House of Representatives

Explanatory Memorandum

Circulated by authority of the Minister for Education the Honourable Julia Gillard MP

Schedule 1 - Removing minimum rate of CCB

Summary

Amendments made in this Schedule give effect to the Budget 2008-09 measure to remove the minimum rate of CCB for care provided to a child by an approved child care service, with the effect that an individual's CCB rate calculated under the Child Care Benefit Rate Calculator in Schedule 2 to the Family Assistance Act may be reduced to nil.

Amendments are also made to make CCTR available in respect of child care expenses incurred in a week by an individual or individual's partner if the individual claims CCB for that care, is eligible but is not entitled to be paid CCB due to nil rate.

These measures apply in respect of CCB and CCTR entitlements relating to child care occurring on or after 7 July 2008.

Background

Currently, CCB rate for care provided by an approved child care service is income tested, but there is a minimum rate, which an individual who is eligible for CCB is entitled to be paid regardless of income. This means that high income earners are entitled to the minimum rate of CCB.

As a result of the Budget announcement, the minimum rate will no longer apply and the CCB rate of an individual will be able to be reduced to nil. Therefore, individuals with income above a certain level, who currently are entitled to be paid CCB, will not be so entitled.

Currently an individual's CCTR entitlement for an income year in respect of out-of-pocket expenses for care provided to a child is linked to the individual's entitlement for CCB for that year for the child. The CCTR entitlement of the individuals who claim CCB and are eligible but are not entitled to CCB due to nil rate will be preserved.

CCB rate for care provided by a registered carer is not affected by this measure.

Explanation of the changes

To give effect to this measure, a number of amendments are made to the family assistance law as it relates to CCB and CCTR.

Part 1 - Amendments

A New Tax System (Family Assistance) Act 1999

CCB amendments

Schedule 2 to the Family Assistance Act includes the CCB Rate Calculator (clauses 1 - 12) relevant to the calculation of rate for CCB for care provided by an approved child care service. It does not specify any particular 'minimum rate'. The minimum CCB rate for an individual is achieved by working out the individual's 'minimum taxable income %' (under clause 12) and using this value for the purposes of working out the individual's 'taxable income %' (under clause 8), which in turn is used to arrive at the individual's 'CCB%' (under subclause (2)(2)) needed to calculate the individual's 'adjustment percentage' (subclause 2(1)) which, under the method statement in clause 1, is applied to the 'standard rate' relevant to the individual's situation to arrive at the 'individual's CCB rate'.

CCB Rate Calculator ( items 7, 8, 9 and 10 )

The element of the calculator that turns on the minimum rate is the 'taxable income %' in clause 8. Clause 8 operates to the effect that if a 'taxable income %' calculated in accordance with that clause is higher than the 'minimum taxable income %' worked out under clause 12, the 'minimum taxable income %' applies.

The following amendments are made to the CCB Rate Calculator to remove the mechanisms for the application of the minimum CCB rate.

Item 10 repeals clause 12 providing for the 'minimum taxable income %'. As a consequence, steps 7 and 8 in the method statement for calculation of 'taxable income %' in clause 8 are no longer required and are repealed by item 9 .

Item 8 amends step 6 in the method statement in clause 8 so that the result in this step constitutes the individual's 'taxable income %'. The amended step 6 provides that if the result of this step is less than zero the individual's taxable income % is zero. A zero taxable income % will result in the nil rate.

Item 7 amends the definition of 'taxable income %' in subclause 2(3) to correct cross-reference in this definition to clause 12 repealed by item 10 .

CCB rate for care provided by a registered carer ( item 2 )

Item 2 amends section 83 providing for working out CCB rate for care provided by a registered carer. The formula for calculating this rate includes a reference to the 'minimum hourly amount', which is defined in this section as the amount specified in the numerator in the formula in clause 12 of Schedule 2. As clause 12 is repealed by item 10, item 2 substitutes a new definition of the 'minimum hourly amount'. The new definition specifies that 'minimum hourly amount' is $0.581.

Items 11, 12 and 13 make amendments to Schedule 4 - Indexation and adjustment amounts, clause 2, table item 21 and clause 3, table item 21 to ensure that this 'minimum hourly amount' is indexed on each 1 July (taking effect the first Monday in July each year), taking into account the December reference quarter and the highest December quarter before reference quarter as the base quarter (not earlier than December quarter 2007). The first indexation of this amount is to occur on 1 July 2009.

CCTR amendments (items 1, 3, 4, 5 and 6)

Item 1 amends section 57F, which specifies conditions of eligibility for CCTR for an income year.

