House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Family and Community Services, Senator the Hon. Jocelyn Newman)

Schedule 2 - Amendment of the A New Tax System (Family Assistance) (Administration) Act 1999 - Part 1 - Amendments relating to family tax benefit, maternity allowance and maternity immunisation allowance

Overview of Part 1 of Schedule 2

Part 1 of Schedule 2 amends the payment rules for FTB contained in Part 3 of the FA Admin Act. These amendments can be grouped as follows:

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payment into bank account;

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requirement to provide a tax file number;

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variation of entitlement determination where unreasonable estimate provided;

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variation of entitlement determination pending determination of claim for social security pension or benefit etc;

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variation of entitlement determination to reflect revised estimate of adjusted taxable income;

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variation of entitlement determination to reflect revised estimate of maintenance income; and

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other amendments.

Explanation of amendments

Payment into bank account

The FA Admin Act provides for the payment of FTB, maternity allowance and maternity immunisation allowance at such times and in such manner as the Secretary considers appropriate. This flexible approach is complemented by provisions that allow timing and manner of payments to be more precisely described in regulations.

Part 1 of Schedule 2 to this Bill amends the FA Admin Act to repeal the regulation making powers referred to above. Instead, new provisions are inserted that ensure that the principal manner of payment of FTB by instalment is into a bank account nominated by the customer. This is consistent with the approach taken under the social security law. In relation to other payment options, flexible payment arrangements would be retained.

Payment of FTB by instalment

Section 23 of the FA Admin Act provides for the payment of FTB by instalment to a claimant. Subsection 23(1) gives the Secretary a discretion to determine the timing and manner of payment of instalments of FTB. Subsection 23(5) enables the timing and manner of making payments to be prescribed in regulations.

Items 19, 20 and 21 amend section 23 of the FA Admin Act. Subsection 23(1) is amended by item 19 to ensure that the principal method of payment of FTB by instalment is to the credit of a bank account nominated and maintained by the claimant. Item 20 amends section 23(4) to enable the Secretary to determine the timing and manner of payment of instalments of FTB to a third party on behalf of the claimant. Item 21 repeals the existing regulation making power in subsection 23(5) and replaces it with a provision facilitating the payment of FTB by instalments in a manner other than into the claimant's bank account.

If direct credit is to be the predominant method of payment of FTB by instalment, further supporting provisions are required.

New section 7A, inserted by item 4 , requires a person claiming FTB by instalment to nominate a bank account on the claim form or to undertake to provide account details within 28 days after the claim is made. Where it is inappropriate for a claimant to nominate a bank account (for example, where banking facilities are not accessible to the claimant because the claimant lives in a remote locality), the Secretary would have a discretion to waive the requirement.

Item 2 makes a consequential amendment to section 7 of the FA Admin Act to ensure that a claim for FTB by instalment cannot be effective unless the bank account requirement set out in new section 7A is satisfied.

If a claimant undertakes to provide account details within 28 days after the claim is made, the claim is to remain undetermined until those details are provided. If the claimant fails to provide account details within the 28 day period, then the claim is taken not to have been made. These rules are contained in new section 15A, inserted by item 12 .

There will be situations where a claimant is exempt from the requirement to provide bank account details at the time of claim but the Secretary considers it appropriate at a later stage to pay the claimant's fortnightly instalments of FTB into a bank account. The following rules are inserted into the FA Admin Act to cover this situation.

Item 29 inserts a new section 26A into the FA Admin Act. Under new section 26A, if an entitlement determination is in force under which a claimant is entitled to be paid FTB by instalment and the claimant has not nominated a bank account into which the instalment of FTB can be paid, then the Secretary may require the claimant to nominate such an account. The account may be an account maintained by the claimant either alone or jointly or in common with another person. The claimant would then have 28 days within which to comply with the requirement.

The consequences of a failure to comply with the requirement in new section 26A is set out in new section 27A, as inserted by item 35 .

If a claimant fails to comply with the requirement to provide a bank account within the 28 day time limit set out in new section 26A, the Secretary has the option of varying the claimant's entitlement determination so that it has the effect that the claimant is not entitled to be paid FTB from the day after the end of the last instalment period before the variation takes place.

