Explanatory Memorandum
(Circulated by the authority of the Minister for Family and Community Services, Senator the Hon Kay Patterson)Notes on clauses
Clause 1 sets out how the Act is to be cited, that is, the Family Assistance Legislation Amendment (More Help for Families - One-off Payments) Act 2004.
Clause 2 provides that the Act commences on Royal Assent.
Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule (see notes on following pages).
This Explanatory Memorandum uses the following abbreviations:
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- 'Family Assistance Act' means the A New Tax System (Family Assistance) Act 1999;
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- 'Family Assistance Administration Act' means the A New Tax System (Family Assistance) (Administration) Act 1999;
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- 'FTB' means family tax benefit;
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- 'YA' means youth allowance;
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- 'Social Security Act' means the Social Security Act 1991;
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- 'Social Security Administration Act' means the Social Security (Administration) Act 1999.
Schedule 1 - One-off payments to families
This Schedule provides for a one-off payment to families of $600 per FTB child. Eligibility for the new payment will be linked to:
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- eligibility for FTB Part A on Budget night 2004 for instalment customers;
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- a confirmed entitlement to FTB Part A in respect of the 2002-03 income year for lump sum claimants; and
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- receipt by parents and nominees of dependent youth allowance for 16-17 year old children on Budget night 2004.
In broad terms, this Schedule introduces a new one-off payment to families, which would be paid as a single lump sum payment, generally before 30 June 2004. There would not be a claim process attached to the one-off payment.
An individual who is entitled to FTB as an instalment claimant on 11 May 2004 would be eligible for a one-off amount of $600 for each FTB child in respect of whom the individual is eligible for FTB Part A on Budget night, 11 May 2004. An individual who is paid YA on behalf of a 16 to 17 year old dependent child for 11 May 2004 would be eligible for the one-off payment of $600. Finally, an individual would be eligible for the one-off payment if the individual were entitled to be paid FTB Part A in respect of a child for a period or periods in the 2002-03 income year on a past period claim for that income year, but only if not entitled for the one-off payment as an FTB instalment claimant or an individual paid YA on behalf of a child.
The new one-off payment to families would be exempt from tax and would not be taken as income for the purposes of the social security law.
The new one-off payment to families would be provided for in the family assistance law.
Amendments to the A New Tax System (Family Assistance) Act 1999
Item 1 inserts a definition of 'one-off payment to families' into subsection 3(1) of the Family Assistance Act. The one-off payment to families means a payment to which an individual is entitled under new section 86.
Item 2 inserts a new Part 5 into the Family Assistance Act. This new Part deals with entitlement to the one-off payment to families and sets out some rules about how the amount of the one-off payment to families is to be worked out.
New section 86 sets out the three circumstances in which an individual is entitled to the one-off payment to families. New section 87 defines an 'eligible child' in relation to each of these circumstances.
The first circumstance in new section 86 is where an instalment determination is in force in relation to the individual under which the individual was entitled to be paid a daily rate of FTB in respect of 11 May 2004 that included a Part A rate. Each FTB child of the individual taken into account in determining the individual's daily rate in respect of 11 May 2004 is an eligible child.
This rule would also cover individuals who are entitled to FTB as described above but who have chosen to defer receiving any of their entitlement under the More Choice for Families (MCFF) initiative until after the end of the 2003-2004 income year. The MCFF initiative is based on the underlying legal principle that a person can waive (or defer) their statutory entitlement to a payment. There are individuals who choose to defer their entitlement to FTB in order to minimise the risk of overpayment - these individuals are not actually paid anything in the short term but retain their statutory entitlement and therefore fall within the first circumstance.
The second circumstance is where the individual is paid one or more instalments of YA, including an amount in respect of 11 May 2004, on behalf of a young person (or persons) aged 16 or 17 who is not independent (within the meaning of Part 3.5 of the Social Security Act). In this situation, each young person is an eligible child.
The third circumstance is where a past period determination is in force for the 2002-2003 income year in relation to the individual under which the individual was entitled to be paid a daily rate of FTB that included a Part A rate at some point in the 2002-2003 income year. The third circumstance cannot apply if the first or second applies. Each FTB child of the individual taken into account in determining the individual's daily rate on the last day in the 2002-2003 income year that included FTB Part A is an eligible child.
The amount of the one-off payment for which an individual is entitled is worked out under new section 88. The amount is worked out by adding together the amounts applicable under new section 88 for each eligible child of the individual.
In general terms, the amount for an eligible child is $600. An individual should not get more than one amount of $600 for the one child.