One of the conditions of an individual's eligibility for CCTR for an income year in respect of a child is that a determination of entitlement for CCB for the child and the income year is in force in respect of the individual (either for CCB by fee reduction under section 51B or for CCB for a past period under section 52E of the Family Assistance Administration Act). Amendments made by item 1 ensure that eligibility for CCTR also arises if a determination of no entitlement to CCB by fee reduction was made under subsection 51C(1) (as amended by item 25 ) or a determination of no entitlement to CCB for a past period was made under subsection 52G(1) (as amended by item 29 ), that is, if the individual was eligible for CCB but the individual's rate was zero.

CCTR calculation

Item 3 makes a small consequential amendment to step 2 in the method statement in section 84A providing for the calculation of the CCTR amount to reflect the fact that the total amount of fee reduction applicable to each base week in the income year for which CCTR applies may be nil.

Item 4 amends section 84B dealing with the 'approved child care fees' component of the formula in the method statement in section 84A. Item 4 makes a minor stylistic amendment.

Item 5 amends section 84C dealing with the 'base week' component of the formula in the method statement in section 84A. Under this section, a base week for which CCTR is calculated for an individual and a child is the week of care in respect of which a determination of entitlement for CCB for the individual and the child is made (either for CCB by fee reduction under section 51B or for CCB for a past period under section 52E of the Family Assistance Administration Act). Amendments made by item 5 ensure that a week is also a base week for CCTR if a determination of no entitlement to CCB by fee reduction was made under subsection 51C(1) (as amended by item 25 ) or a determination of no entitlement to CCB for a past period was made under subsection 52G(1) (as amended by item 29 ), that is, if the individual was eligible for CCB but the individual's rate was nil.

Item 6 amends section 84D dealing with the 'amount of the individual's CCB entitlement' component of the formula in the method statement in section 84A. For a base week, the relevant amount of CCB is the amount determined in the determination of entitlement for CCB for the individual and the child made either for CCB by fee reduction under section 51B or for CCB for a past period under section 52E of the Family Assistance Administration Act and attributable to that week. Amendments made by item 6 ensure that the CCB amount attributable to a base week is zero in the situation where in respect of that week a determination of no entitlement to CCB by fee reduction is made under subsection 51C(1) (as amended by item 25 ) or a determination of no entitlement to CCB for a past period is made under subsection 52G(1) (as amended by item 29 ); that is, if the individual was eligible for CCB but the individual's rate was nil.

A New Tax System ( Family Assistance ) ( Administration ) Act 1999

CCB amendments

Determinations relating to a claim for CCB by fee reductions - overview

If an effective claim is made for CCB by fee reduction in respect of care provided to a child by an approved child care service and the individual is conditionally eligible for CCB by fee reduction (under section 42 of the Family Assistance Act), the Secretary must make a determination that the individual is conditionally eligible for CCB by fee reduction (section 50B of the Family Assistance Administration Act). If the conditions of conditional eligibility are not met, the Secretary makes a determination of no entitlement to CCB by fee reduction for the individual and the child (section 50B).

If a determination of conditional eligibility is made for an individual and the child, the Secretary must also make a determination of the weekly limit of hours applicable to CCB eligibility (section 50H), a determination of CCB% (section 50J) and a determination of schooling % (section 50K). These determinations serve as a basis for calculation of the rate and amount of fee reductions, by which the individual's child care fees are reduced during an income year.

After the end of any income year during which a determination of conditional eligibility is in force for an individual and a child, the Secretary determines whether the individual is entitled to CCB by fee reduction for the income year. If the individual is eligible for CCB by fee reduction during this year under section 43 of the Family Assistance Act, a determination of entitlement for CCB by fee reduction for the income year is made (section 51B). The amount of the entitlement is reduced by the total amount of fee reduction made during the year. If the individual is not eligible for CCB by fee reduction during this year, a determination of no entitlement for CCB by fee reduction for the income year is made (section 51C) - in this case the total amount of fee reduction made during the year constitutes a debt due to the Commonwealth by the individual.

The CCB% determined under section 50J is an element of the CCB rate calculation, that depends, among other things, on the individual's adjusted taxable income ('adjusted taxable income', defined in section 3 by reference to Schedule 3, includes the partner's income). CCB% is calculated under Schedule 2 of the Family Assistance Act.

In certain specified situations, the CCB% is calculated without any reference to the individual's taxable income %, using the minimum taxable income % specified in Schedule 2, clause 12 of the Family Assistance Act, resulting in the minimum CCB rate. This may occur at the time when a determination of CCB% is made in the claim, if a claimant opts in the claim for the application of the minimum taxable income %, or if information needed for the calculation of CCB% is not provided in the claim, or if estimate of income provided by the claimant is not considered to be reasonable. It may also occur later as a result of a variation of the CCB% determination to the effect that the minimum taxable % applies in the circumstances specified in Subdivisions M to V, Division 4, Part 3 of the Family Assistance Administration Act.

