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2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Hon Kevin Andrews MP)
SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT BILL 2013
OUTLINE
Encouraging responsible gambling
As foreshadowed during the 2013 election campaign, this Bill will implement the first
stage of a different approach to addressing problem gambling, reducing bureaucracy
and the duplication of functions between the Australian Government and State and
Territory Governments.
The Bill will repeal the position and functions of the National Gambling Regulator,
along with those provisions relating to the supervisory and gaming machine
regulation levies, the automatic teller machine withdrawal limit, dynamic warning
provisions, the trial on mandatory pre-commitment, and matters for Productivity
Commission review. The Bill will also amend the pre-commitment and gaming
machine capability provisions, to express clearly the Governments commitment to
the development and implementation of these measures in the near future, informed
fully by consultations with industry, State and Territory Governments, and other
stakeholders.
Continuing income management as part of Cape York Welfare Reform
The Bill amends the Social Security Administration Act to enable a two-year
continuation of income management as part of the continuation of Cape York
Welfare Reform. The continuation of income management until the end of 2015 as a
key element of the reforms will continue to assist in stabilising peoples
circumstances and fostering behavioural change, particularly in the areas of school
attendance, parental responsibility and increasing individual responsibility.
Family tax benefit and eligibility rules
From 1 January 2014, family tax benefit Part A will be paid to families only up to the
end of the calendar year in which their teenager is completing school.
Youth allowance, with its ,,learn or earn provisions that require young people to
participate in work, job search, study or training, will remain available as the more
appropriate payment to help young people transition from school into work or
post-secondary study.
Exemptions will continue to apply for children who cannot work or study due to
physical, psychiatric, intellectual or learning disability.
1
Period of Australian working life residence
From 1 January 2014, age pensioners and certain other pensioners with unlimited
portability, will be required to have been Australian residents for 35 years during their
working life (from age 16 to age pension age) to receive their full means-tested
pension after 26 weeks absence from Australia. The current requirement is
25 years. The change will also apply to all pensioners paid under social security
agreements outside Australia, except those with Greece and New Zealand due to
the specific terms of those agreements.
The change recognises that Australias social security system differs markedly from
the contributory systems that operate overseas, and that payments are made from
general tax revenue and based on the concepts of residence and need. Other
countries generally require 35 to 45 years of pension contributions to receive a full
pension.
Pensioners who are living overseas immediately before 1 January 2014 will continue
to be paid under the current 25-year rule, unless they return to Australia for longer
than 26 weeks and leave again, when the new rules will start to apply to their
pension calculation.
In an associated change, members of a couple paid outside Australia under a social
security agreement will now have their pensions calculated on the basis of their own
Australian working life residence, rather than their partners Australian working life
residence, as already applies to pensioners paid outside Australia under domestic
portability rules in non-agreement countries. Existing pensioners outside Australia
immediately before 1 January 2014 are exempt from this change unless they would
be eligible for a higher rate of pension under the new rules.
Interest charge
The Bill will allow for an interest charge to be applied to certain debts relating to
austudy payment, fares allowance, youth allowance payments to full-time students
and apprentices, and ABSTUDY living allowance payments. The interest charge will
only be applied where the debtor does not have or is not honouring an acceptable
repayment arrangement. Debtors who are already making repayments, or who
come to a repayment agreement with the Department of Human Services following
the implementation of the measure, will not be charged interest.
The key purpose of the interest charge is to encourage debtors to repay their debt,
in a timely fashion, where they have the financial capacity to do so. At present,
current recipients of income support with debts have their payments reduced until
their debts are repaid. For former recipients of income support, on the other hand,
there is no incentive to repay their debts. Once the interest charge is in place,
debtors who have not been making repayments will have an incentive to engage with
the Department of Human Services to make a repayment arrangement in order to
avoid the interest charge.
2
The rate of the interest charge will be based upon on the 90-day Bank Accepted Bill
rate, plus an additional seven per cent, as is currently applied by the Australian
Taxation Office for tax debts under the Taxation Administration Act 1953. Over the
last four years, this rate has averaged 11.07 per cent, and currently stands at
9.6 per cent.
Student start-up loans
The Bill establishes, from 1 January 2014, the student start-up loan. These loans
will be income-contingent, and there will be a limit of two loans a year of $1,025 each
(indexed from 2017). The loans will be repayable under similar arrangements to
Higher Education Loan Program debts. Students will only be required to begin
repaying their start-up loan after their Higher Education Loan Program debt has been
repaid.
The Bill also provides grandfathering arrangements so that recipients who received a
student start-up scholarship or Commonwealth Education Costs Scholarship prior to
1 January 2014, and have remained continuously on student payments, will continue
to be eligible to receive the student start-up scholarship, as a grant, until coming off
student payments.
The student start-up loan and student start-up scholarship aim to assist students with
the costs of study, including the purchase of text books, computers and internet
access.
Paid parental leave
To ease administrative burdens on business, the Paid Parental Leave legislation will
be amended to remove the requirement for employers to provide
Government-funded parental leave pay to their eligible long-term employees.
From 1 March 2014, employees will be paid directly by the Department of Human
Services, unless an employer opts in to provide parental leave pay to its employees
and an employee agrees for their employer to pay them.
Pension bonus scheme
From 1 March 2014, the Bill will end late registrations for the closed pension bonus
scheme.
The scheme provides a lump sum payment to people who are qualified for age
pension, age service pension, partner service pension after reaching pension age,
or income support supplement after reaching qualifying age - but who choose to
defer their pension and remain in the workforce. The scheme was closed from 2009,
although people remained able to register for the scheme if they were qualified for it,
but had not registered, at the time of its closure.
However, the introduction around the same time of a work bonus for age pensioners
with earnings from employment has been more effective in encouraging older
Australians to continue contributing to the workforce past pension age. Ending late
registrations for the pension bonus scheme will help ensure the pension system is
simpler and more sustainable for older Australians into the future.
3
Indexation
This Bill will extend the indexation pauses on certain higher income limits for three
further years until 30 June 2017.
This will apply to the family tax benefit Part B primary earner income limit,
the parental leave pay and dad and partner pay individual income limits,
and the higher income free area for family tax benefit Part A. In addition, the annual
end-of-year family tax benefit supplements will remain at current levels for three
years.
This Bill will also maintain the annual child care rebate limit at $7,500 for three
further income years starting from 1 July 2014, with the first indexation of this
amount occurring on 1 July 2017. As a result, an individual will be able to receive up
to the maximum amount of $7,500 per child per financial year for out-of-pocket child
care costs for those three income years.
Changes to the rules for receiving payments overseas
From 1 July 2014, the length of time that families can be temporarily overseas and
continue to receive family and parental payments will reduce from three years to
56 weeks.
In some circumstances, (such as where certain Australian Defence Force and
Australian Federal Police personnel are deployed overseas) a person will continue to
be eligible for family and parental leave payments for up to three years while
temporarily absent from Australia.
Extending the deeming rules to account-based income streams
The Bill will align the income test treatment of account-based superannuation income
streams, for products assessed from 1 January 2015, with the deemed income rules
applying to other financial assets. Account-based income streams held by income
support recipients immediately before 1 January 2015 will continue to be assessed
under the previous rules unless recipients choose to change to a product that is
assessed under the new rules.
Other amendments
Other amendments include improving the administration of debt recovery under the
Student Financial Supplement Scheme, clarifying the provisions relating to the time
period for lodging tax returns for family assistance purposes, and ensuring that
funding under the National Disability Insurance Scheme paid into a persons
account, which is set up for the purpose of managing the funding for supports for a
participants plan, cannot be garnisheed for debt recovery purposes.
4
Financial impact statement
MEASURE FINANCIAL IMPACT
Encouraging responsible gambling Abolition of the National Gambling Regulator may
result in savings.
Continuing income management as Cost of $4.2 million over two years.
part of Cape York Welfare Reform
Family tax benefit and eligibility Saving of $76.6 million over four years.
rules
Period of Australian working life Saving of $50.8 million over four years.
residence
Interest charge Saving of $33.5 million over three years.
Student start-up loans Saving of $1,214.0 million over five years.
Paid parental leave Cost of $7.0 million over five years.
Pension bonus scheme Saving of $80.5 million over three years.
Indexation - child care rebate Saving of $105.8 million over three years.
Indexation - remaining Saving of $1,213.7 million over four years.
amendments
Reduction of period for temporary Saving of $18.8 million over four years.
absence from Australia
Extending the deeming rules to Saving of $161.7 million over four years.
account-based income streams
Other amendments Nil
REGULATION IMPACT STATEMENT
The regulation impact statement for the paid parental leave measure appears at the
end of this explanatory memorandum.
STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS
The statements of compatibility with human rights appear at the end of this
explanatory memorandum.
5
SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT BILL 2013
NOTES ON CLAUSES
Abbreviations used in this explanatory memorandum
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
Paid Parental Leave Act means the Paid Parental Leave Act 2010
Social Security Act means the Social Security Act
Social Security Administration Act means the Social Security
(Administration) Act 1999
Student Assistance Act means the Student Assistance Act 1973
Taxation Administration Act means the Taxation Administration Act 1953
Clause 1 sets out how the new Act is to be cited - that is, as the Social Services and
Other Legislation Amendment Act 2013.
Clause 2 provides a table that sets out the commencement dates of the various
sections in, and Schedules to, the new Act.
Clause 3 provides that each Act that is specified in a Schedule is amended or
repealed as set out in that Schedule.
1
Schedule 1 - Encouraging responsible gambling
Summary
As foreshadowed during the 2013 election campaign, this Schedule will implement
the first stage of a different approach to addressing problem gambling, reducing
bureaucracy and the duplication of functions between the Australian Government
and State and Territory Governments.
The Schedule will repeal provisions no longer required and make amendments
to express clearly the Governments commitment to the development and
implementation of appropriate measures in the near future, informed fully by
consultations with industry, State and Territory Governments, and other
stakeholders.
Background
In broad terms, this Schedule repeals the position and functions of the National
Gambling Regulator, along with provisions relating to the supervisory and gaming
machine regulation levies, the automatic teller machine withdrawal limit, dynamic
warning messages on gaming machines, the trial of mandatory pre-commitment,
and matters for Productivity Commission review. All related compliance and
enforcement provisions are also repealed.
This Schedule also replaces existing provisions relating to pre-commitment systems
with provisions that recognise the Governments commitment to responsible
gambling and its support for voluntary pre-commitment as a part of a broader plan to
assist all gamblers.
Explanation of the changes
Amendments to the National Gambling Reform Act 2012
Item 1 repeals the long title of the Act and substitutes a new title, ,,An Act in relation
to measures to encourage responsible gambling, and for related purposes. This
new title reflects the new object of the Act, as described in new section 4 (inserted by
item 6).
Item 2 repeals the Chapter 1 heading, consistent with the revised structure of the
Act.
Item 3 omits the words, ,,National Gambling Reform, from the short title of the Act
set out in section 1, and substitutes the words, ,,Gambling Measures. This
amendment reflects the substituted long title of the Act (referred to in item 1).
Item 4 repeals the note from section 2. The note refers the reader to Part 2, which
deals with the application of the Act. As Part 2 is also repealed, the note becomes
redundant.
2
Schedule 1 - Encouraging responsible gambling
Item 5 repeals section 3, setting out the Guide to the Act.
Item 6 repeals and substitutes section 4 to provide the new object of the Act, which
is to recognise the Commonwealths commitment to the development and
implementation of voluntary pre-commitment in venues nationally in order to
encourage responsible gambling by all gamblers.
Item 7 repeals and substitutes section 5 to remove redundant definitions and provide
definitions of Australian Institute of Family Studies and Director of the
Australian Institute of Family Studies.
Item 8 is a technical amendment.
Item 9 repeals subsections 6(2) to (4) to simplify the definition of gaming machine.
Item 10 repeals sections 7 to 12, which are no longer required due to the other
changes made by this Schedule.
Item 11 repeals Part 2 (Application of the Act), which is also not required due to the
other changes made by this Schedule.
Item 12 repeals Chapter 2 and substitutes a new Part 2, which sets out the
measures that are to be taken to encourage responsible gambling.
Under new section 19, the Commonwealth recognises the importance of meaningful
measures to encourage responsible gambling. The provision also acknowledges the
Commonwealth support for venue-based voluntary pre-commitment (which allows a
person to set voluntarily a limit on the amount they are prepared to lose from playing
gaming machines).
New section 20 sets out the Commonwealths commitment to work with State and
Territory Governments and relevant stakeholders including the gaming industry to:
develop and implement a voluntary pre-commitment system in venues
nationally and to develop a realistic implementation timeframe for this
measure; and
ensure that gaming machines are capable of supporting a venue-based
voluntary pre-commitment system and to develop a realistic implementation
timeframe.
In new section 21, the Commonwealth commits to working with State and Territory
Governments on the most appropriate way of administering the voluntary
pre-commitment measure.
Item 13 repeals Chapters 3 to 8.
Item 14 repeals the heading Chapter 9, consistent with the revised structure of
the Act.
Item 15 repeals Part 1 of Chapter 9, setting out the Guide to Chapter 9.
3
Schedule 1 - Encouraging responsible gambling
Item 16 repeals the heading of Part 2 of Chapter 9 and substitutes a new heading for
new ,,Part 3 - Research and other provisions, consistent with the revised structure of
the Act.
Item 17 repeals the heading of Division 1 of Part 2 of Chapter 9, consistent with the
revised structure of the Act.
Item 18 repeals sections 193 to 195 to remove provisions relating to the Productivity
Commission review.
Item 19 repeals subsection 196(2) to remove the limitation in use of the supervisory
levy. This amendment is consequential to the repeal of the supervisory levy
provisions by item 13.
Item 20 repeals the heading of Division 2 of Part 2 of Chapter 9, consistent with the
revised structure of the Act.
Item 21 repeals sections 198 to 200 and substitutes a new section 198 to provide
that the Act does not create rights or duties that are legally enforceable in judicial or
other proceedings.
Item 22 makes a technical amendment subsection 201(1).
Item 23 repeals subsection 201(2), to remove the express power to make
regulations prescribing offences and civil penalty provisions.
Item 24 repeals the National Gambling Reform (Related Matters) Act (No. 1) 2012.
This Act becomes redundant with the repeal of the supervisory levy.
Item 25 repeals the National Gambling Reform (Related Matters) Act (No. 2) 2012.
This Act becomes redundant with the repeal of gaming machine regulation levy.
4
Schedule 2 - Continuing income management as part of
Cape York welfare reform
Summary
This Schedule amends the Social Security Administration Act to enable a two-year
continuation of income management as part of the continuation of Cape York
Welfare Reform. The continuation of income management until the end of 2015 as a
key element of the reforms will continue to assist in stabilising peoples
circumstances and fostering behavioural change, particularly in the areas of school
attendance, parental responsibility and increasing individual responsibility.
Background
Cape York welfare reform is a partnership between the communities of Aurukun,
Coen, Hope Vale and Mossman Gorge, the Australian Government, the Queensland
Government and the Cape York Institute for Policy and Leadership. It aims to
restore local Indigenous authority, rebuild social norms, encourage positive
behaviours, and improve economic and living conditions.
To date, Cape York welfare reform has made a real difference in the lives of
Indigenous people in the four communities. Since it began in July 2008,
the Cape York welfare reform communities have seen improved school attendance,
care and protection of children and community safety.
A 2012 evaluation of Cape York welfare reform found that progress has been made
at the foundational level in stabilising social circumstances and fostering behavioural
change, particularly in the areas of sending children to school, caring for children and
increasing individual responsibility.
The Family Responsibilities Commission, which is established under Queensland
Government legislation, is a key plank of Cape York welfare reform. Local
Commissioners hold conferences with community members, refer people to support
services and, when necessary, arrange income management. Income management
acts both as a means to ensure financial stability for families and as an incentive for
the individual to engage with support services and observe behavioural obligations.
Currently, a person can be subject to income management under Cape York welfare
reform only after a decision by the Family Responsibilities Commission made before
1 January 2014.
This Schedule amends the Social Security Administration Act to extend this date to
1 January 2016, enabling income management to continue in the four Cape York
welfare reform communities for two further years.
5
Schedule 2 - Continuing income management as part of Cape York Welfare Reform
Explanation of the changes
Amendments to the Social Security Administration Act
Paragraphs 123UF(1)(g) and 123UF(2)(h) of the Social Security Administration Act
currently provide that a person can be subject to income management under
section 123UF only after a decision by the Family Responsibilities Commission
made before 1 January 2014.
Item 2 omits the references to 1 January 2014 in paragraph 123UF(1)(g)
and paragraph 123UF(2)(h), and substitutes references to 1 January 2016.
6
Schedule 3 - Family tax benefit and eligibility rules
Summary
From 1 January 2014, family tax benefit Part A will be paid to families only up to the
end of the calendar year in which their teenager is completing school.
Youth allowance, with its ,,learn or earn provisions that require young people to
participate in work, job search, study or training, will remain available as the more
appropriate payment to help young people transition from school into work or
post-secondary study.
Exemptions will continue to apply for children who cannot work or study due to
physical, psychiatric, intellectual or learning disability.
Background
Currently, family tax benefit Part A can be payable to a parent or guardian, or an
approved care organisation, for children aged 0 to 15, children aged 16 to 17 who
are still undertaking or have completed secondary study, and dependent full-time
secondary students aged 18 until the end of the calendar year they turn 19.
From 1 January 2014, this Schedule limits eligibility for family tax benefit Part A to
families with children aged 0 to 15 and teenagers aged 16 to 19 (until the end of the
calendar year they turn 19) who are in full-time secondary study to attain their Year
12 qualification or equivalent. Eligibility for children aged 16 to 17 who have already
completed their Year 12 qualification will be removed. This Schedule also makes
similar changes to eligibility for family tax benefit for approved care organisations.
Exemptions will still continue to apply for a child who lacks capacity to undertake the
course due to physical, psychiatric, intellectual or learning disability so that these
children may still be eligible for family tax benefit.
This Schedule also removes the child ,,cut-out amount or income limit, which is
currently $14,078 per annum, as family tax benefit will no longer be paid for children
who have completed school and entered the workforce.
The amendments made by this Schedule commence on 1 January 2014.
Explanation of the changes
Amendments to the Family Assistance Act
Items 1 and 2 repeal the definitions of exempt from the FTB activity test and
satisfies the FTB activity test in subsection 3(1). These items are consequential to
item 3.
Item 3 repeals the FTB activity test in section 17B. This concept will no longer be
used as the family tax benefit participation requirements will instead be incorporated
in the definition of senior secondary school child.
7
Schedule 3 - Family tax benefit and eligibility rules
Item 4 repeals paragraph 22(3)(e) to remove the reference to the FTB activity test,
and substitutes new paragraph 22(3)(e), containing the requirement for an FTB child
aged 16 to 17 to be a senior secondary school child (defined in section 22B).
Item 5 is consequential to item 8.
Item 6 repeals and substitutes a cell at table item 1 in subsection 22A(1), to remove
the concept of the ,,cut-out amount, which applies to a child aged from 5 to less than
16 who is not undertaking education, but retain other current requirements before the
child is considered to be an FTB child.
Item 7 repeals paragraph (a) of the cell at table item 2 in subsection 22A(1), to
remove the concept of the cut-out amount for a child aged 16 or more who is not in
secondary study.
Item 8 repeals subsections 22A(1A) and (2), to remove the definition of cut-out
amount for an FTB child and the concept of undertaking primary education for the
purposes of the cut-out amount.
Item 9 repeals and substitutes subparagraph 22B(1)(b)(ii) to provide that an
individual may be a senior secondary school child if the individual has an exemption
from the full-time study requirement in new subsection 22B(2), inserted by item 10.
Item 10 repeals subsection 22B(2), and substitutes new subsections 22B(2) and
(2A). New subsection 22B(2) incorporates the exemptions from the full-time study
requirement for a senior secondary school child that were incorporated in
section 17B, now repealed by item 3. Under new subsection 22B(2), an individual
may be exempt from satisfying the family tax benefit participation requirements and
still be a senior secondary school child if:
there is no locally accessible course (including a distance education course);
or
if there is a course:
o there is no place available on the course; or
o the individual is not qualified to undertake the course; or
o the individual lacks the capacity to undertake the course because they
have a physical, psychiatric or intellectual disability or a learning
disability, such as for example attention deficit disorder; or
in the Secretarys opinion, special circumstances exist that make it
unreasonable to require the individual to undertake an approved course of
education or study.
New subsection 22B(2A) incorporates the capacity, repealed under item 3, for the
Secretary to determine, for the purposes of subparagraph 22B(1)(b)(i) or (ia), that
the normal amount of full-time study for the individual in respect of a course is a
number of hours averaged over the duration of the period for which the individual is
enrolled in the course.
8
Schedule 3 - Family tax benefit and eligibility rules
Items 11 and 12 are technical amendments that insert new headings before
subsections 22B(3) and (4).
Items 13 and 14 are consequential amendments to paragraphs 31(3)(a), (b) and (c)
to lower the age limits for continued eligibility for family tax benefit if an FTB child or
regular care child dies.
Item 15 repeals subparagraphs 34(1)(a)(ii) and (iii), and substitutes new
paragraph 34(1)(a)(ii), to change an approved care organisations eligibility for family
tax benefit in respect of children who have turned 16 so that eligibility is restricted to
children who are senior secondary school children.
Item 16 repeals table item 1 in subsection 35(1), consistent with the change made in
item 6.
Item 17 repeals and substitutes a cell at table item 2 in subsection 35(1), consistent
with the change made in item 7.
Item 18 repeals subsections 35(2A) and (3), consistent with the change made in
item 8.
Items 19 to 22 are consequential amendments to the single income family
supplement and family tax benefit rate calculation provisions, consistent with the
changes made in items 13 and 14.
Item 23 omits the words, ,,but is under 16, in table item 2 in clause 7 of Schedule 1,
which sets out the family tax benefit Part A standard rates per child.
Item 24 repeals table items 3 and 4 in clause 7 of Schedule 1, consequential to
item 23.
Item 25 omits the words, ,,but is under 16, in table item 2 in subclause 38AA(1) of
Schedule 1, which sets out the family tax benefit Part A clean energy supplement
rates per child.
Item 26 repeals table items 3 and 4 in subclause 38AA(1) of Schedule 1,
consequential to item 25.
Item 27 repeals and substitutes subclause 38B(3) of Schedule 1 to provide that a
regular care child of an individual is a rent assistance child of the individual if the
regular care child is not an absent overseas regular care child.
Items 28, 29 and 30 repeal table item 14A in clause 2 of Schedule 4, table item 14A
in subclause 3(1) of Schedule 4, and subclause 3(4) of Schedule 4. These
amendments are consequential to items 8 and 18.
Amendments to the Family Assistance Administration Act
Item 31 amends subsection 29(2B), and is consequential to items 3 and 4.
9
Schedule 3 - Family tax benefit and eligibility rules
Item 32 removes the requirement in paragraph 32J(1)(b) to consider the income of
an FTB child or regular care child in working out an individuals entitlement to family
tax benefit, and is consequential to item 8.
Item 33 repeals sections 32K and 32L, and is consequential to item 8.
Item 34 amends subparagraph 32P(1)(c)(ii), and is consequential to item 35.
Item 35 repeals paragraph 32P(1)(d), and is consequential to item 8.
Item 36 sets out the application and savings provisions for this Schedule.
10
Schedule 4 - Period of Australian working life residence
Summary
From 1 January 2014, age pensioners and certain other pensioners with unlimited
portability, will be required to have been Australian residents for 35 years during their
working life (from age 16 to age pension age) to receive their full means-tested
pension after 26 weeks absence from Australia. The current requirement is
25 years. The change will also apply to all pensioners paid under social security
agreements outside Australia, except those with Greece and New Zealand due to
the specific terms of those agreements.
Pensioners who are living overseas immediately before 1 January 2014 will continue
to be paid under the current 25-year rule, unless they return to Australia for longer
than 26 weeks and leave again, when the new rules will start to apply to their
pension calculation.
In an associated change, members of a couple paid outside Australia under a social
security agreement will now have their pensions calculated on the basis of their own
Australian working life residence, rather than their partners Australian working life
residence, as already applies to pensioners paid outside Australia under domestic
portability rules in non-agreement countries. Existing pensioners outside Australia
immediately before 1 January 2014 are exempt from this change unless they would
be eligible for a higher rate of pension under the new rules.
Background
Strengthening Australian working life residence requirements
Domestically-qualified pensioners
Currently, some Australian pensions may continue to be paid to a pensioner who is
overseas for an unlimited period. However, after 26 weeks, such pensions are paid
at a rate which is a proportion of the domestic rate of pension where the pensioner
has less than 25 years of Australian working life residence.
A persons working life is the period beginning when the person turns 16 and ending
when the person reaches age pension age (as defined in the Social Security Act).
A pensioners period of Australian working life residence is the aggregate of periods
during the persons working life during which the person has been an Australian
resident.
Where the person has an Australian working life residence of 25 years or more, their
pension is not reduced. However, if they have an Australian working life residence
of less than 25 years, their pension is reduced to the percentage of the full
means-tested rate of pension represented by dividing the number of years of their
Australian working life residence by 25 years. For example, a person with 15 years
of Australian working life residence will have their maximum payment rate reduced to
60 per cent - a percentage calculated on the basis of 15 years divided by 25 years.
11
Schedule 4 - Period of Australian working life residence
This has been significantly more generous than the pension rules of other OECD
countries, which generally require 35 to 45 years of pension contributions to receive
a full pension. For example, France, Denmark, Japan and Canada require 40 years
of pension contributions, and New Zealand has a 45-year working age residence
requirement for payment overseas.
These amendments increase the required working life residence to receive a full
means-tested rate of pension overseas from 25 to 35 years.
Pensions affected are age pension and, in some circumstances, disability support
pension, wife pension and widow B pension.
The change will apply from 1 January 2014 to absences from Australia commencing
on or after that day. In general, the change will not apply to pensioners who are
already overseas on 1 January 2014, unless they subsequently return to Australia for
a period of more than 26 weeks. Special arrangements will also be made for
pensioners who reside overseas, but are temporarily in Australia on 1 January 2014.
Provided such pensioners again leave Australia to return overseas before the expiry
of 26 weeks from 1 January 2014, their pension rate will continue to be calculated by
reference to a period of 25 years working life residence.
Pensioners paid under international agreements
In some circumstances, an Australian pension is paid to a pensioner as a result of
the operation of one of Australias various social security agreements with other
countries. In this case, a scheduled international social security agreement under
the Social Security (International Agreements) Act 1999 (the Social Security
International Agreements Act) may override the ordinary provisions of the social
security law. For pensioners who are outside Australia, and receive an Australian
social security payment solely because of the operation of a scheduled international
agreement, where the rate of payment is to be determined under the agreement
according to the law of Australia, Australian working life residence is also relevant.
For a small number of Australias international agreements, calculation of pension
rate for a pensioner who is in Australia may also be subject to Australian working life
residence. To align with the change from 25 to 35 years for domestically-qualified
pensioners, the Social Security International Agreements Act is also amended to
increase the base Australian working life residence from 25 to 35 years.
The change will similarly apply to absences or to the rate of pensions granted under
an international agreement from 1 January 2014. However, if a pensioner is outside
Australia at this date and is receiving a social security payment under a scheduled
international agreement at a rate worked out taking into account the persons period
of Australian working life residence, the amendments will not apply unless the
person subsequently returns to Australia for a period of at least 26 weeks. Similarly,
where such a pensioner resides overseas, but is temporarily in Australia on
1 January 2014, their pension rate will continue to be calculated by reference to a
period of 25 years working life residence, provided they again leave Australia to
return overseas before the expiry of 26 weeks from 1 January 2014.
12
Schedule 4 - Period of Australian working life residence
Paying pensioners qualified under international agreements based upon their
own working life residence
In a related change, members of a couple paid outside Australia under a social
security agreement will have their pensions calculated on the basis of their own
Australian working life residence, rather than their partners or former partners
Australian working life residence.
Currently, partnered age and disability support pensioners, or former members of
age or disability support pension couples, paid under the Social Security
International Agreements Act, are able to be paid according to the higher Australian
working life residence duration of either partner. A person receiving, under the
Social Security International Agreements Act, either carer payment in respect of their
care for their partner or wife pension, is deemed to have a period of Australian
working life residence that is equal to the Australian working life residence of their
partner (even if that is less than their own). Basing these peoples pensions upon
their own Australian working life residence will mean that these pensioners are
treated the same as pensioners paid outside Australia under domestic portability
rules.
This change will also apply to periods of absence commencing on or after
1 January 2014, such that pensioners already overseas at that date will not be
affected unless they return to Australia for at least 26 weeks. However, for some
wife pensioners or carer payment recipients already overseas, the change may
result in a higher rate of payment. If so, despite the fact they are already overseas,
the amendments will apply to the calculation of their pensions from 1 January 2014.
Explanation of the changes
Amendments to the Social Security Act
Module C of the Pension Portability Rate Calculator at section 1221 provides for the
calculation of the residence factor, as part of the process of generating a rate of
pension for portable pensions. Point 1221-C1 provides that, if a persons period of
Australian working life residence is 300 months (25 years) or more, the persons
residence factor is 1. Item 2 omits the reference in this point to 300 months
(25 years) and substitutes 420 months (35 years). Item 1 updates the heading to
the point, to refer to 35 years, rather than 25 years.
Point 1221-C2 provides the formula for calculating the residence factor. The formula
divides the persons period of Australian working life residence by 300 months
(25 years) if the persons period of Australian working life residence is less than
25 years. Items 4 and 5 omit the references to 300 months (25 years) in this point
and the related formula, and substitute references to 420 months (35 years). Item 3
updates the heading to the point, to refer to 35 years, rather than 25 years.
