of `personal assistance' in the Data-matching
Program (Assistance and Tax) Act 1990 (the Data-matching Act) to extend to
CSHCs. The intended effect is that only `basic data' (as defined in the
Data-matching Act) that is essential for TFN data-matching (for example, the
person's name and income details as attached to a person's TFN) is to be
data-matched for the strict purpose of ensuring compliance with the income
test for the CSHC.
Item 2 provides that the amendments made by item 1 apply to CSHCs
granted before, on or after the commencement of item 1.
17
Amendments to the Social Security Act
Item 3 adds a note to subsection 1061ZG(2) of the Social Security Act, which
is the provision that provides the qualification rules for the CSHC. The note is
a signpost to indicate that, although the Secretary may be satisfied that a
person satisfies the qualification criteria for the grant of a CSHC, if a person
fails to satisfy a request for a TFN made under subsection 75(2) or (3) of the
Social Security Administration Act, subsection 76(1A) or 77(1A) of that Act
may apply with the effect that the Secretary must not grant the person's claim.
Amendments to the Social Security Administration Act
Item 4 adds to subsection 37(8) a similar note to that described above in
item 3. The note is a signpost to indicate that, although the Secretary may be
satisfied that a person satisfies the qualification criteria for the grant of a
CSHC, if a person fails to satisfy a request for a TFN made under
subsection 75(2) or (3) of the Social Security Administration Act,
subsection 76(1A) or 77(1A) of that Act may apply with the effect that the
Secretary must not grant the person's claim.
Item 5 amends section 75 to allow for the Secretary to request TFNs from
either claimants or holders of CSHCs. This amendment is enacted with the
intention that paragraph 8WA(1AA)(a) of the Taxation Administration Act 1953
applies to exempt this request from subsection 8WA(1) of that Act.
Item 6 amends section 76 to provide that, if the Secretary requests a TFN
from either a claimant or a holder of a CSHC under subsection 75(2) of the
Social Security Administration Act, the Secretary must not grant a claim, or
must cancel a holder's CSHC, unless the claimant or holder, within 28 days of
the request: satisfies the request by providing a TFN; satisfies
subsection 76(2) or (3); or is exempted by the Secretary from satisfying the
request.
Item 7 amends section 77 to provide that, if a Secretary requests a person to
provide their partner's TFN under subsection 75(3) of the Social Security
Administration Act, the Secretary must not grant a claim of the person, or, if
the person is a holder, must cancel the person's CSHC, unless, within
28 days of the request: the request is satisfied; subsection 77(2) or (3) is
satisfied; or the Secretary exempts the person from satisfying the request.
Item 8 adds a note to subsection 86(1), which provides for cancellation of
concession cards, to indicate that cancellation is also possible under
subsections 76(1B) and 77(1B) of the Social Security Administration Act.
Item 9 amends section 121 so that cancellation determinations made under
new subsections 76(1B) and 77(1B) are `adverse determinations' for the
purposes of the date of effect rule in section 122 of the Social Security
Administration Act.
18
Item 10 amends paragraph 123(2)(a) to provide that a determination to grant
a CHSC continues in effect until a cancellation determination under
subsection 76(1B) or 77(1B) is made.
Item 11 provides that the amendments in item 4 take effect in relation to
claims for CSHCs made, and CSHCs that are granted, on or after the
commencement of item 11.
Amendments to the Veterans' Entitlements Act
Item 12 is a technical amendment to note 2 at the end of
subsection 118V(1A). The amendment replaces the incorrect reference to
section 118ZAA with a correct reference to section 118ZZA.
Item 13 inserts a note to subsection 118V(4). Subsection 118V(4) sets out
the circumstances in which a person would not be eligible for a seniors health
card although the person would be eligible under the other provisions of the
section.
The note informs the reader that the Repatriation Commission must not
determine that an eligible person is entitled to a seniors health card if the
person has failed to comply with a request to provide a tax file number under
subsection 128A(3) or (3A).
Item 14 amends section 118ZG. Section 118ZG provides that the
Repatriation Commission is to make a determination that a person is entitled
to a seniors health card if the Commission is satisfied that the person is
eligible for the card.
A reference to new subsection 128A(2A) (inserted by item 17) is added to
follow the reference to the section being applicable subject to section 118X.
Items 15 and 16 add reference in paragraph 118ZK(b) and
subsection 118ZR(1) to new subsection 128A(2B) (inserted by item 17).
Item 17 inserts new subsections 128A(2A) and (2B). New
subsection 128A(2A) provides that the Repatriation Commission must not
make a determination that a person is entitled to a seniors health card if a
person who is otherwise eligible for a seniors health card, fails to comply with
a request under subsection 128A(3) or (3A) to provide a tax file number.
New subsection 128A(2B) provides that the Repatriation Commission must
determine that a cardholder ceases to be entitled to the card if the person fails
to comply with the tax file number request mentioned above.
Item 18 is an application provision that provides that the amendment made by
Item 17 is applicable in relation to claims for a seniors health card that are
made on or after the commencement of the item, and cards granted before,
on or after that time.
19
Schedule 4 - Income management regime
Summary
This Schedule provides for the Secretary and a person to enter voluntarily into
an agreement under which the person agrees to be subject to the income
management regime under Part 3B of the Social Security Administration Act
(the voluntary scheme of income management) for the duration of the
agreement.
The Schedule also includes an amendment to ensure that, if Centrelink has
not been advised of the existence of a legal personal representative for a
person, the credit balance of the person's income management account upon
the death of the person can be paid to another person who, in the opinion of
the Secretary, is carrying out an appropriate activity in relation to the estate or
affairs of the person. This will apply only to credit balances of $500 or less
and provide the Secretary with more flexibility in dealing with the credit
balance of an income management account to ensure that the credit balance
is paid to an appropriate person within the 12 month period provided for under
the Social Security Administration Act.