This rule provides the Secretary with the discretion not to apply the sanction where a claimant has a good reason for not complying with the requirement to provide bank account details (eg, where banking facilities are not accessible to the claimant because the claimant lives in a remote locality).

If the Secretary varies the determination under new section 27A and the claimant provides his or her bank account details before the end of the income year following the one in which the variation took effect, then the Secretary must vary the determination to undo the effect described above. Where this happens, the claimant would be entitled to arrears FTB, backdated to the day after the end of the last instalment period before the variation took place.

Items 7, 8 and 42 make consequential amendments to subparagraphs 9(c)(i) and 10(1)(c)(i) and paragraph 31(3)(a) of the FA Admin Act by inserting into each provision a cross reference to the new section 27A.

Payment of FTB for a past period etc

Section 24 of the FA Admin Act provides for the payment of FTB for a past period or by single payment/in substitution because of the death of another individual. This provision also gives the Secretary a discretion to pay the lump sum or single payment at a time and in a manner determined by the Secretary. The power in subsection 24(3) allows regulations to be made prescribing the timing and manner of making payments.

Items 24 and 25 amend section 24 of the FA Admin Act as follows:

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subsection 24(2) is amended to enable the Secretary to determine the time and manner of payment of FTB to a third party on behalf of the claimant; and

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the regulation making power in subsection 24(3) is repealed.

Payment of maternity allowance or maternity immunisation allowance

Subsection 47(1) of the FA Admin Act provides the Secretary with a discretion to pay maternity allowance or maternity immunisation allowance at a time and in a manner determined by the Secretary. The power in subsection 47(3) allows regulations to be made providing for the timing and manner of making payments.

Items 50 and 51 amend section 47 of the FA Admin Act as follows:

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subsection 47(2) is amended to enable the Secretary to determine the time and manner of payment of maternity allowance/maternity immunisation allowance to a third party on behalf of the claimant; and

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the regulation making power in subsection 47(3) is repealed.

Requirement to provide a tax file number

Under section 7 of the FA Admin Act, a claim for FTB by instalment or for a past period is effective only if the tax file number (TFN) requirement in section 8 is satisfied. This requirement does not currently apply to individuals claiming FTB in substitution because of the death of another individual (that is, claims under section 33 of the Family Assistance Act).

TFNs are used in the data-matching process to ensure that correct entitlements are paid. TFNs are also to be used for the purposes of income reconciliation by virtue of new section 154A (inserted by Part 3 of Schedule 2 to this Bill). At the end of each income year, families paid on an estimate of their adjusted taxable income and required to lodge income tax returns will have their actual income, as assessed by the Commissioner of Taxation, reconciled with the income they estimated. This is the process of income reconciliation. The purpose of reconciliation is to ensure that correct family assistance entitlements have been paid for a particular income year.

Where a claim is made under section 33 of the Family Assistance Act, the income details of the deceased individual and his or her partner or partners during the relevant period are relevant in working out the FTB entitlement. Accordingly, item 6 inserts a new section 8A into the FA Admin Act that imposes a TFN requirement on claims for FTB made in substitution because of the death of another individual (that is, claims under section 33 of the Family Assistance Act).

The TFN requirement outlined in new section 8A of the FA Admin Act requires the provision of one of the following statements.

First, a claimant may provide a statement of a TFN substitution person's TFN.

A definition of "TFN substitution person" is inserted into subsection 3(1) of the FA Admin Act by item 67 . A "TFN substitution person" is defined as the deceased individual referred to in section 33 of the Family Assistance Act and any partner or partners of the deceased individual during the period in respect of which payment is claimed.

Second, a statement can be provided by the deceased individual's partner that he or she:

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has a TFN but does not know what it is; and

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has asked the Commissioner of Taxation what the TFN is; and

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authorises the Commissioner to tell the Secretary the TFN or that the person does not have a FTN.

Third, a statement can be provided by the deceased individual's partner that he or she:

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has applied for a TFN; and

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authorises the Commissioner of Taxation to tell the Secretary the number if the TFN is issued or if the application is refused or withdrawn.

These statements must be provided to the Secretary with the claim. Otherwise the claim is not effective.

The Secretary may exempt a claimant from the TFN requirement in the following circumstances:

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in relation to the TFN of a deceased individual or partner, where the claimant does not know the TFN;

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in relation to the partner of the deceased individual, where the claimant cannot obtain a statement by the partner as described above.