Item 6 provides for the application of these changes. Subitem 6(1) provides that the
change from 25 to 35 years Australian working life residence applies to periods of
absence from Australia starting on or after 1 January 2014. However, the other
subitems qualify this general case.
13
Schedule 4 - Period of Australian working life residence
Subitem 6(2) deals with a situation where a person receiving a portable pension
which may be subject to a proportional calculation based upon Australian working life
residence, is in Australia immediately before 1 January 2014, although is not at that
date residing in Australia. Provided such a person departs Australia before the end
of the period of 26 weeks beginning on 1 January 2014, and remains in receipt of
that pension at the point of departure, then the amendments do not apply (subject to
subitem (5)).
Subitem 6(3) deals with a person who came within the situation covered by
subitem (2), who again returns to Australia on or after 1 January 2014. Where such
a person again leaves Australia within the period of 26 weeks of returning, and
remains in receipt of that pension, then the amendments do not apply. However, this
is subject to subitem (5).
Subitem 6(4) deals with the situation where a person receiving a portable pension
which is subject to a proportional calculation based upon Australian working life
residence, was outside Australia immediately before 1 January 2014.
The amendments do not apply to such a person by virtue of subitem (1). If such a
person later returns to Australia, but again leaves Australia within 26 weeks of
returning having remained in receipt of their pension, then subitem (4) provides that
the amendments will not apply to the later absence, subject to subitem (5).
The above items may prevent application of the amendments for successive returns
to and departures from Australia. Subitem 6(5) then provides a general rule which
will end this saving if the person at any time returns to Australia and their subsequent
departure is not covered by any of subitems (1) to (4). In this case, the particular
departure will be subject to the new rules applying a 35-year Australian working life
residence. This subitem continues to apply the new 35-year rule to any subsequent
departures from Australia despite the fact they may otherwise have been covered by
one of the earlier subitems.
Amendments to the Social Security International Agreements Act
Strengthening Australian working life residence
Division 3 of Part 3 of the Social Security International Agreements Act (calculation
of international agreement portability rates) provides for the calculation of the
residence factor, as part of the process of generating a rate of pension for portable
pensions paid because of the operation of scheduled international social security
agreements. Section 23 provides that, if a persons period of Australian working life
residence is 300 months (25 years) or more, the persons residence factor is 1.
Item 10 omits the reference in this section to 300 months (25 years), and substitutes
a reference to 420 months (35 years). Item 9 updates the heading to the section,
to refer to 35 years, rather than 25 years.
14
Schedule 4 - Period of Australian working life residence
Section 24 provides the formula for calculating the residence factor. The formula
divides the persons period of Australian working life residence by 300 months
(25 years) if the persons period of Australian working life residence is less than
25 years. Items 12 and 13 update the references to 300 months (25 years) in the
section and the related formula, substituting references to 420 months (35 years).
Item 11 updates the heading to the section, to refer to 35 years, rather than
25 years.
Item 14 provides for the application of these amendments for periods of absence
from Australia. Subitem 14(1) provides that the change from 25 to 35 years
Australian working life residence applies to periods of absence from Australia
starting on or after 1 January 2014. However, the other subitems qualify this general
case.
Subitem 14(2) deals with a situation where a person receiving a social security
payment under a scheduled international social security agreement is in Australia
immediately before 1 January 2014, although is not at that time residing in Australia.
Provided such a person departs Australia before the end of the period of 26 weeks
beginning on 1 January 2014, and remains in receipt of that payment at the point of
departure, then the increase in working life residence to 35 years does not apply.
This is subject to exceptions dealt with in subitems (5) and (6).
Subitem 14(3) deals with a person who came within the situation covered by
subitem (2), who again returns to Australia having previously departed on or after
1 January 2014. Where such a person again leaves Australia within the period of
26 weeks of returning, and remains in receipt of that pension, then the amendments
do not apply. However, this is subject to subitem (5), and subitem (6) (dealt with
under paying agreement pensioners based upon their own working life residence
below).
Subitem 14(4) deals with the situation where a person receiving a portable pension
which is subject to a proportional calculation based upon Australian working life
residence at a rate worked out under Part 3 of the Social Security International
Agreements Act was outside Australia immediately before 1 January 2014.
The amendments do not apply to such a person by virtue of subitem (1). If such a
person later returns to Australia, but again leaves Australia within 26 weeks of
returning, having remained in receipt of their pension, then the amendments will not
apply to the later absence, subject to subitems (5) and (6).
The above items may prevent application of the amendments for successive returns
to and departures from Australia. Subitem 14(5) then provides a general rule which
will end this saving if the person at any time returns to Australia and their subsequent
departure is not covered by any of subitems (1) to (4). In this case, the particular
departure will be subject to the new rules applying a 35-year Australian working life
residence. This subitem continues to apply the new 35-year rule to any subsequent
departures from Australia despite the fact they may have otherwise been covered by
one of the earlier subitems on a previous occasion.
15
Schedule 4 - Period of Australian working life residence
Subitem 14(7) provides an additional overarching case for people who claim a
pension, generally from outside Australia, under a social security agreement and
whose start date for payment is on or after 1 January 2014. Regardless of when
such a persons absence from Australia began, the new rules applying a 35-year
Australian working life residence apply.
Paying internationally qualified pensioners based upon their own working life
residence
Division 2 of Part 3 of the Social Security International Agreements Act (Australian
working life residence) establishes the rules for determining a persons period of
Australian working life residence. Sections 18 to 20 and section 22 provide for the
calculation of a persons Australian working life residence by reference to another
persons Australian working life residence (generally the persons partner) for age
pension, disability support pension, wife pension and carer payment. Item 8 repeals
these sections. As a result, a persons Australian working life residence for the
purposes of calculating the rate of these payments is calculated on an individual
basis.
Item 7 makes a consequential change to section 16.
In alignment with the change to increase Australian working life residence
requirements from 25 to 35 years, this change applies to periods of absence from
Australia starting on or after 1 January 2014 (subitem 14(1)) and to persons whose
start day for their social security payment under a scheduled international agreement
is on or after 1 January 2014 (subitem 14(7)). However, subitem 14(6) provides an
additional application for wife pension or carer payment recipients who are overseas
immediately before 1 January 2014 where the amendments made by items 7 and 8
would result in a higher rate of pension. For these pensioners, the amendments will
apply from 1 January 2014. Similarly, where the temporary return of a person
provided for in subitem 14(2), 14(3) or 14(4) would otherwise apply the old rules,
subitem (6) ensures that the amendments made by items 7 and 8 apply despite the
return.
16
Schedule 5 - Interest charge
Summary
This Schedule will allow for an interest charge to be applied to certain debts relating
to austudy payment, fares allowance, youth allowance payments to full-time students
and apprentices, and ABSTUDY living allowance payments. The interest charge will
only be applied where the debtor does not have or is not honouring an acceptable
repayment arrangement. Debtors who are already making repayments, or who
come to a repayment agreement with the Department of Human Services following
the implementation of the measure, will not be charged interest.
The rate of the interest charge will be based upon on the 90-day Bank Accepted Bill
rate, plus an additional seven per cent, as is currently applied by the Australian
Taxation Office for tax debts under the Taxation Administration Act. Over the last
four years, this rate has averaged 11.07 per cent, and currently stands at
9.6 per cent.
Background
The key purpose of the interest charge is to encourage debtors to repay their debt,
in a timely fashion, where they have the financial capacity to do so.
Once the interest charge is in place, debtors who have not been making repayments
will have an incentive to engage with the Department of Human Services to make a
repayment arrangement in order to avoid the interest charge. The design of the
repayment arrangement will mean that the interest charge will only be applied to
debts of those debtors who have the capacity to repay their debt but are not doing
so. There will also be provision for concessions, in the form of reduced repayment
rates or temporary halts to repayment arrangements, for people experiencing
financial hardship and other special circumstances.
These amendments will mean that the existing penalty interest charge scheme
contained in the Social Security Act and the Student Assistance Act will no longer
apply to debtors covered by the new arrangements.
The amendments made by this Schedule commence on 1 January 2014.
Explanation of the changes
Part 1 - Amendments
Amendments to the Social Security Act
Item 1 makes technical amendments for the purpose of identifying what methods of
recovery will be available for the interest charge.
17
Schedule 5 - Interest charge
Item 2 inserts new section 1228B(2A) to clarify that a 10 per cent penalty added to a
debt for the understatement of income is part of the debt. For the purposes of
imposing an interest charge, this will mean that a reference to ,,debt will include the
amount of the payment that a person has obtained to which they were not entitled,
as well as any additional 10 per cent penalty added to the debt under section 1228B.
Item 3 amends subsection 1228B(5) so that an additional 10 per cent penalty
imposed for the understatement of income does not apply to a debt due to the
Commonwealth under section 1229G (as inserted by item 6).
The purpose of this amendment is to clarify that an additional 10 per cent penalty
cannot apply to an interest charge under section 1229G. This is because
section 1229B only imposes an additional 10 per cent penalty where a person has
refused or failed to provide information in relation to the persons income or
knowingly or recklessly provided false or misleading information in relation to the
persons income. The interest charge debt due to the Commonwealth under
section 1229G is not dependent on an individual providing information on their
income, so an additional 10 per cent penalty cannot apply to an interest charge debt
under section 1229G.
Item 4 inserts new paragraph 1229(1)(ea) to ensure that a notice in respect of a debt
given to a person under section 1229 specifies the effect of an interest charge if it is
applied to their debt. This will ensure that the person is fully informed of how the
new interest charge will operate.
Item 5 inserts subsection 1229(5) to provide that the existing penalty interest
scheme, as provided for in sections 1229A and 1229AB, does not apply if an interest
charge applies in relation to a person and a social security debt under section 1229E
or 1229F.
Item 6 inserts new sections 1229D to 1229H, which relate to the interest charge.
New section 1229D - Interest charge payable under section 1229E or 1229F on
certain social security debts
New subsection 1229D(1) provides that an interest charge will apply to a person and
a debt if the debt has not been wholly paid and the debt relates to either youth
allowance (student and apprentices), austudy payment, fares allowance or any other
social security payment prescribed in a legislative instrument. The power to
prescribe other social security payments in a legislative instrument will provide the
flexibility to extend the interest charge, at a later point in time, to debts relating to
other payments under social security law.
This subsection further clarifies that the interest charge will only apply to youth
allowance students who undertake full-time study or are new apprentices.
18
Schedule 5 - Interest charge
New subsection 1229D(1) also provides that the interest charge will apply to a
person and a debt where qualification for youth allowance was in circumstances
prescribed by a legislative instrument. This will allow the flexibility to extend the
interest charge, at a later point in time, to debts relating to youth allowance payments
where qualification for the payment was in circumstances other than where the
student was undertaking full time study or was a new apprentice.
As any extension of these rules would be made through a legislative instrument,
it would be subject to Parliamentary scrutiny and disallowance.
New subsections 1229D(2) and (3) provide that the Minister may make the above
mentioned legislative instruments.
For the purposes of discussion in this explanatory memorandum, the debts that
relate to the payments prescribed in paragraphs 1229D(1)(b) and 1229(1)(c) are
referred to as ,,relevant social security debts.
New section 1229E - No repayment arrangement in effect
New subsection 1229E(1) provides that, if a person has an unpaid amount on a
relevant social security debt and, by the end of the due day, has not entered into an
arrangement for the repayment of the debt (under section 1234), then the person is
liable to pay, by way of penalty, an interest charge on the debt for each day in a
period.
New subsections 1229E(2) and (3) allow for the Minister to make a legislative
instrument to prescribe circumstances in which the interest charge would not apply if
a person has an unpaid amount on a relevant social security debt and, by the end of
the due day, has not entered into an arrangement for the repayment of the debt.
It is envisaged that the instrument would prescribe circumstances in which a person
would not have an interest charge applied to their debt if the amount that is being
withheld from their payments (under current section 1231 of the Act) is satisfactorily
repaying the debt. This instrument would also allow flexibility to exempt the
application of the interest charge in prescribed circumstances at a later point in time.
In the event that a person is no longer in the circumstances prescribed in the
legislative instrument, subsection 1229E(4) allows the Secretary to give a notice to
the person, specifying the information provided in paragraphs 1229E(4)(a)(i) to (iv).
It also provides that the outstanding amount of the debt is due and payable on the
28th day after the day on which the notice was issued.
New subsection 1229E(5) provides that, if a person has been given such a notice,
the person has an outstanding debt at the end of the due date, and has not entered
into an arrangement for the repayment of the debt, then the person is liable to pay,
by way of penalty, an interest charge on the debt for each day in a period.
19
Schedule 5 - Interest charge
New subsection 1229E(6) provides that the period for which the interest charge will
be applied to the debt starts at the beginning of the day after the due day. It further
provides that the period will end on the earliest of either the last day on which the
unpaid amount (and any interest charge on the unpaid amount) remains unpaid or
the day before the first day on which the person makes a payment under an
arrangement for repayment of the debt.
This subsection is intended to ensure that a person will be able to end the
application of the interest charge by entering into, and making a payment under,
an arrangement for repayment of the debt. This, in addition to entering into an
arrangement before the due date, will mean that the person can entirely avoid the
interest charge applying to their debt.
New subsection 1229E(7) provides that the interest charge on any unpaid amount is
worked out by multiplying the interest charge rate for that day by the sum of the
remaining unpaid amount and the interest charge from previous days. This provision
ensures that the interest is compounded on a daily basis. New section 1229H
prescribes the calculation of the ,,interest charge rate for that day, and is explained
below.
New subsection 1229F - Failure to comply with or termination of repayment
arrangement
New subsection 1229F(1) provides that, if a person has an unpaid amount on a
relevant social security debt, the person has entered into a repayment arrangement
under section 1234, and the person fails to make a payment under the arrangement,
then the person is liable to pay, by way of penalty, an interest charge for each day in
a period.
New subsection 1229F(2) provides that the period for which the interest charge will
be applied to the debt starts at the beginning of the day after the due day. It further
provides that the period will end on the earlier of the last day on which the
outstanding amount (and any interest charge on any of the outstanding amount)
remains unpaid, the day before the first day on which the person has paid all the
payments that have so far become due and payable under the arrangement, or the
day before the day the arrangement is terminated.
This subsection is intended to ensure that a person may end the application of the
interest charge to their debt at the point where they catch up on any missed
payments under the arrangement. To avoid doubt, while the interest charge will
apply to the debt during the period, a person is only required to pay an amount equal
to the missed payments (rather than an amount equal to the missed payments and
the interest charge) to end the period of the application of the interest charge.
The interest charge will otherwise be payable as a debt due to the Commonwealth,
as explained below.
New subsection 1229F(3) prescribes the calculation of an interest charge for a day.
The interest charge is calculated in the same way as in new subsection 1229E(7),
which is explained above.
20
Schedule 5 - Interest charge
Repayment arrangement is terminated
New subsection 1229F(4) provides that, if a person has an unpaid amount on a
relevant social security debt, the person has entered into an arrangement under
section 1234, and the arrangement is terminated, then the outstanding debt, and any
interest charge on the outstanding debt, is due and payable on the 14th day after the
termination. If, at the end of the 14th day, any amount remains unpaid, the person is
liable to pay, by way of penalty, an interest charge each day in a period.
New subsection 1229F(5) provides that the period for which the interest charge will
be applied to the debt starts at the beginning of the day after the 14th day. It further
provides that the period will end on the earliest of the last day on which the
outstanding amount (and any interest charge on the outstanding amount) remains
unpaid or the day before the first day after the 14th day on which the person makes a
payment on another arrangement for the repayment of the debt.
This subsection is intended to ensure that a person may end the application of the
interest charge at the point where they enter into another arrangement for repayment
of the debt.
New subsection 1229F(6) prescribes the calculation of an interest charge for a day.
The interest charge is calculated in the same way as in new subsection 1229E(7),
which is explained above.
New section 1229G - Other rules for interest charge
New subsection 1229G(1) provides that the interest charge under section 1229E
or 1229F for a day is due and payable to the Commonwealth at the end of that day.
New subsection 1229G(2) provides that an interest charge under section 1229E
or 1229F for a day is a debt due to the Commonwealth by the person.
New subsection 1229G(3) clarifies that subsection 1229(1) and
paragraph 1229D(1)(b) do not apply to a debt which is also an interest charge
(as provided for under new sections 1229E and 1229F). This means that, for the
interest charge, a notice in respect of a debt is not required to be issued under
subsection 1229(1) and it is not a debt to which new section 1229D would apply.
This avoids a situation where an interest charge is subject to further interest charges.
New section 1229H - What is the interest charge rate?
New section 1229H provides for the calculation of the interest charge rate.
New subsections 1229H(1) and 1229H(2) provide that the rate is based upon the
90-day Bank Accepted Bill rate, plus an additional seven per cent, as is currently
applied by the Australian Taxation Office for tax debts under the Taxation
Administration Act. This is an appropriate method for calculating the rate of the
interest charge to apply to income support debts because the rate is high enough to
encourage repayment without being punitive, it provides a return to the
Commonwealth (commensurate with the time value of the monies overpaid) and it
will help align tax and income support debt recovery policy.
21
Schedule 5 - Interest charge
New subsection 1229H(2) specifies what the base interest rate is, with reference to
the monthly average yield of 90-day Bank Accepted Bills. The rate is currently
published by the Reserve Bank of Australia in the ,,Interest Rates and Yields -
Money Market - Monthly table on the Banks website. This subsection also provides
a table identifying the appropriate monthly average to be used for each quarter.
Where the Reserve Bank of Australia has not published the specified rate by the
start of a quarter, new subsection 1229H(3) substitutes the last published monthly
average.
New subsection 1229H(4) provides for the rounding of the base interest rate to the
second decimal place.
Item 7 is to clarify that, if a person has entered into an arrangement for the payment
of a debt, it is a statutory requirement for the person to make a payment under an
arrangement before the end of the day that the arrangement requires such a
payment.
Amendments to the Student Assistance Act
Item 9 inserts into section 38 a definition of ABSTUDY debt, which means an
amount paid under the ABSTUDY Scheme (which is also known as the Aboriginal
and Torres Strait Islander Study Assistance Scheme) that should not have been
paid.
An ABSTUDY debt is a special educational assistance scheme overpayment (or a
debt under paragraph 38(a)), which, under section 39, is a debt owed by the person
to the Commonwealth.
Item 10 amends paragraph (c) of the definition of debt in section 38 to ensure that
an interest charge, imposed under section 41CA or section 41CB, is an amount
payable to the Commonwealth and is therefore a debt.
In view of these amendments, item 8 makes a technical amendment to simplify the
heading to section 38.
Item 11 inserts new sections 41A to 41H.
New section 41A - Sections 40 and 41 do not apply to ABSTUDY debts
New section 41A provides that sections 40 and 41 do not apply in relation to a
person and an ABSTUDY debt owed by the person the Commonwealth. This will
have the effect that a person and an ABSTUDY debt will not be subject to the
existing provisions in the Student Assistance Act relating to late payment charges
and interest in relation to an overpayment of a benefit, but will instead be subject to
the interest charge provisions contained in new sections 41CA and 41CB.
22
Schedule 5 - Interest charge
New section 41B - Notice in respect of ABSTUDY debt
New section 41B provides for a notice in respect of an ABSTUDY debt. This section
mirrors the notice of debt provisions in the Social Security Act (that is,
subsections 1229(1) and (2), as amended by this Schedule), and ensures consistent
treatment of debts relating to ABSTUDY payments and relevant social security
debts.
New subsection 41B(1) provides that, if an ABSTUDY debt has not been wholly paid,
the Secretary must provide a notice specifying the information contained in
paragraphs 41B(1)(a) to 41B(1)(h), which mirrors the notice of debt provisions in the
Social Security Act. The subsection also provides that the outstanding amount of the
debt is due and payable on the 28th day after the date on the notice.
New section 41C - Interest charge payable on ABSTUDY debts
New section 41C provides that the interest charges (provided by sections 41CA
and 41CB) only apply if the debt is an ABSTUDY debt that has not been wholly paid.
New section 41D - No repayment arrangement in effect
New section 41D mirrors the operation of new section 1229E of the Social Security
Act (as inserted by item 6 of this Schedule), but with respect to an ABSTUDY debt
that has not been wholly paid.
New section 41E - Failure to comply with or termination of repayment arrangement
New section 41E mirrors the operation of new section 1229F of the Social Security
Act (as inserted by item 6 of this Schedule), but with respect to an ABSTUDY debt
that has not been wholly paid.
New section 41F - When interest charge becomes due and payable
New section 41F mirrors the operation of new subsection 1229G(1) of the Social
Security Act (as inserted by item 6 of this Schedule), but with respect to an
ABSTUDY debt that has not been wholly paid.
New section 41G - What is the interest rate charge
New section 41G mirrors the operation of new section 1229H of the Social Security
Act (as inserted by item 6 of this Schedule) to provide the calculation of the interest
rate charge referred to in sections 41CA and 41CB.
New section 41H - Arrangement for payment of ABSTUDY debt
New section 41H provides that the Secretary may, on behalf of the Commonwealth,
enter into an arrangement with a person for payment of an ABSTUDY debt. This
section mirrors subsections 1234(1) to 1234(4) of the Social Security Act to ensure
consistent treatment of debts related to ABSTUDY payments and relevant social
security debts.
23
Schedule 5 - Interest charge
Item 12 amends paragraph 51(1)(b) to ensure that a certificate by the Secretary
(stating that, on a specified day, a notice, to a specified effect, in respect of an
ABSTUDY debt, was given to a specified person by the Secretary) is prima facie
evidence of the matters stated in the certificate.
Part 2 - Application and transitional provisions
Subitem 13(1) provides that section 1229D, as inserted by this Bill, only applies in
relation to a debt that arises on or after the commencement of item 13 and a
pre-existing debt that is outstanding immediately before the commencement of the
Bill. This will mean that the amendments contained in item 7 will not apply to debts
that are no longer outstanding immediately before the commencement of item 13.
Subitem 13(2) provides that paragraph 1229E(1)(b), as inserted by this Bill, applies
to a notice given on or after the commencement of item 13. This will mean that a
person is not liable to pay an interest charge under section 1229E if there was not a
notice given to a person under subsection 1229(1) on or after the commencement of
item 13.
Subitem 13(3) provides that, if section 1229D, as inserted by this Bill, applies to a
debt that arose before the commencement of item 13 and, before the
commencement of this item, the Secretary gave a person a notice under
subsection 1229(1) of the Social Security Act, the Secretary must give the person
another notice under section 1229(1) of that Act, as amended by this Bill. This
means that the person will be informed in the new notice of the effect of the
application of the interest charge, and that the Secretary can issue a second notice
under subsection 1229(1) of the Social Security Act.
Subitem 13(4) provides that paragraph 1229F(1)(c), as inserted by this Bill, only
applies in relation to a failure that occurs on or after the commencement of item 13,
regardless of whether the arrangement was entered into before, on or after that
commencement. This means that a person is not liable to pay an interest charge
under section 1229F if a failure occurs before the commencement of item 13. It also
means that an arrangement that was entered into prior to commencement of the Bill
will continue in effect after commencement.
Subitem 13(5) provides that paragraph 1229F(4)(c), as inserted by this Bill, only
applies to a termination that occurs on or after the commencement of item 13,
regardless of whether the arrangement was entered into before, on or after that
commencement. This means that a person is not liable to pay an interest charge
under section 1229F if a termination occurs before the commencement of item 13.
It also means that an arrangement that was entered into prior to commencement of
the Bill will continue in effect after commencement.
Item 14 provides that interest charges under sections 41A to 41H, as inserted by this
Bill, apply to an ABSTUDY debt that arises on or after the commencement of item
14, and to one that arose before the commencement of item 14, to the extent that
the debt is outstanding immediately before that commencement.
24
Schedule 6 - Student start-up loans
Summary
This Schedule establishes, from 1 January 2014, the student start-up loan. These
loans will be income-contingent, and there will be a limit of two loans a year of
$1,025 each (indexed from 2017). The loans will be repayable under similar
arrangements to Higher Education Loan Program debts. Students will only be
required to begin repaying their start-up loan after their Higher Education Loan
Program debt has been repaid.
The Schedule also provides grandfathering arrangements so that recipients who
received a student start-up scholarship or Commonwealth Education Costs
Scholarship prior to 1 January 2014, and have remained continuously on student
payments, will continue to be eligible to receive the student start-up scholarship, as a
grant, until coming off student payments.
The student start-up loan and student start-up scholarship aim to assist students with
the costs of study, including the purchase of text books, computers and internet
access.
Background
This Schedule amends both the Social Security Act and the Student Assistance Act
to provide for the student start-up loan and ABSTUDY student start-up loan from
1 January 2014. Each version of the loan will be an income-contingent loan, and will
be repayable under similar arrangements to Higher Education Loan Program (HELP)
debts, as provided for under the Higher Education Support Act 2003.
The qualification provisions for the student start-up loan and ABSTUDY student
start-up loan are similar to the existing qualification provisions for the student start-up
scholarship contained in Division 1 of Part 2.11B of the Social Security Act.
To the extent that it is possible, the provisions in Schedule 6 that amend the Social
Security Act mirror the amendments made to the Student Assistance Act for the
purpose of ensuring consistency between the administration of the student start-up
loan and ABSTUDY student start-up loan. To ensure consistency with HELP, to the
extent possible, the provisions in Schedule 6 relating to the recovery of the student
start-up loans and ABSTUDY student start-up loans reflect the relevant provisions in
the Higher Education Support Act 2003.
Schedule 6 also contains consequential amendments to the Social Security
Administration Act, the Income Tax Assessment Act 1936, the Income Tax
Assessment Act 1997, the Taxation Administration Act, and the Taxation (Interest on
Overpayment and Early Payments) Act 1983, for the purpose of ensuring consistent
administration between the student start-up loans and HELP.
25
Schedule 6 - Student start-up loans
Explanation of the changes
Amendments to the Income Tax Assessment Act 1936
Item 1 amends subsection 82A(2) to ensure that a payment made in respect of, or in
the reduction or discharge of any indebtedness under Chapter 2AA of the Social
Security Act or under Part 2 of the Student Assistance Act are not included within the
definition of expenses of self-education.
Items 2 and 3 amend section 202, which establishes the system of tax file numbers,
and outlines the object of the system, to allow for the administration of Chapter 2AA
of the Social Security Act and Part 2 of the Student Assistance Act with regard to the
provision of student start-up loans and ABSTUDY student start-up loans and the
recovery of these debts.
Item 4 amends subsection 202F(1)(fb) to provide that a decision of the
Commissioner to give a notice under subsections 1061ZVHD(1) and 1061ZVHE(1)
of the Social Security Act (as inserted by item 25 of this Schedule) and
sections 10D(1) and 10E(1) of the Student Assistance Act (as inserted by item 67 of
this Schedule) can be reviewed by the Administrative Appeals Tribunal.
Amendments to the Income Tax Assessment Act 1997
Items 5 and 6 amend section 12-5 to include student start-up loans in the list of
provisions about deductions.
Item 7 amends section 26-20 to ensure that a payment made in respect of, or in the
reduction or discharge of any indebtedness under Chapter 2AA of the Social
Security Act or Part 2 of the Student Assistance Act is not a payment that can be
deducted under the Act. This amendment will ensure that there is a consistent
treatment between HELP and the student start-up loan under section 26-20.
Items 8 and 9 amend paragraphs 52-132(a) and 52-140(3)(a) respectively to ensure
that payments received to assist in the discharge of a compulsory SSL or ABSTUDY
SSL repayment amount are deemed to be exempt income under the Act.
Items 10 and 11 insert definitions of accumulated ABSTUDY SSL debt and
accumulated SSL debt into the Act.
Amendments to the Social Security Act
Item 12 inserts section 19AAA, which provides a series of definitions for the purpose
of Chapter 2AA. The definitions in section 19AAA relate solely to the provisions in
the Act that deal with the student start-up loan.
Items 13 to 19 insert definitions under section 23, including accumulated SSL debt,
approved scholarship course, enrolment test day, scholarship-entitled person
and student start-up loan.
26
Schedule 6 - Student start-up loans
Item 17 will ensure that a student start-up loan will be a social security payment for
the purposes of the Act.
Items 20 and 21 insert paragraph 592F(1)(a) and 592F(2)(a) to amend the
qualification provisions of the student start-up scholarship to allow a person who
currently receives a student start-up scholarship to continue to receive this payment.
In order to continue to qualify for and receive a student start-up scholarship on the
basis of youth allowance, a person must have received either a student start-up
scholarship payment, an ABSTUDY student start-up scholarship payment or a
Commonwealth Education Costs Scholarship with respect to a period before
1 January 2014.
A person must also be receiving youth allowance or Living Allowance under the
ABSTUDY Scheme for a continuous period since the time in which they received at
least one of the above mentioned scholarships.
The qualification to receive a student start-up scholarship on the basis of austudy is
the same as the qualification for a student start-up scholarship on the basis of youth
allowance, except that a person can still be qualified if the person continuously
received a youth allowance, a Living Allowance under the ABSTUDY Scheme or
austudy.
A person will be treated as continuously receiving either youth allowance, a Living
Allowance or austudy even though the person did not actually receive such
payments if they comply with section 38B of the Act. In addition, a person will be
continuously regarded as receiving such payments even if these payments are
temporarily reduced to nil.
Items 22 and 23 make minor amendments to ensure that the definition of an
approved scholarship course will apply to all references in the Act, rather than just
within Part 2.11B.
Item 24 provides that a legislative instrument that determines the approved
scholarship courses (made prior to the commencement of the Bill) will continue to be
in force after the amendment in item23, and will have the effect for the whole of the
Act and not just for the purposes of Part 2.11B. This will ensure that an approved
course for the purposes of the student start-up scholarship is an approved course for
the purposes of the student start-up loan.
