Explanatory Memorandum
(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Jocelyn Newman)PRELIMINARY
Clause 1 of the Assistance for Carers Legislation Amendment Bill 1999 sets out how the amending Act will be cited.
Clause 2 specifies when the various items and Schedules of the Act are to commence.
Clause 3 provides that each Act that is specified in a Schedule to the Assistance for Carers Legislation Amendment Bill 1999 is amended in accordance with the applicable items in those Schedules.
Schedule 1-Carer payment
1. Summary of proposed changes
This Schedule is divided into four parts. These are as follows:
Part 1 amends the Social Security Act 1991 (the Social Security Act) to introduce a new method of assessing an adult's disability-the Adult Disability Assessment Tool. It also extends qualification for carer payment to carers of disabled adults who have children under 16, where the carer provides care for both the adult and the child and the child is disabled or is aged under 6. Amendments are also made to allow a person to qualify for carer payment for a period of up to 63 days in a calendar year whilst any person being cared for is in hospital, and the carer participates in the hospital care. The amendments also extend qualification for carer payment bereavement payments on the death of a partner who was receiving a social security benefit, and apply the full carer payment qualification requirements in cases where the care receivers are 2 or more disabled children.
Parts 2 to 4 include amendments to the Income Tax Assessment Act 1997 (the 1997 Income Tax Assessment Act). Part 4 makes amendments that are consequential on the introduction of the measures specified above. Part 3 makes amendments that are consequential on the introduction, from 1 July 1998, of a new category of care receivers, 2 or more disabled children. Part 2 makes technical amendments correcting a drafting error relating to carer payment.
Each of these parts is dealt with separately below.
Part 2-Technical amendments of the income tax law commencing on 1 July 1997
This Part makes minor technical amendments to a number of provisions in the Income Tax Assessment Act 1936 (the 1936 Income Tax Assessment Act) and the 1997 Income Tax Assessment Act.
Item 122 rectifies a technical error in section 52-10 of the 1997 Income Tax Assessment Act (section 52-10 was introduced by the Tax Law Improvement Act 1997 with effect from 1 July 1997). Section 52-10 lists all the payments under the Social Security Act that are wholly or partly exempt from income tax and deals with 4 different cases. Case 4 in this section describes the tax treatment of the lump sum payments paid because of death of a carer payment recipient's partner. Table items 4.1 to 4.4 in section 52-10, dealing with carer payment, incorrectly include in Case 4 references to section 236A which provides for lump sum payments paid because of the death of the person being cared for who was not the carer's partner. Item 122 amends Table items 4.1 to 4.4 in section 52-10 to remove the reference to section 236A from Case 4 and to insert that reference in Case 3 dealing with payments received because of the death of a person (other than the carer payment recipient's partner).
A number of provisions in the 1936 Income Tax Assessment Act and the 1997 Income Tax Assessment Act contain references to 'carer pension'. These references are incorrect as the name of that pension was changed, from 1 July 1997, to 'carer payment' (as a result of amendments made by Schedule 2 of the Social Security Legislation Amendment (Budget and Other Measures) Act 1996 ). Items 123 to 127 make the necessary corrections. Items 123 to 125 amend section 52-15, subsection 52-25(1) and section 52-40 of the Income Tax Assessment Act to replace the references to carer pension with references to carer payment and items 126 and 127 make similar amendments to paragraph 202EA(5)(d) and subparagraph 202EB(5)(a)(iv) of the 1936 Income Tax Assessment Act.
Item 128 is an application provision that provides that the amendments made by this Part apply to assessments for the 1997-98 income year and later years.
The changes made by Part 2 of Schedule 1 are taken to have commenced immediately after Schedule 1 to the Tax Law Improvement Act 1997 (which commenced on 1 July 1997).
Part 3-Amendments of the income tax law relating to carer payment for disabled children
Until 1 July 1998, carer payment could only be paid to a carer of a 'severely handicapped person'. The 1997 Income Tax Assessment Act makes specific reference to this category of care receivers.