The requirements outlined above are similar to the TFN requirement in section 8 of the FA Admin Act that applies to individuals who claim FTB by instalment or for a past period.

Item 3 makes a consequential amendment to subsection 7(2) of the FA Admin Act to ensure that a claim for payment of FTB in substitution because of the death of another individual is not effective unless the TFN requirement set out in new section 8A is sat

If a claimant provides the relevant TFNs at the time of claim, then the claim can be determined. Under section 15 of the FA Admin Act, however, if an individual provides a statement under subsection 8(4) or 8(5), the Secretary can only determine the claim in prescribed circumstances.

Item 12 remakes section 15 so that it also applies to a statement made by a TFN substitution person under subsections 8A(4) and 8A(5). The prescribed circumstances outlined in existing section 15 remain unaltered.

The effect is as follows.

If a statement under subsection 8(4) or 8A(4) is provided, the claim can only be determined if:

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within 28 days of the claim being made, the Commissioner of Taxation tells the Secretary the individual's TFN; or

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28 days passes without the Commissioner telling the Secretary that the person does not have a TFN.

If a statement under subsection 8(5) or 8A(5) is provided, the claim can only be determined if:

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within 28 days of the claim being made, the Commissioner of Taxation tells the Secretary the individual's TFN; or

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28 days passes without the Commissioner telling the Secretary that the individual has not applied for a TFN or that the application has been refused or withdrawn.

Variation of determination where unreasonable estimate provided

Section 20 of the FA Admin Act enables the Secretary to use an estimate of adjusted taxable income provided by the claimant in determining the claimant's rate of FTB.

If, as part of the claims process, the claimant does not provide the Secretary with a reasonable estimate, the consequence is ultimately a determination under section 19 of the FA Admin Act (that the claimant is not entitled to FTB). This is because the Secretary does not have sufficient information to determine the individual's eligibility for, or rate of, FTB.

A claimant who is receiving instalments of FTB can provide a new estimate of their adjusted taxable income at any time. In some circumstances, the claimant has an obligation to notify of changes in income, ie, where the claimant's rate would decrease as a result of the change (see section 25 of the FA Admin Act). Furthermore, the Secretary can request the provision of a new estimate under Division 1 of Part 6 of the FA Admin Act (income is relevant in determining a claimant's rate of FTB).

In each of these situations, the claimant may provide the Secretary with an estimate that the Secretary does not consider reasonable. If this happens, there is no immediate action that can be taken by the Secretary in relation to the claimant's ongoing instalment payments. Payments would need to continue on the basis of the previous estimate even though it is no longer appropriate. It would only be at the end of the income year when income reconciliation occurs that the appropriate top up would be paid or debt raised.

Item 36 therefore inserts new section 28A to deal with the situation where a claimant, in respect of whom an entitlement determination is in force, provides an unreasonable estimate of adjusted taxable income to the Secretary.

Where this happens, the Secretary must vary the determination so that it has the effect that the claimant is not entitled to be paid FTB for any day after the end of the last instalment period before the variation takes place.

If a determination is so varied and either:

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the claimant provides a reasonable estimate of adjusted taxable income by the end of the income year following the one in which the variation took effect; or

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the Secretary finds out the actual amount needed to calculate the claimant's rate of FTB (whether from the claimant or someone else) by the end of the income year following the one in which the variation took effect,

then the Secretary must vary the determination to undo the effect described above.

An example where the second dot point might apply would be where, as part of the reconciliation process, the Secretary obtains information about the claimant's actual adjusted taxable income for the relevant income year from the Commissioner of Taxation.

Item 42 makes a consequential amendment to paragraph section 31(3)(a) of the FA Admin Act to ensure that a variation determination under new section 28A is not overridden by a determination under section 31.

Items 7 and 8 insert a reference to new subsection 28A(2) into subparagraphs 9(c)(i) and 10(1)(c)(i) of the FA Admin Act. These amendments ensure that a new claim cannot be made while a variation determination under the new section 28A is in force.