Where the individual is entitled to a percentage of the standard rate of FTB Part A for an eligible child because there is a percentage determination under subsection 59(1) of the Family Assistance Act in force, then the amount for the eligible child is that specified percentage. For example, if an individual is entitled to 100% FTB Part A on 11 May 2004 for 2 children and 30% of FTB Part A for one child, the amount of the one-off payment to families for which the individual is eligible is $600 for each 100% child and $180 for the 30% child.
The amount of the one-off payment to families can also be affected by a specified percentage due to a blended family determination under section 28 of the Family Assistance Act (where there is an instalment or past period determination) or section 29 of the Family Assistance Act (where there is a past period determination). The amount of the one-off payment would be reduced to reflect the percentage. For example, if the individual is eligible for three FTB children on 11 May 2004 and the specified percentage for each child under section 28 of the Family Assistance Act is 50%, the individual is eligible for $900 (that is $600 x 50% x 3).
Where there is a percentage determination under subsection 59(1) of the Family Assistance Act in relation to a particular child and a section 28 or 29 specified percentage, both percentages are taken into account in determining the amount of an individual's one-off payment to families. The relevant rules are in new subsection 88(4) and (5). The effect of these rules is best described in an example. If an individual has 100% care of two FTB children, 30% care of one FTB child (due to section 59 of the Family Assistance Act), plus a specified percentage under section 28 of 50%, the individual is eligible for $690 (that is, 2 x $600 x 50% plus 0.3 x $600 x 50%).
Amendments to the A New Tax System (Family Assistance) (Administration) Act 1999
Item 3 inserts a new Division 4A into Part 3 of the Family Assistance Administration Act.
In accordance with new section 65F, the new one-off payment to families is to be paid as a single lump sum in an appropriate manner and on the date that is determined by the Secretary to be the earliest date on which it is reasonably practicable for the payment to be made to the individual.
A claim would not be required for the new one-off payment to families. The entitlement rules for the payment are such that relevant individuals can be identified by information held in Centrelink computer systems and without any further reference to the individual concerned.
Item 4 inserts a reference to the new one-off payment to families into subsection 66(1) of the Family Assistance Administration Act, thereby making the new payment inalienable within the terms of that provision.
Item 5 inserts a reference to the new one-off payment to families into section 70 of the Family Assistance Administration Act. The effect is that an amount paid by way of one-off payment to families can only be a debt to the extent that a provision in the Family Assistance Administration Act expressly provides for it.
Such a provision is new section 71I that is inserted by item 6. This provision sets out when a one-off payment to families is a debt.
As a broad principle, a debt would only arise in relation to the payment of a one-off payment to families where some or all of the payment was incorrectly paid because a relevant individual knowingly made a false or misleading statement or knowingly provided false or misleading information.
Where an individual is paid a one-off payment because of entitlement to FTB Part A on Budget night under an instalment determination, the determination is later changed with the effect that the individual was not so entitled, and a reason for the determination needing to be changed was that the individual knowingly made a false or misleading statement or knowingly provided false or misleading information, then the one-off payment paid is a debt. Similar rules apply where an individual is paid in excess of the amount of their entitlement to the one-off payment to families, except that the amount of the debt is the difference between the amount of one-off payment paid and the amount that should have been paid.
Where an individual is paid a one-off payment because of being paid (in accordance with a determination) one or more instalments of YA that include an amount in respect of 11 May 2004 on behalf of a 16 to 17 year old who is not independent, the determination is later changed with the effect that the individual should not have been paid YA for 11 May 2004, and a reason for the determination needing to be changed was that the YA customer knowingly made a false or misleading statement or knowingly provided false or misleading information, then the one-off payment paid is a debt. Similar rules apply where an individual is paid in excess of the amount of their entitlement to the one-off payment to families, except that the amount of the debt is the difference between the amount of one-off payment paid and the amount that should have been paid.
Where an individual is paid a one-off payment because there is a past period determination in force on Budget night under which the individual is entitled to FTB Part A at some point in the 2002-03 income year, the determination is later changed with the effect that the individual was not so entitled, and a reason for the determination needing to be changed was that the individual knowingly made a false or misleading statement or knowingly provided false or misleading information, then the one-off payment paid is a debt. Similar rules apply where an individual is paid in excess of the amount of their entitlement to the one-off payment to families, except that the amount of the debt is the difference between the amount of one-off payment paid and the amount that should have been paid.
Item 7 inserts a reference to the new one-off payment to families in paragraph 74(a) to cover the situation where the new one-off payment to families is made by cheque and someone other than the recipient obtains the value of the cheque without proper endorsement.
Item 8 inserts a reference to the new one-off payment to families in paragraph (a) of the definition of 'debt' in subsection 82(3). This ensures that the provisions relating to debt recovery and non-recovery of debts can apply to debts under new section 71I as appropriate.