Background
Part 3B of the Social Security Administration Act establishes an income
management regime for recipients of certain welfare payments. If a person is
subject to the income management regime, the Secretary will deduct amounts
from the person's relevant welfare payments and credit those amounts to the
person's income management account. The Secretary may then debit
amounts from the person's income management account for the purpose of
taking actions directed to meeting the priority needs of the person or his or her
dependants.
A person is only subject to the income management regime if certain
conditions set out in Division 2 of Part 3B are satisfied in relation to the
person. At present, under Part 3B, there is no capacity for a person to be
subject to the income management regime on a voluntary basis.
This new scheme of voluntary income management provides Centrelink and
Department of Veterans' Affairs customers with the ability to enter voluntarily
into an agreement with the Secretary under which their income support and
family payments will be income managed. Income management ensures that
individuals receive assistance and financial education to meet their priority
needs, to manage their finances, and to provide for themselves and their
children in the long term.
20
A voluntary income management agreement will last for 12 months, unless it
is terminated earlier. A person to whom a voluntary income management
agreement relates may ask the Secretary to terminate the agreement at any
time. The Secretary must also terminate a voluntary income management
agreement if certain events occur, including if the person ceases to be an
eligible recipient of a relevant welfare payment.
The voluntary income management amendments commence on 1 July 2008,
and the remaining amendments commence on Royal Assent.
Explanation of the changes
Voluntary income management agreements
Item 1 amends the simplified outline of Part 3B of the Social Security
Administration Act contained in section 123TA of that Act to insert a reference
to the new basis on which a person may become subject to the income
management regime - because he or she has entered into a voluntary
agreement with the Secretary under which he or she has agreed to be subject
to the income management regime.
Item 2 inserts a new defined term, declared voluntary income management
area, into section 123TC of the Social Security Administration Act. New
subsection 123UM (3) provides that the Secretary must not enter into a
voluntary income management agreement with a person unless, amongst
other things, the person's usual place of residence is within a declared
voluntary income management area.
Item 3 amends the definition of subject to the income management regime
contained in section 123TC of the Social Security Administration Act to
include a reference to new section 123UFA, the provision which provides that
a person is subject to the income management regime if a voluntary income
management agreement is in force in relation to the person.
Item 4 inserts a new defined term, voluntary income management
agreement, into section 123TC of the Social Security Administration Act. An
agreement entered into by the Secretary and a person under new
section 123UM is known as a voluntary income management agreement.
Item 5 inserts new section 123TGA, which enables the Minister to make a
legislative instrument determining that a specified State, or a specified
Territory, or a specified area is a declared voluntary income management
area for the purposes of Part 3B of the Social Security Administration Act.
Specifying areas by legislative instrument, rather than in the principal
legislation, will enable the voluntary scheme of income management to be
introduced progressively, as the administrative infrastructure is established to
deliver income management in those areas.
21
Item 6 inserts a new section, section 123UFA, in Subdivision A of Division 2
of Part 3B of the Social Security Administration Act. Subdivision A of
Division 2 sets out the various situations in which a person is subject to the
income management regime. New section 123UFA provides that a person
will be subject to the income management regime if a voluntary income
management agreement, as defined in section 123TC, is in force in relation to
the person.
Item 7 inserts a new subdivision, Subdivision D, in Division 2 of Part 3B of the
Social Security Administration Act. New Subdivision D sets out the
circumstances in which a voluntary income management agreement can be
entered into by a person and the Secretary, and governs the content and
operation of a voluntary income management agreement.
New section 123UM sets out the circumstances in which a voluntary income
management agreement may be entered into by a person and the Secretary.
Subsection 123UM(1) provides the authority for a voluntary income
management agreement to be entered into by a person and the Secretary.
Subsection 123UM(2) provides that an agreement between a person and the
Secretary under which the person agrees voluntarily to be subject to the
income management regime is to be known as a voluntary income
management agreement.
Subsection 123UM(3) provides that the Secretary must not enter into a
voluntary income management agreement with a person unless certain
conditions are satisfied.
First, the person must be an eligible recipient of a category H welfare
payment. The term category H welfare payment is defined in section 123TC
of the Social Security Administration Act and includes the following payments:
all social security benefits; all social security pensions; a payment under the
ABSTUDY scheme that includes an amount identified as living allowance; a
service pension; income support supplement; and a Defence Force Income
Support Allowance. The term eligible recipient is defined in section 123TK of
the Social Security Administration Act: a person is an eligible recipient of a
welfare payment beginning (in general terms) on the start date for the
payment and ending when the payment is cancelled.
Second, the person's usual place of residence must be within a declared
voluntary income management area (as defined in section 123TC).
22
Third, if the person has a payment nominee, the payment nominee must not
be an excluded nominee. (The terms payment nominee and excluded
nominee are defined in section 123TC of the Social Security Administration
Act.) This requirement mirrors the similar requirement in sections 123UB,
123UC, 123UD, 123UE and 123UF of the Social Security Administration Act.
If the person's welfare payments are already being managed by an excluded
payment nominee (that is, the Public Trustee of a State or Territory, or a
person who is not subject to the income management regime), it is not
considered appropriate for the income management regime to apply while the
nominee arrangement is in place.
Fourth, if the person is a payment nominee in relation to another person (the
principal), the Secretary must not enter into a voluntary income management
agreement with the person unless the principal has consented to the
agreement and that consent has not been withdrawn. (Section 123UP
provides for the principal to give, and withdraw, such consent.) This rule
protects the integrity of the role of the payment nominee. The obligations
attached to the role of payment nominee are significant: a payment nominee
is responsible for the management of the principal's welfare payments. It is
accordingly considered appropriate that the principal should be informed of,
and required to consent to, any proposal by their payment nominee to enter
into an agreement with the Secretary under the voluntary scheme of income
management.
Subsection 123UM(4) provides that, in deciding whether to enter into a
voluntary income management agreement with a person, the Secretary must
have regard to the extent to which it would be feasible for the Secretary to
take action under Division 6 of Part 3B of the Social Security Administration
Act to meet the priority needs of the person if the person were subject to the
income management regime. The Secretary must also have regard to any
other matters (if any) that the Secretary considers relevant. This discretion
allows the Secretary to take into account, amongst other things, the
availability of administrative mechanisms for the delivery of income
management services to a person, including access to purchasing
mechanisms such as vouchers and stored value cards.