Variation of instalment determination pending determination of claim for a social security pension or benefit, a payment under a Labour Market Program or a prescribed educational scheme

Variation of instalment determination pending determination of claim for a social security pension or benefit, a payment under a Labour Market Program or a prescribed educational scheme

Under the eligibility rules for FTB, an individual or approved care organisation cannot be eligible for FTB in respect of a child if the child, or someone on behalf of the child, is receiving:

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a social security pension; or

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a social security benefit; or

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payments under a program included in the programs known as labour market programs; or

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payments under a prescribed educational scheme (if the child is aged 16 or more).

These rules are contained in subsections 22A(1) and 35(1) of the Family Assistance Act. "Receiving", in relation to a social security payment, is defined in section 3 of the Family Assistance Act as having the same meaning as in the Social Security Act (that is, a person is taken to have been receiving a payment from the first day on which it was payable even if an instalment is not paid until a later day).

Situations will arise where a claim is made for one of the payments listed above, the claim is determined and payments are backdated. Where this happens, payment of FTB would continue unaffected until such time as the claim is determined and the arrears payment made. Once arrears are paid, an FTB debt may arise. This is because FTB was paid in respect of a child who was, at the same time, "receiving" a listed payment.

This issue is addressed in new section 28B (inserted by item 36 ). New section 28B applies where:

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a determination is in force under which the claimant is entitled to be paid FTB by instalment; and

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the individual is an FTB child of the claimant or an individual in respect of whom an approved care organisation is the claimant; and

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the individual makes a claim for a social security pension, a social security benefit, payments under a program included in the programs known as Labour Market Programs or, if the individual is aged 16 or more, payments under a prescribed educational scheme.

Where these conditions are present, the Secretary must vary the determination as follows:

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where the individual is the claimant's only FTB child, the determination must be varied so that it has the effect that the claimant is not entitled to be paid FTB from the day after the end of the claimant's last instalment period before the variation or from a later day determined by the Secretary; or

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where the individual is not the claimant's only FTB child, the determination must be varied so that the daily rate of FTB for which the claimant is entitled under the determination does not take into account the child who has made a claim for any of the listed payments - this variation would have effect from the day after the end of the claimant's last instalment period before the variation or from a later day determined by the Secretary.

A later date might be specified where it is known or expected that the claim could only be granted from the later date, such as the individual turning 16.

If the individual's claim for any of the listed payments is rejected, withdrawn or taken not to have been made, then the Secretary must vary the determination to undo the effect mentioned above.

In this way, a debt cannot arise in the circumstance described above.

Item 42 makes a consequential amendment to paragraph section 31(3)(a) of the FA Admin Act to ensure that a variation determination under the new section 28B is not overridden by a determination under section 31.

Items 7 and 8 insert a reference to new subsections 28B(2) and (3) into subparagraphs 9(c)(i) and 10(1)(c)(i) of the FA Admin Act. These amendments ensure that a new claim cannot be made while a variation determination under new section 28A is in force.

Variation of entitlement determination to reflect revised estimate of adjusted taxable income

Section 20 of the FA Admin Act allows the Secretary to use an estimate of adjusted taxable income in calculating an individual's rate of FTB.

The use of an estimate to determine the rate of FTB will be of particular relevance where an individual claims FTB by instalment. Where such a claim is made, the individual will not know his or her actual taxable income for the current year.

At the end of the income year when actual taxable income is known, the individual's entitlement is reviewed on the basis of the individual's adjusted taxable income for the relevant income year and the relevant adjustments made. This process is known as income reconciliation.

A number of issues arise in relation to the application of section 31 of the FA Admin Act where a revised estimate is provided to the Secretary. First, there is some doubt about whether the giving of a revised estimate is a "change in the claimant's circumstances" for the purposes of invoking section 31. More importantly, when should such a variation take effect?

Where a revised estimate is given (and the estimate is reasonable), the intention is that the individual's rate of FTB would be varied from the day on which that estimate is provided by the customer rather than the day on which the event that prompted the giving of a revised estimate occurred. This is because payment of FTB, when based on an estimate of adjusted taxable income, is an interim arrangement subject to income reconciliation when the individual's adjusted taxable income is known. Any retrospective adjustments are more appropriately made in the context of income reconciliation.

Accordingly, item 31 inserts a new section 31A that deals specifically with variation of an entitlement determination where a revised estimate of adjusted taxable income is provided.