Item 9 inserts a reference to the new one-off payment to families at the end of the definition of 'family assistance payment' in subsection 93A(6). This would enable a one-off payment to families paid to a financial institution, to the credit of an account with that institution, to be recovered from the institution in certain circumstances (eg, where the one-off payment is paid into an incorrect account).
Item 10 inserts a reference to the new one-off payment to families in paragraph 106(3)(c). This amendment ensures that, if the Secretary reviews a decision relating to payment of the one-off payment to families, the individual affected by the decision is notified of the outcome of the review.
As a general rule, an application for review of a decision must be made no later than 52 weeks after the applicant has been notified of the decision. There are exceptions to this general rule. Items 11 and 12 insert a reference to the new one-off payment to families into subsection 109D(4) and paragraph 109D(5)(a) to enable the existing exceptions to apply also to a decision relating to the payment to a person of a one-off payment to families.
Item 13 inserts a reference to the new one-off payment to families at the end of the definition of 'relevant benefit' in section 219TA. This would enable the Secretary to appoint a payment nominee who would be paid the one-off payment to families on behalf of the entitled individual.
Amendments to the Income Tax Assessment Act 1936
A taxpayer's dependants' Separate Net Income (SNI) is used to determine the taxpayer's eligibility to certain dependant offsets. SNI is income and other specified amounts earned, derived or received, less certain expenses incurred in earning that income. Payments such as carer allowance, child care benefit and FTB are not included as part of SNI. As it is not intended that the one-off payment to families, nor a payment to families under the scheme determined under Schedule 3 to this Bill, form part of SNI, items 14 and 15 make necessary amendments to the Income Tax Assessment Act 1936.
Amendments to the Income Tax Assessment Act 1997
The new one-off payment to families, and a payment made under the scheme determined under Schedule 3 to this Bill, will be exempt from tax. Amendments are made to section 52-150 to achieve this effect (items 17 and 18).
A consequential amendment is also made to the table in section 11-15 to add in references to the new one-off payment to families and a payment made under the scheme determined under Schedule 3 to this Bill (item 16).
Item 19 inserts new paragraphs 8(8)(jaa) and (jab) into the Social Security Act. These new paragraphs ensure that the new one-off payment to families, and a payment made under the arrangements determined under Schedule 3 to this Bill, do not count as income for the purposes of the social security law. The opportunity is also taken to clarify that family assistance payments more generally are not income for the purposes of the social security law.
Schedule 2 - One-off payments to carers
This Schedule provides for a one-off payment of $1000 to recipients of carer payment on Budget night 2004. It also provides for a one-off payment to recipients of carer allowance on Budget night 2004. Where the carer is the only person who is being paid carer allowance in respect of the care receiver (or care receivers), the one-off payment will be $600 in respect of each care receiver (or in respect of the care receivers in relevant cases). Where carer allowance is shared in relation to a care receiver (or care receivers), the $600 will be shared on the same basis as the payment(s) of carer allowance is shared.
In broad terms, this Schedule introduces a new one-off payment to carers, which would be paid as a lump sum payment, generally before 30 June 2004. There would not be a claim process attached to the one-off payment.
A person who receives an instalment of carer payment for a period that includes 11 May 2004 will be entitled to a one-off payment of $1000. Subject to certain qualifications, a person will be entitled to $600 in respect of each care receiver in relation to whom the person receives an instalment of carer allowance for a period that includes 11 May 2004. Where the care of the care receiver is shared, the $600 will also be shared. Where qualification for carer allowance depends on the person providing care for two disabled children, the payment will also be $600. The one-off payment to carers will be exempt from tax.
Item 1 inserts new Part 2.5A into the Social Security Act.
New section 247 provides that a person is qualified for a one-off payment if the person has been paid an instalment of carer payment and the instalment period includes 11 May 2004. The Note to this provision makes it clear that a person can qualify for this one-off payment as well as the one-off payment that is available in respect of carer allowance.
New section 248 provides that the amount of the one-off payment is $1000. The Note to the provision makes it clear that the maximum available to a person is $1000 regardless of the number of people in relation to whom the qualified person provides care.
Item 2 inserts new Part 2.19A into the Social Security Act.
New section 992N sets out the criteria to be satisfied in order for a person to qualified for a one-off payment to carers (carer allowance related). In effect, there are two requirements that need to be met in respect of one or more instalments of carer allowance that have been paid to the person. The first requirement is that the instalment of carer allowance was in respect of a period that includes 11 May 2004. The second requirement is that the operation of clause 16 or 17 of Schedule 2 to the Social Security Administration Act (which deal with 'backdating') must not be the reason that the instalment covered 11 May 2004.
