Commonwealth of Australia Explanatory Memoranda

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FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS AND OTHER LEGISLATION AMENDMENT (2008 BUDGET AND OTHER MEASURES) BILL 2008

                                2008




     THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                              SENATE




FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
  AND OTHER LEGISLATION AMENDMENT (2008 BUDGET AND OTHER
                     MEASURES) BILL 2008




          SUPPLEMENTARY EXPLANATORY MEMORANDUM




Amendments and Requests for amendments to be moved on behalf of the
                           Government




   (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

The amendments restore the use of the value of net fringe benefits for the
purposes of the family assistance law.

Financial impact statement

The revised financial impact statement for Schedule 6 to the Bill is as follows:

Total administered 2007-08         2008-09       2009-10       2010-11
for all agencies
                   $0.0 m          $61.8 m       $63.4 m       $65.0 m


Departmental expenses will be identified at Additional Estimates. There has
been insufficient time since the Government's announcement to accurately
quantify these costs.
FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
  AND OTHER LEGISLATION AMENDMENT (2008 BUDGET AND OTHER
                     MEASURES) BILL 2008


NOTES ON AMENDMENTS

Adjusted fringe benefits total

Amendment 3 inserts new items 9A, 9B and 9C into Schedule 6 of the Bill.

Items 9A and 9B amend the A New Tax System (Family Assistance) Act 1999
with the effect that, in working out an individual's adjusted taxable income, the
individual's `adjusted fringe benefits total' and not their `reportable fringe benefits
total' is relevant.

Item 9A omits the reference to `reportable fringe benefits total' in
paragraph 2(1)(b) of Schedule 3 and replaces it with a reference to `adjusted
fringe benefits total'.

Item 9B repeals clause 4 of Schedule 3 which, from 1 July 2008, provides a
definition of `reportable fringe benefit total'. In its place, the current definition of
`adjusted fringe benefits total' is reinstated.

An individual's adjusted fringe benefits total is worked out using the formula:

              Reportable fringe benefit total x (1-FBT rate)

For the purposes of the formula, `FBT rate' is defined as the rate of tax set by the
Fringe Benefits Tax Act 1986 for the FBT year beginning on the 1 April before the
start of the income year. The `reportable fringe benefits total' is defined by
reference to the Fringe Benefits Tax Assessment Act 1986.

Item 9C provides that these changes apply in relation to the 2008-09 income
year and later income years.

Amendment 1 amends the commencement table in clause 2 of the Bill to
provide that the changes made by new items 9A, 9B and 9C commence on
1 July 2008.

Indexed estimates and indexed actual incomes

Items 12 and 14 of Schedule 6 to the Bill amend the A New Tax System (Family
Assistance) (Administration) Act 1999. These amendments provide that indexed
estimates of income and indexed actual incomes that start to apply on or after
1 July 2008 are to be based on the gross value of reportable fringe benefits
rather than the net value, consistent with the child support reform changes to the
definition of adjusted taxable income that were to apply from 1 July 2008.

                                           1
Items 12 and 14 of Schedule 6 are opposed by Amendments 4 and 5 as a
consequence of the changes proposed by Amendment 3.

Amendment 2 makes a consequential change to the commencement table in
clause 2 of the Bill to omit items 17 and 19 which provide for the commencement
of items 12 and 14 of Schedule 6.




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