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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SECURITY AND VETERANS' ENTITLEMENTS AMENDMENT
(COMMONWEALTH SENIORS HEALTH CARD) BILL 2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Families, Housing, Community Services and Indigenous Affairs,
the Hon Jenny Macklin MP)
SOCIAL SECURITY AND VETERANS' ENTITLEMENTS AMENDMENT
(COMMONWEALTH SENIORS HEALTH CARD) BILL 2009
OUTLINE
This bill implements a 2008 Budget measure relating to the adjusted taxable
income test for the Commonwealth seniors health card.
The measure will provide for adjusted taxable income for this purpose to
include income from a superannuation stream with a taxed source (gross
superannuation) and income salary sacrificed to superannuation.
The measure will ensure that income received by seniors is treated in a
similar way, will align with the age pension the treatment of income salary
sacrificed to superannuation, and will ensure that the income test is
applied to all cardholders consistently.
The change will apply to the Commonwealth seniors health card issued under
either the Social Security Act 1991 or the Veterans' Entitlements Act 1986.
Financial impact statement
Total resourcing - all portfolios:
|2008-09 |$12.3 m |
|2009-10 |- $30.2 m |
|2010-11 |- $32.3 m |
|2011-12 |- $34.6 m |
SOCIAL SECURITY AND VETERANS' ENTITLEMENTS AMENDMENT
(COMMONWEALTH SENIORS HEALTH CARD) BILL 2009
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, the Social Security
and Veterans' Entitlements Amendment (Commonwealth Seniors Health Card)
Act 2009.
Clause 2 provides a table that sets out the commencement dates of the
various provisions in the Act.
Clause 3 provides that each Act that is specified in a Schedule is amended
or repealed as set out in that Schedule.
This explanatory memorandum uses the following abbreviations:
. 'Amending Tax Act' means the Tax Laws Amendment (2009 Measures No. 1)
Act 2009;
. 'Income Tax Assessment Act' means the Income Tax Assessment Act 1997;
. 'Social Security Act' means the Social Security Act 1991; and
. 'Veterans' Entitlements Act' means the Veterans' Entitlements
Act 1986.
Schedule 1 - Amendments
Summary
This Schedule implements a 2008 Budget measure relating to the adjusted
taxable income test for the Commonwealth seniors health card.
The measure will provide for adjusted taxable income for this purpose to
include income from a superannuation stream with a taxed source (gross
superannuation) and income salary sacrificed to superannuation.
The measure will ensure that income received by seniors is treated in a
similar way, will align with the age pension the treatment of income salary
sacrificed to superannuation, and will ensure that the income test is
applied to all cardholders consistently.
The change will apply to the Commonwealth seniors health card issued under
either the Social Security Act or the Veterans' Entitlements Act.
The Schedule also ensures that these amendments, and amendments to the same
provisions proposed in the Tax Laws Amendment (2009 Measures No. 1) Bill
2009, will be implemented regardless of which bill is enacted first.
Background
The measures proposed by this Schedule were announced in the 2008 Budget
and are part of a wider measure to make various tax and transfer programs
fairer and better targeted to those in need of government assistance.
The current definition of adjusted taxable income in section 1071 of the
Social Security Act and section 118ZZA of the Veterans Entitlements Act
does not include income from a superannuation stream with a taxed source
(gross superannuation), nor income salary sacrificed to superannuation.
The new definition of adjusted taxable income will include income received
by claimants that is classified in the Income Tax Assessment Act as non-
assessable and non-exempt income which is not otherwise included in a
person's taxable income.
The main amendments, made by Part 1, commence on 1 July 2009.
The amendments in Part 2 commence on the later of:
. 1 July 2009; or
. the date Schedule 3 to the Amending Tax Act commences.
The amendments in Division 1 of Part 3 commence on 1 July 2009. However,
if Schedule 3 to the Amending Tax Act commences on or before 1 July 2009,
then the amendments in Division 1 do not commence at all.
The amendments in Division 2 of Part 3 commence immediately before the
commencement of Schedule 3 to the Amending Tax Act. However, if that
Schedule commences on or before 1 July 2009, then the amendments in
Division 2 do not commence at all.
Explanation of the changes
Part 1 - Main amendments
Amendments to the Social Security Act
Item 1 adds new paragraphs (e) and (f) to point 1071-3 of the Social
Security Act to expand the types of income to be included in a person's
adjusted taxable income for a tax year, for the purposes of determining
their qualification for the seniors health card.