Item 25 inserts new Chapter 2AA - Student start-up loans.
Section 1061ZVAA - Simplified outline of this Part
Section 1061ZVAA outlines broadly the qualification criteria and operation of the
student start-up loan. Full-time students who are receiving youth allowance or
austudy may qualify for a student start-up loan if they meet the qualification criteria in
subsections 1061ZVAB(1) and 1061ZVAB (2). A student can qualify for up to two
loans per calendar year.
27
Schedule 6 - Student start-up loans
Section 1061ZVAB - Qualification for student start-up loan
Section 1061ZVAB provides the qualification requirement for a student start-up loan.
These qualification requirements are similar to the qualification requirements for the
student start-up scholarship contained in section 592F of the Social Security Act.
To qualify for a student start-up loan, each of the following must occur at the same
time:
the person is qualified for youth allowance or austudy payment;
youth allowance or austudy payment is payable to the person;
the person is receiving youth allowance or austudy payment;
the person is receiving part of the basic rate component of youth allowance or
austudy payment, or youth disability supplement (that is, the person is not
receiving only that component of youth allowance or austudy payment that
consists of pharmaceutical allowance and rent assistance);
the person is receiving youth allowance or austudy payment because the
person is enrolled in an approved scholarship course;
the Secretary is satisfied that the person is not likely to receive the amount or
value of a Commonwealth Education Costs Scholarship in the period of six
months starting immediately after the time: and
at the time of qualification, the person has notified their tax file number to the
Secretary and the Secretary has verified the persons tax file number or
obtained the correct tax file number.
Under paragraphs 1061ZVAB(1)(a) to (b) and 1061ZVAB(2)(a) to (b), while a person
must be receiving youth allowance or austudy payment to qualify for a scholarship
payment, the person must also be qualified for youth allowance or austudy payment,
and youth allowance or austudy payment must be payable to the person.
This provision is designed to ensure that if a person is later found not to be qualified
for the youth allowance or austudy payment that the person was receiving (or the
allowance was not payable), a debt may also be raised for any student start-up loan
payment that paid for that time.
A person must also be in receipt of youth allowance or austudy payments even if the
payments did not include an amount for rent assistance or pharmaceutical
allowance. Under section 1210, a reduction for income is applied first against the
maximum basic rate component of a rate plus youth disability supplement, then
against rent assistance and pharmaceutical allowance. If a person's rate of payment
has been reduced so that only rent assistance or pharmaceutical allowance is paid,
the person will not be qualified for a student start-up loan payment.
Under paragraphs 1061ZVAB(1)(c) and 1061ZVAB(2)(c), approved scholarship
courses will be approved by the Minister under section 592N.
28
Schedule 6 - Student start-up loans
Paragraphs 1061ZVAB(1)(d) and 1061ZVAB(2)(d) mean that a Commonwealth
Education Costs Scholarship (CECS) takes precedence over a student start-up loan.
If a person is likely to receive a CECS payment within six months of receiving a
student start-up loan, the person will not be entitled to a student start-up loan.
Paragraphs 1061ZVAB(1)(e) and 1061ZVAB(2)(e) require a person to notify his or
her tax file number to the Secretary. The Secretary will be obliged to verify the
persons tax file number with the Commissioner or obtain the correct tax file number.
As the student start-up loan is an income-contingent loan to be collected through the
taxation system, similar to the operation of the Higher Education Loan Program
(HELP) under the Higher Education Support Act 2003 (Higher Education Support
Act), the correct tax file number is necessary for the Australian Taxation Office to be
able to administer the recovery of the loans effectively.
Subsection 1061ZVAB (3) operates such that a person does not qualify for a loan
until the Secretary so determines, unless the determination occurs after the course
or the qualification period has finished, in which case the person qualifies from the
earlier of those dates. This is to ensure that loans are only paid to people who are
continuing their qualifying study or have studied for the duration of their course or
qualification period.
Section 1061ZVAC - Circumstances in which person is not qualified for student
start-up loan
Section 1061ZVAC(1) provides the circumstances in which a person is not qualified
for a student start-up loan.
A person is not qualified for a student start-up loan for a qualification period at a time
in that period if:
it has already been determined that the person is qualified for a student start-
up loan or ABSTUDY student start-up loan for that qualification period; or
the person is a scholarship entitled person; or
in the period of six months ending immediately before what would otherwise
be the person's qualification time one of the following circumstances apply:
o the person has received a payment known as a student start-up
scholarship payment under the Veterans Children Education Scheme;
or
o the person has received a payment known as a student start-up
scholarship payment under the Military Rehabilitation and
Compensation Act Education and Training Scheme; or
o the person has received the amount or value of a Commonwealth
Education Costs Scholarship; or
o the person was entitled to the amount or value of a Commonwealth
Education Costs Scholarship but has not received the full entitlement
only because the scholarship was suspended.
29
Schedule 6 - Student start-up loans
Subsection 1061ZVAC(2) defines a scholarship-entitled person as someone who
has received a student start-up scholarship payment by virtue of receiving youth
allowance, austudy or ABSTUDY or received the amount or value of a
Commonwealth Education Costs Scholarship in respect of a time before
1 January 2014 and the student has been receiving these payments for a continuous
period. This prevents students who have been grandfathered to continue receiving
the student start-up scholarship from also qualifying for a student start-up loan while
they remain on student payments.
Section 1061ZVAD - Amount of student start-up loan
Section 1061ZVAD provides that the amount of the student start-up loan payment is
$1,025. The amount of the student start- up loan payment will be indexed on
1 January 2017 and each later 1 January in line with CPI increases.
Section 1061ZVBA - Simplified outline of this Part
Section 1061ZVBA outlines broadly how student start-up loan debts are incurred in
Part 2AA.2.
Section 1061ZVCA - SSL debts
Section 1061ZVCA establishes the student start-up loan as an income-contingent
loan that is recovered and administered in a similar way to HELP. As explained
below, the student start-up loan is only treated as an income-contingent loan if the
person remains in their course for 35 days after being qualified for the loan or after
the commencement of their course. If this does not occur, section 1223ABF
(as inserted by Item 30 of Schedule 6) will provide that the student start-up loan is a
debt due to the Commonwealth and, under current section 1229, is due and payable
28 days after the person receives a debt notice.
Subsection 1061ZVCA(1) provides a person incurs a debt to the Commonwealth if
the person has received a student start-up loan for a qualification period and the
amount of the loan is not a debt in respect of student start-up loan under
section 1223ABF, or as a result of the person obtaining benefit where they were not
entitled for any reason to obtain that benefit.
Subsection 1061ZVCA (2) provides that the SSL debt is incurred by the person
either on the day the person received the loan or the day after the persons
enrolment test day for the qualification period. Enrolment test day is defined by
subsection 1223ABF(2).
Subsection 1061ZVCA(3) clarifies that the amount of the SSL debt is the amount of
loan reduced by any amount repaid before the day on which the debt is incurred.
This will mean that if a student initially enrols in a course or part of a course, receives
a payment and withdraws from the course, then they will be able to reduce their debt
if they make a repayment.
30
Schedule 6 - Student start-up loans
Subsection 1061ZVCA (4) provides that an SSL debt is not incurred if the loan has
been fully repaid before the day on which the loan would have otherwise been
incurred or if the Secretary has formed an opinion under subsection 1223ABF(3) in
relation to the loan that the person ceased studying due to exceptional
circumstances beyond the persons control. In this case, if a person ceases to be
enrolled in an approved scholarship course or is no longer enrolled full-time before
the enrolment test day, neither a social security debt nor an SSL debt will be
incurred. This provision will ensure that there is flexibility and equity respect to
incurring a student start-up loan.
Section 1061ZVCB - SSL debt discharged by death
Section 1061ZVCB provides that, upon the death of a person who owes a SSL debt
to the Commonwealth, the debt is taken to have been paid.
Division 2 - Working out accumulated SSL debts
This Division provides for the calculation of a SSL debt and largely mirrors the
calculation of a HELP debt under Division 140 of the Higher Education Support Act.
Section 1061ZVDA - Simplified outline of this Division
Section 1061ZVDA is an information provision, which provides an outline as to how
accumulated SSL debts are worked out for any given financial year. There are two
stages to working out a persons accumulated SSL debt. Stage 1 of the process is
to work out a person's former accumulated SSL debt for the preceding financial year
by taking account of a range of specified matters. Stage 2 of the process of working
out a person's accumulated SSL debt is to take into account a range of specified
matters. .
Section 1061ZVDB - Working out a former accumulated SSL debt.
Subsection 1061ZVDB(1) provides that a persons former accumulated SSL debt,
in relation to the persons accumulated SSL debt for a financial year is worked out by
multiplying the amount worked out using a six step method statement (set out in the
table in the subsection) by the HELP debt indexation factor for 1 June in that
financial year.
The HELP debt indexation factor is defined in section 19AAA (as inserted by
item 12 of Schedule 6) and has the same meaning as in section 140-10 of the Higher
Education Support Act. As the calculation of the index numbers and the method of
publication of HELP debt indexation factors are factors in calculating the HELP debt
indexation factor, then by reference, the definition of HELP debt indexation draws on
section 140-10 to 140-20 of the Higher Education Support Act. For this reason,
equivalent provisions in the Social Security Act are not required.
Subsection 1061ZVDB(2) provides that, for the purposes of section 1061ZVDB,
an assessment (or an amendment of an assessment) is taken to have been made on
the day specified in the notice of assessment (or notice of amended assessment)
as the date of issue of that notice.
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Schedule 6 - Student start-up loans
Section 1061ZVDC - Working out an accumulated SSL debt
Subsection 1061ZVDC(1) provides that a persons accumulated SSL debt, for a
financial year is equal to the persons former accumulated SSL debt plus the SSL
debts incurred minus the persons SSL repayments, where:
a former accumulated SSL debt is the persons former accumulated SSL debt
in relation to that accumulated SSL debt;
SSL debt repayments are the sum of all voluntary SSL repayments paid on or
after 1 July in the financial year and before 1 June in that year, in reduction of
the SSL debts incurred in that year; and
SSL debts incurred are the sum of all SSL debts (if any) that the person has
incurred during the first 6 months of the financial year.
Subsection 1061ZVDC(2) provides that the person incurs the accumulated SSL debt
on 1 June in the financial year.
Subsection 1061ZVDC(3) provides that the first financial year for which a person can
have an accumulated SSL debt is the financial year starting on 1 July 2014. This is
because the SSL provisions contained within the Bill commence on 1 January 2014
and, due to subsection 1061ZVDC(2), an SSL debt can only be incurred on 1 June in
a financial year.
Section 1061ZVDD - Rounding of amounts
Subsection 1061ZVDD(1) provides that, if (apart from this section) a persons
accumulated SSL debt is $1 or above, then that debt will be rounded down to the
nearest whole dollar.
Subsection 1061ZVDD(2) provides that, if (apart from this section) a persons
accumulated SSL debt is below $1, then that debt is rounded down to zero.
Section 1061ZVDE - Accumulated SSL debt discharges earlier debt
Subsection 1061ZVDE(1) provides that the accumulated SSL debt a person incurs
on 1 June in a financial year discharges (or discharges the unpaid part of) any SSL
debt that the person incurred during the calendar year immediately preceding that
day and any accumulated SSL debt that the person incurred on the preceding
1 June. This is because accumulated SSL debt incurred on 1 June in a financial
year is calculated to include any new SSL debt incurred the calendar year as well as
any outstanding accumulated SSL debt that was incurred immediately preceding
1 June.
Subsection 1061ZVDE(2) clarifies that subsection 1061ZVDE(1) does not affect the
calculation of accumulated SSL debts.
32
Schedule 6 - Student start-up loans
Section 1061ZVDF - Accumulated SSL debt discharged by death
Subsection 1061ZVDF(1) provides that, when a person who has an accumulated
SSL debt dies, the accumulated SSL debt is taken to have been discharged.
Subsection 1061ZVDF(2) provides that subsection 1061ZVDF(1) does not affect any
compulsory SSL repayment amounts required to be paid in respect of the
accumulated SSL debt, whether or not those amounts were assessed before the
persons death.
Part 2AA.3 - Discharge of indebtedness
Division 1 of Part 2AA.3 provides for the voluntary and compulsory discharge of SSL
repayments. These provisions mirror the discharge of indebtedness provisions of
Divisions 148 to 154 of the Higher Education Support Act 2003.
Section 1061ZVEA - Simplified outline of this Part
Subsection 1061ZVEA provides an outline of Part 2AA.3-Discharge of indebtedness.
Section 1061ZVEB - Debts under this Chapter
Section 1061ZVEB(1) provides that debts under this Chapter are SSL debts and
accumulated SSL debts. Debts that arise under sections 1223 (Debts arising from a
lack of qualification, overpayment etc.) and 1223ABF (Debts in respect of student
start-up loans) are not debts under Chapter 2AA of the Act
Section 1061ZVFA - Voluntary SSL repayments in respect of debts
Section 1061ZVFA allows a person to may make a voluntary payment, at any time,
in respect of a debt that the person owes to the Commonwealth under Chapter 2AA.
This payment must be made to the Commissioner for Taxation as a debt under this
Chapter a debt that is administered by the Australian Taxation Office.
Section 1061ZVFB - Application of voluntary SSL repayments
Subsection 1061ZVFB(1) provides that a person who makes voluntary payments to
the Commonwealth in respect to debts under Chapter 2AA may give a direction as to
which debt they are paying off.
Subsection 1061ZVFB(2) provides that if the person has not given an adequate
direction, then the money will firstly be paid to the discharge or reduction of any
accumulated SSL debt of the person and secondly to the discharge or reduction of
any SSL debts of the person.
33
Schedule 6 - Student start-up loans
Section 1061ZVFC - Refunding of payments
Section 1061ZVFC ensures that a person cannot pay more money than they owe to
the Commonwealth by providing that if a person pays an amount to the
Commonwealth under Division 2 of Part 2AA.3 and the amount is greater than the
amount required to discharge all debt under Chapter 2AA and the total amount of the
persons primary tax debts (within the meaning of Part IIB of the Taxation
Administration Act), then the Commonwealth must refund to the person an amount
equal to that excess.
Section 1061ZVGA - Liability to repay amounts
Subsection 1061ZVGA(1) provides that, if:
a persons repayment income for an income year is greater than their
minimum repayment income for that income year; and
the person had an accumulated SSL debt on the 1 June immediately
preceding an assessment of the persons income of that year; and either:
o the person does not have an outstanding accumulated HELP debt; or
o the amount required to be paid would fully discharge the HELP debt;
then the person is liable to pay to the Commonwealth the amount worked out in
section 1061ZVGE in reduction of the persons repayable debt. The effect of this
subsection is that the repayment of any existing HELP debt is paid back before a
SSL debt. It also ensures that in a year where an amount payable is more than what
is remaining of the accumulated HELP debt, the remainder of what is payable to the
Commonwealth is paid to reduce a persons SSL debt.
Subsection 1061ZVGA(2) provides that a person is not liable to pay an amount
under this section for an income year if no Medicare levy is payable by the person on
their taxable income for that year or if the amount of the Medicare levy payable by
the person on their taxable for the income year is reduced.
Section 1061ZVGB - Repayment income
Section 1061ZVGB provides repayment income has the same meaning as under
section 154-5 of the Higher Education Support Act.
Section 1061ZVGC - Minimum repayment income
Section 1061ZVGC provides that the minimum repayment income has the same
meaning as section 154-10 of the Higher Education Support Act. As the calculation
of the indexation of an income year and the method of publication of indexed
amounts are factors in calculating the minimum repayment income, then by
reference, the definition of minimum repayment income draws on sections 154-25
and 154-30 of the Higher Education Support Act. For this reason, equivalent
provisions in the Social Security Act are not required.
34
Schedule 6 - Student start-up loans
Section 1061ZVGD - Repayable SSL debt for an income year
Subsection 1061ZVGD(1) provides that a persons repayable SSL debt for an
income year is their accumulated SSL debt immediately preceding 1 June in that
income year or the amount (if any) remaining after deducting the total amount paid or
assessed to be payable.
Subsection 1061ZVGD(2) clarifies that, in the calculation of a persons repayable
debt, if the amount assessed to be payable has been increased, or reduced by an
amendment, then the amendment amount is the amount payable.
Section 1061ZVGE - Amounts payable to the Commonwealth
Section 1061ZVGE provides that the amount that person is liable to pay under
section 1061ZVGA in respect of an income year.
If the person does not have an accumulated HELP debt on 1 June immediately
preceding an assessment of the SSL debt, then the person is liable to pay an
amount that is applicable under the table in section 154-20 of the Higher Education
Support Act.
If a person is required to pay an amount that would fully discharge their accumulated
HELP debt, then the amount the person is liable to pay in respect of the SSL debt is
an amount that is applicable under the table in section 154-20 of the Higher
Education Support Act minus the amount that they have been required to pay in
respect of their accumulated HELP debt for that income year.
This section will mean that a person will only repay an amount of SSL debt if they
meet the same income thresholds as under HELP (as contained in section 154-20 of
the Higher Education Support Act). It will also mean that the amounts payable with
respect to a SSL debt are consistent with amounts payable with respect to an
accumulated HELP debt.
This section will also mean that a SSL debt will only be payable if an accumulated
HELP debt has been fully discharged. In the event that a person is able to discharge
their accumulated HELP debt in an income year, then if the person would otherwise
be liable to pay an amount under the table in section 154-20 of the Higher Education
Support Act, then this amount will be compulsorily payable with respect to their SSL
debt.
It is also important to note that a person will repay their SSL debt if there is no
accumulated HELP debt. This may mean that if, for whatever reason, a person has
no accumulated HELP debt at the point of an assessment, and they otherwise incur
a HELP debt that has not become an accumulated HELP debt under that
assessment, then this section will operate so that a person will repay an amount of
their SSL debt. In these circumstances, the person will then repay that HELP debt
only when it is an accumulated HELP debt at the point of an assessment.
35
Schedule 6 - Student start-up loans
Section 1061ZVGF - Commissioner may make assessments
Section 1061ZVGF allows the Commissioner to make an assessment of the persons
accumulated SSL debt on the 1 June immediately before making the assessment.
The Commissioner may also make an assessment of the amount that is required to
be paid in respect of that debt. In making this assessment, the Commissioner may
use any information in his or her possession.
Section 1061ZVGG - Notification of notices of assessment of tax
Section 1061ZVGG allows the Commissioner to provide an additional notice of an
assessment of a SSL debt if the Commissioner did not provide this with an
assessment that he has severed with respect to a persons income under
section 174 of the Income Tax Assessment Act 1936. This additional notice of
assessment must also contain the amounts that have been provided in the notice
under section 174 of that Act.
Section 1061ZVGH - Commissioner may defer making assessments
Subsection 1061ZVGH(1) provides that a person may apply in an approved form to
the Commissioner for deferral of the making of an assessment in respect of the
person under section 1061ZVGF.
Subsection 1061ZVGH(2) provides that the application must specify the income year
for which the deferral is being sought and the reasons for seeking the deferral.
Subsection 1061ZVGH(3) provides that the income year specified in the application
must be the income year in which the person makes the application, the immediately
preceding income year or the immediately succeeding income year.
Subsection 1061ZVGH(4) provides that, on application by a person under
section 1061ZVGH(1), the Commissioner may defer making an assessment in
respect of the person under section 1061ZVGF if the Commissioner is of the opinion
that if the assessment were made, payment of the assessed amount would either
cause serious hardship to the person, or there are other special reasons that make it
fair and reasonable to defer making the assessment.
Subsection 1061ZVGH(5) provides that the Commissioner may defer making the
assessment for any period that he or she thinks appropriate.
Subsection 1061ZVGH(6) provides that as soon as practicable after an application is
made under section 1061ZVGH(1), the Commissioner must consider the matter to
which the application relates and notify the applicant of the Commissioners decision
on the application.
36
Schedule 6 - Student start-up loans
Section 1061ZVGJ - Commissioner may amend assessments
Subsection 1061ZVGJ(1) provides that a person may apply in an approved form to
the Commissioner for an amendment of an assessment made in respect of the
person under section 1061ZVGF so that the amount payable under the assessment
is reduced or no amount is payable under the assessment.
Subsection 1061ZVGJ(2) provides that the application must be made no later than
two years after the day the Commissioner to which the assessment relates or must
specify the reasons justifying a later application.
Subsection 1061ZVGJ(3) provides that, on application by a person under
section 1061ZVGJ(1), the Commissioner may amend an assessment made in
respect of the person under section 1061ZVGF so that the amount payable under
the assessment is reduced or no amount is payable under the assessment if the
Commissioner is of the opinion that payment of the assessed amount has caused
(or would cause) serious hardship to the person or there are other special reasons
that make it fair and reasonable to make the amendment.
Subsection 1061ZVGJ(4) provides that, as soon as practicable after an application is
made under section 1061ZVGJ(1), the Commissioner must consider the matter to
which the application relates and notify the applicant of the Commissioners decision
on the application.
Part 2AA.4 - Tax administration matters
Section 1061ZVFHA Simplified outline of this Part
Section 1061ZVFHA outlines the purpose of Part 2AA.4 - Tax administration
matters.
Section 1061ZVHB - Verification of tax file numbers
Section 1061ZVHB(1) allows the Secretary, when determining a claim for a student
start-up loan for a person receiving youth allowance or austudy, to verify the
persons tax file number with the Commissioner.
Section 1061ZVFHB(2) allows the Commissioner, if they are satisfied with the
persons tax file number, to notify the Secretary, via a written notice, accordingly.
Section 1061ZVHC - When person with tax file number incorrectly notifies number
Subsection 1061ZVHC provides that, if the Commissioner is satisfied that the tax file
number that was given to the Secretary in order to become qualified for a student
start-up loan has been at any time cancelled or withdrawn, or is otherwise wrong,
and the person does have a tax file number, then the Commissioner may give a
notice of this to the Secretary. The Commissioner may also provide the Secretary
with the persons tax file number. For the purposes of qualification, the new tax file
number is the one that is taken to have been given to the Secretary.
37
Schedule 6 - Student start-up loans
This provision ensures that a person will not be disqualified from the student start-up
loan because of providing an incorrect tax file number.
Section 1061ZVHD - When person without tax file number incorrectly notifies
number
Subsection 1061ZVHD(1) provides that, if the Commissioner is satisfied that the tax
file number that was given to the Secretary in order to become qualified for a student
start-up loan has been cancelled or for any other reason is not the persons tax file
number and the Commissioner is not satisfied that the person has such a number,
then the Commissioner may give to the Secretary a written notice informing the
Secretary accordingly.
The Commissioner must also give a copy of any notice to the person concerned
containing a statement of reasons for the decision to give the notice.
In addition, section 75 of the Social Security Administration Act allows the Secretary
to request a tax file number from a person who is receiving a social security
payment.
Section 1061ZVHE - When tax file numbers are cancelled
Section 1061ZVHE provides that if the Commissioner cancels a tax file number that
a person has given to the Secretary in order to become qualified for a student
start-up loan, then the Commissioner may give to the Secretary a written notice of
the cancelation.
The Commissioner must also give a copy of any notice to the person concerned
containing a statement of reasons for the decision to give the notice.
In addition, section 75 of the Social Security Administration Act allows the Secretary
to request a tax file number from a person who is receiving a social security
payment.
Section 1061ZVHF - Return assessments, collection and recovery
Section 1061ZVHF provides that, subject to Parts 2AA.3 and 2AA.4 of the Act
(as inserted by Schedule 6 of the Bill), Part VI of the Income Tax Assessment Act
1936, Division 5 of the Income Tax Assessment Act 1997 and Part 4-15 in Schedule
1 to the Taxation Administration Act apply (so far as they are capable of application)
in relation to a compulsory SSL repayment amount of a person as if it were income
tax assessed to be payable by a taxpayer by an assessment made under Part IV of
the Income Tax Assessment Act 1936.
38
Schedule 6 - Student start-up loans
Section 1061ZVHG - Charges and civil penalties for failing to meet obligations
Section 1061ZVHG provides that Part 4-25 in Schedule 1 to the Taxation
Administration Act has effect as if any compulsory SSL repayment amount of a
person were income tax payable by the person in respect of the income year in
respect of which the assessment of that debt was made, and Part 2AA.1 so far as it
relates to tax file numbers, and Part 2AA.2, 2AA.3 and this Part were an income tax
law.
This does not have the effect of making a person liable to a penalty for any act or
omission that happened before the commencement of this section.
Section 1061ZVHH - Pay as you go (PAYG) withholding
Section 1061ZVHH provides that Part 2-5 (other than section 12-55 and
Subdivisions 12-E, 12-F and 12-G) in Schedule 1 to the Taxation Administration Act
applies (so far as it is capable of application) in relation to the collection of amounts
of a persons compulsory SSL repayment amount of a person as if the compulsory
SSL repayment amount were income tax.
Section 1061ZVHJ - Pay as you go (PAYG) instalments
Section 1061ZVHJ provides that Division 45 in Schedule 1 to the Taxation
Administration Act applies (so far as it is capable of application) in relation to the
collection of a persons compulsory SSL repayment amount as if the compulsory
repayment amount were income tax.
Section 1061ZVHK - Administration of this Chapter
Section 1061ZVHK provides that the Commissioner of Taxation has general
administration of Part 2AA.1 in so far as it relates to tax file numbers, Parts 2AA.2
and Part 2AA.3 of the Act (as inserted by this Schedule) and Division 2A of Part 4 of
the Administration Act.
The purpose of this provision is to allow the Commissioner of Taxation to administer
the recovery of SSL debts.
It is important to note that, while the Commissioner of Taxation has general
administration of Part 2AA.1, it is the Secretary who, under
subparagraph 1061ZVCA(4)(b)(ii), is responsible for forming an opinion as to
whether a person ceased to be enrolled in an approved scholarship course because
of exceptional circumstances beyond the persons control.
Items 26 and 27 insert items 69A and 41A into the tables contained in section 1190
and subsection 1191(1) respectively to provide for the indexation of the student
start-up loan amount. This is not to be confused with the indexation of the
accumulated SSL debt.
39
Schedule 6 - Student start-up loans
Item 28 inserts subsection 1192(8B) to provide that the student start-up loan
payment is not indexed on 1 January 2014, 1 January 2015 and 1 January 2016.
This will ensure that the amount of the student start-up scholarship payment and the
student start-up loan will remain equal in value.
Item 29 is a technical amendment for the purpose of section 1223ABG (as inserted
by item 30).
Item 30 inserts sections 1223ABF and 1223ABG.
Section 1223ABF - Debts in respect of student start-up loans
Subsection 1223ABF(1) provides that if a person:
has received a student start-up loan for which the person qualified at the time
in a qualification period; and
at any time on or before the persons enrolment test day, the person is not
enrolled in an approved scholarship course;
then the amount of the loan is a debt due to the Commonwealth and the debt is
taken to have arisen when the person received the loan.
Subsection 1223ABF(2) defines a persons enrolment test day for a qualification
period, which is the earliest of the following days:
the last day of the approved scholarship course, if the approved scholarship
course ends during that qualification period;
the last day of the relevant qualification period;
the 35th day of the period starting on either the first day of the approved
scholarship course (if the persons qualification time was before the first day
of the relevant approved scholarship course, for example where a person is
beginning their course) or the day on which the person qualifies for the loan.
The purpose of these rules is to ensure that the loans are targeted to people who
have a genuine commitment to continuing their study.
Subsection 1223ABF(3) states that a debt will not arise under this section if the
Secretary determines that a person is no longer enrolled full-time in an approved
scholarship course because of exceptional circumstances beyond the persons
control.
40
Schedule 6 - Student start-up loans
Section 1223ABG - Student start-up loan previously treated as part of accumulated
SSL debt
Section 1223ABG is a mechanism by which the Commissioner can amend a student
start-up loan if it is found to be a debt under section 1223 or 1223ABF and is
therefore not an income-contingent loan. This is to ensure that where a person was
discovered to have not been qualified for a student start-up loan, then the indexation
can be applied to the amount of the loan by way of the Commissioner amending the
amount of debt.
Subsection 1223ABG(1) clarifies that this section applies to debts that arise under
section 1223 or 1223ABF in relation to a student start-up loan and the Commissioner
has been treating them as if they were part of an accumulated SSL debt, but at a
time since (to be known as the cessation time) has ceased to do so.
Subsection 1223ABG states that the amount of the debt arising under section 1223
or 1223ABF is the amount of the accumulated SSL debt as is immediately before the
cessation time.
Item 31 inserts subparagraph 1229D(1)(b)(iiia) to provide that a student start-up
loan, as contemplated under section 1223ABF, is a debt to which an interest charge
may be applied to under section 1229E or 1229F of the Social Security Act
(as inserted by Schedule 1 of the Bill).
Amendments to the Social Security Administration Act
Item 32 amends subsection 10(1) to exclude Divison 2A from the jurisdiction of the
Social Security Appeals Tribunal. This is because decisions under Division 2A are
made by the Commissioner and, consistent with other decisions by the
Commissioner, are reviewable by the Administrative Appeals Tribunal.
Item 33 inserts section 26C, which provides a time limit for claiming the student
start-up loan.
Subsection 26C(1) provides that a persons claim for a student start-up loan for a
qualification period must be made before the end of the qualification period.
Section 26C(2) provides that a persons claim for a student start-up loan for a
qualification period must be made at least 35 days before the course end date if the
student is expected to complete the approved scholarship during that qualification
period.
Item 34 inserts subsection 36(4) and (5) which provide obligations of the Secretary
in determining claims and intend to give the Secretary flexibility in when to determine
claims.