New section 31A applies where:

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a determination is in force under which the claimant is entitled to be paid FTB by instalment; and

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the Secretary has determined the claimant's rate of FTB for a particular income year on the basis of an estimate provided by the claimant; and

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the claimant provides the Secretary with a revised estimate before or during the particular income year that is attributable to an event other than an event that also impacts on the individual's eligibility for, or rate of FTB (such as becoming or ceasing to be a member of a couple); and

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the Secretary considers the estimate to be reasonable; and

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if the claimant's rate of FTB were worked out using the revised estimate, a different rate would be applicable.

The third condition described above ensures that if an event has the dual quality of impacting on eligibility for, or rate of FTB and also prompting a revised estimate, then any variation of the entitlement determination is to be considered under section 31 and not new section 31A. The most obvious example of such an event is where an individual becomes, or ceases to be, a member of a couple.

Where these conditions are present, the Secretary must vary the entitlement determination as follows.

Variations with a favourable effect take effect from the day the estimate was provided to the Secretary or, if the estimate relates to a subsequent income year, from the first day in that income year.

The general rule in relation to variations having an adverse effect is that they take effect from the day the estimate was provided to the Secretary. If the day after the last day in the instalment period before the variation takes place occurs after the day on which the estimate was provided, then the variation takes effect from the latter day.

If, however, the estimate relates to a subsequent income year, the variation takes effect from the first day in that income year. If the day after the last day in the instalment period before the variation takes place occurs after the first day in the relevant income year, then the variation takes effect from the latter day.

Subsection 31A(3) provides that the variation of a determination under section 27, 27A, 28, 28A, 28B, 29 or 30 prevails over a variation under new section 31A. This provision mirrors subsection 31(3) of the FA Admin Act.

Item 37 makes consequential amendments to section 31 of the FA Admin Act as a result of the insertion of new section 31A. In particular, new subsection 31(1B) ensures that an event that causes the claimant to provide a revised estimate of adjusted taxable income to the Secretary is not covered under section 31 unless:

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the event also affects the claimant's eligibility for, or rate of, FTB for a reason other than the amount of the claimant's adjusted taxable income; or

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the event is the claimant's becoming, or ceasing to be, a member of a couple.

Variation of entitlement determination to reflect revised estimate of maintenance income

Section 20 of the FA Admin Act, as amended by item 17 , allows the Secretary to determine an individual's rate of FTB on the basis of an estimate by the Secretary of the individual's maintenance income.

For reasons similar to those described above in relation to new section 31A, item 31 inserts a new section 31B to deal specifically with the issue of variation of an entitlement determination where the Secretary revises an estimate of maintenance income.

New section 31B applies where:

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a determination is in force under which the claimant is entitled to be paid FTB by instalment; and

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the Secretary has determined the claimant's rate of FTB for a particular income year on the basis of the Secretary's estimate of the claimant's maintenance income; and

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the Secretary makes a revised estimate of maintenance income before or during the particular income year that is attributable to an event other than an event that also impacts on the individual's eligibility for, or rate of FTB (such as becoming or ceasing to be a member of a couple); and

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if the claimant's rate of FTB were worked out using the revised estimate, a different rate would be applicable.

Where these conditions are present, the Secretary must vary the entitlement determination so that the individual's rate of FTB is determined on the basis of the revised estimate. The variation determination would have effect from a day determined by the Secretary which cannot be earlier than the day after the end of the last instalment period before the variation takes place or the first day of the income year to which the revised estimate relates.

Section 31B also provides that the variation of a determination under section 27, 27A, 28, 28A, 28B, 29 or 30 prevails over a variation under new section 31B. This provision mirrors subsections 31(3) and 31A(3) of the FA Admin Act.

Item 37 makes consequential amendments to section 31 of the FA Admin Act as a result of the insertion of new section 31B. In particular, new subsection 31(1B) ensures that an event that causes the Secretary to revise an estimate of the claimant's maintenance income is not covered under section 31 unless:

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the event also affects the claimant's eligibility for, or rate of, FTB for a reason other than the amount of the claimant's maintenance income; or

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the event is the claimant's becoming, or ceasing to be, a member of a couple.

Other amendments

Definitions

Item 1 amends the definition of "instalment period" so that the concept only relates to FTB. The definition for FTB purposes does not change. There is no "instalment period" for the purposes of CCB.