Subsection 123UM(5) provides that the Secretary must not enter into a
voluntary income management agreement with a person if the person is
already subject to the income management regime under section 123UB,
123UC, 123UD, 123UE or 123UF (the mandatory income management
measures) of the Social Security Administration Act.
23
Subsection 123UM(5) also provides that the Secretary must not enter into a
voluntary income management agreement if, in the 12 month period
preceding the day on which the proposed voluntary income management
agreement would come into force, there have been two or more occasions on
which previous voluntary income management agreements relating to the
person have been terminated at the person's request (as provided for in
section 123UP). This restriction balances the possibility that a person may
wish to enter and exit the voluntary scheme of income management several
times in a period of 12 months with a recognition of the administrative
complexity and cost involved in administering the income management
regime.
New subsection 123UN governs the circumstances in which a voluntary
income management agreement comes into force and the duration of a
voluntary income management agreement.
Subsection 123UN(1) provides that a voluntary income management
agreement comes into force on the day specified in the agreement, as long
as, at that time: the person to whom the agreement relates is an eligible
recipient of a relevant welfare payment; the person's usual place of residence
is within a declared voluntary income management area; the person is not
subject to the income management regime under any of the mandatory
income management measures; if the person is a payment nominee for
another person (the principal), the principal has not withdrawn his or her
consent to the agreement; and, if the person has a payment nominee, the
payment nominee is subject to the income management regime under Part 3B
of the Social Security Administration Act (that is, the payment nominee is not
an `excluded payment nominee' as defined in section 123TC of the Social
Security Administration Act).
Subsection 123UN(1) also provides that a voluntary income management
agreement that comes into force remains in force for 12 months.
Subsection 123UN(2) provides that the rules in subsection 123UN(1) are
subject to new section 123UP which allows for the termination of a voluntary
income management agreement.
Subsection 123UN(3) confirms that, if a voluntary income management
agreement (the original agreement) is in force in relation to a person, the
Secretary is able to enter into another voluntary income management
agreement with the person to come into force immediately after the original
agreement ceases to be in force. This allows a person to extend the period of
time that he or she is subject to the income management regime under a
voluntary income management agreement if the person wishes to do so.
Subsection 123UN(4) confirms that the Secretary is able to enter into a
voluntary income management agreement with a person who has been
subject to a voluntary income management agreement at an earlier time.
(However, in such cases, the restriction in new subsection 123UM(5) may
apply.)
24
New section 123UO sets out the circumstances in which a voluntary income
management agreement ceases to have effect.
Subsection 123UO(1) provides that the person to whom a voluntary income
management agreement relates may ask the Secretary, by written notice
given to the Secretary, to terminate the agreement. As the agreement has
been entered into voluntarily, it is considered appropriate for the person to
whom the agreement relates to have the capacity to terminate the agreement
at any time, for any reason.
Subsection 123UO(2) requires the Secretary to comply with a request to
terminate an agreement as soon as practicable after receiving the request.
This recognises that there are administrative processes that will need to be
completed before an agreement can be terminated by the Secretary.
Subsection 123UO(3) provides that the Secretary must terminate a voluntary
income management agreement if any of the following occur: if the person to
whom the agreement relates ceases to be an eligible recipient of a relevant
welfare payment; if the person's usual place of residence ceases to be within
a declared voluntary income management area; if the person becomes
subject to any of the mandatory income management measures under
Part 3B of the Social Security Administration Act; if the Secretary is satisfied
that it is no longer feasible to deliver income management services to the
person; if the person has a payment nominee and the payment nominee
becomes an excluded payment nominee; or if the person is a payment
nominee for another person (the principal) and the principal withdraws his or
her consent to the agreement. If any of these events occur, the Secretary
must terminate the voluntary income management agreement as soon as
practicable after the occurrence of the specified event.
Subsection 123UO(4) provides that, if a voluntary income management
agreement has been terminated, whether because of a request by the person
to whom it relates or because of the occurrence of an event, the Secretary
must not enter into another voluntary income management agreement with
the person until 60 days have elapsed from the date of the termination. Like
paragraph 123UM(5)(b), this restriction recognises the administrative
complexities and resources involved in implementing and delivering income
management services to a person.
New section 123UP provides for a person who has a payment nominee (a
principal) to give the Secretary consent to a voluntary income management
agreement for the payment nominee, and to withdraw that consent.
Subsection 123UP(1) provides for the principal to give the consent to the
Secretary in written form. Subsection 123UP(2) provides that the consent will
remain in force until the principal, by written notice given to the Secretary,
withdraws the consent. The principal's consent is relevant to the entering into
of an agreement (under new section 123UM), to the coming into force of an
agreement (under section 123UN) and to the termination of an agreement
(under section 123UO).
25
Item 8 amends subsection 123WJ(1) of the Social Security Administration
Act. Section 123WJ governs the payment of the credit balance of an income
management account if the person to whom the income management account
relates ceases to be subject to the income management regime.
If a person who ceases to be subject to the income management regime has
a credit balance in their income management account, under section 123WJ,
that credit balance must be paid to the person in certain circumstances.
As a consequence of the amendments made to subsection 123WJ(1) by
item 8, if a person was subject to the income management regime under a
voluntary income management agreement and ceases to be subject to the
income management regime because that voluntary income management
agreement has ceased to be in force, any credit balance that remains in the
person's income management account must be repaid to the person, unless
the Secretary is satisfied that the person is likely to become subject to the
income management regime under one of the mandatory income
management measures within the next 60 days.
Further, if a person was subject to the income management regime under one
of the mandatory income management measures immediately before ceasing
to be subject to the regime, any credit balance that remains in the person's
income management account must be repaid to the person unless the
Secretary is satisfied that the person is likely to become subject to the income
management regime, either under one of the mandatory income management
schemes or under a voluntary income management agreement, within the
next 60 days.