41
Schedule 6 - Student start-up loans
Subsection 36(4) states that, if a person claims a student start-up loan for a
qualification period, the Secretary may determine the persons claim at a time the
Secretary considers appropriate. The Secretary should have regard to the principle
that the time should be close to the start of the period of study concerned for the
relevant approved scholarship course.
Subsection 36(5) provides that nothing in subsection 36(4) affects the operation of
section 39 which provides that if the Secretary does not make a determination
regarding a claim within the period of 13 weeks after the day on which the claim was
made, the Secretary is taken to have made a determination rejecting the claim.
Item 35 is a minor amendment for the purposes of item 36.
Item 36 inserts subsection 39(9) to provide an exception to the requirement in
subsection 39(1). Subsection 39(1) deems that a claim that has not been decided
upon by the Secretary within a 13 week period of making the claim is refused.
Subsection 39(9) provides that, if, at any time, a person has lodged more than one
claim for a student start-up loan for a qualification period that has not yet been
determined and a person has not yet actually qualified for a claim, then the 13-week
period will start on the day when the person does become qualified. This will ensure
that a person can validly put in a claim in advance of being qualified.
Item 37 provides that the student start-up loan is within the definition of a lump sum
benefit for the purposes of section 47 of the Act.
Item 38 makes technical amendments to subsection 47(4) to allow for sections 47DA
and 47DB.
Item 39 inserts section 47DB, which provides that, where a person qualifies for a
student start-up loan because the person is receiving youth allowance and all or part
of that person's youth allowance is being paid to the person's parent or another
person, the whole amount of the SSL, or the proportion of youth allowance that is
being paid to the person's parent or other person, may be paid by the Secretary to
the persons parent or other person.
Item 40 amends the heading of section 58 to ,,Payment of social security payment
after death.
Item 41 amends section 58 to include reference to the student start-up loan.
Item 42 inserts subsection 127(4) to provide that the Secretary must not review a
decision that is a reviewable decision under section 138A. As discussed with
respect to section 138A, the purpose of this amendment is to ensure that reviewable
decisions under the student start-up loan provisions are reviewed in the same way
that the equivalent decisions in the Higher Education Support Act that relate to HELP
are reviewed. Under the recovery of HELP the decision maker for reviewable
decisions is the Commissioner. This amendment appropriately ensures that the
Commissioner, who administers the recovery of HELP is the relevant decision
maker.
42
Schedule 6 - Student start-up loans
For the same reason, item 42 will ensure the Secretary will not be able to review a
decision relating to the student start-up loan that is reviewable by the Commissioner.
Item 43 inserts paragraph 129(4)(da) to provide that a person may not apply to the
Secretary for a decision that is reviewable under section 138A. As discussed in
relation to item 42, it is intended that the Commissioner reviews decisions under
section 138A, rather than the Secretary, and therefore a person cannot apply to the
Secretary for such a review.
Item 44 inserts Division 2A - Internal review of Commissioner decisions relating to
student start-up loans - which contains sections 138A to 138G. These provisions
are intended to ensure that the system of review for the student start-up loan is
consistent with the system of review for HELP under the Higher Education Support
Act.
Section 138A - Decisions reviewable under this Division
Section 138A provides that the decisions by the Commissioner to defer making an
assessment or to amend an assessment are reviewable decisions.
Section 138B - Commissioner must give reasons for reviewable decisions
Section 138B provides that, if the Commissioner is required to notify a person of the
making of a reviewable decision, then the notice must include the reasons for the
decision. This will mean that if the Commissioner makes a reviewable decision
under 138A, then he or she will have to include the reasons for the decision. This
section will not affect any other legal obligation to give reasons for a decision.
Section 138C - Reviewer of decisions
Subsection 138C(1) provides that Commissioner is the reviewer of reviewable
decisions under Division 2A unless subsection 138C(2) applies.
Subsection 138C(2) provides that, where a delegate of the Commissioner makes a
reviewable decision, any delegate of the Commissioner who reconsiders the
decision must not have been involved in the making of the decision and must be
more senior to the decision maker.
Section 138D - Reviewer may reconsider reviewable decisions
Section 138D provides a mechanism by which a reviewer can reconsider a
reviewable decision. Unlike section 138E, a reviewer can review a decision under
this section whether or not a person requests such reconsideration.
Subsections 138D(1) and (2) provide that the reviewer of a reviewable decision may
reconsider the decision if they are satisfied that there is a sufficient reason to do so.
The reviewer will be able to do so even if the application for reconsideration was
made on request or the decision had been confirmed, varied or set aside and an
application had otherwise been made to the Administrative Appeals Tribunal.
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Schedule 6 - Student start-up loans
Subsection 138D(3) provides that, after reconsidering the decision, the reviewer
must either confirm, vary or set aside the decision. If the decision is set aside a new
decision must be substituted.
Subsection 138D(4) provides that decision of the reviewer to confirm vary or set
aside the original decision takes effect either on the day that is specified in the
decision of the review or if it is not specified, the day on which the new decision was
made.
Subsection 138D(5) provides that the reviewer must give written notice of the
decision on review to the person to whom the decision relates.
Subsection 138D(6) provides that the notice must be given within a reasonable
period of time after the decision has been made and must contain a statement of the
reason for the reviewers decision on review. In addition to this requirement,
section 27A of the Administrative Appeals Tribunal Act 1975 will also require the
person to be notified of the persons review rights.
Section 138E - Reconsideration of reviewable decisions on request
Section 138E provides a mechanism by which a person can require a reviewer to
confirm, vary or set aside a decision that is to be reconsidered.
Subsection 138E(1) provides a right of a person whose interests are affected by a
reviewable decision to request the reviewer to reconsider the decision.
Subsection 138E(2) provides that such a request must be in a written notice given to
the reviewer within 28 days (or longer, if the reviewer allows it) from when the person
first received the notice of decision.
Subsection 138E(3) provides that the notice must set out the reasons for making the
request.
Subsections 138E(4) to 138E(7) operate in the same way as subsections 138D(3) to
138D(6) but with respect to a decision reconsidered on request.
Subsection 138E(8) provides that, if a reviewer does not give a notice of a decision
to the person within 45 days after receiving the persons request, then the original
decision is taken to be confirmed. In addition to this requirement, section 27A of the
Administrative Appeals Tribunal Act 1975 will also require the person to be notified of
the persons review rights.
Section 138F - AAT review of the reviewable decisions
Section 138F provides that, if a reviewable decision has been confirmed, varied or
set aside by a reviewer has reconsidered the decision, then a person may apply to
the AAT for review of the decision.
44
Schedule 6 - Student start-up loans
Item 45 amends section 144 to provide that the reviewable decision under 138A or
decisions under section 138E or 138F cannot be reviewed by the Social Security
Appeals Tribunal (SSAT). This is because the reviewable decisions under
section 138A are reviewable decisions made by the Commissioner relating to the
deferral and amendments of assessment of SSL debts. To ensure that the student
start-up loan is administered in a way that is consistent with the administration of
HELP under the Higher Education Support Act, such reviewable decisions will not be
reviewed by the SSAT. This will not prohibit any other decision contained in
Chapter 2AA of the Social Security Act (as inserted by item 25) from being reviewed
by the SSAT subject to the existing provisions in the Social Security Administration
Act.
Amendments to the Student Assistance Act
Items 46 to 66 amend subsection 3(1) to include definitions of terms relating to the
ABSTUDY student start-up loan.
Item 67 inserts Part 2 - ABSTUDY student start-up loans.
Section 6A - Simplified outline of this Division
Section 6A briefly outlines the qualification for and amount of ABSTUDY student
start-up loan.
Section 6B - ABSTUDY Scheme
Section 6B provides clarity that ABSTUDY student start-up loans are made under
the ABSTUDY scheme.
Section 6C - Qualification for ABSTUDY student start-up loan
Section 6C operates in a similar way to section 1061ZVAB of the Social Security Act
(as inserted by item 25) but with respect to the ABSTUDY student start-up loan.
The difference between these provisions is that, in order to be qualified for a student
start-up loan under section 6C, rather than being qualified on the basis of youth
allowance or austudy, a person at the qualification time has to be qualified for a
payment known as Living Allowance under the ABSTUDY Scheme and Living
Allowance must be payable to the person.
Section 6D - Circumstances in which person is not qualified for ABSTUDY student
start-up loan
Section 6D mirrors the operation of section 1061ZVAC of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 6E - Amount of ABSTUDY student start-up loan
Subsection 6E(1) provides that the amount of the ABSTUDY student start-up loan is
$1,025.
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Schedule 6 - Student start-up loans
Subsection 6E(2) provides that the ABSTUDY student start-up loan is indexed under
Division 2 of Part 3.16 of the Social Security Act on 1 January 2017 and each
subsequent 1 January, as if it were a student start-up loan amount referred to in the
table in subsection 1191(1) of that Act.
Section 7A - Simplified outline of this Division
Section 7A briefly outlines the process for incurring ABSTUDY SSL debts.
Section 7B - ABSTUDY SSL debts
Section 7B mirrors the operation of section 1061ZVCA of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 7C - ABSTUDY SSL debt discharged by death
Section 7C mirrors the operation of section 1061ZVCB of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 8A - Simplified outline of this Division
Section 8A mirrors the operation of section 1061ZVDA of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 8B - Working out a former accumulated ABSTUDY SSL debt
Section 8B mirrors the operation of section 1061ZVDB of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 8C - Working out an accumulated ABSTUDY SSL debt
Section 8C mirrors the operation of section 1061ZVDC of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 8D - Rounding of amounts
Section 8D mirrors the operation of section 1061ZVDD of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 8E - Accumulated ABSTUDY SSL debt discharges earlier debts
Section 8E mirrors the operation of section 1061ZVDE of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 8F - Accumulated ABSTUDY SSL debt discharged by death
Section 8F mirrors the operation of section 1061ZVDF of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
46
Schedule 6 - Student start-up loans
Section 9A - Simplified outline of this Division
Section 9A mirrors the operation of section 1061ZVEA of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9B - Debts under this Part
Section 9B provides that a debt within the meaning of section 39 of the Act is not a
debt that arises under Part 2. This is because these debts relate to the ABSTUDY
student start-up loans which are income-contingent loans and are therefore
administered differently to other debts arising under the Student Assistance Act.
Section 9C - Voluntary ABSTUDY SSL repayments in respect of debts
Section 9C mirrors the operation of section 1061ZVFA of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9D - Application of voluntary ABSTUDY SSL repayments
Section 9D mirrors the operation of section 1061ZVFB of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9E - Refunding of payments
Section 9E mirrors the operation of section 1061ZVFC of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9F - Liability to repay amounts
Section 9F mirrors the operation of section 1061ZVGA of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9G - HELP repayment income
Section 9G provides that for the purposes of Part 2 of the Act, the term HELP
repayment income has the same meaning as repayment income in the Higher
Education Support Act.
Section 9H - Minimum repayment income
Section 9H provides that for the purpose of Part 2, the term minimum HELP
repayment income has the same meaning as minimum repayment income in the
Higher Education Support Act.
Section 9J - Repayable ABSTUDY SSL debt for an income year
Section 9J mirrors the operation of section 1061ZVGD of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
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Schedule 6 - Student start-up loans
Section 9K - Amounts payable to the Commonwealth
Section 9K mirrors the operation of section 1061ZVGE of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9L - Commissioner may make assessments
Section 9L mirrors the operation of section 1061ZVGF of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9M - Notification of notices of assessment of tax
Section 9M mirrors the operation of section 1061ZVGG of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9N - Commissioner may defer making assessments
Section 9N mirrors the operation of section 1061ZVGH of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 9P - Commissioner may amend assessments
Section 9P mirrors the operation of section 1061ZVGJ of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10A - Simplified outline of this Division
Section 10A briefly outlines tax administration matters with regards to the ABSTUDY
student start-up loan.
Section 10B - Verification of tax file numbers
Section 10B mirrors the operation of section 1061ZVHB of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10C - When person with tax file number incorrectly notifies number
Section 10C mirrors the operation of section 1061ZVHC of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10D - When person without tax file number incorrectly notifies number
Section 10D mirrors the operation of section 1061ZVHD of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10E - When tax file numbers are cancelled
Section 10E mirrors the operation of section 1061ZVHE of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
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Schedule 6 - Student start-up loans
Section 10F - Returns, assessments, collection and recovery
Section 10F mirrors the operation of section 1061ZVHF of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10G - Charges and civil penalties for failing to meet obligations
Section 10G mirrors the operation of section 1061ZVHG of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10H - Pay as you go (PAYG) withholding
Section 10H mirrors the operation of section 1061ZVHH of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10J - Pay as you go (PAYG) instalments
Section 10J mirrors the operation of section 1061ZVHJ of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Section 10K - Administration of this Part
Section 10K mirrors the operation of section 1061ZVHK of the Social Security Act
(as inserted by item 25) but with respect to an ABSTUDY student start-up loan.
Item 68 amends the definition of ABSTUDY debt to include an ABSTUDY student
start-up loan overpayment. This amendment is necessary given item 71 of this
Schedule inserts section 38A, which provides for the meaning of ABSTUDY student
start-up loan overpayment.
Item 69 amends the definition of debt to include an ABSTUDY student start-up loan
overpayment.
Item 70 makes technical amendments for the purposes of the amendment contained
in item 71.
Item 71 inserts section 38A - ABSTUDY student start-up loans overpayments.
Section 38A operates in a similar way to section 1223ABF of the Social Security Act
(as inserted by item 30) as it sets out circumstances in which the ABSTUDY start-up
loan will not be treated as an income-contingent loan but as a debt owed by the
person to the Commonwealth under section 39 of the Act.
Items 72 and 73 make minor amendments for the purposes of item 74.
Item 74 amends section 39 to provide that, where an ABSTUDY student start-up
loan payment becomes a debt recoverable by the Commonwealth, the ABSTUDY
student start-up loan overpayment is taken to have arisen when the person received
the loan to which the overpayment relates.
49
Schedule 6 - Student start-up loans
Item 75 inserts section 39AAA (ABSTUDY student start-up loan), previously treated
as part of accumulated ABSTUDY SSL debt. This section mirrors section 1223ABG
of the Social Security Act (as inserted by item 30), but with respect to an ABSTUDY
student start-up loan overpayment.
Item 76 makes a minor amendment for the purposes of item 77.
Item 77 amends subsection 44A(7) to provide that subsection 44A(5) does not apply
in relation to recovery of an amount relating to an ABSTUDY student start-up loan.
This will mean that a student will have to provide their actual tax file number, rather
than lodging an application for a tax file number with the Department, in order to
meet the qualification requirements for the ABSTUDY student start-up loan.
Item 78 amends subsection 55A to clarify that payments made in relation to
ABSTUDY student start-up loans are be to made out of the Consolidated Revenue
Fund, which is appropriated accordingly.
Item 79 makes a minor amendment for the purposes of item 80.
Item 80 amends section 302 to provide that Division 1 of Part 9 does not apply to a
decision that is reviewable under section 308A.
Item 81 inserts new Division 1A - Internal review of Commissioner decisions relating
to ABSTUDY student start-up loans.
Section 308A - Decisions reviewable under this Division
Section 308A mirrors the operation of section 138A of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable decisions
in relation to ABSTUDY student start-up loan.
Section 308B - Commissioner must give reasons for reviewable decisions
Section 308B mirrors the operation of section 138B of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable decisions
in relation to ABSTUDY student start-up loan.
Section 308C - Reviewer of decisions
Section 308C mirrors the operation of section 138C of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable decisions
in relation to ABSTUDY student start-up loan.
Section 308D - Reviewer may reconsider reviewable decisions
Section 308D mirrors the operation of section 138D of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable decisions
in relation to ABSTUDY student start-up loan.
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Schedule 6 - Student start-up loans
Section 308E - Reconsideration of reviewable decisions on request
Section 308E mirrors the operation of section 138E of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable decisions
in relation to ABSTUDY student start-up loan.
Section 308F - AAT review of reviewable decisions
Section 308F mirrors the operation of section 138F of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable decisions
in relation to ABSTUDY student start-up loans.
Item 82 mirrors the operation of subsection 144(t) of the Social Security
Administration Act (as inserted by item 45) but with respect to ABSTUDY student
start-up loans.
Amendments to the Taxation Administration Act
Item 83 inserts a definition of compulsory ABSTUDY SSL repayment amount into
the Act.
Item 84 inserts a definition of compulsory SSL repayment amount into the Act.
Item 85 amends section 8AAZLD to provide that any compulsory SSL repayment
amount of the entity and then any compulsory ABSTUDY SSL repayment amount
will be prioritised in that order after any compulsory repayment amount but before
any FS assessment debt when the Commissioner applies a credit that arises under
the Pay As You Go system.
Item 86 amends section 6-1 in Schedule 1 to allow for the Pay As You Go system to
collect amounts that go towards meeting liability to repay debts in relation to student
start-up loans and ABSTUDY student start-up loans.
Item 87 amends the objects in section 11-1 of Schedule 1 to ensure that the object
Part 2-11 is to ensure the efficient collection of amounts of liabilities to the
Commonwealth under Chapter 2AA of the Social Security Act or under Part 2 of the
Student Assistance Act.
Item 88 amends section 15-30 of Schedule 1 to ensure that the Commissioner must
have regard to the applicable percentages in section 1061ZVGE of the Social
Security Act and the equivalent provision in the ABSTUDY scheme when making a
withholding schedule.
Item 89 amends the object in section 45-5 of Schedule 1 so that the object Part 2-10
is to ensure the efficient collection of amounts of liabilities to the Commonwealth
under Chapter 2AA of the Social Security Act or under Part 2 of the Student
Assistance Act.
Item 90 amends section 45-340 in Schedule 1 to insert steps 3AA and 3AB to the
method statement on adjusted taxable income or on adjusted withholding income.
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Schedule 6 - Student start-up loans
Item 91 makes technical amendments to step 4 of the method statement in
section 45-340 in Schedule 1 to take account of new steps 3AA and 3AB as inserted
by item 90.
Item 92 amends the method statement in section 45-375 in Schedule 1 to insert
steps 3AA and 3AB for adjusted assessed tax on adjusted assessed taxable income.
Item 93 makes a technical amendment to step 4 of the method statement in section
45-375 in Schedule 1 to take account of new steps 3AA and 3AB as inserted by
item 92.
Item 94 amends the table in subsection 250-10(2) to include any compulsory SSL
and ABSTUDY SSL repayment amount in the adjusted taxable income calculation.
Item 95 amends subsection 355-65(2) to include that records or disclosures relating
to social welfare, health or safety can be made for or disclosure can be made to an
Agency Head (within the meaning of the Public Service Act 1999) of an agency
(within the meaning of that Act) dealing with matters relating to the social security
law, including the Student Assistance Act so far as it relates to ABSTUDY student
start-up loans (within the meaning of that Act) and debts relating to such loans, along
with the Social Security Act.
Amendments to the Taxation (Interest on Overpayment and Early Payments)
Act 1983
Items 96 and 97 insert a definition of compulsory ABSTUDY SSL repayment
amount and compulsory SSL repayment amount into the Act.
Item 98 amends the table in subsection 3C(1) so that compulsory SSL repayment
amounts and ABSTUDY SSL repayment amounts are identified as relevant tax law
for the purposes of the Act.
Items 99 and 100 amend subsections 8A(1) and 8A(2) to ensure compulsory SSL
repayment amounts and ABSTUDY SSL repayment amounts are payments for
which interest is payable by the Commissioner to the person on the payment,
calculated in respect of the period applicable under section 8B at the rate specified in
section 8C.
Items 101 and 102 amend paragraphs 8E(1)(d) and 8E(2)(d) to ensure that interest
can be paid when crediting amounts in excess of any compulsory SSL repayment
amounts and compulsory ABSTUDY SSL repayment amounts.
Items 103 and 104 amend subparagraph 12A(1) to ensure that interest entitlement
arises in respect of refunds of payments made on account of compulsory SSL
repayment amounts and compulsory ABSTUDY SSL repayment amounts These
items otherwise amend subparagraph 12A(1) to ensure this provision is written in a
way that reflects current drafting techniques. This is a minor, technical amendment.
Item 105 is a minor amendment for the purposes of item 103.
52
Schedule 7 - Paid parental leave
Summary
To ease administrative burdens on business, the Paid Parental Leave legislation will
be amended to remove the requirement for employers to provide
Government-funded parental leave pay to their eligible long-term employees.
From 1 March 2014, employees will be paid directly by the Department of Human
Services, unless an employer opts in to provide parental leave pay to its employees
and an employee agrees to their employer paying them.
Background
Currently under the Paid Parental Leave Act, in the majority of cases, employers are
required to provide parental leave pay to their eligible long-term employees.
The Secretary must make an employer determination that a persons employer is to
pay the persons instalments of parental leave pay, if the Secretary is satisfied that
certain conditions are met.
However, an employer determination can be made despite not all of the conditions
being satisfied if an employer has made an election to ,,opt-in to pay instalments of
parental leave pay to the employee and the employee consents to the employer
paying the instalments. If an employer determination is in force for an employer and
their employee, the employer must pay instalments of parental leave pay to their
employee.
From 1 March 2014, payments of parental leave pay will be made by the Department
of Human Services, unless an employer chooses to ,,opt in to manage the payment
of parental leave pay to their employees and their employee agrees for the employer
to pay them. This will go some way towards easing the administrative burden on
business.
The amendments will only require an employer to provide instalments of parental
leave pay to a person if an employer determination is in force for the employer and
the employee. An employer determination can only be made if the employer has
made an election to pay instalments, that election applies to the person, and certain
other conditions are met, including the employee agreeing to their employer paying
them. PPL funding amounts will then be transferred to the employer from the
Department of Human Services for payment to the employee, consistent with current
arrangements.
If an employer determination is made for a particular employer and employee,
but the employer no longer wishes to pay parental leave pay for that particular
employee, the employer can decline the paymaster role. If this happens,
the Department of Human Services will pay the employee.
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Schedule 7 - Paid parental leave
To reflect the non-mandatory nature of this role, employers who do not respond to a
notice of an employer determination will no longer be potentially subject to a
compliance notice. Review of an employer determination is no longer required
because the employer can simply decline the paymaster role.
The amendments made by this Schedule commence on 1 March 2014.
Explanation of the changes
Part 1 - Amendments
Amendments to the Paid Parental Leave Act
Items 1, 2 and 3 amend section 4, which is the Guide to the Act, to reflect the
changes made by this Schedule.
Item 4, 5 and 8 amend certain definitions in section 6, to reflect the changes made
by items 11, 21, 22 and 32 of this Schedule.
Item 6 repeals the definition of employer determination decision in section 6,
as this was only relevant to review of these decisions and is no longer required as a
consequence of the amendment made by item 41.
Item 7 inserts a new definition of non-acceptance notice in section 6, which is
defined in paragraph 103(1)(b), as amended by item 21.
Item 9 amends the note under subsection 64(1) by removing the reference to
,,section 93, consequential to repeal of that section by item 15.
Item 10 amends the third paragraph in section 83, which is the Guide to Part 3-3,
relating to payment of instalments by the Secretary.
Item 11 repeals subsection 84(3), to omit reference to an employer having made an
application for review of the decision to make an employer determination.
Item 12 repeals and substitutes a new heading for section 85, titled ,,Payment of
arrears - employer determination revoked before coming into force. This item is
consequential to item 13.
Item 13 repeals and substitutes new subsection 85(1), omitting reference to
subsection 84(3), but otherwise re-enacting the subsection unchanged.
Item 14 amends subsection 85(3) and is consequential to items 12 and 13.
Item 15 repeals section 93, and removes the requirement for the Secretary to pay
instalments because an employer has sought review of an employer determination.
Item 16 repeals and substitutes a new section 100, which is a guide to Part 3-5 of
the Paid Parental Leave Act and gives a brief outline of the matters dealt with in the
Part, relating to employer determinations. The changes to section 100 reflect the
amendments made by items 17 to 32.
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Schedule 7 - Paid parental leave
Item 17 repeals and substitutes new paragraphs 101(1)(b) and (c).
Subsection 101(1) provides that the Secretary must make an employer
determination that a persons employer is to pay the person instalments if the
Secretary is satisfied that certain conditions have been met.
New paragraph 101(1)(b) provides that, when making an employer determination,
one of the conditions of which the Secretary must be satisfied is that the persons
employer has made an election (or ,,opted in) under section 109 to pay instalments
and that election applies to the person.
New paragraph 101(1)(c) provides that, when making an employer determination,
the Secretary must also be satisfied that the person has consented in the claim form
to the employer paying instalments of parental leave pay to the person.
Item 18 repeals paragraph 101(1)(e), which removes the condition that an employer
has an ABN, when the Secretary makes an employer determination.
The requirement to have an ABN is now provided by subsection 109(1) (item 31).
Item 19 amends paragraph 101(1)(f), and is consequential to items 17 and 18.
Item 20 repeals subsection 101(2), and is consequential to the changes made by
item 17.
Item 21 repeals and substitutes new section 103, which sets out the required
employer response to a notice of an employer determination.
New subsection 103(1) provides that, if an employer is given a notice under
section 102 that an employer determination has been made, the employer may,
within the period referred to in subsection 103(2) (which is normally 14 days):
give the Secretary a written notice (the acceptance notice) that complies with
section 104; or
give the Secretary a non-acceptance notice, orally or in writing, declaring
that the employer does not accept the employers obligations to pay
instalments to the person.
New subsection 103(2) provides that, for the purposes of subsection (1), the period
is 14 days, or such longer period allowed by the Secretary, after the date of the
notice given under section 102.
Item 22 repeals subsections 104(2) and (5), which provide the requirement to have
bank account information in the acceptance notice. This requirement is now
provided in paragraph 109(2)(b) (item 32).
Item 23 repeals section 105, removing the requirement for the employer to give bank
account and pay cycle information etc. after an internal review or review by the
SSAT, as this is no longer relevant.
Item 24 amends subsection 107(1), and is consequential to item 27.
Item 25 repeals the heading to subsection 107(2).
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Schedule 7 - Paid parental leave
Item 26 amends subsection 107(2) by omitting the reference to ,,a compliance notice
given under section 157.
Item 27 repeals subsection 107(3), and is consequential to item 23.
Item 28 inserts a new item 1A in the table in subsection 108(1). New table item 1A
provides that the Secretary must revoke an employer determination made for a
person and the persons employer if the Secretary is satisfied that the employer has
given a non-acceptance notice for the person under paragraph 103(b). In this
situation, the revocation comes into force on the day of the revocation.
Item 29 amends item 2 in column 1 of the table in subsection 108(1), and is
consequential to item 21.
Item 30 repeals subsection 108(6), which relates to the notice of revocation of an
employer determination to the SSAT, when the Secretary revokes an employer
determination, as a review would no longer occur in this situation (consequential to
item 41).
Item 31 amends subsection 109(1) by adding the requirement for an employer to
have an ABN, before the employer may choose to ,,opt in to pay instalments of
parental leave pay to an employee.
Item 32 repeals and substitutes new paragraph 109(2)(b), which sets out the
requirements of an election notice (or notice to ,,opt in).
New paragraph 109(2)(b) provides that the election notice must be in the approved
form and contain information (bank account information) about an account held and
maintained by the employer into which PPL funding amounts can be paid.
Item 33 repeals items 10 and 11 in the table in section 146, relating to what
constitutes a civil penalty provision. This is consequential to items 21 and 23.
Item 34 repeals and substitutes new subsection 157(1), which relates to compliance
notices given by the Secretary, to omit reference to failing to respond to an employer
determination or failing to provide certain information after a review.
New subsection 157(1) provides that section 157 applies if the Secretary reasonably
believes that a person has contravened subsection 82(2), which deals with an
employer notifying the Secretary if certain events happen.
Item 35 amends subsection 159(1), and is consequential to item 36.
Item 36 repeals paragraphs 159(1)(b) and (c), relating to infringement notices the
Secretary may give in relation to section 103 (which deals with responding to an
employer determination) and subsection 105(3) (which deals with giving bank
account and pay cycle information etc. after a review).
Item 37 repeals and substitutes a new last paragraph of the Guide to Part 5-1
(relating to internal review of decisions) in section 202. This change reflects the
changes made by item 41.
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Schedule 7 - Paid parental leave
Item 38 repeals the first note under subsection 203(2), which is consequential to the
repeal of section 207 by item 41.
Item 39 changes the heading of ,,Note 2 to ,,Note under subsection 203(2), which is
consequential to item 38.
Item 40 amends subsection 205(1) by removing the reference to section ,,207, which
is consequential to item 41.
Item 41 repeals section 207, removing the right for an employer to make an
application for internal review of an employer determination, as an employer can now
simply decline the employer determination instead.
Item 42 amends subsection 209(2) by omitting the reference to ,,an application under
section 207. This item is consequential to item 41.
Item 43 amends paragraphs 210(2)(a) and (b) by removing the references to
,,an employer determination decision, which is consequential to item 41.
Item 44 repeals paragraph 212(1)(c), relating to a notice of a decision relating to an
employer determination decision, which is consequential to item 41.
Item 45 amends subsection 212(5), and is consequential to item 44.
Item 46 amends paragraphs 223(1)(a), (b), (c) and (d) by omitting the references to
,,an employer determination decision, which is consequential to item 41.
Item 47 repeals subsection 224(1), which allowed an employer to apply to the SSAT
for review of an employer determination decision. This item is consequential to the
changes made by item 41.
Item 48 amends subsection 224(2) by omitting the reference to ,,if the decision is an
employer funding amount decision.
Item 49 amends subsection 224(3), and is consequential to item 47.
Item 50 repeals paragraph 225(2)(b), which is consequential to item 47.