From 1 July 1998, two new categories of carer payment recipients were introduced: a carer for a profoundly disabled child and a carer for 2 or more disabled children. Due to an oversight, the necessary consequential amendments to the taxation legislation for the purposes of the new categories of recipients were not made. As the relevant 1997 Income Tax Assessment Act provisions exempting carer payment amounts from income tax specifically refer to 'severely handicapped person', those provision do not apply to carer payment amounts when the person cared for is a disabled child. As a result, in certain situations, carer payment amounts paid in respect of disabled children are taxable while carer payment amounts paid in respect of a disabled adult are exempt). Amendments made by Part 3 of Schedule 1 rectify the situation by amending the relevant provisions, with effect from 1 July 1998, to ensure that the taxation treatment that applies to carer payment paid in respect of the 'severely handicapped person' is extended to carer payment paid for the new categories of care receivers.
Item 129 amends Table items 4.2 to 4.4 in section 52-10 of the 1997 Income Tax Assessment Act. The amendment to item 4.2 is of a stylistic nature. Item 4.3 currently provides for the taxation treatment of carer payment that is paid when both the carer payment recipient and the severely handicapped person are under pension age. As a result of the inclusion in item 4.3 of the references to the two new categories of care receivers, the taxation treatment specified in item 4.3 will apply to carer payment paid for the profoundly disabled child and for 2 or more disabled children. Item 4.4 currently provides for the taxation treatment of carer payment that is paid when the recipient of carer payment is under pension age and the severely handicapped person has died. As a result of the inclusion in item 4.4 of the references to the two new categories of care receivers, the taxation treatment specified in this item will be extended to carer payment paid for the profoundly disabled child or for 2 or more disabled children.
Items 130, 131 and 132 amend section 52-35 that exempt from tax lump sum payments made because of the death of the person cared for. To extend the operation of this provision to the two new categories of care receivers, those items insert references to 'profoundly disabled child' and 'disabled child' or '2 or more disabled children' (as appropriate) alongside the existing references to 'severely handicapped person'.
Item 133 is an application provision providing that the amendments made by this Part apply to assessments for the 1998-99 income year.
The changes made by Part 3 of Schedule 1 are taken to have commenced on 1 July 1998.
Part 4-Amendments of the income tax law relating to carer payment for disabled adult and dependent child
From 1 July 1999 another category of carer payment recipients is introduced: a carer who cares for an adult with a disability who has a child (amendments introducing this category of carer payment recipients are made by Part 1 of Schedule 1 ). Part 4 of Schedule 1 makes amendments to the 1997 Income Tax Assessment Act to ensure that the taxation treatment of carer payment paid to the new category of recipients is aligned with the taxation treatment of carer payment paid to other categories of carer payment recipients.
Item 134 amends Table items 4.2 to 4.4 in section 52-10 of the 1997 Income Tax Assessment Act providing for the taxation treatment of carer payment amounts. The specific references in those items to the existing categories of care receivers, that is, 'severely handicapped person', 'profoundly disabled child' and '2 or more disabled children' are amended to refer to 'care receiver' or 'care receivers' (as the case may be). These amendments ensure that the taxation treatment of carer payment of the new category of carer payment recipients who care for a disabled adult with a child is the same as the taxation treatment of carer payment paid to other carer payment recipients.
Items 135 and 136 make similar amendments to subsections 52-35(1) and 52-35(3), respectively, that exempt from tax lump sum payments made because of the death of the person cared for. The amendments extend the operation of this provision to the new category of carer payment recipients.
Item 137 is an application provision providing that the amendments made by this Part apply to assessments for the 1999-2000 income year and later years.
The changes made by Part 4 of Schedule 1 commence immediately after the commencement of Schedule 1 to the Payment Processing Legislation Amendment (Social Security and Veterans' Entitlements) Act 1998 (which commences on 1 July 1999).
Part 4-Consequential amendments of the income tax Acts
Part 4 of Schedule 2 makes amendments to the 1997 Income Tax Assessment Act and the 1936 Income Tax Assessment Act that are consequential on the introduction of carer allowance from 1 July 1999 (amendments introducing carer allowance are made in Part 1 of Schedule 2 ) and the repeal of child disability allowance and domiciliary nursing care benefit.
