Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)SCHEUDLE 2-AMENDMENTS RELATING TO IN-HOME CHILD CARE
Summary of proposed changes
As part of the 2000-2001 Budget initiative relating to the provision of flexible child care, from 1 January 2001, the choice of child care services for which child care benefit may be available will be extended to include in-home care. This measure will enable families who fall outside mainstream services, eg families in rural and remote locations, sole parents working shifts/non-standard hours or families with sick children, greater access to child care services.
To give effect to this measure, this Schedule makes amendments to the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance Administration Act) to enable the approval of in-home care services for the purposes of child care benefit, to enable the payment of child care benefit for care provided by an approved in-home care service at the rate and amount applicable to care provided by a family day care service and to align the treatment of approved in-home services in other aspects with the treatment afforded to approved family day care services.
This Schedule also makes amendments to the Fringe Benefits Tax Assessment Act 1986 to ensure that residual benefits arising out of priority of access contributions to an approved in-home care service are exempt benefits.
Explanation of the changes
The Family Assistance Act and the Family Assistance Administration Act introduced from 1 July 2000 a new payment, child care benefit. Eligibility for child care benefit arises in respect of informal care provided to a child by registered carers and in respect of formal care provided by one of the four kinds of approved child care services: a centre based long day care service, a family day care service, an occasional care service and an outside school hours care service.
Amendments to the Family Assistance Administration Act made by items 7, 8 and 9 introduce a new kind of formal care for which child care benefit will be available, that is, in-home care provided by an approved child care service.
Section 194 of the Family Assistance Administration Act provides a mechanism for application by an operator of a child care service for approval of the service as one of the four specified kinds of a child care service for family assistance purposes (section 3 of the Family Assistance Act defines family assistance as including child care benefit). Item 9 inserts in section 194 a reference to an in-home care service; as a result an operator of an in-home care service will be able to apply to the Secretary for approval of the service for the family assistance purposes. Item 8 inserts in subsection 3(1) of the Family Assistance Administration Act a definition of an approved in-home care service as a service in respect of which an approval as an in-home care service is in force under Division 1 of Part 8 of that Act. Item 7 amends the definition of approved child care service in subsection 3(1) of that Act by adding to it a reference to an approved in-home care service.
Section 209 of the Family Assistance Administration Act dealing with application for approval as a registered carer prevents some individuals from applying for such an approval. Under paragraph 209(2)(c), a person who provides child care under a contract with an approved family day care service cannot apply for approval as a registered carer. A similar restriction on approval as a registered carer will apply if an individual provides care under a contract with an approved in-home care service. Item 10 makes an amendment to subsection 209(2) to achieve this effect.
Items 1 to 6 make amendments to the Family Assistance Act, which contains provisions relating to child care benefit eligibility and rates, to ensure that the amount of child care benefit paid for in-home care provided by an approved in-home care service is the same as the amount of child care benefit paid for care provided by an approved family day care service.
Clause 4 of Part 2 of Schedule 2 (Child care benefit rate calculator) of the Family Assistance Act defines the meaning of standard hourly rate applicable to the calculation of an individuals hourly rate of child care benefit. A table in subclause 4(1) sets out 3 standard hourly rates that depend on the kind of care provided. Table item 1 specifies the rate for care other than the care specified in table items 2 and 3 (the applicable rate is $2.40). Table item 2 specifies the rate for part-time family day care (the applicable rate is the lesser of one and a third times the item 1 rate and the ceiling rate worked out under subclause 4(2)). Table item 3 specifies the rate for non-standard family day care (the applicable rate is one and a third times the item 1 rate). The relevant terms are defined in section 3 of that Act. The term part-time family day care is defined as standard hours family day care provided by a family day care service for a child in a week during which the service provides a total of less than 50 hours of standard hours family day care for the child (the term standard hours family day care is defined as hours of care provided by a family day care at times that are identified in the services conditions of approval as being standard hours of care). The term non-standard hours family day care is defined as hours of care provided by a family day care service at times that are identified in the services conditions of approval as being non-standard hours of the service.
Item 5 amends the table in subclause 4(1) so that the rate which applies for part time family day care and non-standard hours family day care applies also to the analogous types of in-home care, that is, to part-time in-home care and non-standard hours in-home care respectively. Amendment made to the table by item 4 ensures that the table item1 rate applies to all other types of care. Items 1, 2 and 3 insert in section 3 definitions of non-standard hours in-home care, part-time in-home care and standard hours in-home care that are phrased in the same terms as the respective family day care definitions.
Item 6 makes a consequential amendment to item 18 of clause 2 of Part 1 of Schedule 4 (Indexation and adjustment of amounts) to the Family Assistance Act that provides for an indexation of the standard hourly rate of child care benefit specified in item 1 of the table in subclause 4(1) of Schedule 2.
Amendments to the Fringe Benefits Tax Assessment Act 1986 (the FBTA Act)
Section 47 of the FBTA Act exempts a number of residual benefits from fringe benefits tax. Certain recreational or child care facilities provided by employers, or an associate of an employer, for the benefit of employees, and contributions to secure priority of access to certain child care facilities, are exempt residual benefits under section 47. Paragraph 47(8)(a) of the FBTA Act, as it will operate from 1 July 2000, ensures that the residual benefits in the form of priority of access to the existing types of child care services, including family day care service, are exempt from fringe benefits tax . Items 11 and 12 amend this paragraph to include contributions made to an approved in-home care service so that the fringe benefits tax exemption applies to residual benefits arising from priority of access contributions to approved in-home care services.
This measure commences on 1 January 2001.