Determination of claims

Section 13 of the FA Admin Act provides for the determination of claims. When making a determination the Secretary may, under subsection 13(2), take into account only the information obtained during the claim process or that information and any other information or documents available to the Secretary.

Item 10 repeals subsection 13(2). This provision is not necessary. When making a determination, it should be open to the Secretary to consider any relevant information at hand.

Item 9 clarifies that the Secretary must make a determination on a claim in accordance with Subdivision B of Division 1 of Part 3 of the FA Admin Act.

Restriction on determining claim where income tax assessment not made Restriction on determining claim where income tax assessment not made

Section 14 of the FA Admin Act applies to claims for FTB for a past period that occurs in the income year before the one in which the claim is made where the claimant is required to lodge a tax return for that previous income year. The Secretary can defer determining these claims until an assessment is made under the Income Tax Assessment Act 1936 .

As currently worded, section 14 can apply to both individuals and approved care organisations who claim FTB for a previous income year.

Item 11 amends section 14 to make it clear that section 14 only applies to claims by individuals.

Pattern of care eligibility - consequential amendments

Part 1 of Schedule 1 to this Bill amends the pattern of care eligibility rules to allow individuals with a pattern of care in relation to a child to be eligible for FTB for each day in the period of the pattern of care. Each individual with a pattern of care would then be entitled to a percentage of FTB depending on the care arrangements for the child and provided the child is in the care of the individual for10% or more of the period.

This changed approach to pattern of care eligibility has consequences for the FA Admin Act.

Section 16 of the FA Admin Act provides for the determination of claims for FTB by instalment.

Subsection 16(3) applies in situations where there is a pattern of care in relation to a child and the claimant is eligible for FTB for the child on those days when the child is in the claimant's care.

Under the new pattern of care arrangements, a claimant with a pattern of care in relation to a child will be eligible for FTB for each day on which the entitlement determination is in force. Subsection 16(3) therefore becomes redundant and is omitted by item 13 .

Item 13 also recasts subsection 16(2) so that it is no longer subject to the operation of subsection 16(3). A similar consequential amendment is made by item 14 to omit a reference to subsection 16(3) from paragraph 16(4)(a) of the FA Admin Act.

Provision of an estimate of maintenance income

Section 20 of the FA Admin Act operates where information about an amount that is not available is needed to calculate an individual's rate of FTB. In this situation, the Secretary may determine the individual's rate on the basis of a reasonable estimate provided by the individual. For example, section 20 allows an individual to estimate his or her adjusted taxable income for the current income year for the purposes of being paid FTB by instalments. The provision also allows an estimate of maintenance income to be provided by an individual for the purpose of determining the individual's rate of FTB.

Section 20 works well in relation to the provision of an estimate of adjusted taxable income. Most individuals are required to lodge tax returns and have a reasonable grasp of the concept.

In relation to maintenance income, however, it would be unreasonable to expect an individual to estimate his or her maintenance income because of the complexity of the definition of maintenance income and the inherent difficulty in predicting the financial and other arrangements of the other parent of the child. In the case of child support payments made through the Child Support Agency, the Secretary would be able to reassess FTB when the amount of child support varies, without the person needing to advise the change.

Item 15 therefore amends subsection 20(1) so that it only applies where the amount of adjusted taxable income is not available.

Item 17 inserts a new subsection 20(3) that applies where information about the amount of maintenance income is needed to calculate an individual's rate of FTB but the information is not available. In this situation, new subsection 20(3) provides that the Secretary may determine the individual's rate of FTB on the basis of an estimate of maintenance income made by the Secretary.

This approach is consistent with the current administration of the maintenance income test under the social security law.

Provision of estimate when making bereavement claim

Section 33 of the Family Assistance Act deals with situations where, due to the death of an individual (the deceased), there is an unpaid amount of FTB. The unpaid amount can then be claimed by, and paid to, another appropriate individual. Where this happens, the rate of FTB for the relevant period is based on the circumstances of the deceased, including the income of the deceased for the relevant income year. If the deceased has not already provided the Secretary with an estimate of adjusted taxable income for the relevant income year or if the actual income of the deceased individual for the relevant income year is not known, then the individual's rate of FTB cannot be determined. This was not the intended outcome.