Item 9 amends subsection 123WJ(9) of the Social Security Administration
Act, which governs when a credit balance can be paid to a person as a lump
sum. The amendment gives the Secretary the capacity to pay the credit
balance as a lump sum, regardless of the value of that lump sum, if,
immediately before the person ceased to be subject to the income
management regime, the person was subject to the regime under a voluntary
income management agreement.
Item 10 inserts a new Subdivision, Subdivision DA, in Division 5 of Part 3B of
the Social Security Administration Act. Subdivision DA deals with the
deduction of amounts from a person's relevant welfare payments under the
income management regime if the person is subject to the income
management regime under new section 123UFA (because of a voluntary
income management agreement that is in force in relation to the person).
26
New section 123XPA applies if a person is subject to the income
management regime under new section 123UFA and an instalment of a
category I welfare payment is payable to the person. The term category I
welfare payment is defined in section 123TC of the Social Security
Administration Act. If section 123XPA applies, the Secretary must deduct
70 per cent (or another percentage, if the Minister has, by legislative
instrument, specified another percentage, which may be up to 100 per cent) of
the net amount of that payment and credit the person's income management
account and the Special Account accordingly. (The term net amount is
defined in section 123TC of the Social Security Administration Act.)
New section 123XPB applies if a person is subject to the income
management regime under new section 123UFA and a payment of a
category I welfare payment is payable to the person other than by instalments
(that is, by lump sum). If section 123XPB applies, the Secretary must deduct
100 per cent (or another percentage, if the Minister has, by legislative
instrument, specified a lower percentage) of the amount that is payable and
credit it to the person's income management account and the Special Account
accordingly.
The Minister's capacity to specify another percentage by legislative instrument
under these provisions is consistent with arrangements in comparable
provisions in Division 5 of Part 3B.
Other amendments
Items 11, 12 and 13 make minor amendments to Part 3B of the Social
Security Administration Act to ensure that, if a person has died with a credit
balance remaining in his or her income management account and the
Secretary has not been notified of the existence of a legal personal
representative for the person, the Secretary is able to pay the credit balance
of the income management account to another person.
Item 11 amends subsection 123WL(3) of the Social Security Administration
Act to provide that, if the Secretary has not been notified of the existence of a
legal personal representative for the deceased person, and the total amount
of the credit balance is equal to or less than $500, the Secretary may pay the
credit balance to a person who the Secretary is satisfied is carrying out, or will
carry out, an appropriate activity in relation to the estate or affairs of the
deceased person. Such an activity could include arranging the funeral of the
deceased person, paying the taxes and other debts of the deceased estate or
controlling the property (if any) of the estate. This amendment will ensure
that, where the existence of a legal personal representative has not been
notified to the Secretary, credit balances up to and including $500 can be paid
to an appropriate person within the 12 month period provided for in
section 123WL of the Social Security Administration Act.
Item 12 amends section 123WM to clarify, in line with the amendments to
section 123WL, which bank account the credit balance is to be paid to.
27
Item 13 provides that the amendments made by items 11 and 12 will apply in
relation to a person who died before, or who dies on or after, the
commencement of the amendments. Extending the amendments to a person
who died before the commencement of the amendments allows the Secretary
to pay out credit balances that are currently held in the Special Account and
that relate to a person for whom no legal personal representative can be
identified.
28
Schedule 5 - Eligibility for partner service pension
Summary
Amendments to the Veterans' Entitlements Act will increase the eligible age
for partner service pension to qualifying age.
Background
Currently, a person may be eligible for partner service pension at age 50.
This measure will increase the age criterion for partner service pension from
age 50 to qualifying age. Qualifying age is age 60 years for a male and is
currently 58.5 years for a female (female qualifying age being subject to age
equalisation).
The age restriction does not apply to people with dependent children or
people who are partnered to a veteran in receipt of special rate disability
pension.
These amendments commence on 1 July 2008.
Explanation of the changes
Item 1 amends paragraph 38(1B)(a) of the Veterans' Entitlements Act by
omitting `the age of 50 years' and substituting `qualifying age'.
Item 2 adds a note at the end of subsection 38(1B), advising that qualifying
age is defined in section 5Q.
Item 3 is an application provision. The amendment made by item 1 applies to
claims for partner service pension made on or after 1 July 2008.
29
Schedule 6 - Other amendments
Summary
This Schedule will make some minor policy and technical amendments to
portfolio legislation, including to the family assistance law in relation to the
1 July 2008 child support reforms, and to provide a discretion for the Child
Support Registrar to deduct child support arrears from Centrelink and
Department of Veterans' Affairs payments at less than the full prescribed
amount in cases of hardship.
Background
The final stages of the child support reforms legislated for in recent years
commence on 1 July 2008. This Schedule contains a number of amendments
to the family assistance law that are related to these child support reforms and
aim to ensure that the reforms operate as intended. Amendments are made
to:
· clarify that a shared care percentage for FTB does not apply where a
parent's care of a child is more than 65 per cent, and clarify the
meaning of a `regular care child';
· clarify the operation of certain aspects of the maintenance income test
for FTB Part A, relating to the maintenance income ceiling and notional
assessments (including in relation to the treatment of disability
expenses maintenance); and
· ensure that indexed estimates of income for family assistance
purposes are based on the gross value of reportable fringe benefits,
rather than the net value, to be consistent with the change to the
definition of adjusted taxable income for these payments from
1 July 2008.
Amendments are also made to child support legislation to ensure that the new
rules from 1 July 2008 for child support agreements and court orders, and the
new rules for notional assessments relating to an agreement or order, do not
apply for a period before 1 July 2008.
This Schedule also contains other minor amendments unrelated to the child
support reforms. There are amendments to the family assistance law to
ensure consistency in referring to `income support supplement' paid by the
Department of Veterans' Affairs and a technical amendment is made to the
claim provision for FTB. There are amendments to child support legislation to
provide a discretion for the Child Support Registrar to deduct child support
arrears from Centrelink and Department of Veterans' Affairs payments at less
than the full prescribed amount in cases of hardship and a technical correction
is made to a provision in the social security law
30
Most of the amendments in this Schedule commence on 1 July 2008, and
some on Royal Assent. Some amendments commence retrospectively, but
without any practical adverse retrospective effect, as described in relation to
items 12, 14, 16 and 17 below.