Item 51 amends subsection 278(1), which relates to Commonwealth employees and
is consequential to item 52.
Item 52 repeals subsection 278(2), which relates to Commonwealth employees and
is consequential to item 17.
Item 53 repeals subsection 299(1) and substitutes a new subsection.
New subsection 299(1) provides that the PPL Rules or the regulations may provide
that a person may make an election under section 109 to pay instalments to another
person if both persons are in a relationship that is similar to the relationship between
an employer and an employee.
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Schedule 7 - Paid parental leave
Part 2 - Application and transitional provisions
Item 54 is an application provision, which provides that the amendments made by
Part 1 of this Schedule apply in relation to an employer determination that is made
on or after the commencement of this Schedule in relation to a claim for parental
leave pay that is made before, on or after that commencement.
Item 55 is a transitional provision relating to elections made before commencement.
This item provides that an election under section 109 of the Paid Parental Leave Act
that is in force immediately before the commencement of this Schedule ceases to be
in force at that commencement.
Item 56 is a transitional provision relating to revoking employer determinations made
before commencement.
Subitem 56(1) provides that this item applies if:
an employer determination was made before the commencement of this
Schedule for a person and the persons employer; and
the determination had not been revoked before that commencement; and
the persons PPL period had not started before that commencement.
Subitem 56(2) provides that the Secretary must revoke any determination captured
under subitem 56(1).
Subitem 56(3) provides that the Paid Parental Leave Act applies as if a revocation
under subitem 56(2) were made under subsection 108(1) of that Act.
58
Schedule 8 - Pension bonus scheme
Summary
From 1 March 2014, this Schedule will end late registrations for the closed pension
bonus scheme.
The scheme provides a lump sum payment to people who are qualified for age
pension, age service pension, partner service pension after reaching pension age,
or income support supplement after reaching qualifying age - but who choose to
defer their pension and remain in the workforce. The scheme was closed from 2009,
although people remained able to register for the scheme if they were qualified for it,
but had not registered, at the time of its closure.
However, the introduction around the same time of a work bonus for age pensioners
with earnings from employment has been more effective in encouraging older
Australians to continue contributing to the workforce past pension age. Ending late
registrations for the pension bonus scheme will help ensure the pension system is
simpler and more sustainable for older Australians into the future.
Background
Both the social security law and the Veterans Entitlements Act provide for a pension
bonus scheme.
The pension bonus scheme under the social security law is established by Part 2.2A
of the Social Security Act. It allows a person registered for the scheme,
who qualifies for age pension but defers claiming it, to claim a single lump-sum
pension bonus.
A person must apply to register in the pension bonus scheme (section 92D), and be
registered (section 92J) in order to become a member of the scheme and accrue a
pension bonus. Section 92H imposes time limits on when a person can lodge an
application for registration, depending on the persons date of qualification for age
pension.
The pension bonus scheme was closed to new entrants whose date of qualification
for age pension occurred on or after 20 September 2009 (subsection 92J(1A).
In general, an application for registration must be made within 13 weeks after the
date of the persons qualification for age pension (section 92H). However,
subsection 92H(3) permits the Secretary to extend the period within which a person
must lodge their application. This has allowed a person to make a late application
for registration in the pension bonus scheme and have their registration start date
backdated.
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Schedule 8 - Pension bonus scheme
This Schedule prevents an application for registration in the scheme from being
made on or after 1 March 2014. It removes capacity for the Secretary to extend the
period for an application for registration to be made on or after 1 March 2014. As a
result, it will no longer be possible for a person to apply for registration in the scheme
if their application for such registration is not lodged before 1 March 2014. A saving
provision will allow registration applications lodged prior to 1 March 2014 to be
processed after that date, and the person registered in the scheme if qualified.
Similarly, under the Veterans Entitlements Act, the scheme provides a lump sum
payment to people who are registered in the scheme and eligible for service pension
or partner service pension after reaching pension age, or income support
supplement after reaching qualifying age, but who choose to defer their pension or
supplement and remain in the workforce. The pension bonus scheme is established
under Part IIIAB of the Veterans Entitlements Act.
Mirror amendments are made to the Social Security Act and the Veterans
Entitlements Act.
The amendments made by this schedule commence on 1 March 2014.
Explanation of the changes
Amendments to the Social Security Act
Items 1 and 2 add new subsection (2) to section 92D, to provide expressly that a
person cannot make an application on or after 1 March 2014.
Item 3 repeals notes to subsections 92H(1) and (2) consequential upon the main
repeal made by item 4 below.
Item 4 repeals subsections 92H(3) to (7), which provided capacity for the Secretary
to extend the timeframe for an application for registration in the pension bonus
scheme.
Item 5 provides a saving provision. If an application for registration has been made
prior to 1 March 2014, then, despite the repeal of subsection 92H(3), the Secretary
may register the person in the scheme as a result of the application, with the
registration taking effect on a date determined under that subsection. That is,
applications for registration in the scheme lodged before 1 March 2014 will be
determined in line with legislation in effect immediately before the commencement of
this Schedule. It will not be possible to lodge an application for registration in the
Scheme on or after 1 March 2014.
Amendments to the Veterans Entitlements Act
Items 6 and 7 add new subsection 45TD(2) to provide expressly that a person
cannot make an application for registration in the pension bonus scheme on or after
1 March 2014.
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Schedule 8 - Pension bonus scheme
Item 8 repeals the notes to subsections 45TH(1) and (2) consequential to the repeal
made by item 9.
Item 9 repeals subsections 45TH(3) to (7), which provided capacity for the
Repatriation Commission to extend the timeframe for an application for registration in
the pension bonus scheme.
Item 10 provides a saving provision. If an application for registration has been made
prior to 1 March 2014, then, despite the repeal of subsection 45TH(3), concerning
late applications, the Repatriation Commission may register the person in the
scheme. The registration will take effect on a date determined under the repealed
subsection 45TH(3). This provision enables the Repatriation Commission to
continue to extend the application lodgement period for registrations lodged before
1 March 2014 in accordance with the legislation that was in effect immediately before
the commencement of this Schedule. It will not be possible to lodge an application
for registration in the scheme on or after 1 March 2014.
61
Schedule 9 - Indexation
Summary
This Schedule will extend the indexation pauses on certain higher income limits for
three further years until 30 June 2017.
This will apply to the family tax benefit Part B primary earner income limit,
the parental leave pay and dad and partner pay individual income limits,
and the higher income free area for family tax benefit Part A. In addition, the annual
end-of-year family tax benefit supplements will remain at current levels for three
years.
This Bill will also maintain the annual child care rebate limit at $7,500 for three
further income years starting from 1 July 2014, with the first indexation of this
amount occurring on 1 July 2017. As a result, an individual will be able to receive up
to the maximum amount of $7,500 per child per financial year for out-of-pocket child
care costs for those three income years.
Background
Family tax benefit income thresholds
Schedule 4 to the Family Assistance Act sets out the arrangements for indexation of
family assistance rates and income thresholds. Amendments to Schedule 4 will
result in the continuation of indexation pauses until 30 June 2017 on the higher
income free area for family tax benefit Part A (both the basic amount of $94,316 and
the additional amount for each FTB child after the first of $3,796) and the $150,000
primary earner income limit for family tax benefit Part B.
Family tax benefit Part A and Part B end-of-year supplements
The indexation arrangements for the end-of-year family tax benefit Part A and family
tax benefit Part B supplement amounts, also provided by Schedule 4, will be
amended so that indexation of these amounts is paused until 30 June 2017.
The supplement amounts are currently $726.35 for family tax benefit Part A for each
FTB child, and $354.05 for a family tax benefit Part B recipient.
62
Schedule 9 - Indexation
Child care rebate limit
Child care rebate is a payment assisting eligible individuals with the cost of child care
fees for sessions of care provided by an approved child care service. The amount of
child care rebate an individual may receive for a child for an income year is 50 per
cent of the difference between the amount that the individual is liable to pay for care
provided to the child and the sum of the individuals child care benefit entitlement
(if any) and the Jobs, Education and Training Child Care fee assistance (if any)
relating to that child, up to the maximum limit legislatively set at $7,500 for 2012-14
(the CCR limit). The legislation currently provides for the CCR limit to be indexed on
1 July 2014. Amendments in this Schedule will maintain the annual child care rebate
limit at $7,500 for three further income years starting from 1 July 2014, with the first
indexation of this amount occurring on 1 July 2017.
Paid parental leave income limit
The Paid Parental Leave Act provides that a person can only be eligible for parental
leave pay if they meet certain requirements, which include having adjusted taxable
income for the reference income year of no more than the relevant ,,PPL income
limit. The PPL income limit before 1 July 2014 is $150,000 and is then subject to
indexation. The amendments in this Schedule will further delay the commencement
of indexation of the PPL income limit from 1 July 2014 to 1 July 2017.
The amendments made by this Schedule commence on 1 March 2014.
Explanation of the changes
Amendments to the Family Assistance Act
Section 84F specifies the child care rebate limit applicable in respect of a child and
an income year. These amounts are relevant to the calculation of the amount of
child care rebate for a quarter (under section 84AA), and for an income year (under
section 84A), the amount of child care rebate relating to child care benefit in
substitution (under section 84DA), and the amount of child care rebate for a week
(under section 84AAA). Paragraph 84F(ea) currently specifies the income limit of
$7,500 for the income years ending on 30 June 2012, 30 June 2013 and
30 June 2014.
Item 1 amends paragraph 84F(ea) to specify the limit of $7,500 for the additional
income years ending on 30 June 2015, 30 June 2016 and 30 June 2017.
Item 3 amends subclause 3(6B) of Schedule 4 to the Family Assistance Act to
prevent the indexation of specified child care rebate payments from occurring on
1 July 2014, 1 July 2015 and 1 July 2016. Item 2 makes a consequential
amendment to the heading to subclause 3(6A) of Schedule 4.
Item 4 amends the note to subclause 3(6B) of Schedule 4 to state that the
indexation of the child care rebate limit resumes on 1 July 2017.
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Schedule 9 - Indexation
Item 5 is a transitional provision to the effect that, for the purposes of working out the
indexed amount for the child care rebate limit on 1 July 2017 under Schedule 4 to
the Family Assistance Act, the current figure for the child care rebate limit
immediately before that day is taken to be $7,500.
Item 7 amends subclause 3(7) of Schedule 4 to the Family Assistance Act. This
amendment will prevent the indexation of specified family tax benefit income limits
from occurring on 1 July 2014, 1 July 2015 and 1 July 2016. Item 6 makes a
consequential amendment to the heading to subclause 3(7).
Item 9 amends subclause 3(8) of Schedule 4 to the Family Assistance Act to provide
that indexation of the FTB gross supplement amount (A) and FTB gross supplement
amount (B) will not occur on 1 July 2014, 1 July 2015 and 1 July 2016. Item 8
makes a consequential amendment to the heading to subclause 3(8).
Amendment to the Family Assistance Legislation Amendment (Child Care Budget
Measures) Act 2011
Item 10 repeals item 5 of Schedule 1 to the Family Assistance Legislation
Amendment (Child Care Budget Measures) Act 2011, which is a transitional
provision that is superseded by item 5 above.
Amendments to the Paid Parental Leave Act
Item 11 amends the Guide to Part 2-3 by substituting the date 30 June 2017 for the
date 30 June 2014 as the date before the first indexation of the PPL income limit.
Item 12 amends paragraph 41(a) to extend the time that the $150,000 figure applies
for the PPL income limit from ,,before 1 July 2014 to ,,before 1 July 2017.
Item 13 amends subsection 42(1) to provide for the first indexation of the
PPL income limit to occur on 1 July 2017.
Item 14 amends the Guide to Part 3A-3 (Eligibility for dad and partner pay), which
states that DAPP claimants must not have income exceeding the PPL income limit,
which will not be indexed until after 30 June 2017.
64
Schedule 10 - Reduction of period for temporary absence from Australia
Summary
From 1 July 2014, the length of time that families can be temporarily overseas and
continue to receive family and parental payments will reduce from three years to
56 weeks.
In some circumstances, (such as where certain Australian Defence Force and
Australian Federal Police personnel are deployed overseas) a person will continue to
be eligible for family and parental leave payments for up to three years while
temporarily absent from Australia.
Background
Currently, if an individual leaves Australia temporarily, the maximum period for which
the individual can be eligible for family tax benefit during the absence from Australia
is three years.
Similarly, the maximum period for which a person may be temporarily absent from
Australia and still be eligible for parental leave pay, or dad and partner pay,
is currently three years. If the three-year temporary absence period is exceeded
before the end of a PPL period or DAPP period, the payment will stop from that day.
This Schedule reduces the allowed period of temporary absence from Australia for
family tax benefit, parental leave pay and dad and partner pay recipients from three
years to 56 weeks. This will also affect payments that link to family tax benefit, such
as double orphan pension.
However, in some circumstances (such as where certain Australian Defence Force
and Australian Federal Police personnel are deployed overseas), a person will
continue to be eligible for family and parental leave payments for up to three years
while temporarily absent from Australia.
The amendments made by this Schedule commence on 1 July 2014.
Explanation of the changes
Amendments to the Family Assistance Act
Items 1, 2, 3 and 4 change the allowed period of temporary absence from Australia
for an FTB or regular care child, or an individual, from three years to 56 weeks in
subsection 24(1), paragraph 24(2)(a), subsection 24(4) and paragraph 24(5)(a).
Item 5 adds new subsections 24(7) to (10) into the Family Assistance Act. These
provisions set out the circumstances in which the 56-week temporary absence
period from Australia can be extended for an individual or child, to a period of up to
three years. The 56-week period can be extended:
65
Schedule 10 - Reduction of period for temporary absence from Australia
where the person is unable to return to Australia within the 56-week period
because of a specified event such as serious illness or hospitalisation of the
person or a family member, or natural disaster or war in the country in which
the person is located (see new subsections 24(7) and (8));
where the person is receiving financial assistance in relation to their absence
from Australia under the Medical Treatment Overseas Program (see new
subsection 24(9)); and
where the person is unable to return to Australia within the 56-week period
because the person is deployed outside Australia as a defence force member,
or, for the purpose of capacity building or peacekeeping, as a member or
special member of the Australian Federal Police or a protective services
officer (see new subsection 24(10)).
These circumstances are consistent with the circumstances in which the six-week
temporary absence period that applies before a temporary overseas absence affects
an individuals rate of family tax benefit can be extended (see section 63A of the
Family Assistance Act).
Amendments to the Family Assistance Administration Act
Items 6 and 7 change current references to the allowed period of temporary
absence from Australia in paragraphs 30A(1)(c) and 30B(1)(c) from three years to
56 weeks.
Item 8 is an application provision, which provides that the amendments made by
items 1 to 7 apply in relation to any absence from Australia, whether this begins
before, on or after 1 July 2014. However, the amendments only affect an individuals
eligibility for family tax benefit on and from 1 July 2014.
Amendments to the Paid Parental Leave Act
Items 9 and 11 change the allowed period of temporary absence from Australia,
for parental leave pay and dad and partner pay recipients, from three years to
56 weeks in paragraph 46(1)(b) and paragraph 46(2)(a).
Items 10 and 12 are technical amendments to the headings to subsection 46(2) and
subsection 46(3), changing each reference to three years to a reference to
56 weeks.
Item 13 adds new subsections 46(4) and (5) into the Paid Parental Leave Act.
New subsection 46(4) provides for an extension of the 56-week temporary absence
period from Australia, to a period of up to three years, for a person who is unable to
return to Australia within the initial period because the person is deployed outside
Australia in certain circumstances. This extension can be applied if the person is
deployed outside Australia as a member of the Defence Force, or if the person is
deployed outside Australia, for the purpose of capacity-building or peacekeeping
functions, as a member or a special member of the Australian Federal Police or a
protective service officer.
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Schedule 10 - Reduction of period for temporary absence from Australia
New subsection 46(5) provides for the PPL rules to prescribe further events or
circumstances in which the 56-week temporary absence period from Australia can
be extended, to a period of up to 3 years.
Item 14 is an application provision for items 9 to 13.
Subitem 14(1) provides that the amendments made by items 9 to 13 apply in
relation to a persons eligibility for parental leave pay and dad and partner pay for a
child born on or after 1 July 2014. For this purpose, it does not matter whether an
absence from Australia began before, on or after 1 July 2014.
Subitem 14(2) provides that the following provisions in the Paid Parental Leave Act
apply in relation to this item as if this item were a provision of that Act:
section 275, which deals with how the Act applies to an adopted child;
section 276, which deals with how the Act applies to claims for parental leave
pay made in exceptional circumstances; and
section 277A, which deals with how the Act applies to claims for dad and
partner pay made in prescribed circumstances.
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Schedule 11 - Extending the deeming rules to account-based income streams
Summary
This Schedule will align the income test treatment of account-based superannuation
income streams, for products assessed from 1 January 2015, with the deemed
income rules applying to other financial assets. Account-based income streams held
by income support recipients immediately before 1 January 2015 will continue to be
assessed under the previous rules unless recipients choose to change to a product
that is assessed under the new rules.
Background
Generally, to calculate the income assessed in relation to an income support
recipients financial investments, deeming rates are applied to the total market value
of their financial investments. That is, financial investments are assumed to be
earning a certain rate of income, regardless of what they actually earn. The policy
rationale is that, by treating all financial investments in the same way, the deeming
rules encourage people to choose investments on their merit rather than on the
effect the investment income may have on the persons income support entitlement.
However, under the current legislation, Division 1C of part 3.10 of the Social Security
Act and Division 4 of Part IIIB of the Veterans Entitlements Act set out different rules
for assessing income in relation to certain income streams. Those income streams
provided for in Division 1C and Division 4 are not subject to income deeming.
This measure extends the income deeming provisions to any asset-tested income
stream (long term) that is an account-based pension, or an equivalent annuity
product. The extension of the deeming rules that currently apply to financial assets,
such as bank accounts, shares and managed funds, will ensure that people with
similar financial assets are treated consistently under the income support system.
The amendments made by this Schedule commence on 1 January 2015.
Explanation of the changes
Part 1 - Amendments
Amendments to the Social Security Act
Items 3 and 4 broaden the definition of financial investment by inserting
new paragraphs 9(1)(i) and (j) to include an asset-tested income stream (long term)
that is an account-based pension, and an asset-tested income stream (long term)
that is an annuity provided under a contract that meets the requirements determined
in an instrument under new subsection 9(1EA). Account-based pension is defined
in Part 1.03 of the Superannuation Industry (Supervision) Regulations 1994.
Annuity is defined in section 10 of the Superannuation Industry (Supervision)
Act 1993.
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Schedule 11 - Extending the deeming rules to account-based income streams
Item 5 repeals notes 4 and 5 to subsection 9(1C). Subsection 9(1C) defines what
are not managed investments for the purposes of the Social Security Act.
The repealed notes referred to the treatment of income streams under Subdivision B
of Division 1C of Part 3.10 prior to the amendments made by this Schedule.
Item 6 inserts new subsection 9(1EA), which empowers the Minister to determine
the requirements to be met for an annuity to be considered a financial investment
under new paragraph 9(1)(j), inserted by item 4 above, for the purposes of the social
security law. This power may only be exercised by the making of a legislative
instrument in accordance with the Legislative Instruments Act 2003. It is intended to
apply only to annuities equivalent to account-based pensions, such as products
covered by Regulation 1.05(11A) of the Superannuation Industry (Supervision)
Regulations 1994.
Items 24 and 25 substitute new headings to Division 1B and 1C of Part 3.10,
to indicate clearly the application of each Division to the determination of income
from financial assets and income streams.
Items 26 and 27 limit the scope of Subdivision B of Division 1C of Part 3.10, which
sets out the rules for assessing income from income streams that are not family law
affected income streams, by inserting new subsection 1097A(2). The new
subsection states that Subdivision B of Division 1C does not apply to an asset-tested
income stream (long term) that is an account-based pension, and an asset-tested
income stream (long term) that is an annuity provided under a contract that meets
the requirements determined in an instrument under new subsection 9(1EA).
Note 1 to new subsection 1097A(2) provides that an income stream of the type
referred to in the subsection will be subject to treatment under Division 1B.
Note 2 to new subsection 1097A(2) provides a signpost to the application provisions
in item 48 of Part 2 of this Schedule, which preserve the rule in Subdivision B in
certain situations.
Item 28 substitutes new paragraph 1099DAA(1)(b), which removed the reference
to income streams that are a pension or an annuity that meets the requirements
determined by the Minister. This is because these products are now subject to the
general rules for assessing income that apply to financial investments.
Items 29 and 30 limit the scope of Subdivision C of Division 1C of Part 3.10, which
sets out the rules for assessing income from family law affected income streams, by
inserting new subsection 1099DA(2). The new subsection states that Subdivision C
of Division 1C does not apply to an asset-tested income stream (long term) that is an
account-based pension, and an asset-tested income stream (long term) that is an
annuity provided under a contract that meets the requirements determined in an
instrument under new subsection 9(1EA).
Note 1 to new subsection 1099DA(2) provides that an income stream of the type
referred to in the subsection will be subject to treatment under Division 1B.
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Schedule 11 - Extending the deeming rules to account-based income streams
Note 2 to new subsection 1099DA(2) provides a signpost to the application
provisions in item 48 of Part 2 of this Schedule, which preserve the rule in
Subdivision B in certain situations.
The combined effect of items 3 to 6 and 24 to 30 is that an asset-tested income
stream (long term) that is an account-based pension or annuity will no longer be
subject to the rules for assessing income that apply to most income streams.
Instead, by including these asset-tested income streams (long term) in the definition
of financial investment, they will be subject to the general rules for assessing income
that apply to financial investments.
Items 1, 2, 7 to 23, and 31 make consequential amendments to parts of the Social
Security Act that refer to provisions amended by this Part.
Amendments to the Veterans Entitlements Act
Items 32 and 33 amend notes 1 and 3 respectively to the definitions of income and
ordinary income in subsection 5H(1).
The consequential amendments revise the references to the provisions of Part IIIB
which may impact on the determination of the income and the ordinary income of a
person.
Items 34 and 35 broaden the definition of financial investment by inserting
new paragraphs 5J(1)(i) and (j) to include an asset-tested income stream (long term)
that is an account-based pension, and an asset-tested income stream (long term)
that is an annuity provided under a contract that meets the requirements determined
in an instrument made under new subsection 5J(1G).
The definition of account-based pension is located in Part 1.03 of the
Superannuation Industry (Supervision) Regulations 1994, and the definition of
annuity is in section 10 of the Superannuation Industry (Supervision) Act 1993.
Item 36 repeals notes 4 and 5 to subsection 5J(1C). Subsection 5J(1C) defines
what are not managed investments for the purposes of the Veterans Entitlements
Act.
The repealed notes referred to the treatment of income streams under Subdivision B
of Division 4 prior to the amendments made by this Schedule.
Item 37 inserts new subsection 5J(1G), which empowers the Minister to determine
the requirements to be met for an annuity to be considered a financial investment
under new paragraph 5J(1)(j), inserted by item 35 above, for the purposes of the
Veterans Entitlements Act. This power may only be exercised by the making of a
legislative instrument in accordance with the Legislative Instruments Act 2003. It is
intended to apply only to annuities equivalent to account-based pensions -
for example, products covered by Regulation 1.05(11A) of the Superannuation
Industry (Supervision) Regulations 1994.
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Schedule 11 - Extending the deeming rules to account-based income streams
Item 38 amends note 2 to section 46, revising the references to the provisions of
Part IIIB which may impact on the determination of the ordinary income of a person.
Items 39 and 40 substitute new headings to Divisions 3 and 4 of Part IIIB, to indicate
clearly the application of each Division to the determination of income from financial
assets and income streams.
Items 41 and 42 limit the scope of Subdivision B of Division 4 of Part IIIB, which sets
out the rules for assessing income from income streams that are not family law
affected income streams, by inserting new subsection 46SA(2). The new subsection
states that Subdivision B of Division 4 does not apply to an asset-tested income
stream (long term) that is an account-based pension, and an asset-tested income
stream (long term) that is an annuity provided under a contract that meets the
requirements determined in an instrument made under new subsection 5J(1G).
Note 1 to new subsection 46SA(2) provides that an income stream of the type
referred to in the subsection will be subject to treatment under Division 3.
Note 2 to new subsection 46SA(2) provides a signpost to the application provisions
in item 48 of Part 2 of this Schedule, which preserve the rule in Subdivision B of
Division 4 in certain situations.
Item 43 substitutes new paragraph 46YA(1)(b), removing the reference to an income
stream that is a pension or an annuity that meets the requirements determined by
the Minister. This is because these products are now subject to the general rules for
assessing income applying to financial investments.
Items 44 and 45 limit the scope of Subdivision C of Division 4 of Part IIIB, which sets
out the rules for assessing income from family law affected income streams,
by inserting new subsection 46Z(2). The new subsection states that Subdivision C
of Division 4 does not apply to an asset-tested income stream (long term) that is an
account-based pension, and an asset-tested income stream (long term) that is an
annuity provided under a contract that meets the requirements determined in an
instrument made under new subsection 5J(1G).
Note 1 to new subsection 46Z(2) provides that an income stream of the type referred
to in the subsection will be subject to treatment under Division 3.
Note 2 to new subsection 46Z(2) provides a signpost to the application provisions in
item 48 of Part 2 of this Schedule, which preserve the rule in Subdivision C of
Division 4 in certain situations
The combined effect of items 34 to 37 and 41 to 45 is that an asset-tested income
stream (long term) that is an account-based pension or annuity will no longer be
subject to the rules for assessing income that apply to most income streams.
Instead, by including these asset-tested income streams (long term) in the definition
of financial investment, they will be subject to the general rules for assessing income
that apply to financial investments.
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Schedule 11 - Extending the deeming rules to account-based income streams
Items 46 and 47 amend paragraphs (c) and (d) of note 2 to point SCH6-E2 of the
Rate Calculator in Schedule 6 to the Veterans Entitlements Act.
The consequential amendments revise the references to the provisions of Part IIIB
which may impact on the determination of the ordinary income of a person.
Part 2 - Application provisions
Item 48 contains four subitems. Subitem 48(1) provides that the amendments
made by Part 1 apply in relation to working out the ordinary income of a person in
relation to days occurring on or after 1 January 2015.
Subitems 48(2) and (3) preserve the existing rules for assessing income from
certain income streams in existence immediately before 1 January 2015.
Subitem 48(2) provides that the amendments made by Part 1 do not apply to a
person and an income stream if the following criteria are met:
(a) the person was receiving an income support payment immediately before
1 January 2015;
(b) either of the following was being provided to the person immediately before
1 January 2015:
(i) an asset-tested income stream (long term) that is an account-based
pension; or
(ii) an asset-tested income stream (long term), that is an annuity provided
under a contract that meets the standards determined in an instrument
under subparagraph 1099DAA(1)(b)(ii) of the Social Security Act;
(c) the person has been continuously receiving an income support payment since
1 January 2015; and
(d) that income stream has continued to be provided to the person since
1 January 2015.
The person in subitem (2) is referred to as the primary beneficiary for the purposes
of subitem (3).
It is intended that, if a persons income support payment ceases to be payable and,
on a later date, the same or another income support payment becomes payable to
the person, that person would be subject to the amendments made by Part 1 from
the day that the income support payment ceases to be payable to that person.
Subitem 48(3) provides that the amendments made by Part 1 do not apply in
relation to a reversionary beneficiary and an income stream if the following criteria
are met:
(a) the primary beneficiary dies during a time while the amendments made by
Part 1 do not apply because of subitem (2);
(b) the income stream referred to in subitem (2) reverts to the reversionary
beneficiary on the primary beneficiarys death;
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Schedule 11 - Extending the deeming rules to account-based income streams
(c) at the time of that reversion, the reversionary beneficiary is receiving an
income support payment;
(d) the reversionary beneficiary has been continuously receiving an income
support payment since the time of that reversion; and
(e) that income stream has been provided to the reversionary beneficiary since
the time of that reversion.
Subitem 48(4) defines the term income support payment for the purposes of this
application provision.
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Schedule 12 - Other amendments
Summary
This Schedule makes miscellaneous amendments. These include improving the
administration of debt recovery under the Student Financial Supplement Scheme,
clarifying the provisions relating to the time period for lodging tax returns for family
assistance purposes, and ensuring that funding under the National Disability
Insurance Scheme paid into a persons account, which is set up for the purpose of
managing the funding for supports for a participants plan, cannot be garnisheed for
debt recovery purposes.
Further amendments recast and simplify the tax file number provisions in the Family
Assistance Administration Act, including to enable the Commissioner of Taxation to
provide the Secretary with income information about an individual who is not
required to lodge a tax return (that is, Australian Taxation Office pre-fill data), using
tax file numbers as the primary matching key.
Amendments to the child support legislation ensure that provisions relevant to child
support service delivery operate consistently with the arrangements for child support
administration.
Background
Part 1 - Repayment of financial supplement through taxation system
This Schedule amends the Social Security Act and the Student Assistance Act to
allow the Commissioner of Taxation to continue administering the recovery of debts
under the Student Financial Supplement Scheme (SFSS), and to make other minor
amendments relating to the administration of the SFSS.
These amendments commence on the day after Royal Assent.
Part 2 - Time periods and FTB reconciliation conditions
Section 32A of the Family Assistance Administration Act ensures that the family tax
benefit Part A supplement and family tax benefit Part B supplement cannot be
included in determining an individuals rate of family tax benefit unless and until the
individual satisfies the family tax benefit reconciliation conditions. These conditions
are set out in sections 32C to 32Q. Each of these sections provides when it applies
and then provides for a reconciliation time. It is possible that more than one section
applies to a particular individual, in which case section 32B provides that the
reconciliation conditions are satisfied at the latest reconciliation time.