Item 16 therefore amends subsection 20(1) so as to enable an individual who claims FTB in substitution because of the death of another individual to provide an estimate of the amount needed to calculate the rate of FTB to which the individual is entitled.

Early payment of instalment of FTB

Under the social security law, where an amount that should be paid on a particular day cannot reasonably be paid on that day, the Secretary may direct the amount to be paid on an earlier day (section 57 of the Social Security (Administration) Act 1999 refers). An example of where this provision may be used is where an instalment payday falls on a public holiday.

Item 22 inserts an equivalent provision into the FA Admin Act.

Amendments consequential upon the relocation of certain debt recovery provisions

Section 23 of the FA Admin Act provides for the payment of FTB by instalments. Section 24 provides for the payment of FTB for a past period or by single payment/in substitution because of the death of another individual. Section 35 deals with the payment of FTB advances, while section 47 provides for the payment of maternity allowance and maternity immunisation allowance. Each of these sections contain a provision that makes it clear that payment is subject to Part 4 (overpayments and debt recovery) and sections 225 to 228 (other debts).

Amendments are made in Part 3 of Schedule 2 to this Bill to relocate sections 227 and 228 of the FA Admin Act into Part 4 of that Act. The reason is that these provisions are debt recovery provisions that allow arrears payments to be set off against a debt in prescribed circumstances.

As a result of the relocation, items 23, 26, 48 and 52 amend the payment provisions listed above to omit the current cross reference in those provisions to sections 227 and 228. The reference to Part 4 would cover setting off provisions.

Secretary to approve manner of notification of changes in circumstances

Under section 25 of the FA Admin Act, a claimant who is entitled to be paid FTB by instalment is required to notify the Secretary of anything that may impact on the claimant's eligibility for, or rate of, FTB. This is to be done in a manner set out in the regulations.

Item 27 amends section 25 so that notification of a change in circumstances occurs in the manner set out in a written notice to the claimant under new section 25A.

New section 25A is inserted by item 28 . The new provision requires the Secretary to approve a manner of notification that a claimant is to use when notifying the Secretary of a change in circumstances. The Secretary must notify the claimant in writing of the approved manner of notification.

In practice, such a power would give the Secretary flexibility about how notification should occur (eg, by phone, in writing, by electronic means etc).

Minor amendments to the FTB TFN provisions

There are a number of technical issues that need to be addressed in relation to the TFN provisions for FTB.

Item 5 makes a minor amendment to paragraph 8(7)(a) of the FA Admin Act to enable the Secretary to determine that the TFN requirement does not apply to a TFN claim person if the person is or was the claimant's partner and the claimant cannot obtain from the person his or her TFN or a relevant statement.

Under section 26 of the FA Admin Act, the Secretary may request the claimant to provide the Secretary with:

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a TFN determination person's TFN (TFN determination person is defined in subsection 3(1) of the FA Admin Act);

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a statement by a TFN determination person that the person has a TFN but does not know what it is and authorising the Commissioner of Taxation to tell the Secretary whether that person has a TFN and, if so, the number; or

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a statement by a TFN determination person that the person has applied for a TFN and authorising the Commissioner of Taxation to tell the Secretary the TFN if issued or if the application has been refused or withdrawn.

The claimant has 28 days in which to comply with the Secretary's request.

Section 27 of the FA Admin Act provides for the variation of an entitlement determination where a claimant fails to comply with the requirements of section 26 of the FA Admin Act.

There will be situations where, in relation to a statement provided by a TFN determination person under subsection 26(3) or (4), the Commissioner will not have responded to the Secretary in the terms contemplated by subparagraphs 27(3)(b)(ii) or 27(4)(b)(ii) within 28 days after the request was made. This may happen where, for example, the person provides the statement 27 days after the request. If the Commissioner tells the Secretary that the person does not have a TFN, has not applied for a TFN or that the application has been refused or withdrawn after the end of the 28 day period, then it is not open to the Secretary to vary the claimant's determination under subsection 27(5) of the FA Admin Act. This result is a loophole in the provisions described above.

Items 30 and 31 amend subsections 27(3) and (4) of the FA Admin Act so that the reference to 28 days only refers to the person giving a statement. The amendments ensure that there is no time limit on the Commissioner of Taxation providing the information required under subparagraphs 27(3)(b)(ii) or 27(4)(b)(ii).