Explanation of the changes
Amendments to the Family Assistance Act and the Family Assistance
Administration Act
Shared care percentages
From 1 July 2008, new section 59 of the Family Assistance Act sets out an
individual's `shared care percentage' for an FTB child of the individual.
Item 55 of Schedule 8 to the Child Support Legislation Amendment (Reform of
the Child Support Scheme - New Formula and Other Measures) Act 2006
(the amending Act) is the relevant amending provision.
New subsection 59(2) has a table that gives the individual's `shared care
percentage' (column 2 of table) for the individual's percentage determined
under subsection 22(6A) (column 1 of table). The table covers the following
percentages determined under subsection 22(6A) of the Family Assistance
Act for an FTB child:
· 35 per cent to less than 48 per cent (item 1);
· 48 per cent to 52 per cent (item 2);
· more than 52 per cent to 65 per cent (item 3);
· more than 65 per cent to 100 per cent (item 4).
Item 4 omits item 4 from the table in subsection 59(2) of the Family
Assistance Act, and item 3 reworks subsection 59(1) so that an individual can
have a shared care percentage only if the percentage determined by the
Secretary under subsection 22(6A) is 35 per cent to 65 per cent.
For an individual who has more than 65 per cent care of an FTB child, it is
unnecessary to specify a shared care percentage of 100 per cent for the
FTB child. An individual's FTB rate in relation to an FTB child will not be
altered by the multiplication of relevant rate components for the child by
100 per cent (for example, the FTB child rate in clause 7 of Schedule 1 to the
Family Assistance Act).
31
Item 4 of the table in subsection 59(2) also creates an unintended outcome for
the definition of `relevant shared carer' in subsection 3(1) of the Family
Assistance Act. This definition affects an individual's eligibility for, and rate of,
rent assistance (new clauses 38C to 38E of Schedule 1 to the Family
Assistance Act refer). It is intended that an individual be a relevant shared
carer only if the amount of FTB for each FTB child is altered because the
individual has 35 per cent to 65 per cent care of each FTB child. The
amendments made by items 3 and 4 therefore also have the effect of
rectifying this unintended outcome.
Regular care child for each day in period of care
Before and after 1 July 2008, if a separated parent has a pattern of care in
relation to a child over a period, then subsection 22(7) has the effect of
deeming the child to be an FTB child of the parent for the whole period of the
pattern of care, despite the parent not having actual care for the whole period.
The parent's percentage of care is then reflected in their rate of FTB.
From 1 July 2008, a `regular care child' is defined in subsection 3(1) of the
Family Assistance Act. It is intended that a deeming rule similar to that in
subsection 22(7) should also apply in relation to a regular care child. Such a
rule would ensure that an individual's eligibility for, and rate of, rent assistance
takes into account a regular care child during the whole period of a pattern of
care for the child.
Item 2 inserts new section 25A into the Family Assistance Act, which
achieves this effect by ensuring that, where there is a pattern of care for a
child and an individual is determined under subsection 22(6A) as having at
least 14 per cent care but less than 35 per cent care, then the child is taken to
be a regular care child of the individual for the whole period of the pattern of
care.
Item 1 is a consequential amendment that inserts a note at the end of the
definition of regular care child in subsection 3(1) of the Family Assistance Act.
The new note refers the reader to the new rule in section 25A.
Section 25 would still ensure that a child whose care is less than 35 per cent
is not an FTB child.
Maintenance income ceiling
From 1 July 2008, new clause 24K of Schedule 1 to the Family Assistance Act
sets out an individual's maintenance income free area (MIFA) amount for the
purposes of the maintenance income ceiling (clauses 24G and 24N of
Schedule 1 refer).
32
The intent of subclause 24K(2) is to apportion the total MIFA relating to all the
relevant children in the household between the maintenance income received
from different maintenance payers. It is intended that the FTB children in the
formula in subclause 24K(2) should be consistent with the FTB children who
are included in calculating the total MIFA under clause 22.
In calculating an individual's MIFA, clause 22 of Schedule 1 excludes an
FTB child for whom maintenance income is disregarded under paragraph (a)
of step 1 of the method statement in clause 20 (for example, an FTB child
who has turned 16). Item 9 amends the formula in subclause 24K(2) of
Schedule 1 so that this exclusion also applies for the purposes of the
reference to `FTB children' in the formula.
Example
An FTB recipient receives maintenance income from Payer 1 for two
FTB children aged 14 and 16, and the FTB recipient's current partner
also receives maintenance income from Payer 2 for one FTB child
aged 10. In calculating the FTB recipient's MIFA under clause 22 of
Schedule 1, the FTB child aged 16 is excluded. Only the FTB children
aged 14 and 10 are included. Under subclause 24K(2):
· in calculating the MIFA amount for maintenance income
received from Payer 1, it is intended that the number of FTB
children should equal one (that is, the child aged 14), as the
FTB child aged 16 should be excluded;
· in calculating the MIFA amount for maintenance income
received from Payer 2, the number of FTB children would equal
one (that is, the child aged 10).
Clause 20C - lump sum child support
Paragraph 20C(1)(a) of Schedule 1 to the Family Assistance Act makes clear
that clause 20C does not apply to child maintenance for an FTB child under a
child support agreement to which clause 20B applies. If a child support
agreement has a `notional assessment', clause 20B will apply rather than
clause 20C, even if the agreement contains lump sum payment provisions.
This is the intended outcome.