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Schedule 12 - Other amendments
Sections 32C to 32H deal with cases where an individual and/or their partner are
required to lodge income tax returns. These provisions ensure that the individual
does not meet the family tax benefit reconciliation conditions if they or their partner
do not lodge tax returns within the specified timeframe. Where the individual
separates from their partner before the period allowed for lodging tax returns,
the provisions seek to ensure that the individuals family tax benefit entitlement is not
affected by their ex-partners failure to lodge a tax return.
The current reconciliation provisions are more complex than they need to be.
The provisions have some gaps (current section 32H does not cover all necessary
scenarios involving separations in the second income year) and also produce
unintended consequences in some scenarios. These are addressed by the
amendments.
The date of effect rules that apply in relation to review decisions (sections 107
and 109E of the Family Assistance Administration Act) and the time limits applicable
to review of certain decisions (section 109D) currently refer to an income tax return
lodged before the end of the next income year. These provisions are amended to
allow a further period in special circumstances if a tax return is lodged in the second
income year, consistent with the claim and reconciliation provisions that allow a
further period in special circumstances if a tax return is lodged in the second income
year.
These amendments commence on the day after Royal Assent.
Part 3 - Protection of amounts under the National Disability Insurance Scheme
One of the objects of the National Disability Insurance Scheme Act 2013
(the National Disability Insurance Scheme Act) is to provide reasonable and
necessary supports for participants in the National Disability Insurance Scheme.
In some cases, amounts will be paid to the participant, their nominee or a registered
plan management provider for the specific purpose of enabling the purchase of
supports identified in the participants plan. It would be contrary to the objectives of
National Disability Insurance Scheme Act to allow amounts paid in respect of
reasonable and necessary supports to be garnisheed, sold or transferred for any
other purposes.
This measure amends the National Disability Insurance Scheme Act to ensure that
amounts paid under the National Disability Insurance Scheme in relation to funding
for supports are inalienable. It also seeks to prevent third parties from seeking to
recover debts by obtaining a garnishee order over bank accounts kept for the
purpose of managing funding for supports under the National Disability Insurance
Scheme.
These amendments commence on the day after Royal Assent.
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Schedule 12 - Other amendments
Part 4 - Use of tax file numbers
Section 154A of the Family Assistance Administration Act currently allows for the
exchange of tax file number data between the Secretary and Commissioner of
Taxation for the purpose of the Commissioner informing the Secretary of amounts
determined by the Commissioner to be included in an individuals adjusted taxable
income. There are also rules requiring destruction of tax file number records
provided by the Secretary and covering situations where an individual is not required
to lodge a tax return. Section 154B currently allows the Secretary to provide an
individuals tax file number and other relevant information to the Commissioner in
relation to specified debt recovery actions provided for in the Family Assistance
Administration Act, which involve the Commissioner.
Amendments are made to replace the current provisions with new section 160A.
In broad terms, new section 160A is cast more generally, is simpler and more closely
aligned with the model of tax file number provisions used in other portfolio Acts.
The new provision allows for the exchange of tax file numbers between the
Secretary and Commissioner of Taxation for the purpose of the Commissioner
providing the Secretary with information relevant for specified family assistance
purposes relating to compliance and debt recovery. The new provision covers the
data transfer allowed under the existing rules but would also allow the Secretary to
require the Commissioner to provide income information received by the Australian
Taxation Office from third parties (that is, pre-fill data) in relation to individuals who
are not required to lodge tax returns. This information is of relevance in determining
the adjusted taxable income of individuals who are not required to lodge tax returns
and may be relevant in verifying eligibility for family assistance or in determining rate.
The new provision also deals with the transfer of tax file number data for debt-related
purposes.
These amendments commence on the day after Royal Assent.
Part 5 - Child support amendments
Child support administration involves the Department of Social Services, with
responsibility for child support policy, and the Department of Human Services, with
responsibility for child support service delivery. The amendments to the child
support legislation ensure that certain provisions relevant to child support service
delivery will operate consistently with these arrangements for child support
administration.
A number of provisions relevant to child support service delivery will be amended to
replace references to ,,the Secretary with ,,the Human Services Secretary, replace
references to ,,the Department with ,,the Human Services Department, or add
reference to ,,the Human Services Department.
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Schedule 12 - Other amendments
The relevant provisions are for the Child Support Registrar, Acting Child Support
Registrar, the use of computer programs to make decisions, the delegation
provision, the multiple secrecy provision, and the procedures on receiving an
application for a Social Security Appeals Tribunal review of certain child support
decisions.
The Child Support Registrar will be an SES employee in the Human Services
Department, appointed by the Human Services Secretary. The amendment of the
other provisions noted will ensure they relate to the Human Services Secretary,
or relate to the Human Services Department.
A number of amendments simplify provisions by replacing references to ,,the Family
Assistance Secretary with ,,the Secretary, as these references relate to the
Secretary of the Department of Social Services.
The amendments made by this Schedule will commence on the 7th day after the Act
receives Royal Assent.
Part 6 - Other amendments
This Part makes some minor adjustments to provisions relating to the newborn
supplement and newborn upfront payment of family tax benefit and the stillborn baby
payment, which commence on 1 March 2014, including to:
ensure that the newborn upfront payment of family tax benefit is treated in the
same way as the newborn supplement where the relevant tax returns have
not been lodged on time and the non-lodger provisions apply;
ensure that percentage determinations that allow family tax benefit to be split
in blended families and in certain situations where couples separate,
are taken into account in determining eligibility for the newborn supplement
and amount of the newborn upfront payment;
allow a claim for stillborn baby payment to be made more than 52 weeks after
the birth of the stillborn child in further specified circumstances;
clarify that the higher rate of newborn supplement is available in relation to the
first child aged less than one year who is entrusted to the care of an individual
or their partner; and
ensure that a stillborn child in a multiple birth is taken into account in
determining the amount of newborn supplement.
These amendments commence on 1 March 2014, immediately after the
commencement of Parts 1 and 2 of Schedule 2A to the Family Assistance and Other
Legislation Amendment Act 2013. Those Parts replace baby bonus with the
newborn supplement (and related newborn upfront payment) and stillborn baby
payment.
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Schedule 12 - Other amendments
Explanation of the changes
Part 1 - Repayment of financial supplement through taxation system
Amendments to the Social Security Act
Item 1 inserts section 1061ZZENA, which provides that the Commissioner of
Taxation has the general administration of Part 2B.3 of the Social Security Act with
respect to Divisions 2, 4, 6 to 8 and 5 (except for section 1061ZZFE), as well as
section 1061ZZFO. These provisions are taken to be taxation laws for the purposes
of the Taxation Administration Act.
The purpose of this provision is to allow the Commissioner of Taxation to continue
administering the recovery of debts under the SFSS.
Item 2 repeals section 1061ZZFGC as this section related to the now-redundant
provisional tax system.
Item 3 amends subsection 1061ZZFJ(1) to allow the Commissioner of Taxation to
delay the making of an assessment under section 1061ZZFH if the person has made
an application in an approved form. This gives greater flexibility to a person to make
an application as it will not have to be strictly in written form.
Item 4 inserts subsection 1061ZZFJ(4), which provides that, for section 1061ZZFJ,
an approved form has the same meaning in section 388-50 in Schedule 1 to the
Taxation Administration Act.
Item 5 amends subsection 1061ZZFK(1) to allow the Commissioner of Taxation to
amend an assessment made under section 1061ZZFH so that no amount is payable
under the assessment if the person has made an application in the approved form.
This gives greater flexibility to a person to make an application as it will not have to
be strictly in written form.
Item 6 inserts subsection 1061ZZFK(3), which provides that, for section 1061ZZFK,
approved form has the same meaning in section 388-50 in Schedule 1 to the
Taxation Administration Act.
Amendments to the Student Assistance Act
Item 9 inserts section 12ZEA to provide that the Commissioner of Taxation has the
general administration of Division 6 of Part 4A of the Student Assistance Act to the
extent that it relates to the Commissioner. These provisions are taken to be taxation
laws for the purposes of the Taxation Administration Act.
The purpose of this provision is to allow the Commissioner of Taxation to administer
the recovery of debts under the SFSS.
Items 7 and 8 make technical amendments for the purpose of item 9.
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Schedule 12 - Other amendments
Item 10 repeals section 12ZNC as this section is related to the now-redundant
provisional tax system.
Item 11 amends subsection 12ZP(1) and 12ZP(2) so that a person may apply to the
Commissioner of Taxation in an approved form, rather than strictly by written
application, under these subsections.
Item 12 inserts subsection 12ZP(4), which provides that, for section 12ZP, approved
form has the meaning given by section 388-50 in Schedule 1 to the Taxation
Administration Act.
Item 13 is a minor technical amendment.
Item 14 provides that the amendments made by items 3, 5, and 11 (which will allow
applications in an approved form, rather than in written form) will apply to
applications made on or after the commencement of those items. This means an
application in written form made before the commencement of those items will
comply with the requirements of those provisions amended by items 5, 15 and 30.
Part 2 - Time periods and FTB reconciliation conditions
Amendments to the Family Assistance Administration Act
Replacement of sections 32C to 32H
Item 16 replaces current sections 32C to 32H with new sections 32C to 32F.
In broad terms, if the first individual is or was required to lodge a tax return, then one
provision (new section 32C) would set out the relevant reconciliation time for that
circumstance, rather than six sections (current sections 32C to 32H). If the first
individuals tax return is lodged before the end of the first income year after the
relevant income year or such further period allowed by the Secretary, then the
individuals relevant reconciliation time is when the tax assessment is made under
the Income Tax Assessment Act 1936.
If the other member of the couple is or was required to lodge a tax return, then three
new provisions would set out the relevant reconciliation time.
New section 32D applies where the first individual has a partner who is required to
lodge a tax return and they continue to be a couple until the end of the first income
year after the relevant income year or such further period allowed by the Secretary.
If the partners tax return is lodged before the end of the first income year after the
relevant income year or such further period allowed by the Secretary, then the
relevant reconciliation time is when the tax assessment is made.
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Schedule 12 - Other amendments
New section 32E covers situations where the first individuals partner is required to
lodge a tax return for the relevant income year and the couple separate during the
first income year after the relevant income year. If the partner lodges a tax return
before the end of the first income year after the relevant income year, then the
relevant reconciliation time is when the tax assessment is made. Otherwise, it is the
end of the first income year after the relevant income year.
New section 32F covers situations where:
the first individuals partner is required to lodge a tax return for the relevant
income year;
the partner does not do so before the end of the next income year;
the Secretary has allowed a further period for lodgement; and
the couple separate after the end of the first income year but before the end of
that further period.
If the partner lodges the tax return before the separation, then the relevant
reconciliation time is when a tax assessment is made. Otherwise, it is when the
couple separate.
New sections 32C to 32F do not use the concept of a designated date.
A consequential amendment is therefore made by item 17 to repeal section 32R of
the Family Assistance Administration Act (which defines designated date).
These changes apply in relation to a relevant income year (as referred to in
subsection 32A(1) of the Family Assistance Administration Act) that is the 2013-14
income year or a later income year (subitem 26(1) refers).
Amendments to certain review provisions
Subsections 107(3), 109D(4) and 109E(3) of the Family Assistance Administration
Act set out date of effect rules relating to certain review decisions and time limits on
seeking review of other decisions. However, the limitations set out in these
provisions do not apply where the relevant decision is being reviewed because the
Commissioner of Taxation has made or reviewed a decision on the basis of an
income tax return lodged before the end of the first income year following the income
year to which the assessment relates.
These provisions are amended by items 18 to 25 to ensure that the limitations also
do not apply in relation to tax returns that are lodged within such further period
(if any) as the Secretary allows because of special circumstances that prevented the
income tax return being lodged before the end of the first income year. This
approach is consistent with the claim and reconciliation provisions that allow a
further period in special circumstances if a tax return is lodged in the second income
year.
These changes apply in relation to an income year as referred to in specified
provisions that is the 2013-14 income year or a later income year (subitem 26(2)
refers).
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Schedule 12 - Other amendments
Technical amendment
Item 15 makes a technical amendment to the heading of subsection 10(2) to reflect
the content of the provision.
Part 3 - Protection of amounts under the National Disability Insurance Scheme
Amendments to the National Disability Insurance Scheme Act
Item 27 inserts new sections 46A and 46B at the end of Division 3 of Part 2 of
Chapter 3.
New subsection 46A(1) provides that an NDIS amount is absolutely inalienable.
An NDIS amount is defined under section 9 to mean an amount paid under the
National Disability Insurance Scheme in respect of reasonable and necessary
supports funded under a participants plan. This provision gives legal force to the
intention that NDIS amounts are paid to a participant, their nominee or a registered
plan management provider for the specific purpose of purchasing the supports
identified under a participants plan. Such an amount cannot be transferred to
another person either by a voluntary act or by the operation of the law.
New subsection 46A(2) provides that inalienability is subject to Part 1 of Chapter 7.
The effect is that the Agency may fully exercise its powers to recover debts due to
the Agency in accordance with sections 183, 184 and 185, despite
subsection 46A(1).
New subsection 46B(1) provides the general rule that a court must not make an
order in the nature of a garnishee order in respect of an account with a financial
institution if:
one or more NDIS amounts for a particular participant have been paid into an
account; and
the account has been kept solely for the purpose of managing the funding for
supports under the participants plan.
New subsection 46B(2) provides an exception to the general rule in
subsection 46B(1). That is, a court may make an order in the nature of a garnishee
order in respect of an account if:
the account is made in favour of a person in relation to a debt that arose
because of the person providing goods or services in relation to the
participant; and
the goods and services are reasonable and necessary supports specified in
the participants plan.
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Schedule 12 - Other amendments
New subsection 46B(1) is intended to protect NDIS amounts paid into certain
accounts from being garnisheed by third parties for debt recovery purposes.
New subsection 46B(2) seeks to limit this protection, in the situation where the
person seeking a garnishee order should rightfully be paid from NDIS amounts held
in an account, because they have not been paid for providing goods or services that
have been identified as reasonable and necessary supports under a participants
plan.
Item 28 provides the application provisions, such that new section 46A applies in
relation to amounts paid on or after the commencement of this item, and new
section 46B applies in relation to court orders made on or after the commencement
of this item.
Part 4 - Use of tax file numbers
Amendments to the Family Assistance Administration Act
Items 29 and 30 replace sections 154A and 154B of the Family Assistance
Administration Act with a new section 160A.
New section 160A applies in relation to a tax file number provided under and for the
purposes of the Family Assistance Administration Act (see, for example, section 8,
which sets out the tax file number requirement).
New subsection 160A(2) provides specific authority for the Secretary to provide such
a tax file number to the Commissioner of Taxation and require the Commissioner to
provide specified information, including the individuals tax file number, back to the
Secretary. This could be a different tax file number to the one provided by the
Secretary if it is not the correct tax file number for the individual concerned.
The Secretary could also provide other relevant information about the individual to
the Commissioner, provided the disclosure is consistent with the confidentiality
provisions in the Family Assistance Administration Act.
Under new subsection 160A(3), the information provided to the Secretary by the
Commissioner can only be used by the Secretary for specified, compliance related
purposes (for example, to verify eligibility or entitlement or to establish whether the
correct rate of family assistance is or was paid).
New subsection 160A(4) provides authority for the Secretary to provide a tax file
number to the Commissioner for specified debt related purposes which involve the
Commissioner. For example, section 87 of the Family Assistance Administration Act
allows for the application of a tax refund by the Commissioner to satisfy the whole of
part of a family assistance debt. Section 226, on the other hand, provides for the
setting off of family assistance entitlement against a tax liability.
Item 31 sets out application and saving provisions.
Subitem 31(1) ensures that new section 160A can apply to a tax file number
provided to the Secretary before, on or after commencement of the provision.
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Schedule 12 - Other amendments
Subitem 31(2) preserves the operation of existing sections 154A and 154B in
relation to a record of a tax file number provided to the Commissioner under
subsection 154A(2) or 154B(1) before commencement of new section 160A.
Part 5 - Child support amendments
Amendments to the Child Support (Assessment) Act 1989
Item 32 repeals the definition of Family Assistance Secretary contained in
subsection 5(1). This definition will not be required, as other amendments made by
this Part replace references to ,,Family Assistance Secretary with ,,Secretary. Under
the child support legislation, ,,the Secretary is the Secretary of the Department of
Social Services.
Item 33 amends subsection 12A(1) by omitting the words, ,,The Secretary of the
Department of which the Registrar is an employee, and substituting the words,
,,The Human Services Secretary. This amendment will enable the Human Services
Secretary to arrange for the use, under the Registrars control, of computer programs
for the purposes of decision-making.
Items 34 to 41 omit references to ,,Family Assistance Secretary, and substitute a
reference to ,,Secretary in the relevant provisions. These items are consequential to
item 32.
Item 42 amends subsection 149(1) by adding a reference to ,,the Human Services
Department. Section 149 contains the Registrars powers of delegation and this
amendment enables the Registrar to delegate all or any of the Registrars powers
and functions under the Act to an officer or employee of the Department (of Social
Services) or the Human Services Department, as well as to the Chief Executive
Centrelink.
Items 43 to 47 amend section 150, which regulates the use of ,,protected
information. Item 43 amends the definition of person to whom this section
applies in subsection 150(1), with the effect that it will refer to ,,the Minister
(for Social Services) and ,,the Human Services Minister.
Item 44 amends the definition of relevant Minister in subsection 150(1), with the
effect that it will refer to ,,the Minister (for Social Services) and ,,the Human Services
Minister.
Item 45 amends paragraph 150(3)(ba) by adding a new
subparagraph 150(3)(ba)(ia), which refers to ,,the Human Services Secretary.
Items 46 and 47 amend paragraphs 150(4)(a) and 150(4C)(d), with the effect that
the provisions will refer to the Department (of Social Services) and ,,the Human
Services Department.
The amendments made by items 43 to 47 ensure that the relevant provisions apply
to the persons specified and operate consistently with the arrangements for child
support administration.
83
Schedule 12 - Other amendments
Item 48 amends the definition of relevant information in subsection 150AA(3)
by inserting a reference to ,,the Human Services Department. Section 150AA
provides for an offence of unauthorised use of information. This amendment
ensures that section 150AA applies to the records of the Department (of Social
Services) and the Human Services Department.
Items 49 and 50 amend subparagraph 151A(1)(b)(ii) and paragraph 151A(7)(b)
by omitting the reference to ,,Department and inserting a reference to the ,,Human
Services Department.
Amendments to the Child Support (Registration and Collection) Act 1988
Item 51 amends the definition of Human Services Department in subsection 4(1).
This definition is simplified by omitting the words, ,,Minister administering the Human
Services (Centrelink) Act 1997, and substituting, ,,Human Services Minister.
Item 51 is consequential to item 52, which inserts a new definition of Human
Services Minister into subsection 4(1). Human Services Minister means the
Minister administering the Human Services (Centrelink) Act 1997.
Item 53 inserts into subsection 4(1) a definition of Human Services Secretary,
which is defined to mean the Secretary of the Human Services Department.
Item 54 amends subsection 4A(1) by omitting the words, ,,The Secretary of the
Department of which the Registrar is an employee, and substituting the words,
,,The Human Services Secretary. This amendment is made for similar reasons to
item 33.
Items 55 and 56 amend section 10 by replacing the reference in paragraph 10(2)(a)
to ,,the Department with ,,the Human Services Department, and replacing the
reference in paragraph 10(2)(b) to ,,the Secretary with "the Human Services
Secretary. These amendments provide that the Child Support Registrar is an SES
employee in the Human Services Department and appointed by the Human Services
Secretary.
Item 57 makes corresponding amendments to section 10A, which provides for the
appointment of an Acting Child Support Registrar.
Item 58 amends subsection 15(1) by adding a reference to the Human Services
Department. This amendment is made for similar reasons to item 42.
Items 59 and 60 amend subsection 16(1) by adding references to the Human
Services Minister in the definitions of person to whom this section applies and
relevant Minister. These amendments are made for similar reasons to items 43
and item 44.
84
Schedule 12 - Other amendments
Items 61 and 62 amend subsection 16(2AA), which applies to communication of a
Social Security Appeals Tribunal (SSAT) child support decision under Part VIIA of
the Child Support (Registration and Collection) Act 1988. Item 61 amends
paragraph 16(2AA)(a) by inserting after, ,,by the Secretary, the words, ,,or to the
Human Services Secretary or a person authorised by the Human Services
Secretary. Item 62 amends paragraph 16(2AA)(b) by adding at the end of that
paragraph ,,or the Human Services Secretary from communicating the reasons for a
decision of the SSAT under Part VIIA to a person authorised by the Human Service
Secretary. Both items ensure that paragraphs 16(2AA)(a) and (b) operate in relation
to the Secretary (of Social Services) and the Human Services Secretary.
Item 63 amends subsection 16(2AB) by inserting the words, ,,or the Human Services
Secretary, or a person authorised by the Human Services Secretary, after the
words, ,,by the Secretary. Subsection 16(2AB) enables the publication of
,,de-identified SSAT child support decisions. The amendment ensures that
subsection 16(2AB) operates in relation to the Secretary (of Social Services) and the
Human Services Secretary.
Item 64 amends paragraph 16(3)(ba) by inserting a reference to the ,,Human
Services Secretary before subparagraph 16(3)(ba)(i). This amendment is made for
similar reasons to item 45.
Items 65 and 66 amend paragraphs 16(4)(a) and 16(4C)(d) by inserting references
to the Human Services Department. These amendments are made for similar
reasons as for items 46 and 47.
Item 67 amends the definition of relevant information contained in
subsection 16AA(3) by adding a reference to the Human Services Department after
,,Department. This amendment is made for similar reasons to item 48.
Items 68 and 69 amend subsection 16AB(2). Section 16AB deals with multiple
secrecy provisions. Item 68 amends paragraph 16AB(2)(a) by replacing the
reference to ,,the Secretary, the Registrar or an officer or employee of the
Department with a reference to ,,the Human Services Secretary, the Registrar or an
officer or employee of the Human Services Department. Item 69 makes a similar
amendment to paragraph 16AB(2)(b).
Item 70 amends section 80A by omitting the reference to ,,Family Assistance
Secretary, and substituting ,,Secretary. This item is consequential to item 32.
Items 71 and 72 amend subsection 95(1) and paragraph 95(2)(b) by omitting
,,Secretary, and substituting references to ,,Human Services Secretary. Section 95
deals with procedures on receiving application for review to the SSAT. These
amendments ensure that these provisions will operate in relation to the Human
Services Secretary.
Item 73 amends paragraph 110Y(1)(a) by omitting the reference to ,,Family
Assistance Secretary, and substituting, ,,Secretary. This item is consequential to
item 32.
85
Schedule 12 - Other amendments
Part 6 - Other amendments
Amendments to the Family Assistance Act
Items 74, 75 and 76 make some minor adjustments to subsection 36(2) of the
Family Assistance Act (eligibility for stillborn baby payment) to ensure the provisions
work as intended.
The amount of newborn upfront payment of family tax benefit under
subsection 58AA(1) is $500. There is no provision for splitting the payment where
family tax benefit is shared because a percentage determination is in force under
section 28 (blended families) or section 29 (eligibility for family tax benefit where a
couple separates, for a period before separation).
Item 77 inserts such a rule as new subsection 58AA(1A). New subsection 58AA(1A)
applies where an amount of newborn supplement is added for a day in relation to
both members of a couple and an FTB child, there is a percentage determination
under section 28 or 29 in force in relation to the couple and the child for that day,
and the day is the first day on which an amount of newborn supplement is added in
relation to that child. In this situation, each member of the couple is entitled to the
same percentage of $500 as is applicable under the percentage determination.
A note at the end of new subsection 58AA(1A) indicates to the reader that the
newborn upfront amount is paid as a single lump sum and cross-references the
relevant provision.
Item 84 makes a related amendment to the indexation provisions to ensure the
amount of $500 referred to in new subsection 58AA(1A) is indexed in the same way
as the amount referred to in subsection 58AA(1). To this end, a reference to new
subsection 58AA(1A) is added into item 7B of the table in clause 2 of Schedule 4 to
the Family Assistance Act.
Item 78 makes a consequential amendment, which takes account of new
subsection 58AA(1A).
Item 79 inserts new subsection 58AA(5) to ensure that the application of
section 58AA is subject to new sections 28AA and 32AEA of the Family Assistance
Administration Act, as inserted by this Part.
Subclause 35A(10) of Schedule 1 ensures that the partner of an individual who has
been paid the newborn supplement in respect of an FTB child for 13 weeks cannot
also be eligible for newborn supplement in respect of that child. This rule does not
have regard to circumstances in which family tax benefit can be shared by a couple,
that is, where there is a percentage determination in force under section 28 (blended
family) or section 29 (where a couple separates, for a period before separation)
of the Family Assistance Act. Item 81 amends subclause 35A(10) to add another
condition which ensures that eligibility for the newborn supplement is not precluded
unless there is also no percentage determination in force in relation to both members
of the couple and the child.
86
Schedule 12 - Other amendments
Item 80 is a technical amendment.
Clause 35B of Schedule 1 to the Family Assistance Act sets out the annualised rate
of newborn supplement for the different eligibility categories. A higher rate is
available for a first child who is born alive to a woman or who becomes entrusted to
the care of an individual or their partner. This amount is also applicable where two
or more children are born during the same multiple birth or come into the care of the
individual or their partner as part of the same entrustment to care or adoption
process.
Item 82 makes a minor amendment to paragraph 35B(1)(b) so the higher rate is
available in relation to a first entrustment of the care of a child who is aged less than
one on the relevant day.
Item 83 amends subclause 35B(2) to ensure that a stillborn child is taken into
account in determining the amount of newborn supplement for an FTB child who is
born alive in the case of a multiple birth. If, for example, a multiple birth consists of a
stillborn child and a child who is delivered alive, then the child who is born alive
would attract the higher rate under subclause 35B(2). A stillborn baby payment
would be available in respect of the stillborn child, subject to the relevant eligibility
conditions being satisfied.
Amendments to the Family Assistance Administration Act
Section 28 of the Family Assistance Administration Act outlines the consequences
for family tax benefit where the relevant tax returns have not been lodged within
required timeframes. Section 28 sets out the circumstances in which a claimants
family tax benefit entitlement determination can be varied with the effect that the
claimant is not entitled to family tax benefit in relation to a particular income year
(which can result in a debt) and the circumstances in which that decision can be
undone. As newborn supplement is a component of the rate of family tax benefit,
section 28 can also affect entitlement to the newborn supplement.
New section 28AA, as inserted by item 85, ensures the newborn upfront payment of
family tax benefit is affected in the same way as the newborn supplement where
section 28 applies.
If a claimant is entitled to a newborn upfront payment because an amount of
newborn supplement is added to their rate of family tax benefit and the claimants
family tax benefit entitlement determination is varied under section 28 with the effect
that the claimant is not entitled to family tax benefit, then new subsection 28AA(1)
provides that the claimant is also not entitled to the upfront amount. However, new
subsection 28AA(2) ensures that, if that variation is undone, then new
subsection 28AA(1) ceases to preclude entitlement to the upfront amount.
New subsection 28AA(3) makes it clear that new subsection 28AA(1) can apply
more than once.
A variation under section 28 to the effect that the individual is not entitled to family
tax benefit can also affect ongoing payment of family tax benefit on an estimated
income basis under Subdivision CA of Division 1 of Part 3.
87
Schedule 12 - Other amendments
Item 86 inserts a new section 32AEA at the end of Subdivision CA. The effect is to
preclude entitlement to the newborn upfront payment if payment of family tax benefit,
worked out on an estimated income basis, is precluded under Subdivision CA.
As a general rule, a claim for stillborn baby payment is not effective unless it is made
before the end of 52 weeks beginning on the day of the birth of the stillborn child
(subsection 39(2) of the Family Assistance Administration Act refers). There are
exceptions, as set out in subsections 39(3) and (4).
Item 88 inserts a new exception, as new subsection 39(3A). The new rule applies
where an individual is eligible for the stillborn baby payment because the individual
or their partner is entitled to family tax benefit that includes a Part A rate greater than
nil in relation to a day during the period of 52 weeks after the birth of the stillborn
child and the individual or their partner is notified of their rate of family tax benefit
after the end of, or during the last 13 weeks of, that 52 week period. In these
circumstances, the individual can made a claim for stillborn baby payment up to
13 weeks after the day on which the notice is given.
Item 87 makes a consequential amendment to subsection 39(2) to take account of
new subsection 39(3A).
88
REGULATION IMPACT STATEMENT
Social Services and Other Legislation Amendment Bill 2013
Schedule 7 - Paid parental leave - remove mandatory employer role
This Regulation Impact Statement has been prepared by the Commonwealth
Department of Social Services. Its purpose is to assist the Australian Government to
make decisions regarding removing the mandatory employer role under the national
Paid Parental Leave (PPL) scheme.
This Regulation Impact Statement has been prepared in accordance with the
Australian Government Best Practice Regulation Handbook, July 2013, issued by the
Office of Best Practice Regulation in the Department of the Prime Minister and
Cabinet, and in consultation with the Office of Best Practice Regulation.
1. Background
The national PPL scheme started on 1 January 2011. The PPL scheme is
designed to provide financial support to eligible working parents to take time off
work to care for a newborn or recently-adopted child.
Two payments are provided under the national scheme:
parental leave pay (PLP), which provides up to 18 weeks pay at the rate
of the National Minimum Wage to eligible primary carers (usually birth
mothers) since 1 January 2011;
dad and partner pay (DAPP), which provides up to two weeks pay at the
rate of the National Minimum Wage to eligible dads or partners caring for a
child born or adopted from 1 January 2013.