A similar issue arises under section 8 of the FA Admin Act. If a "TFN claim person" (as defined in subsection 3(1) of the FA Admin Act) makes a statement under subsection 8(4) or (5) at the time of claim, and the Commissioner of Taxation has not advised the Secretary within 28 days after the claim that the person does not have a TFN etc, then the claim is effective. Such a claim can then be determined in accordance with the normal rules in Subdivision B of Division 1 of Part 3 of the FA Admin Act. If the Commissioner tells the Secretary that the person does not have a TFN etc after 28 days, this information is of no consequence. It would then be necessary for the Secretary to request the claimant to provide a TFN/statement under section 26 of the FA Admin Act, allow the claimant up to 28 days to provide the TFN/statement and then take the relevant variation action under subsection 27(5).

This issue is addressed by item 32 which expands the ambit of section 27 so that it also covers statements made by a TFN claim person under subsections 8(4) and 8(5) of the FA Admin Act.

Item 32 inserts new subsections 27(4A) and (4B) into the FA Admin Act.

New subsection 27(4A) deals with the situation where:

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a TFN claim person makes a statement of the kind set out in subsection 8(4); and

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a determination is in force under which the claimant is entitled to be paid FTB by instalment or for a past period; and

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the Commissioner of Taxation tells the Secretary that the person has no TFN.

Where these conditions are met, the consequence in subsection 27(5) applies to enable the Secretary to vary the claimant's entitlement determination.

New subsection 27(4B) deals with the situation where:

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a TFN claim person makes a statement of the kind set out in subsection 8(5); and

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a determination is in force under which the claimant is entitled to be paid FTB by instalment or for a past period; and

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the Commissioner of Taxation tells the Secretary that the person has not applied for a TFN, that an application by the person for a TFN has been refused or that the person has withdrawn the application.

Again, the consequence in subsection 27(5) may be applied where these conditions are present.

Items 33 and 34 make minor consequential amendments to subsections 27(5) and (6) respectively as a result of the above changes.

Variation of determination after the end of the bereavement period etc

Section 31 of the FA Admin Act provides for the variation of an instalment determination where a change in the claimant's circumstances occurs.

There is some doubt about whether the phrase "change in the claimant's circumstances" is broad enough to cover the myriad of situations affecting a claimant's entitlement to, or rate of, FTB that should lead to the variation of an existing instalment determination.

For example, the phrase, "change in the claimant's circumstances" may not cover the following situations:

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where an individual has been overseas for more than 3 years and, at the expiration of that 3 year period, the claimant is no longer eligible for FTB by operation of section 24 of the Family Assistance Act; or

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where a bereavement period ends and, as a result, the claimant is no longer eligible for FTB or remains eligible for FTB but at a different rate.

In these situations, a variation determination is required so that the claimant's entitlement determination can be varied to reflect the claimant's changed circumstances.

Items 37 to 41 address this issue by changing the terminology used in section 31. The concept of a "change in the claimant's circumstances" is replace by the broader concept of the "occurrence of an event". Furthermore, new subsection 31(1A) makes it clear that an expiration of time can constitute the occurrence of an event.

Minor changes to FTB advance rules

Division 2 of Part 3 of the FA Admin Act provides for the payment of FTB advances. Section 33 deals with entitlement to an FTB advance. As currently drafted, section 33 restricts the availability of FTB advances to individuals whose FTB Part A rate is worked out using Part 2 of Schedule 2 to the Family Assistance Act (subparagraph 33(1)(a)(ii) refers). Accordingly, an individual whose FTB Part A rate is calculated using Part 3 of Schedule 1 to the Family Assistance Act cannot access an FTB advance.

Subparagraph 33(1)(a)(ii) is repealed by item 45 . This repeal ensures that all FTB Part A customers are given the same access to FTB advances.

Items 46 and 47 amend the entitlement rules for FTB advances so that an individual who owes a debt to the Commonwealth cannot be entitled to an FTB advance. This is consistent with the social security rules relating to the payment of advances.

Other technical changes

Items 18, 44 and 49 amend subsections 22(2), 32(2) and 46(2) of the FA Admin Act respectively. These are technical changes that ensure that a determination is not ineffective by reason only that certain notification requirements are not complied with.