New paragraph (e) provides that the total amounts of income received by a
person that are neither assessable income nor exempt income for that tax
year under Subdivision 301-B or section 302-65, 302-70 or 302-80 of the
Income Tax Assessment Act are to be included in a person's adjusted taxable
income. Those provisions relate to superannuation benefits that are tax-
free.
New paragraph (f) provides that a person's reportable superannuation
contributions for that tax year are to be included in their adjusted
taxable income.
Item 2 inserts a new note 5 at the end of point 1071-3, signposting the
definition of reportable superannuation contributions in subsection 10A(2)
of the Social Security Act (inserted by item 7 or 10).
Item 3 provides that the additions to the definition of adjusted taxable
income made by item 1 are to apply to claims made on or after, and to
grants made before, on or after, the commencement of item 1, but are not to
affect a person's qualification for a card before that commencement.
Therefore, there will be no adverse retrospective effect on a person from
these amendments.
Amendments to the Veterans' Entitlements Act
Item 4 adds new paragraphs (e) and (f) to point 118ZZA-3 of the Veterans'
Entitlements Act to expand the types of income to be included in a person's
adjusted taxable income for a tax year, for the purposes of determining
their qualification for the seniors health card.
New paragraph (e) provides that the total amounts of income received by a
person that are neither assessable income nor exempt income for that tax
year under Subdivision 301-B or section 302-65, 302-70 or 302-80 of the
Income Tax Assessment Act are to be included in a person's adjusted taxable
income. Those provisions relate to superannuation benefits that are tax-
free.
New paragraph (f) provides that a person's reportable superannuation
contributions for that tax year are to be included in their adjusted
taxable income.
Item 5 inserts a new note 5 at the end of point 118ZZA-3, signposting the
definition of reportable superannuation contributions in subsection 5PB(1)
of the Veterans' Entitlements Act (inserted by item 8 or 13).
Item 6 provides that the additions to the definition of adjusted taxable
income made by item 4 are to apply to claims made on or after, and to
grants made before, on or after, the commencement of item 4, but are not to
affect a person's qualification for a card before that commencement.
Therefore, there will be no adverse retrospective effect on a person from
these amendments.
Part 2 - Amendments commencing on or after the tax amendments
Amendments to the Social Security Act
Item 7 inserts a definition of reportable superannuation contributions into
subsection 10A(2) of the Social Security Act by reference to the definition
to be contained in the Income Tax Assessment Act after the commencement of
the Amending Tax Act.
Amendments to the Veterans' Entitlements Act
Item 8 inserts a definition of reportable superannuation contributions into
subsection 5PB(1) of the Veterans' Entitlements Act by reference to the
definition to be contained in the Income Tax Assessment Act after the
commencement of the Amending Tax Act.
Part 3 - Contingent amendments
Division 1 - Amendments inserting definitions
Amendments to the Social Security Act
Item 9 inserts a definition of reportable employer superannuation
contribution into subsection 10A(2) of the Social Security Act by reference
to the new section 10AA (inserted by item 11).
Item 10 inserts a definition of reportable superannuation contributions
into subsection 10A(2). The definition is in the same terms as those in
the Amending Tax Act and is included in this Schedule to ensure it is
inserted into the Social Security Act in the event the Amending Tax Act
does not commence before 1 July 2009.
Reportable superannuation contributions are defined as the sum of an
individual's reportable employer superannuation contributions for the tax
year and the total amount of personal deductions under Subdivision 290-C of
the Income Tax Assessment Act.
The definition of reportable superannuation contributions incorporates the
amounts of superannuation payments that individuals may receive in excess
of amounts required to be paid under the Superannuation Guarantee Scheme
and any amounts 'salary sacrificed' into the individual's superannuation
fund.
Item 11 inserts a new section 10AA into Part 1.2 of the Social Security
Act, creating a definition of a reportable employer superannuation
contribution. The definition is in the same terms as those in the Amending
Tax Act and is included in this item to ensure the definition is inserted
into the Social Security Act in the event the Amending Tax Act does not
commence before 1 July 2009.