However, subclause 20C(1) is not clear about situations where child
maintenance for an FTB child:
· is received under both a court order made under section 123A of the
Child Support (Assessment) Act 1989 (for example, order for transfer
of share of home property worth $20,000) and a court order made
under section 124 of that Act that has a notional assessment or a child
support agreement that has a notional assessment (for example,
order/agreement for payment of monthly home mortgage repayments);
or
33
· is received under both a child support agreement containing lump sum
payment provisions to which clause 20B does not apply (a `lump sum
only agreement') (for example, an agreement for transfer of share of
home property worth $20,000) and a court order made under
section 124 of that Act that has a notional assessment (for example,
order for payment of monthly home mortgage repayments).
In these situations, the intention is that clause 20C should not apply to the
child maintenance for the FTB child under the 123A court order or the `lump
sum only agreement'. Only clause 20B should apply, as there is a notional
assessment in relation to either the court order made under section 124 or the
child support agreement.
Item 8 provides that clause 20C does not apply in relation to an individual and
a child for a period if the individual is taken to receive child maintenance for
the child for the period under an agreement or order, in relation to which there
is a notional assessment, under subclause 20B(2), (3) or (4).
Disability expenses maintenance and notional assessments
Disability expenses maintenance is defined in subsection 19(3) of the Family
Assistance Act, and the definition of `maintenance income' in subsection 3(1)
excludes disability expenses maintenance.
From 1 July 2008, the treatment of notional assessments will be covered by
clause 20B of Schedule 1 to the Family Assistance Act. However, the
relationship between the rules regarding notional assessments in clause 20B
and disability expenses maintenance is unclear. The intention is that,
regardless of whether a liability under a child support agreement or court
order includes an amount for disability expenses, if the notional assessment
under the Child Support (Assessment) Act 1989 relating to the agreement or
order simply reflects the relevant child support formula amount, none of the
amount worked out under clause 20B should be disability expenses
maintenance. However, if the notional assessment has been altered to take
account of disability expenses (for example, by a departure from the relevant
child support formula amount), then the extra amount in the notional
assessment due to disability expenses should be excluded from the amount
worked out under clause 20B.
Item 7 adds some words at the end of subclause 20B(2) to ensure that the
notional assessed amount worked out under this provision does not include
so much of the annual rate of child support for the child for the period that is
attributable to disability expenses maintenance.
34
Income support supplement
Certain provisions in the family assistance law are designed to have a
particular effect for families who receive an income support payment paid by
Centrelink or the Department of Veterans' Affairs (DVA). Examples are the
exemption from the income test for FTB Part A or the streaming of such
families into receiving FTB in fortnightly instalments (rather than lump sums).
These provisions appropriately refer to social security income support
payments and to service pension, an income support payment administered
by DVA. However, some of the provisions do not refer to `income support
supplement' paid by DVA. The relevant provisions are
subparagraphs 1(2)(a)(ii) and (b)(ii) of Schedule 1 to the Family Assistance
Act and paragraphs 10(4)(b) and (d) and paragraph 21(3)(b) of the Family
Assistance Administration Act. Items 6, 11 and 13 amend these provisions to
refer also to `income support supplement' after existing references to `service
pension'.
The amendments ensure that there is consistency with other provisions in the
family assistance law that refer to both `service pension' and `income support
supplement' (for example, clause 17 of Schedule 1 to the Family Assistance
Act, which will become new clause 38L from 1 July 2008).
Restrictions on past period claims for FTB
Subsection 10(4) of the Family Assistance Administration Act streams income
support recipients who claim FTB for the previous income year into receiving
fortnightly payment of FTB by also requiring an instalment claim.
Paragraph 10(4)(a) needs to be updated to reflect a previous amendment to
subsection 10(2) of the Family Assistance Administration Act, which extended
the time period for making FTB for a past period by an extra 12 months.
Accordingly, item 10 amends paragraph 10(4)(a) so that it covers income
support recipients who claim FTB for either of the two income years before
the income year in which the claim is made.
Indexed estimates and indexed actual incomes
Sections 20A and 20B of the Family Assistance Administration Act set out the
circumstances in which the Secretary can calculate and use an indexed
estimate of an individual's adjusted taxable income or indexed actual income
for the purposes of calculating the individual's rate of FTB. Sections 55AA
and 55AB are the equivalent provisions for child care benefit.
Schedule 3 to the Family Assistance Act defines the concept of `adjusted
taxable income'. From 1 July 2008, the fringe benefits component of adjusted
taxable income is changing, from `adjusted fringe benefit total' (net value) to
`reportable fringe benefits total' (gross value).
35
The amendments made by item 12 (in relation to FTB) and item 14 (in
relation to child care benefit) ensure that indexed estimates and indexed
actual incomes that start to apply on or after 1 July 2008 would also be based
on the gross value of reportable fringe benefits. This would avoid an
understated estimate of income that would result if an indexed estimate or
indexed actual income for 2008-09 or a later year were to be based on the net
value of fringe benefits for 2007-08 or an earlier year.
Item 12 inserts a new section 20D into the Family Assistance Administration
Act.
If, in applying an indexed estimate or indexed actual income from 1 July 2008
or a later day, an estimate of the individual's adjusted fringe benefits total for
2007-08 or an earlier year would otherwise be taken into account, then an
amount worked out using the specified formula is to be taken into account
instead. The formula has the effect of reversing the adjustment required
under the current definition of `adjusted fringe benefits total'. This rule is in
new subsection 20D(1).
If, in applying an indexed estimate or indexed actual income from 1 July 2008
or a later day, an individual's actual adjusted fringe benefits total for 2007-08
or an earlier year would otherwise be taken into account, then the individual's
actual reportable fringe benefits total is to be taken into account instead. This
rule is in new subsection 20D(2).
Notes are inserted at the end of subsections 20D(1) and (2). They explain the
link between an individual's adjusted fringe benefits total and sections 20A
and 20B of the Family Assistance Administration Act.
New subsection 20D(3) defines the term `adjusted fringe benefits total' and
the related terms, `FBT rate' and `reportable fringe benefits total'. This
definition is the same as the current definition of `adjusted fringe benefits total'
in clause 4 of Schedule 3 to the Family Assistance Act (which is to be
repealed from 1 July 2008 as part of the child support reforms).