The employer role is a feature of the current PPL scheme. Under the scheme,
the Department of Human Services funds employers to provide PLP to their eligible
long-term employees. The employer role was recommended by the Productivity
Commission to benefit employers through improved retention rates, and to help
change community attitudes by sending a strong signal that taking leave from work
around the time of birth or adoption is seen as part of the normal course of work and
life.
The employer role became a mandatory requirement from 1 July 2011 for employers
of PLP recipients who are long-term employees of the employer, noting:
more than 125,000 employees have received PLP from their employer since
the start of the PPL scheme from 1 January 2011 to 30 June 2013; and
in June 2013, 76 per cent of recipients were receiving their PLP from their
employer.
Employers do not have a role in the administration of DAPP payments.
1
Regulation impact statement - paid parental leave
In its 2013 Federal Election policy document, Our Plan: Real Solutions for all
Australians, as part of the government red tape reduction process, the Government
committed to ,,give employers the option of "opting in" to managing the administration
of Paid Parental Leave to their employees. If they choose not to be the
governments paymaster, payments will be made directly to the employee (p27).
The Government made a further election commitment in its 2013 Federal Election
policy document, The Coalition's Policy for Paid Parental Leave, to enhance the PPL
scheme from 1 July 2015 so that working mothers would be able to access 26 weeks
of payment at their replacement wage plus superannuation, rather than being limited
to 18 weeks of payment at national minimum wage.
2. Problem
The Government is currently undertaking a legislated review of the PPL scheme
(,,the review), in addition to an evaluation being undertaken to assess whether the
scheme is meeting its objectives (,,the evaluation).
In their feedback to the review, employer and industry groups generally did not
support the employer role, particularly in relation to small business. These
stakeholders considered the employer role places an unnecessary administrative
burden on business, and any benefits to employers in terms of employee retention
were not commensurate with the administrative burden imposed.
The Australian Chamber of Commerce and Industry conducted a survey of members
on the PPL scheme in May 2013. In the survey, 84.3 per cent of businesses either
agreed or strongly agreed that ,,the Government should not require employers to be
the paymaster for the Paid Parental Leave scheme.
The evaluation of the scheme has found the employer role is generally operating
smoothly. While employers were mostly positive about the process to make
payments, quantitative data was not collected as to their attitude towards the
employer role. Quantitative data collected on process issues did not highlight
significant differences across employer organisation size. However, a number of
smaller employers were more negative in their views during qualitative interviews.
PPL administrative data suggests that some employers may be more likely to find
the PPL role valuable or cost-effective, and therefore opt in to provide payments
beyond what is required under legislation:
PPL administrative data for 2012-13 shows that 11.7 per cent of all
businesses opted in to provide parental leave pay to non-mandatory
employees.
o This proportion was significantly higher amongst large businesses
(27.7 per cent) than medium (10.8 per cent) and small (6.7 per cent)
businesses.
In 2012-13, only 10 per cent of small businesses paid PLP in respect of more
than one of their employees.
2
Regulation impact statement - paid parental leave
3. Objectives
A removal of the mandatory employer role under the PPL scheme could assist in
meeting the following objectives:
helping to reduce administration and compliance costs on employers,
particularly those who feel the role is not beneficial for their organisation; and
where the employer has administrative capacity and has found the role to be
beneficial for their organisation, continue to provide an option for employers to
take on this role voluntarily.
4. Options
In terms of assessing the regulatory impact, this statement reports on three options:
implementing the measure as proposed from 1 March 2014;
implementing the measure from 1 July 2015 as part of the broader reforms to
the PPL scheme; or
removing the employer role completely, with all payments under the
PPL scheme to be made by the Department of Human Services.
Implementing the measure as proposed from 1 March 2014
The measure as proposed would be to remove the PPL mandatory employer role
from 1 March 2014, while still allowing employers to opt into providing payments
under the PPL scheme to employees on a voluntary basis, where both the employer
and employee agree.
Implementing the measure from 1 July 2015 as part of the broader reforms to the
PPL scheme
This option would implement the measure as proposed, but delay the start date to
1 July 2015, in line with commencement of the broader reforms to the PPL scheme.
Removing the employer role completely, with all payments under the PPL scheme to
be made by the Department of Human Services.
A complete removal of the employer role, either from 1 March 2014 or 1 July 2015,
could also be considered. Under this option, employers could no longer make any
payments to employees, with all payments to be made by the Department of Human
Services.
5. Impact
Impact on employers
All three options would result in the same outcome: to shift administration costs from
the employer to Government.
3
Regulation impact statement - paid parental leave
The evaluation Phase 2 report found the additional costs for employers were mainly
due to the extra workload, rather than purchasing a new payroll system or hiring
additional staff to administer the scheme:
Among the 29 per cent of employers who felt additional costs were involved,
almost all (94 per cent) said these costs involved taking on extra workload
themselves, while half (51 per cent) said the workload of current staff had
been increased to implement PPL.
In terms of staff hours needed to implement PPL, the median identified by all
organisations was 22 hours:
o 23 per cent of organisations reported only 1 to 2 hours were needed;
o 22 per cent reported implementation required 3 to 5 staff hours; and
o 30 per cent of all employers reported the implementation of PPL took
15 staff hours or more.
The median cost identified by all organisations to implement PPL was $1,783:
o nearly half (45 per cent) of employers estimated the cost to be between
$1 and $250;
o 21 per cent estimated the cost to be between $250 and $1,000; and
o 20 per cent estimated the cost to exceed $1,000.
It is possible that smaller businesses would feel a larger proportional impact, as they
do not have the same economies of scale when applying the process for a single
employee. As noted earlier, for 90 per cent of small businesses who provided PPL
to an employee in 2012-13, this employee was the only PLP recipient in that
business in the 2012-13 financial year. Therefore, it is likely that, for many small
businesses, costs incurred to administer PLP payments are mostly one-off costs.
Forty-one per cent of employers felt organising payments was time consuming,
and submissions to the review indicated that, even though costs may not have been
significant, the process was viewed by some as time-consuming.
Some employers find the administration of PPL problematic. A very small number
report very high monetary costs. Evaluation interviews found some employers
experienced problems, especially small, private organisations.
While there would be benefits to employers in the form of increased workforce
attachment and overall participation, these are difficult to quantify. As raised earlier,
most employers are of the view that costs to administer the scheme outweigh any
benefits that a mandatory employer role may deliver. The evaluation results showed
that most employers felt it was too soon to tell if there would be gains, but most
agreed there had been good workplace attachment in women on parental leave.
4
Regulation impact statement - paid parental leave
Impact on employees
The proposed measure has no impact on regulatory or compliance costs for
employees, as they would still undertake the same claim process as currently
required.
While most of the impact in removing the mandatory employer role would be felt by
employers, there is an impact on employees with salary sacrifice arrangements in
place. Where their employer is administering the PLP payment, these salary
sacrifice arrangements are able to continue and so the employees tax liability would
continue to be calculated on a lower salary. However, as the Department of Human
Services does not offer salary sacrifice deduction functionality, an employees tax
liability could increase if the mandatory employer role is removed and their employer
does not opt back in. This may be a particular issue for employees in the
not-for-profit sector. This impact is not a compliance cost, but is an impact on the
after-tax PLP a person may receive, dependent on an employees income and the
level of income salary sacrificed under the arrangement.
Impact on Government
As noted above, the proposed measure would result in a shift of administration costs
from employers to Government. Currently, the Department of Human Services
administers payments for around 24 per cent of employees. However, under the
proposed measure, the Department of Human Services would be responsible for
making the majority of payments to employees. The additional cost to Government
to implement the measure as proposed is $7 million over five years.
Impacts associated with particular options
Implementing the measure as proposed from 1 March 2014
For employers who consider the employer role to be an unnecessary burden, this
option would provide an early removal of the mandatory nature of the current
employer role.
Proceeding with this option would also provide an opportunity to monitor
employer involvement and any issues raised through an ,,opt-in role well before
commencement of the enhanced PPL scheme from 1 July 2015.
Implementing the measure from 1 July 2015 as part of the broader reforms to
the PPL scheme
Delaying the start date of the measure to 1 July 2015 would allow a generous
amount of time for consultation with the business community to occur before
making any changes, which could have interactions with other private workplace
arrangements.
However, this delayed start date would not be beneficial for employers who no
longer wish to play a role in administering PLP and incurring related costs.
5
Regulation impact statement - paid parental leave
Removing the employer role completely, with all payments under the
PPL scheme to be made by the Department of Human Services
Consultation with the business community would need to occur before a change
such as this could be implemented, as some businesses may have negotiated
private workplace arrangements on the understanding that they would be the
paymaster for their employees.
Regulatory Burden Estimate Table
Average Annual Change in Compliance Costs (from BAU)
Sector/Cost Categories Business Not-for-profit Individuals Total by cost
category
Administrative Costs $44 million $4 million $ $48 million
(savings) (savings) (savings)
Substantive Compliance $ $ $ $
Costs
Delay Costs $ $ $ $
Total by Sector $44 million $4 million $ $48 million
(savings) (savings) (savings)
Proposal is cost neutral? no
Proposal is deregulatory yes
6. Consultation
The opposition of employer groups to the mandatory employer role was first
established during public consultations conducted in 2009, prior to implementation of
the existing scheme. An ongoing implementation working group, which is made up
of representatives from small business and large employer groups, employee,
womens and community groups (which Government established to inform the PPL
implementation process) has been specifically asked to comment on the mandatory
employer role, and has provided direct feedback indicating that it should be
removed.
A public consultation process was undertaken as part of the PPL Review including:
a public submission phase, including a general call for submissions and direct
emails to employee, employer and community peak bodies;
face-to-face consultation with key stakeholders; and
the formation of a PPL Review steering committee made up of
representatives from employer, employee, womens and community groups.
Feedback on the employer role has also been received through direct contact made
by members of the public, generally small business employers who have been
recently notified of their mandatory obligations.
6
Regulation impact statement - paid parental leave
The proposed measure directly responds to all these forms of feedback received
over a significant period of time. As outlined earlier, employer groups have an
overwhelming and sustained opposition to the mandatory employer role, and have
put forward their own proposals to remove its mandatory nature.
Some representative bodies expressed support for the role (such as bodies
representing employees and other interest groups). The view of these organisations
is that having an employer administer the PLP payment reaffirms the nature of the
payment as an industrial entitlement, rather than a welfare entitlement. These
groups particularly view the employer role to be beneficial in situations where
employers ,,top up PLP payments so that parents above minimum wage continue to
be paid at their normal wage for a period, and so that parents continue to receive
pay in line with their usual pay cycle. A small number of employers have also
responded that they favour this approach. The proposed measure directly responds
to this view by ensuring that employers who value the role can continue to have this
arrangement with their employees (should the employee wish).
Further consultation with interested parties will occur in the lead up to
commencement of the enhanced PPL scheme from 1 July 2015, to gauge the
relevance of a continued employer role under the new scheme and whether any
issues would need to be resolved to ensure effective arrangements from
1 July 2015.
7. Conclusion
Given the feedback from employers and the Governments commitment to move to
an ,,opt-in role, the preferred option could be to move to an opt-in employer role
under the PPL scheme from either 1 March 2014 or 1 July 2015. However, it is
considered that an earlier start date of 1 March 2014 would be more beneficial for
employers and provide a useful indicator of the effectiveness of the opt-in
arrangements well before the commencement of the enhanced PPL scheme on
1 July 2015.
8. Implementation and review
Under the proposed measure to remove the mandatory employer role from
1 March 2014, all employers registered for the PPL scheme will be ,,opted out
on that date and payments of PLP will be made by the Department of Human
Services. However, if an employer chooses to ,,opt in to provide the payment and
the employee consents to being paid by their employer, an employer determination
will be made and payment could be provided by the employer. Where an employer
is already providing PLP to an employee on 1 March 2014, that arrangement would
not be affected.
7
Regulation impact statement - paid parental leave
Ongoing, where an employee consents to being paid by their employer, employers
will be sent a notice with the option to accept or decline an employer determination.
If the employer accepts the notice of the employer determination and their
obligations to pay instalments of parental leave pay to the person, funds will be
transferred to the employer in line with current arrangements. If the employer
declines or does not respond to the notice, the Department of Human Services will
provide PLP directly to the customer. To reflect the non-mandatory nature of their
role, employers will no longer be potentially subject to a compliance notice for not
responding to a notice of an employer determination.
As stated earlier, take up of the opt-in arrangement will be monitored as an indicator
for the effectiveness of these arrangements as part of the enhanced PPL scheme to
commence on 1 July 2015. Key performance indicators could include:
number of employees who consent to their employer providing PLP;
number of employers who accept or decline the employer determination; and
number of employers who opt in after 1 March 2014.
8
STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Social Services and Other Legislation Amendment Bill 2013
Schedule 1 - Encouraging responsible gambling
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
Schedule 1 to the Bill makes a number of amendments to the National Gambling
Reform Act 2012, and repeals in full the National Gambling Reform (Related
Matters) Act (No.1) 2012 and the National Gambling Reform (Related Matters) Act
(No.2) 2012.
The Bill repeals provisions relating to: the National Gambling Regulator (including
removing all its powers and functions, and the penalties to enforce compliance); the
national supervisory levy; the automatic teller machine (ATM) withdrawal limit; the
trial on mandatory pre-commitment; and matters for Productivity Commission review.
The Bill also amends the pre-commitment, gaming machine capability and dynamic
warning requirements to express the Commonwealths commitment to work towards,
and intention to introduce, measures in the future. Most of the research components
in the Act will be retained.
Human rights implications
The amendments have the effect of removing the three main measures in the Act
(that is, the pre-commitment, dynamic warning, and ATM withdrawal limit
requirements) and replacing the provisions with statements setting out the
Commonwealths commitment to the development and implementation of measures
in the future that encourage responsible gambling.
Given that the new provisions will not impose any substantive legal obligations,
Schedule 1 to the Bill will not limit any human rights. In addition, as the amendments
remove existing provisions relating to the exercise of coercive monitoring and
enforcement powers and the collection of personal information, Schedule 1 reduces
the risk of interference with a persons right to a fair and public hearing, right against
self-incrimination and right to privacy and reputation in accordance with Articles
14(1), 14(3)(g) and 17 of the International Covenant on Civil and Political Rights.
Conclusion
Schedule 1 is compatible with human rights as it does not raise any human rights
issues.
1
Statements of compatibility with human rights
Schedule 2 - Continuing income management as part of
Cape York Welfare Reform
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
The continuation of income management as part of Cape York Welfare Reform
component of the Bill introduces a minor amendment to the Social Security
Administration Act (the Social Security Administration Act). Paragraphs 123UF(1)(g)
and 123UF(2)(h) of the Social Security Administration Act provide that a person can
only be subject to income management under section 123UF after a decision by the
Family Responsibilities Commission made before 1 January 2014.
The amendment extends to 1 January 2016 the timeframe for which a person, after a
decision by the Family Responsibilities Commission, can be subject to income
management under section 123UF.
The purpose of the amendment is to allow income management to continue in
Cape York for two further years until 1 January 2016.
Human rights implications
Eliminating racial discrimination
The amendment to the Social Security Administration Act engages Article 2(1) of the
Convention on the Elimination of All Forms of Racial Discrimination (CERD), which:
,,...imposes an obligation on State parties to undertake to pursue a policy of
eliminating racial discrimination in all its forms and promoting understanding
among all races...1
Equality before the law
The amendment to the Social Security Administration Act also engages Article 26 of
the International Covenant on Civil and Political Rights (ICCPR), which states:
,,...all persons are equal before the law and are entitled without any
discrimination to the equal protection of the law. In this respect, the law shall
prohibit any discrimination and guarantee to all persons equal and effective
protection against discrimination on any ground such as race, colour, sex,
language, religion, political or other opinion, national or social origin, property,
birth or other status.2
1
International Convention on the Elimination of All Forms of Racial Discrimination, Article 2(1)
2
International Covenant on Civil and Political Rights, Article 26.
2
Statements of compatibility with human rights
There is no incompatibility with the rights engaged as the circumstances meet the
test for legitimate differential treatment under international law.
Legitimate differential treatment
The objective of Cape York Welfare Reform is aimed at supporting the restoration of
socially responsible standards of behaviour and assisting community members to
resume and maintain primary responsibility for the wellbeing of their community and
the individuals and families within their community. This objective is considered
sufficiently important to justify differential treatment on the basis of a prohibited
ground.
An independent Evaluation of the Cape York Welfare Reform Trial, released in
March 2013, indicates that the trial has had a positive impact in participating
communities, with increased personal responsibility and positive behavioural
changes such as increased school attendance, increased commitment to education
by parents, and greater support for local Indigenous authority and leadership.
Moreover, results of consultations conducted to date have established support for
the welfare reforms in the four participating Cape York communities.
The Family Responsibilities Commission (FRC), a central plank of the reforms,
operates through a conferencing model. In practice, this means an individual will
attend a number of conferences with Local Commissioners who are respected local
Indigenous elders in the community. At the conferences, options for support are
discussed, including referrals to existing support services, prior to any income
management direction being made by the FRC. The FRC considers appropriate
alternatives in conjunction with the individual, with income management only being
used as a final measure.
The results of the reviews and consultations to date demonstrate that the differential
treatment of members of the four Cape York communities is having a positive impact
on individuals, families and the broader communities.
Conclusion
The amendments are compatible with human rights because, to the extent that they
may limit human rights, those limitations are reasonable, necessary and
proportionate.
3
Statements of compatibility with human rights
Schedule 3 - Family tax benefit and eligibility rules
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule makes amendments to limit family tax benefit Part A to children aged
under 16, or teenagers aged 16 to 19 (end of the calendar year they turn 19) who
are in full-time secondary study (or equivalent). Exemptions to the study
requirement will continue to apply for teenagers who cannot study due to physical,
psychiatric, intellectual or learning disability.
Teenagers with a secondary qualification who cease to be eligible for family tax
benefit from 1 January 2014 will be able to apply for youth allowance. Youth
allowance, with its ,,learn or earn provisions that require young people to participate
in work, job search, study or training, will remain available as the more appropriate
payment to help young people transition from school into work or post-secondary
study.
Human rights implications
Article 9 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR), as well as Article 26 of the Convention on the Rights of the Child (CRC),
recognise the right of a child to benefit from social security.
The right to social security in article 9 of the ICESCR requires a social security
system be established and that a country must, within its maximum available
resources, ensure access to a social security scheme that provides a minimum
essential level of benefits to all individuals and families that will enable them to
acquire at least essential health care, basic shelter and housing, water and
sanitation, foodstuffs, and the most basic forms of education.
Article 26 of the CRC requires countries to recognise the right of the child to benefit
from social security. Benefits should take into account the resources and the
circumstances of the child and persons having responsibility for the maintenance of
the child.
From 1 January 2014, this Schedule will mean that teenagers aged 16 to 17 who
have a Year 12 (or equivalent) qualification will no longer be eligible for family tax
benefit. This Schedule makes similar changes to eligibility for family tax benefit for
approved care organisations. These teenagers will continue to be eligible to claim
youth allowance.
This change will focus payments in the family assistance system on families with
children who are at school, while youth allowance will become the primary form of
assistance to eligible young people who have completed secondary study. To the
extent that the changes in Schedule 3 may limit human rights, those limitations are
reasonable and proportionate.
4
Statements of compatibility with human rights
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit access to
family and parental payments, these limitations are reasonable and proportionate.
5
Statements of compatibility with human rights
Schedule 4 - Period of Australian working life residence
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule amends the rules for calculating pensions paid outside Australia.
It primarily affects age pension and some other pensions which also have unlimited
portability, and pensions paid under most social security agreements. Pensioners
paid under the Greek and New Zealand agreements will continue to be paid
according to the specific terms of those agreements.
Under the change, pensioners who leave Australia on or after the start date will be
required to have been Australian residents for 35 years during their working life (from
age 16 to age pension age) to receive their full means-tested pension if they choose
to retire overseas or travel overseas for extended periods of longer than 26 weeks.
The current requirement is 25 years. Thirty-five years is considered a more
appropriate period given Australias pension system is residence-based and
taxpayer-funded.
In an associated change, members of a couple paid outside Australia under a social
security agreement will now have their pensions calculated on their own Australian
working life residence, rather than their partners Australian working life residence,
as already applies to pensioners paid outside Australia in non-agreement countries.
Pensioners paid under the existing rules at the date these changes commence,
and who would be adversely affected, will be grandfathered unless they return to
Australia for more than 26 weeks and subsequently leave Australia again.
Human rights implications
This Schedule has considered the human rights implications, particularly with
reference to the right to social security as contained within Article 9 of the
International Covenant on Economic, Social and Cultural Rights. It is concluded that
the proposed change to the calculation of pensions for people who, after the start
date, leave Australia or claim under a social security agreement is reasonable,
subject to due process provided for in national law, and is permissible (under
ILO Convention No.168 (1988)) in the case of ,,absence from the territory of the
State.
Conclusion
The Schedule is compatible with human rights because it does not limit or preclude
people from gaining or maintaining access to social security.
6
Statements of compatibility with human rights
Schedule 5 (Interest charge), Schedule 6 (Student start-up loans), and
Part 1 of Schedule 12 (Repayment of financial supplement through
taxation system)
These amendments are compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
Schedule 5 - Interest charge
Schedule 5 to the Bill amends the Social Security Act 1991 (the Social Security Act)
and the Student Assistance Act 1973 (the Student Assistance Act) in order to
introduce an interest charge on debts relating to austudy, fares allowance, youth
allowance payments to full-time students and apprentices, and ABSTUDY living
allowance.
The current lack of an interest charge on student income support debt means
recipients have no incentive to repay their debts. Once the interest charge is in
place, debtors will have a pressing incentive to engage with the Department of
Human Services to make a repayment arrangement in order to avoid the interest
charge.
It is also important to note that a debt only arises under the Social Security Act or the
Student Assistance Act where a person receives a payment to which they were not
entitled. Furthermore, an interest charge can only be applied to the person and the
debt where the person has not entered into a repayment arrangement, has failed to
comply with a repayment arrangement, or has terminated a repayment arrangement
without entering into a new repayment arrangement.
In negotiating a repayment arrangement, the Department of Human Services will
take into account the circumstances of the debtor, and will suggest repayment
amounts based on the debtors financial capacity. Where a debtor is experiencing
financial hardship, repayment arrangements can be paused and no interest charge
applied for that period of time. Students will also be able to continue to receive
income support payments whilst repaying any debt and interest charge incurred.
Additionally, an interest charge will not be applied where a person is in
circumstances prescribed in a legislative instrument made by the Minister. It is
envisaged that the prescribed circumstances would be where the amount that is
being withheld from the persons payments (under current section 1231 of the Social
Security Act) is satisfactorily repaying the debt.
7
Statements of compatibility with human rights
An interest charge can only be applied if the person has been issued a notice in
respect of a debt, which will outline the reason why the debt was incurred,
the outstanding amount of the debt, the effect of an interest charge applying, and the
day on which the debt is due and payable. When the debt is initially incurred,
a notice in respect of a debt will provide that the debt is due and payable 28 days
after the notice has been issued. In the event that a repayment arrangement has
been terminated, a newly issued notice will provide that the debt is due and payable
14 days after the notice has been issued. This will ensure that the person will have
sufficient time either to repay the outstanding debt or to enter into a repayment
arrangement and thereby avoid the application of an interest charge.
The interest rate is calculated by adding seven percentage points to the monthly
average yield of 90-day Bank Accepted Bills (as published by the Reserve Bank of
Australia). This is considered an appropriate method for calculating the rate of the
interest charge to apply to income support debt because the rate is high enough to
encourage repayment without being punitive, and it provides a return to the
Commonwealth, commensurate with the time value of the monies overpaid.
Schedule 6 - Student start-up loans
Schedule 6 amends the Social Security Act and the Student Assistance Act to cease
the student start-up scholarship (SSS), from 1 January 2014, for new recipients of
student payments who are participating in higher education. Students will instead be
able to receive either an ABSTUDY student start-up loan or a student start-up loan
(the loans), which are income-contingent loans, equivalent in value to the SSS, and
claimed on a voluntary basis. These loans will be available to new full-time students
who are in receipt of youth allowance, austudy payment or ABSTUDY living
allowance.
The students will be limited to two loans per year of $1,025 (indexed from 2017), in
line with the current SSS arrangements, and the loans will be repayable under
similar arrangements to Higher Education Loan Program (HELP) debts. Students
will only be required to begin repaying the loans once their earnings are above the
repayment threshold (which will be consistent with the current HELP repayment
thresholds) and after any accumulated HELP debt has been paid.
The loans also provide grandfathering arrangements so that recipients who received
an SSS or Commonwealth Education Costs Scholarship, prior to 1 January 2014,
and have remained continuously on student payments will continue to be eligible to
receive the SSS, as a grant, until coming off student payments.
Part 1 of Schedule 12 - Repayment of financial supplement through taxation system
Part 1 of Schedule 12 to the Bill contains technical amendments to the Social
Security Act and Student Assistance Act to give the Commissioner of Taxation
increased flexibility in determining how applications for waiver of Student Financial
Supplement Scheme (SFSS) debts are to be submitted. The amendments will also
remove any doubt that the Commissioner has general administration over the
recovery of these debts.
8
Statements of compatibility with human rights
Human rights implications
Right to education
Schedule 5 to the Bill engages the right to education contained in Article 13 of the
International Covenant on Economic, Social and Cultural Rights (ICESCR).
In particular, article 13(2)(b) states that secondary education, in all its different forms,
including technical and vocational secondary education, shall be made generally
available and accessible to all by every appropriate means and, in particular, by the
progressive introduction of free education.
Schedule 5 - Interest charge
Schedule 5 does not limit the right to education. The interest charge is intended as
an incentive for debtors to repay debts in a timely fashion, where they have the
financial capacity to do so. Given that a debtors financial capacity will be taken into
account before a repayment arrangement is agreed to, the interest charge will not
limit the debtors ability to access education.
Schedule 6 - Student start-up loans
Schedule 6 to the Bill does not limit the right to education. While the SSS will not be
available for new recipients after 1 January 2014, people who would otherwise be
entitled to the SSS will be eligible for the loans. The purpose of the SSS and the
loans are identical as both payments are designed to help students with the up-front
costs of textbooks and equipment. Under the loans, students will be eligible for the
same payment amounts and will be able to claim payments when these expenses
arise. In this way, students will still have access to funds to assist them with the
up-front costs of study. The fact that the loans are repayable once the person
reaches a particular income threshold will not limit a persons right to education.
Right to social security
Schedules 5 and 6 to the Bill engage the rights to social security contained in article
9 of the ICESCR.
The right to social security requires that a system be established under domestic
law, and that public authorities must take responsibility for the effective
administration of the system. The social security scheme must provide a minimum
essential level of benefits to all individuals and families that will enable them to cover
essential living costs.
The United Nations Committee on Economic, Cultural and Social Rights
(the Committee) has stated that a social security scheme should be sustainable and
that the conditions for benefits must be reasonable, proportionate and transparent
(see General Comment No.19).
9
Statements of compatibility with human rights
Article 4 of ICESCR provides that countries may limit the rights such as to social
security in a way determined by law only in so far as this may be compatible with the
nature of the rights contained within the ICESCR and solely for the purpose of
promoting the general welfare in a democratic society. Such a limitation must be
proportionate to the objective to be achieved.
Schedule 5 - Interest charge
To the extent that interest is charged on a persons debt, any impact will be limited
and will have a very marginal effect on the ability of a person to cover essential living
costs or acquire basic forms of education, thereby engaging a persons right to social
security. The provisions in Schedule 5 are therefore unlikely to limit this right, given
the appropriate safeguards put in place to protect it.
As noted above, it is intended that the provisions introduced by Schedule 5 will allow
the efficient recovery of social security payments, supporting effective and efficient
administration of the social security system. This measure is proportionate in
achieving this policy objective as all persons can avoid an interest charge by
entering into a repayment arrangement, and these rights are safeguarded by the
requirements of notice and periods of time in which a person will be able to pay back
the debt or enter into an arrangement. Furthermore, the Secretary will have the
discretion in appropriate circumstances to waive a debt, including any interest
charged on the debt.
By allowing the efficient recovery of social security payments, Schedule 5 ensures
the financial sustainability of the social security system. The interest charge, as it
applies to persons who receive payments to which they are not entitled, is a
reasonable condition on the benefits of the system as it encourages recipients to
repay those amounts and ensures that the Commonwealth is able to recover the real
value of these amounts. The interest charge, as a condition, is also transparent as it
is provided for in legislation, will be accurately communicated through the
Departments website, and can only be applied after the recipient is given notice.
This ensures that all stakeholders will be informed of how the interest charge will
operate before it is applied to recipients.
Therefore, Schedule 5 to the Bill will be compatible with the right to social security as
the potential limitation on this right is proportionate to the policy objective and
intended to improve the administration of social security system.
10
Statements of compatibility with human rights
Schedule 6 - Student start-up loans
To the extent that there is an impact on a persons rights to social security by virtue
of Schedule 6, the impact is limited. In practice, a person will still be entitled to the
same amount of financial assistance under the loans as they would have received
from an SSS, and will only be required to repay the loans once they reach the
relevant threshold level of income. This threshold is set at a level of income at which
a person would no longer require financial assistance to acquire essential health
care, housing, water and sanitation, foodstuffs, and education. Given the above
safeguards, and the fact that the loans will be given on a voluntary basis (that is,
a debtor does not need to incur debt) the measures contained in Schedule 6 are
compatible with the rights to social security.
Additionally, the Government is committed to providing continuing support to
students from regional Australia. Because of this, the Relocation Scholarship,
for dependent students who are required to move to study and some independent
students, will continue to be provided as a grant to all eligible students. Other
student income support payments will also remain unaffected by the loans measure.