The definition of a reportable employer superannuation contribution, in the
new subsection 10AA(1), is an amount contributed by an employer or an
associate of the employer, to a superannuation fund or a retirement savings
account for the benefit of an individual where either or both of the
following apply:
. the individual has or had, or might reasonably be expected to have or
have had, the ability to influence the amount;
. the individual has or has had, or might reasonably be expected to have
or have had, the capacity to influence the way the amount is
contributed so as to reduce their assessable income.
Subsection 10AA(2) provides that an amount is not a reportable employer
contribution to the extent that it is included in the individual's
assessable income for the tax year.
Subsection 10AA(3) provides that the term employer is given the broad
definition set out in section 12 of the Superannuation Guarantee
(Administration) Act 1992 as if subsection 12(11) had not been enacted.
Subsection 10AA(4) provides that the existence of a dependant, as defined
in the Superannuation Industry (Supervision) Act 1993, entitled to receive
a payment from the superannuation fund upon the death of the person
contributing, should not be considered when determining whether a person
has reportable employer superannuation contributions.
Subsection 10AA( 5) provides that a term used in section 10AA has the same
meaning provided for in the Income Tax Assessment Act.
Amendments to the Veterans' Entitlements Act
Item 12 inserts a definition of reportable employer superannuation
contribution into subsection 5PB(1) of the Veterans Entitlements Act by
reference to the new section 5PBA (inserted by item 14).
Item 13 inserts a definition of reportable superannuation contributions
into subsection 5PB(1). The definition is in the same terms as those in
the Amending Tax Act and is included in this Schedule to ensure it is
inserted into the Veterans' Entitlements Act in the event the Amending Tax
Act does not commence before 1 July 2009.
Reportable superannuation contributions are defined as the sum of an
individual's reportable employer superannuation contributions for the tax
year and the total amount of personal deductions under Subdivision 290-C of
the Income Tax Assessment Act.
The definition of reportable superannuation contributions incorporates the
amounts of superannuation payments that individuals may receive in excess
of amounts required to be paid under the Superannuation Guarantee Scheme
and any amounts 'salary sacrificed' into the individual's superannuation
fund.
Item 14 inserts a new section 5PBA into the Veterans' Entitlements Act,
creating a definition of a reportable employer superannuation contribution.
The definition is in the same terms as those proposed in the Amending Tax
Act and is included in this item to ensure the definition is inserted into
the Veterans' Entitlements Act in the event the Amending Tax Act does not
commence before 1 July 2009.
The definition of a reportable employer superannuation contribution, in the
new subsection 5PBA(1), is an amount contributed by an employer or an
associate of the employer, to a superannuation fund or a retirement savings
account for the benefit of an individual where either or both of the
following apply:
. the individual has or had, or might reasonably be expected to have or
have had, the ability to influence the amount;
. the individual has or has had, or might reasonably be expected to have
or have had, the capacity to influence the way the amount is
contributed so as to reduce their assessable income.
Subsection 5PBA(2) provides that an amount is not a reportable employer
contribution to the extent that it is included in the individual's
assessable income for the tax year.
Subsection 5PBA(3) provides that the term employer is given the broad
definition set out in section 12 of the Superannuation Guarantee
(Administration) Act 1992 as if subsection 12(11) had not been enacted.
Subsection 5PBA(4) provides that the existence of a dependant, as defined
in the Superannuation Industry (Supervision) Act 1993, entitled to receive
a payment from the superannuation fund upon the death of the person
contributing, should not be considered when determining whether a person
has reportable employer superannuation contributions.
Subsection 5PBA(5) provides that a term used in this section has the same
meaning provided for in the Income Tax Assessment Act.
Division 2 - Amendments repealing definitions
Amendments to the Social Security Act
Item 15 repeals the definition of reportable employer superannuation
contribution inserted by item 9.
Item 16 repeals the definition of reportable superannuation contributions
inserted by item 10.
Item 17 repeals new section 10AA, inserted by item 11.
All three items have effect from immediately before the commencement of
Schedule 3 to the Amending Tax Act. However, if that Schedule commences on
or before 1 July 2009, then the items do not commence at all.
Amendments to the Veterans' Entitlements Act
Item 18 repeals the definition of reportable employer superannuation
contribution inserted by item 12.
Item 19 repeals the definition of reportable superannuation contributions
inserted by item 13.
Item 20 repeals new section 5PBA, inserted by item 14.
All three items have effect from immediately before the commencement of
Schedule 3 to the Amending Tax Act. However, if that Schedule commences on
or before 1 July 2009, then the items do not commence at all.