New subsection 20D(4) defines the concept of `reportable fringe benefits
total', which is referred to in new subsection 20D(2). The `reportable fringe
benefits total' for an income year of an individual who is an employee will
mean the employee's `reportable fringe benefits total' as defined in the Fringe
Benefits Tax Assessment Act 1986 for that year. This is the same as the
definition of `reportable fringe benefits total' that applies for the purposes of
the definition of `adjusted taxable income' from 1 July 2008.
Equivalent provisions (in new section 55AD) are inserted for child care benefit
by item 14.
36
Example
A single person has estimated income for 2007-08 of $60,700, based
on:
· taxable income of $50,000; and
· adjusted fringe benefits total of $10,700.
The adjusted fringe benefits total is based on a reportable fringe
benefits total of $20,000 which is adjusted by multiplying by 0.535 (one
minus the fringe benefits tax rate of 0.465) to give $10,700. The
indexed estimate for 2008-09 would currently be $60,700 x 1.038
(indexation factor) = $63,006.60.
As a result of the amendment, the indexed estimate for 2008-09 would
be based on the following amounts:
· taxable income $50,000;
· reportable fringe benefits total $20,000.
This would mean the indexed estimate for 2008-09 would become
$70,000 x 1.038 (indexation factor) = $72,660.
A person will continue to be able to provide their own reasonable estimate of
income, which would then be used instead of the indexed estimate or indexed
actual income to calculate their rate of FTB and child care benefit.
The amendments made by items 12 and 14 are to be taken to have
commenced from 1 April 2008. This reflects the commencement in April of
the process of calculating the indexed estimate for 2008-09 and sending
notices to recipients of FTB and child care benefit to advise the amount of the
indexed estimate to apply from 1 July 2008 (unless the person provides a
reasonable estimate of income). The indexed estimates, as amended by this
Schedule, would not have any effect on a person's entitlement to family
assistance before 1 July 2008. Any reduction in rate on the basis of the
indexed estimate (which might be perceived to be an adverse effect) could
apply only from 1 July 2008 at the earliest, and it remains open to the person
to provide a reasonable estimate of income that would be used from that date
instead of the indexed estimate in calculating rate.
Technical amendment
There are two different methods of calculating an individual's rate of FTB
Part A. (From 1 July 2008, there will be a third calculation method.) The first
method is set out in Part 2 (clauses 3 to 24S of Schedule 1).
Item 5 makes a technical correction to paragraphs 1(1)(a) and (2)(a) of
Schedule 1 to the Family Assistance Act to reflect this.
37
Application
Items 10 and 11 amend provisions relating to claims made for payment of
FTB for a past period. Item 15 provides for the application of these
amendments. The amendments will apply to claims made on or after
commencement (Royal Assent).
Amendments to the Child Support Legislation Amendment (Reform of
the Child Support Scheme--New Formula and Other Measures) Act 2006
These amendments clarify the effect under the child support scheme of court
orders and child support agreements which have retrospective effect prior to
1 July 2008. As a result of the amendments from 1 July 2008 effected by
Schedule 5 to the Child Support Legislation Amendment (Reform of the Child
Support Scheme--New Formula and Other Measures) Act 2006 (the
amending Act), the rules governing child support agreements and court orders
will be significantly changed. The effect of those rules is unclear where an
agreement accepted by the Child Support Registrar or a court order made
after 1 July 2008 has effect both prior to 1 July 2008 and after 1 July 2008.
These amendments make it clear that the amendments effected by
Schedule 5 to the amending Act apply only from 1 July 2008 for agreements
accepted after that date and affecting periods from 1 July 2008. Where an
agreement affects a period prior to 1 July 2008, it will be considered for
acceptance after 1 July 2008 by the Registrar both under the law applying
prior to 1 July 2008, and under the amended law. If the agreement cannot be
accepted for both periods, it will operate only for the period in relation to which
it can be accepted.
The amendments also provide that, where an application is made to a court
after 1 July 2008, in relation to a period in part prior to 1 July 2008, the court
must apply the law as it stood immediately prior to 1 July 2008 in making any
order affecting the pre-1 July 2008 period. The court must apply the law as
amended by the amending Act for the period from 1 July 2008. The Registrar
must take various administrative actions in response to a court order. The
amendments also make it clear that, where the court order is made in relation
to a period before 1 July 2008, the actions the Registrar must take are subject
to the law applying immediately before 1 July 2008.
Where the application for the court order is made prior to 1 July 2008, the
actions taken by the Registrar after 1 July 2008 similarly continue to be
subject to the law as it stands immediately prior to 1 July 2008.
Item 16 repeals and replaces item 73 of Schedule 5 to the amending Act,
dealing with the application of the amendments in Schedule 5.
38
New item 73 deals with the application of the Schedule 5 amendments to child
support agreements where the application to the Registrar for acceptance of
the agreement is made on or after 1 July 2008. Subitem 73(1) provides that
the amendments apply in respect of such an application where the agreement
period ends on or after 1 July 2008. A note directs readers to subitem 73(6)
for the definition of `agreement period'. Where the agreement only affects a
period prior to 1 July 2008, it will not be subject to the amendments made by
Schedule 5, despite the application for acceptance being made after
1 July 2008.
Subitem 73(2) deals with child support agreements that span 1 July 2008
where the application for acceptance of the agreement is made on or after
1 July 2008. Such agreements are to be taken to be two separate
agreements. The first agreement is taken to have effect for the period from
the beginning of the agreement period until 30 June 2008. The second
agreement is taken to have effect from 1 July 2008 until the end date of the
agreement period.
Subitem 73(3) provides that, where an agreement is taken to be two
agreements under the previous subitem, the law as it applied immediately
prior to 1 July 2008 continues to apply to the first agreement.
Subitem 73(4) makes it clear that the Registrar or a court may make different
decisions, or take different actions, in relation to the first and second
agreement.
Subitem 73(5) is an avoidance of doubt provision, to the same effect as
current subitem 73(2).