The effect of subsection 992N(2) is that each instalment which meets both the requirements of subsection (1) is a 'qualifying instalment'.
The Note to the provision makes it clear that a person can qualify for this one-off payment as well as the one-off payment that is available in respect of carer payment.
The broad operation of the scheme is that a qualified person will receive payment in respect of each 'eligible care receiver' in relation to the person. The concept of who is an 'eligible care receiver' is dealt with in new section 992O. Subsection (1) essentially provides for the general rule that, where providing care to a person gives rise to a qualifying instalment of carer allowance, that person is an 'eligible care receiver' in relation to the qualified person. However, there are situations where a person's qualification for an instalment of carer allowance arises on account of the care the person provides for two disabled children (subsection 953(2) of the Social Security Act). Accordingly, subsection (2) qualifies the general rule by providing that, where subsection 953(2) applies in relation to the qualifying instalment, the two disabled children are treated as a single 'eligible care receiver'.
New section 992P is concerned with working out the amount of the one-off payment. Subsection (1) provides that the amount is worked out by adding together the amounts applicable for each eligible care receiver. Subsection (2) provides that the applicable amount for an eligible receiver is $600 unless subsection (3) applies. Subsection (3) is concerned with situations where 2 people are qualified for carer allowance because they share the care of a care receiver (or care receivers). In those circumstances, the social security law provides for the Secretary to make a written determination specifying the share of carer allowance that each of the two people is to receive. The effect of subsection (3) is that, where the qualifying instalment was paid on the basis of a determination as to a particular share of carer allowance, the amount applicable for an eligible care receiver in relation to a qualified person is that same share of $600.
Item 3 inserts new section 1223ABA, which deals with debts arising in respect of one-off payments to carers. In very broad terms, a one-off payment (or part of a one-off payment) will be a debt where it is established that the recipient knowingly made a false or misleading statement (or provided false information) and, if the true circumstances had been known, the determination in relation to the relevant instalment (which gave rise to the qualification for the one-off payment) would not have been made.
As a person can qualify for more than one amount of $600 (or part of $600) under the proposal relating to carer allowance, subsection (5) provides for debts to arise in circumstances similar to those contemplated in subsection (4) but which are in respect of amounts less than the full amount of the one-off payment (carer allowance related).
Item 4 inserts new section 12AA into the Social Security Administration Act. It provides that a claim is not required in order to be paid either of the payments provided for by this Schedule.
Item 5 inserts reference to the two new one-off payments into the existing definition of 'lump sum benefit' contained in the Social Security Administration Act.
Item 6 inserts new section 47B. In broad terms, it provides that the Secretary must pay the payments provided for by this Schedule on the date that the Secretary determines is the earliest reasonably practicable date on which to do so. The manner of payment is that manner which the Secretary considers is appropriate.
A taxpayer's dependants' Separate Net Income (SNI) is used to determine the taxpayer's eligibility to certain dependant offsets. SNI is income and other specified amounts earned, derived or received, less certain expenses incurred in earning that income. Payments such as carer allowance, child care benefit and FTB are not included as part of SNI. As it is not intended that the one-off payments to carers form part of SNI, items 7 and 8 make necessary amendments to the Income Tax Assessment Act 1936.
The effect of Items 9 to 11 is to make one-off payments to carers (as well as payments to carers under the scheme determined under Schedule 3 to the Bill) exempt from income tax.
Schedule 3 - Administrative scheme for one-off payments to families and carers
This Schedule contains provisions to enable an administrative scheme to be established. In broad terms, the purpose of the administrative scheme will be to provide payments in circumstances where the statutory one-off payments regime provided for in Schedules 1 and 2 does not produce an appropriate result in relation to circumstances that occur in the 2003-04 income year. The Minister for Family and Community Services will determine the details of the scheme by disallowable instrument.
This Schedule enables an administrative scheme to be established alongside the statutory one-off payment scheme.
Item 1 provides for the establishment of an administrative scheme by the Minister for Family and Community Services, under which one-off lump sum payments can be made to families and carers in specified circumstances. The purpose of the scheme is to provide payments in circumstances where the statutory one-off payments regime does not produce an appropriate result in relation to circumstances that occur in the 2003-4 income year.
The details of the administrative scheme (including such matters as eligibility, amount of the payment and administrative matters) would be set out in a disallowable instrument.
Payments under the administrative scheme would not be made after 30 June 2007.
Payments under the administrative scheme would be made out of the Consolidated Revenue Fund (in accordance with subitem 1(6)).