Taking into account the continued access to fund the costs of study, together with
the fact that there will be no changes to the Relocation Scholarship and other
student payments, the amendments to the SSS are consistent with a persons rights
to social security and to an adequate standard of living.
Part 1 of Schedule 12 - Repayment of financial supplement through taxation system
Part 1 of Schedule 12 to the Bill contains amendments which will give the
Commissioner of Taxation greater flexibility in determining how applications for
waiver of youth allowance (student and Australian apprentice), austudy and
ABSTUDY SFSS debts are to be submitted.
These amendments are beneficial in nature as they will allow the Commissioner to
accept applications for waiver of debt without them having to be in writing.
Consequently, these amendments do not have any adverse human rights
implications.
Right to an adequate standard of living, including food, water and housing
Schedule 5 to the Bill engages the right to an adequate standard of living, including
food, water and housing, contained in article 11 of the ICESCR.
The right to an adequate standard of living, including food, water and housing
provides that everyone is entitled to adequate food, clothing and housing and to the
continuous improvement of living conditions.
Schedule 5 - Interest charge
To the extent that there is an impact on a persons right to an adequate standard of
living, including food, water and housing, by virtue of Schedule 5, the impact is
limited.
11
Statements of compatibility with human rights
It is intended that the provisions of Schedule 5 will allow the efficient recovery of
social security payments, which will ultimately improve the efficacy of the social
security system. This measure is proportionate in achieving this policy objective as
all persons can avoid an interest charge by entering into a repayment arrangement,
and these rights are safeguarded by the requirements of notice and periods of time
in which a person will be able to repay the debt or enter into an arrangement.
The Secretary will also have the discretion to waive a debt in appropriate
circumstances, including any interest charged on the debt.
Furthermore, by allowing the efficient recovery of social security payments, Schedule
5 ensures the financial sustainability of the social security system. The interest
charge, as it applies to people who receive payments to which they are not entitled,
is a reasonable condition on the benefits of the system as it encourages recipients to
repay those payments and ensures that the Commonwealth is able to recover the
real value of these amounts. The interest charge is also transparent as it is provided
for in legislation, will be accurately communicated through the Departments website,
and can only be applied after the recipient is given written notice. This ensures that
all stakeholders will be informed of how the interest charge will operate before it is
applied.
Therefore, Schedule 5 to the Bill will be compatible with the right an adequate
standard of living as the potential limitations on this right are proportionate to the
policy objective and are intended to improve the administration of the social security
system.
Right to equality and non-discrimination
To avoid doubt, Schedules 5 and 6 do not engage the right to equality and
non-discrimination contained in articles 2 and 26 of the International Covenant on
Civil and Political Rights either on the basis of race or ,,other status.
Article 2(1) of the International Covenant on Civil and Political Rights obligates each
State party to respect and ensure to all persons within its territory and subject to its
jurisdiction the rights recognised in the Covenant without distinction of any kind, such
as race, colour, sex, language, religion, political or other opinion, national or social
origin, property, birth or other status3.
Article 26 not only entitles all persons to equality before the law as well as equal
protection of the law, but also prohibits any discrimination under the law and
guarantees to all persons equal and effective protection against discrimination on
any ground such as race, colour, sex, language, religion, political or other opinion,
national or social origin, property, birth or other status4.
3
CCPR General Comment No. 18
4
CCPR General Comment No. 18
12
Statements of compatibility with human rights
It is important to note, however, that not all differential treatment will be considered
discriminatory. The Committee on Economic, Social and Cultural Rights has
provided the following commentary on when differential treatment will be considered
discriminatory:
Differential treatment based on prohibited grounds will be viewed as
discriminatory unless the justification for differentiation is reasonable and
objective. This will include an assessment as to whether the aim and effects
of the measures or omissions are legitimate, compatible with the nature of the
Covenant rights and solely for the purpose of promoting the general welfare in
a democratic society. In addition, there must be a clear and reasonable
relationship of proportionality between the aim sought to be realised and the
measures or omissions and their effects. A failure to remove differential
treatment on the basis of a lack of available resources is not an objective and
reasonable justification unless every effort has been made to use all
resources that are at the State partys disposition in an effort to address and
eliminate the discrimination, as a matter of priority5.
Schedule 5 - Interest charge
Discrimination on the basis of race
Schedule 5 to the Bill will apply an interest charge to all debts resulting from student
income support debts, including ABSTUDY living allowance, which supports
Indigenous Australians. However, there is no differential treatment on the basis of
race as the interest charge will apply equally to all student debtors.
For these reasons, Schedule 5 to the Bill will not engage the right of equality and
non-discrimination.
Discrimination on the basis of `other status'
Schedule 5 to the Bill applies an interest charge to debts with respect to
overpayments to students (rather than all social security overpayments).
This will not be a limitation on the right to equality and non-discrimination as the
differential treatment is for a reasonable and objective purpose.
Recipients of these payments generally transition from study to employment
(and thus are no longer recipients of social security payments) before the full amount
of the debt is repaid through the social security withholding mechanism. Once the
person has left payments, many often choose not to repay the debt, and indeed
there is currently little incentive for them to do so.
5
CESCR, General Comment No 20
13
Statements of compatibility with human rights
It is therefore reasonable and objective to apply an interest charge to debts with
respect to the above mentioned types of payment to ensure that people with a debt
repay the outstanding amount in a timely fashion. Recipients of these payments will
be able to avoid the interest charge altogether by either repaying their debt within
28 days of being notified of the debt or by entering into an acceptable repayment
arrangement.
For these reasons, Schedule 5 to the Bill will not engage the right of equality and
non-discrimination.
Schedule 6 - Student start-up loans
While the provisions of Schedule 6 will establish an ABSTUDY student start-up loan
(which, given the eligibility criteria of ABSTUDY, will mean that loan recipients are
necessarily of Aboriginal or Torres Strait Islander descent), an equivalent student
start-up loan will also be established for those who are eligible for austudy and youth
allowance recipients (where austudy and youth allowance are available to
non-Indigenous and Indigenous people). As the provisions for the student start-up
loan mirror the provisions for the ABSTUDY student start-up loan, there will be no
effective distinction between Indigenous and non-Indigenous recipients of these
loans.
For these reasons, Schedule 6 to the Bill will not engage the right of equality and
non-discrimination.
Conclusion
These amendments are compatible with human rights. To the extent that they may
have limited adverse impact on a persons access to education, social security,
an adequate standard of living or the right to equality and non-discrimination,
the limitation is reasonable, proportionate to the policy objective and for legitimate
reasons.
14
Statements of compatibility with human rights
Schedule 7 - Paid parental leave
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
Schedule 7 makes amendments to the employer role in the Paid Parental Leave
Act 2010. The amendments will remove the requirement for employers to provide
Government-funded parental leave pay to their eligible long-term employees. From
1 March 2014, employees will be paid directly by the Department of Human
Services, unless an employer opts in to provide parental leave pay to its employees
and an employee agrees for their employer to pay them.
Human rights implications
The Paid Parental Leave scheme engages the right to social security in Article 9 of
the International Covenant on Economic, Social and Cultural Rights, and the right to
work in Article 10 (2) of the International Covenant on Civil and Political Rights.
However, the amendments in this Schedule are limited to changes to the
administrative arrangements for delivering parental leave pay to customers. They do
not affect a customers eligibility to the payment, a customers rate of pay, or a
customers entitlement to paid or unpaid leave from employment before and after the
birth of a child. As such, the amendments do not engage any human rights.
Conclusion
Schedule 7 is compatible with human rights as it does not raise any human rights
issues.
15
Statements of compatibility with human rights
Schedule 8 - Pension bonus scheme
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
From 1 March 2014, the amendments will end late registrations in the pension bonus
scheme. Subsections 92H(3) to (7) of the Social Security Act 1991 provide for late
registration and backdating of the commencement date. The amendment will repeal
these sections. The amendment also inserts a new subsection 92D(2), which states
that a person cannot apply to register in the scheme on or after 1 March 2014.
The scheme was implemented in 1998 to encourage workforce participation.
The scheme provides a lump sum payment to people registered in the scheme who
are qualified for the age pension but who choose to defer their pension and remain in
the workforce.
The scheme was closed from 20 September 2009 because the 2009
Pension Review found the pension bonus scheme did not encourage older
Australians to remain in work, with most participants saying they would have
continued working anyway. The review also found pensioners thought the scheme
was complex and inflexible.
While the scheme was closed from 20 September 2009, eligible people who were
qualified for the age pension before then have remained able to apply for late
registration in the scheme if they had not registered at the time of its closure.
To encourage senior Australians to continue working, the work bonus was
introduced. The work bonus is a pension income test concession for age pensioners
who have earnings from employment.
Under the work bonus, eligible pensioners can earn up to $250 a fortnight ($6,500 a
year) without it being assessed as income under the pension income test.
Any unused amount of the fortnightly concession can accumulate up to a maximum
of $6,500 and be used to offset future earnings.
Mirror amendments are made to the Veterans' Entitlements Act 1986.
Human rights implications
The pension bonus scheme is not a social security entitlement as described in
section 23 of the Social Security Act 1991 and, accordingly, is not considered an
income support payment. Social security income support arrangements for senior
Australians are unaffected by this legislation.
A pension bonus payment is a one-off lump sum bonus paid to senior Australians
who are registered in the scheme but who keep working and defer their age pension
receipt.
16
Statements of compatibility with human rights
The scheme was intended to encourage workforce participation but, following the
Pension Review findings, was closed and limited to people who were qualified before
20 September 2009. The legislation will further limit access to the pension bonus
scheme. However, eligible people will still have until 1 March 2014 to backdate their
registration in the scheme.
A work bonus was introduced when the pension bonus scheme was closed to new
entrants. It provides a clear and immediate benefit to age pensioners who continue
to work by providing a pension income test concession on employment income.
Conclusion
This legislation does not limit human rights because it does not affect social security
income support entitlements for senior Australians. Workforce participation by age
pensioners who wish to work continues to be well supported through the work bonus.
There are no human rights implications.
17
Statements of compatibility with human rights
Schedule 9 - Indexation - child care rebate limit
These amendments are compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Background
The child care rebate is a payment that provides assistance for families who use
approved child care by covering half of all their out-of-pocket fees (after child care
benefit), up to a maximum limit per child per year. The child care rebate is currently
not an indexed amount, and is capped at $7,500 until the financial year ending
30 June 2014. To be eligible for the child care rebate, families must have used
approved child care and met the work, training, study test and be eligible for child
care benefit. Child care rebate is not income tested, and eligibility for child care
benefit includes families who are entitled to child care benefit at the zero rate due to
income.
The child care rebate payment was initially introduced to assist with up to 30 per cent
of out-of-pocket costs per child per financial year, and the payment amount was
indexed. To better assist families with the affordability of child care, the maximum
child care rebate limit per child per financial year was increased to provide up to
50 per cent of out-of-pocket costs per child per financial year up to a maximum
amount of $7,500.
Specifically, legislative amendments were made to paragraph 84F of the A New Tax
System (Family Assistance) Act 1999 (the Family Assistance Act) by the Family
Assistance Legislation Amendment (Child Care Budget Measures) Act 2011
(the Budget Measures Act), which took effect on 15 September 2011, to introduce
the cap and pause of the indexation of child care rebate payment amounts.
Overview of the amendments
The purpose of the child care rebate amendments is to extend the current child care
rebate payment cap of a maximum of $7,500 per financial year per child,
and continue to pause the indexation of the child care rebate payment amounts for a
further three financial years to 30 June 2017.
That is, the amendments to paragraph 84F(ea) of the Family Assistance Act
preserve the current child care rebate payment amounts, and provide for an
extension of the cap and pause measure that were originally introduced through the
Budget Measures Act.
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Statements of compatibility with human rights
Human rights implications
The amendments engage the following human rights:
Rights of the child
The rights of the child are contained in the Convention on the Rights of the Child
(CRC).
Article 3 of the CRC requires that, in all actions concerning children, the best
interests of the child shall be a primary consideration.
To the extent that the amendments engage the rights of the child, it does not limit
those rights as it maintains the provision of payments to assist the affordability of
child care for families.
Right to social security
Providing additional payments to families in the context of childcare benefits, to an
extent, also engages the right to social security contained in article 9 of the
International Covenant on Economic, Social and Cultural Rights (ICESCR), as well
as article 26 of the CRC, which specifically recognises the right of a child to benefit
from social security.
The right to social security in article 9 of the ICESCR requires a social security
system to be established and that a country must, within its maximum available
resources, ensure access to a social security scheme that provides a minimum
essential level of benefits to all individuals and families that will enable them to
acquire at least essential health care, basic shelter and housing, water and
sanitation, foodstuffs, and the most basic forms of education.
Article 26 of the CRC requires countries to recognise the right of the child to benefit
from social security. Benefits should take into account the resources and the
circumstances of the child and persons having responsibility for the maintenance of
the child.
The right to social security is not absolute and may be subject to permissible
limitations. Article 4 of the ICESR provides that rights in the Covenant may be
subject to limitations that are determined by law which are compatible with the nature
of these rights and are solely for the purpose of promoting the general welfare in a
democratic society.
According to the Committee on Economic, Social and Cultural Rights, the right to
social security includes the right not to be subject to arbitrary and unreasonable
restrictions of existing social security coverage.[1] Any removals in entitlements must
be justified in line with Article 4 in the context of the full use of the maximum
available resources of the State party.[2]
[1]
Committee on Economic, Social and Cultural Rights, General Comment No. 19, ,,The right to social
security (art 9), paragraph 9.
[2]
Ibid, paragraph 42.
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Statements of compatibility with human rights
The Government considers that maintaining the current cap on child care rebate
payments and the pausing of indexation of child care rebate payments until
1 July 2017 is a reasonable, necessary and proportionate measure to ensure that
the payments can continue to be realised for present and future generations, and the
measure is in the interest of the general public and Australias economic position.
Among other reasons, the effect of pausing indexation on child care rebate
payments until 1 July 2017 will be, in relation to each child, only a small amount.
The cap of a maximum of $7,500 per financial year is currently set out in the
legislation; the maximum amount of child care rebate payments is not being reduced
through this Schedule.
Conclusion
To the extent that the amendments engage the rights of the child and to the extent it
engages and places any limitation on the right to social security, such limitation is
reasonable, necessary and proportionate to achieving a legitimate aim.
The amendments are compatible with human rights.
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Statements of compatibility with human rights
Schedule 9 - Indexation - family tax benefit, parental leave pay and dad and
partner pay amounts
These amendments are compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
These amendments will pause indexation of certain higher income limits until
30 June 2017. The indexation pauses will apply to the family tax benefit Part A
higher income free area, the family tax benefit Part B primary earner income limit,
and the parental leave pay and dad and partner pay individual income limits.
The Schedule also includes amendments to pause indexation of the family tax
benefit end of year supplements until 30 June 2017.
Maintaining the higher income limits and supplement rates at their current levels until
30 July 2017 will ensure that Government assistance is targeted to low and
middle-income families. This measure will result in savings and ensure that family
and parental payments are sustainable into the future.
Human rights implications
These amendments are likely to engage the following human right:
Right to social security
Article 9 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR) recognises ,,the right of everyone to social security. That right requires a
social security system to be established, and states that a country must, within its
maximum available resources, ensure access to a social security scheme that
provides a minimum essential level of benefits to all individuals and families that will
enable them to acquire at least essential health care, basic shelter and housing,
water and sanitation, foodstuffs, and the most basic forms of education. Article 26 of
the Convention on the Rights of the Child (CRC) ensures that right to ,,every child
and requires that ,,the benefits should, where appropriate, be granted, taking into
account the resources and the circumstances of the child and persons having
responsibility for the maintenance of the child.
These amendments maintain the current income test that applies to the higher
income limits for family and parental payments. These amendments will not affect
the assistance currently provided to low and middle-income families.
There may be families on higher incomes who do experience a reduction in family
tax benefit Part A, or who cease to be eligible for assistance if their income exceeds:
$94,316 plus $3,796 for each child after the first - the family tax benefit Part A
higher income free area; or
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Statements of compatibility with human rights
$150,000 - the family tax benefit Part B primary earner income limit,
paid parental leave and dad and partner pay income limit.
Families at these income levels are considered to have reasonable levels of private
income which would enable them to maintain their current living standards.
Maintaining supplements at their current rates until 30 June 2017 ($726.35 for each
family tax benefit Part A child, and $354.05 for each family tax benefit Part B family)
supports the sustainability of the family assistance program, without reducing
assistance provided to low and middle-income families. Indexation will continue to
apply to all other components of family tax benefit, ensuring that fortnightly rates
continue to increase each year, and assist families with the direct cost of raising
children.
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit access to
family and parental payments, these limitations are reasonable and proportionate.
22
Statements of compatibility with human rights
Schedule 10 - Reduction of period for temporary absence from Australia
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule makes amendments to the allowed period of temporary absence from
Australia for accessing certain family and parental payments. The period of allowed
temporary absence will be reduced from three years to 56 weeks. The amendments
will apply to individuals eligible for family tax benefit Part A and Paid Parental Leave.
Exemptions will apply to allow some individuals to continue to access payments
while overseas for up to three years. Exemptions will apply to individuals who are
members of the Australian Defence Force or Australian Federal Police and who are
deployed overseas, assisted by the Medical Treatment Overseas Program, or unable
to return to Australia for a specified reason (such as a serious accident, or natural
disaster).
Human rights implications
These amendments are likely to engage the following human right:
Right to social security
The amendment to reduce the period of temporary period of absence to 56 weeks
continues to allow families to access family and parental payments for a reasonable
period of time while overseas. The 56-week period ensures that those individuals
who may be overseas for one year for work reasons have time to return to Australia
before ceasing to be eligible for family assistance or parental payments.
The amendments also continue to allow for a reasonable period of access while
overseas as families can become eligible for these payments again if they return to
Australia for six weeks or more. The 56-week time period remains more than the
maximum six-week period allowed for other payments of government assistance
while a person is overseas.
Exemptions to the 56-week rule will allow certain individuals who are temporarily
absent from Australia to remain eligible for family and parental payments for up to
three years. Exemptions will apply to individuals who are members of the Australian
Defence Force or Australian Federal Police who are on an overseas deployment.
Exemptions for family assistance will also apply to individuals accessing
Government-funded medical treatment under the Medical Treatment Overseas
Program, and individuals who are unable to return to Australia due to circumstances
out of their control. Exemptions for parental payment purposes would be available in
circumstances to be prescribed under the Paid Parental Leave Rules.
23
Statements of compatibility with human rights
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit access to
family and parental payments, these limitations are reasonable and proportionate.
24
Statements of compatibility with human rights
Schedule 11 - Extending the deeming rules to account-based income streams
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the legislative amendments
This Schedule will change the social security and veterans entitlements income test
treatment of account-based superannuation income streams for new products
assessed.
For account-based income stream products assessed from 1 January 2015,
the deeming provisions will apply. In effect, the deeming rates will apply to the
combined value of a persons financial assets, including the current account balance
of any account-based income streams, to calculate the amount of deemed income
that is to be assessed under the income test to determine a persons pension
entitlement.
Under the current income test rules for account-based income streams, income
received by a person is reduced by an amount reflecting ,,return of capital. This
amount is calculated by purchase price by the persons life expectancy at purchase.
These rules often result in little or no income being assessed for these products and,
accordingly, higher rates of income support payments and social security outlays.
The current income test rules favour people who can only afford to draw down the
minimum amount from their income stream each year. Many of these people have
no income from their income stream assessed against their pension.
People who draw down significantly larger amounts, including those who need to,
would be better off under deeming rules compared to the current income test rules.
The change will improve the sustainability and equity of the income support system.
It will assess financial investments held within account-based income streams in the
superannuation environment in the same way as the majority of financial
investments held outside of the superannuation system.
Account-based income streams held by income support recipients immediately
before 1 January 2015 are grandfathered, and continue to be assessed under
existing income test rules.
Human rights implications
From 1 January 2015, this change to the social security income test treatment for
account-based income streams will affect account-based income streams held by
new income support recipients, current income support recipients who purchase a
new account-based income stream, or people whose partners are receiving income
support.
25
Statements of compatibility with human rights
These people will have their account-based income stream assessed on the same
basis as similar financial investments under the current income test deeming rules.
A proportion of these people will receive a higher level of income support under the
change, or receive the same amount of income support.
Another proportion will receive lower income support than they otherwise would have
under the current rules. However, it is the same amount of income support that an
identical person would receive if the assets backing the account-based income
stream were held directly in financial investments.
The change will improve the equity of the income testing of social security payments
for account-based income streams.
Conclusion
The Schedule is compatible with human rights because it does not limit or preclude
people from gaining or maintaining access to social security.
There are no human rights implications.
26
Statements of compatibility with human rights
Parts 2, 4, 5 and 6 of Schedule 12 (Miscellaneous amendments)
These amendments are compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule makes clarifying and technical amendments to portfolio legislation,
consistent with intended policy.
Part 2 - Time periods and FTB reconciliation conditions
Amendments are made to simplify current reconciliation provisions for family tax
benefit, addressing some gaps and unintended consequences in the operation of
these provisions. For consistency, minor amendments are also made to the review
time limit provisions to reflect recent changes that reduced the period allowed for
lodgement of relevant tax returns.
Part 4 - Use of tax file numbers
Minor amendments are made to the tax file number (TFN) provisions in the family
assistance law. These provisions simplify the TFN provisions, including to enable
the Commissioner of Taxation to provide the Secretary with income information
about an individual who is not required to lodge a tax return using TFNs as the
primary matching key.
Part 5 - Child support amendments
Child support administration involves the Department of Social Services with
responsibility for child support policy and the Department of Human Services with
responsibility for child support service delivery. Minor amendments of a technical
nature to the child support law will ensure that the provisions operate consistently
with these arrangements for child support administration.
Part 6 - Other amendments
This Schedule also makes some minor adjustments to provisions relating to the
newborn supplement and newborn upfront payment of family tax benefit and the
stillborn baby payment, which commence on 1 March 2014, including to:
ensure that the newborn upfront payment of family tax benefit is treated in the
same way as the newborn supplement where the relevant tax returns have
not been lodged on time and the non-lodger provisions apply;
ensure that percentage determinations that allow family tax benefit to be split
in blended families and in certain situations where couples separate, are
taken into account in determining eligibility for the newborn supplement and
amount of the newborn upfront payment;
27
Statements of compatibility with human rights
allow a claim for stillborn baby payment to be made more than 52 weeks after
the birth of the stillborn child in further specified circumstances;
clarify that the higher rate of newborn supplement is available in relation to the
first child aged less than one year who is entrusted to the care of an individual
or their partner;
ensure that a stillborn child in a multiple birth is taken into account in
determining the amount of newborn supplement.
Human rights implications
This Schedule is likely to engage the following human rights:
Right to social security
Parts 2, 4, 5 and 6
Article 9 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR), and article 26 of the Convention on the Rights of the Child (CRC)
recognise the right to social security.
As the amendments are of a minor or technical nature and are designed to ensure
the legislation is consistent with the intended policy, this right is advanced by the
amendments, and to the extent that the right is limited, the limitations are reasonable
and proportionate.
Right to privacy
Part 4 - Use of tax file numbers
The disclosure of personal information engages the right to privacy under article 17
of the International Covenant on Civil and Political Rights (ICCPR). The protection
may be limited where such limitations are authorised by law and are not arbitrary.
The increase to the tax free threshold has increased the number of family tax benefit
recipients who are not required to lodge a tax return. This Schedule introduces
simpler TFN provisions which more closely align with the model of TFN provisions
used in other portfolio acts. The information is relevant for determining the adjusted
taxable income of individuals who are not required to lodge tax returns and may be
relevant in verifying eligibility for family assistance or to determine an individuals
correct rate of payment. The provisions also deal with the transfer of TFN data for
debt related purposes. This information is currently provided for individuals who are
required to lodge a tax return.
The disclosure of personal information does not treat any group of persons
differently, but rather, ensures that income verification at the time of reconciliation for
all recipients of family assistance includes relevant information available from the
Commissioner of Taxation.
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Statements of compatibility with human rights
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit access to
family assistance, these limitations are reasonable and proportionate.
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Statements of compatibility with human rights
Part 3 of Schedule 12 (Protection of amounts under the National Disability
Insurance Scheme)
These amendments are compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This measure amends the National Disability Insurance Scheme Act 2013 (the NDIS
Act) to ensure that amounts paid under the National Disability Insurance Scheme in
relation to funding for supports are inalienable. It also seeks to prevent third parties
from seeking to recover debts by obtaining a garnishee order over bank accounts
kept for the purpose of managing funding for supports under the National Disability
Insurance Scheme. The amendments therefore extend protection to participants to
ensure that the funding for the reasonable and necessary supports under their
individual support plans can only be used that purpose.
Human rights implications
Article 19 of the Convention on the Rights of Persons with Disabilities (CRPD)
recognises the equal right of all persons with disabilities to live in the community,
with choices equal to others, and requires that effective and appropriate measures
be taken to facilitate full enjoyment by persons with disability of this right and their full
inclusion and participation in the community.
Article 26 of the CPRD provides that nation states should take effective and
appropriate measures to enable people with disability to attain and maintain
maximum independence, full physical, mental, social and vocational ability, and full
inclusion and participation in all aspects of life. The Article requires that parties
should organise, strengthen and extend comprehensive habilitate and rehabilitation
services and programmes, particularly in the areas of health, employment, education
and social services. Parties should ensure that these services: are available at the
earliest possible stage; are based on a multidisciplinary assessment of an
individuals needs and strengths; support participation in society; are voluntary; and
are available as close as possible to people in their own communities.
The NDIS will also provide opportunities for people with disability to take part in
cultural life, consistent with Article 15 of the International Covenant on Economic,
Social and Cultural Rights (ICESCR).
Participant plans
Consistent with the provisions of Article 26 outlined above, the NDIS Act provides for
the provision and funding of reasonable and necessary supports for participants in
the National Disability Insurance Scheme if:
the support will assist the participant to pursue the goals, objectives and
aspirations included in the participants statement of goals and aspirations;
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Statements of compatibility with human rights
the support will assist the participant to undertake activities, so as to facilitate
the participants social and economic participation;
the support represents value for money in that the costs of supports are
reasonable, relative to both the benefits being achieved and the cost of
alternative supports;
the support will be, or is likely to be, effective and beneficial for the participant,
having regard to current good practice;
the funding or provision of the support takes account of what it is reasonable
to expect families, carers, informal networks and the community to provide;
the support is most appropriately provided through the National Disability
Insurance Scheme, and is not more appropriately provided through other
general systems of service delivery or support services offered by a person,
agency or body, or systems of service delivery or support services offered:
o as part of a universal service obligation; or
o in accordance with reasonable adjustments required under a law
dealing with discrimination on the basis of disability;
the support is not specified in the National Disability Insurance Scheme rules
as a support that will not be funded or provided under the National Disability
Insurance Scheme; and
the funding or provision of the support complies with the methods or criteria
(if any) specified in the National Disability Insurance Scheme rules for
deciding the reasonable and necessary supports that will be funded or
provided under the National Disability Insurance Scheme.
Plans are to be approved by the CEO in accordance with prescribed rules
(disallowable instruments) and remain in effect until replaced by another plan,
or they are revoked. Participants must be provided with a copy of the plan.
The provision and funding of support for participants are individualised and
articulated through participant plans. The NDIS Act (sections 31 to 41) requires that
preparation, review and replacement of plans, and management of funding and
supports provided under them should:
be individualised;
be directed by the participant;
where relevant, consider and respect the role of family, carers and other
persons who are significant in the life of the participant;
where possible, strengthen and build capacity of families and carers to
support participants who are children;
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Statements of compatibility with human rights
consider the availability to the participant of informal support and other
support services generally available to any person in the community;
support communities to respond to the individual goals and needs of
participants;
be underpinned by the right of the participant to exercise control over his or
her own life;
advance the inclusion and participation in the community of the participant
with the aim of achieving his or her individual aspirations;
maximise the choice and independence of the participant;
facilitate tailored and flexible responses to the individual goals and needs of
the participant; and
provide the context for the provision of disability services to the participant
and where appropriate coordinate the delivery of disability services where
there is more than one disability service provider.
These individual plans must be approved by the CEO in accordance with prescribed
rules and remain in effect until replaced by another plan, or the plan is revoked.
Managing plans
Funding for supports provided under plans must be managed. This means:
purchasing the supports identified in the plan;
receiving and managing any funding provided by the Agency; and
acquitting any funding provided by the Agency.
Plans may be managed by the participant, by a registered plan management service
provider, by the Agency, or by a plan nominee. In most cases, the plan
management arrangements put in place will be those requested by the participant.
Payments (known as NDIS amounts) will be paid either to a participant or to the
person managing the participants plan. National Disability Insurance Scheme rules
will govern the timing and manner of payments. NDIS amounts must be spent in
accordance with the participants plan, and records of payments and receipts
retained for a period to be specified under the National Disability Insurance Scheme
rules.
32
Statements of compatibility with human rights
These amendments to the NDIS Act ensure that amounts paid in relation to funding
for supports are inalienable. They also seek to prevent third parties from seeking to
recover debts by obtaining a garnishee order over bank accounts kept for the
purpose of managing funding for supports under the National Disability Insurance
Scheme. The amendments therefore extend protection to participants to ensure that
the funding for the reasonable and necessary supports under their plans can only be
used that purpose.
Conclusion
These amendments are compatible with human rights and extend protections to
persons with disabilities that have been afforded by the National Disability Insurance
Scheme.
Minister for Social Services, the Hon Kevin Andrews MP
33