Subitem 73(6) defines `agreement period' for the purposes of an agreement
covered by subitem (1) as the period for which the child support agreement
has effect.
New item 73A deals with the application of the amendments effected by
Schedule 5 in relation to court orders.
Subitem 73A(1) provides that, where the application for an order is made to a
court on or after 1 July 2008, in relation to a period that ends on or after
1 July 2008, then the amendments made by Schedule 5 apply to the
application.
39
Subitem 73A(2) provides that, where the application relates in part to a period
before 1 July 2008, the Child Support (Assessment) Act 1989 and the Child
Support (Registration and Collection) Act 1988 as in force immediately prior to
1 July 2008 will apply to that period. The pre-1 July 2008 law will apply to the
court in making an order in response to the application, any appeal to a court
in relation to such an order, and in respect of any decision or action taken by
the Registrar in relation to such an order. A note to the provision makes it
clear that the Child Support (Assessment) Act 1989 and Child Support
(Registration and Collection) Act 1988 as in force on and after 1 July 2008
apply in respect of the period that begins on 1 July 2008, under subitem (1).
Subitem 73A(3) provides that a court may make different orders in relation to
the period that ends on 30 June 2008 and the period that begins on
1 July 2008 in response to an application made on or after 1 July 2008.
Similarly, subitem 73A(4) provides that the Registrar may make different
decisions, and take different actions, in relation to different orders made in
response to such an application
Subitem 73A(5) is an avoidance of doubt provision, in similar terms to current
subitem 73(3).
Item 17 makes a consequential amendment to subitem 74(2) of Schedule 5,
to maintain the effect of the current reference to subitem 73(2) by substituting
subitem 73(5).
Items 16 and 17 commence retrospectively, on the original commencement
date of the application provisions for the amending Act. No person's rights will
be adversely affected by the retrospectivity because the changes effected by
the amendments only relate to activities which will take place after
1 July 2008.
Amendments to the Child Support (Registration and Collection) Act 1988
As a result of the amendments to the child support formula from 1 July 2008
effected by the amending Act, a parent who is assessed as liable to pay the
minimum rate of child support (due to their low income) will be assessed at
the minimum rate for each of their child support cases, up to a maximum of
three cases. As the result of indexation, three times the minimum rate may
now amount to $39.00 per fortnight. Such liabilities, and any arrears owing by
the parent, may be collected by the Child Support Registrar by deduction up
to this amount from the parent's social security or Department of Veterans'
Affairs payments.
40
The amount deducted in respect of the ongoing child support liability is
prescribed by the regulations as the lesser of the amount of ongoing
fortnightly liability, or three times the minimum rate. The amount which may
be deducted in respect of arrears is then prescribed by the regulations as the
balance remaining of three times the minimum rate (that has not been
deducted in respect of ongoing liability). However, in cases of financial
hardship, amendments will allow the Registrar to negotiate a lesser rate of
deduction of arrears with the parent.
Minor additional amendments are made to improve the consistency and
readability of the provisions.
Paragraph 72AA(2)(d) allows the Registrar to give a notice to the Secretary,
instructing the Secretary to make deductions from a parent's social security
pension or social security benefit. Item 18 creates two new subparagraphs in
this paragraph. New subparagraph 72AA(2)(d)(i) has the same effect as
existing paragraph 72AA(2)(d), requiring the Secretary to deduct the amount
prescribed by the regulations for the purposes of the paragraph. New
subparagraph 72AA(2)(d)(ii) creates a discretion such that, where the
Registrar is satisfied the person is in financial hardship, the Registrar may
specify in the notice an amount less than the amount prescribed by the
regulations. The amount specified will be determined by the Registrar taking
into account all the circumstances of the case.
Similarly, paragraph 72AC(2)(d) allows the Registrar to give a notice,
instructing the Repatriation Commission to make deductions from a parent's
pension or allowance. Item 19 creates two new subparagraphs in this
paragraph. New subparagraph 72AC(2)(d)(i) has the same effect as existing
paragraph 72AC(2)(d), requiring the Repatriation Commission to deduct the
amount prescribed by the regulations for the purposes of the paragraph. New
subparagraph 72AC(2)(d)(ii) creates a discretion such that, where the
Registrar is satisfied the person is in financial hardship, the Registrar may
specify in the notice an amount less than the amount prescribed by the
regulations. The amount specified will be determined by the Registrar taking
into account all the circumstances of the case.
Item 20 deals with transitional matters for the purposes of items 18 and 19.
Subitem 20(1) provides that the validity of any notice given under current
paragraph 72AA(2)(d) before the commencement of item 18 is not affected by
the amendment. Subitems (2) and (3) deem regulations made for
paragraphs 72AA(2)(d) and 72AC(2)(d) before the commencement of this
amendment to have been made for the purposes of
subparagraphs 72AA(2)(d)(i) and 72AC(2)(d)(i) from 1 July 2008.
41
Amendments to the Social Security Act.
Item 21 makes a technical correction to the note to subsection 93K(1) of the
Social Security Act. Section 93K provides for a top-up of pension bonus if the
person's rate of age pension should increase because of a reduction in
ordinary income and/or assets in the 13 weeks after the start day for the
bonus. The note to subsection 93K(1) incorrectly refers to Part 2.3 (it should
be Part 3.2) as the location of Pension Rate Calculator A, which contains the
ordinary income and assets tests that may increase the rate of age pension
when there is a reduction in ordinary income and/or assets.
The item corrects this cross-reference, as well as pointing out that Pension
Rate Calculator B may also affect the rate of age pension in these
circumstances. That rate calculator for blind people, while not containing an
ordinary income test or assets test itself, may still produce a rate that has
regard to a reduction in ordinary income or assets because, under step 6 of
the method statement in point 1065-A1, the blind person's rate of pension is
the higher of the notional income/assets tested rate under Pension Rate
Calculator A and the non-income/assets tested rate under Pension Rate
Calculator B. There is no new policy in this technical correction.
Items 22 and 23 make grammatical corrections to subsection 1192(1) and
section 1198B respectively.
42
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