Currently, both child disability allowance (paid for children under the age of 16 or 16 to 21 if they are in full-time education) and domiciliary nursing care benefit (paid for persons aged 16 or more) are fully exempt from income tax (see Table item 5.1 in section 52-10 and Table item 2 in section 53-10 of the 1997 Income Tax Assessment Act). Carer allowance will be paid for children (under the age of 16) and for adults (aged 16 or more). It will be also fully exempt from tax.
Items 50 to 55 amend the provisions of the 1997 Income Tax Assessment Act. Item 50 omits the reference to 'domiciliary nursing care benefit' from section 11-15 (Ordinary or statutory income which is exempt only if it is derived by certain entities). Item 51 inserts in section 52-10, dealing with social security payments that are fully or partly exempt from income tax, new Table item 3A.1 relating to carer allowance. As a result of this amendment, carer allowance (including lump sum payments paid as a result of death of the child cared for) will be fully exempt from income tax. Item 52 repeals Table item 5.1 in section 52-10 relating to child disability allowance.
Item 53 inserts new Table item 3A relating to carer allowance in section 52-40 which lists the provisions of the Social Security Act under which ordinary payments and bereavement payments are made that are wholly or partly exempt from income tax. Item 54 omits from this section item 5 relating to child disability allowance.
Item 55 repeals Table item 2 relating to domiciliary nursing care benefit from section 53-10, which deals with the exemption of various types of payments.
Items 56 to 62 amend the 1936 Income Tax Assessment Act.
Under section 102AC (Income of certain children-Persons to whom division applies), a person who is less than 18 years of age is not a prescribed person in relation to a year of income if in respect of the person child disability allowance was payable for a period that included the last day of the year of income (subparagraph 102AC(2)(c)((i) refers), or if the Commissioner has received a certificate issued by a legally qualified medical practitioner that the person is a disabled child within the meaning of Part 2.19 of the Social Security Act (sub-subparagraph 102AC(2)(d)(i)(A) refers).
To preserve the operation of this provision in respect of the persons who are younger than 18 years of age, item 56 substitutes the child disability allowance reference in subparagraph 102AC(2)(c)(i) with a reference to 'carer allowance' and item 57 adds in sub-subparagraph 102AC(2)(d)(i)(A) a reference to a 'disabled adult' alongside the reference to a 'disabled child'.
Under subsection 159J(6) (Concessional rebates-'separate net income' definition), the definition of 'separate net income' does not include child disability allowance or domiciliary nursing care benefit amounts (paragraph (a) of the definition). Items 58 to 60 omit the child disability allowance and domiciliary nursing care benefit references and substitute them with a reference to carer allowance.
Paragraph (b) of the definition of 'separate net income' excludes from the definition amounts of child disability allowance payable to dependants in class 3 or 4 of the table in subsection 159J(2), that is, to students under 16 years of age. Item 61 substitutes the child disability allowance reference with a reference to carer allowance (students under 16 will receive the child stream of carer allowance).
Subsection 159P(1) (Rebate for medical expenses) provides that certain medical expenses are treated as rebatable amounts. Subsection 159P(2) specifies that the domiciliary nursing care benefit amounts are not medical expenses amounts. Such a clarification of the nature of domiciliary nursing care benefit was needed as under the domiciliary nursing care benefit regime the qualification for that payment depends on a person being assessed as needing the level of care required for admission to a nursing home and on the certification that such a level of care is provided. With domiciliary nursing care benefit being absorbed by carer allowance in the family and community services portfolio and afforded the same taxation treatment as other social security payments, subsection 159P(2) will cease to serve any useful purpose. Item 62 repeals this subsection.
Item 63 is an application provision. It provides that amendments made by this Part apply to assessments for the 1999-2000 income year and later income years.
Item 64 introduces application provisions that provide for the continuation of the references to the old allowance (child disability allowance) and the old benefit (domiciliary nursing care benefit) after 1 July 1999 for the purposes of the 1997 Income Tax Assessment Act and the 1936 Income Tax Assessment Act provisions specified by this item.
Amendments made by Part 4 of Schedule 2 commence immediately after the commencement of Schedule 1 to the Payment Processing Legislation Amendment (Social Security and Veterans' Entitlements) Act 1998 (which commences on 1 July 1999).