Determinations relating to a claim for CCB for a past period or for CCB in substitution - overview

If an effective claim is made for CCB for a past period in respect of care provided to a child by an approved child care service and the individual is eligible for CCB for that period (under section 44 of the Family Assistance Act), the Secretary must make a determination that the individual is entitled to be paid CCB for that period at the rate and amount specified in the determination (section 52E of the Family Assistance Administration Act). If the conditions of eligibility are not met, the Secretary makes a determination of no entitlement to CCB for the past period (section 52G).

If an effective claim is made for CCB by single payment/in substitution because of the death of another individual in respect of care provided to a child by an approved child care service and the individual is eligible for that CCB (under section 46 of the Family Assistance Act), the Secretary must make a determination that the individual is entitled to be paid CCB for that period at the rate and amount specified in the determination (section 53D of the Family Assistance Administration Act). If the conditions of eligibility are not met, the Secretary makes a determination of no entitlement to CCB by single payment/in substitution (section 53E).

If a determination of entitlement is made for CCB for a past period or for CCB by single payment /in substitution, CCB% calculation forms a part of the rate calculation leading to the determination of the amount of the entitlement (there is no separate determination of CCB% ).

Effect of the measure on CCB % determination, the CCB eligibility and entitlement to be paid

Generally, amendments made in this Schedule, provide for zero CCB% being calculated under the CCB Rate Calculator in Schedule 2 of the Family Assistance Act as a result of a high income, or in the situations where currently the legislation would provide for the minimum taxable % to apply (if a determination of CCB% is made in the claim, a claimant opts in the claim for the application of the minimum taxable income %, information needed for the calculation of CCB% is not provided in the claim, or if estimate of income provided by the claimant is not considered to be reasonable). Similarly, where currently a variation of the CCB% would result in the minimum taxable % being applied, zero CCB% will apply. Zero CCB% will lead to a nil CCB rate.

Currently, if an individual is conditionally eligible for CCB for a session of care and is subsequently eligible for CCB, the individual is entitled to be paid CCB for the session at least at the minimum rate determined by the Secretary. The fact that an individual's rate may be nil will not affect the individual's conditional eligibility or eligibility for CCB by fee reduction. However, if an individual is eligible for CCB by fee reduction in respect of an income year but the applicable rate is nil, the Secretary will make a determination of no entitlement to CCB by fee reduction for a particular income year.

Currently, if an individual is eligible for CCB for a past period or for CCB by single payment/in substitution, the individual is entitled to be paid an amount determined by the Secretary. Under the amendments made in this Schedule, the fact that an individual's rate may be nil will not affect the individual's eligibility for that CCB but if an individual is eligible for CCB for an income year but the applicable rate is nil, the Secretary will make a determination of no entitlement to CCB by fee reduction for a particular income year.

Items 14 to 62 amend various provisions relating to CCB claims, determinations, variations and other relevant provisions to provide for the effect as described above.

Item 14 amends the definition of 'CCB%' in subsection 3(1) to specify that CCB% is the percentage as determined under Division 4 of Part 3 (Payment of family assistance - child care benefit) or, if varied, as varied; or as applicable under specific CCB% provisions of Division 4 of Part 3; or otherwise - as calculated under subclause 2(2) of Schedule 2 (CCB Rate Calculator) to the Family Assistance Act.

Item 15 repeals the definition of the 'minimum taxable income %' as a consequence of the repeal by item 10 of clause 12 in Schedule 2 (CCB Rate Calculator) to the Family Assistance Act specifying the minimum taxable income %.

Item 16 inserts new interpretational section 4A clarifying, for the purposes of the Family Assistance Act and the Family Assistance Administration Act, that a rate of fee reduction calculated by the Secretary under subsection 50Z(1) or 50ZA(1) may be zero and that the amount calculated under these subsections may be nil. The intention behind this provision is to ensure that other provisions of the family assistance law which refer to the rate or amount calculated operate as provided for in these provisions regardless of even if the rate is zero or the amount is nil.

Effective claim - no information about amount required to calculate CCB %

Section 49C deals with form of effective claim for CCB. Generally, if the provision of information/document is required as part of a claim, the lack of information/document makes the claim ineffective (it is taken not to have been made - section 50(2) refers).

There is a current exemption in subparagraph 49C(2)(e)(ii) relating to the lack of information in the claim whether the claimant is opting for the CCB% being calculated using the minimum taxable income % - it does not cause the claim to be ineffective. Item 17 amends subparagraph 49C(2)(e)(ii) to ensure that a CCB claim is effective if the claimant does not provide information whether the claimant is opting for having CCB% of zero % applicable to him or her.

Effective claim - tax file number requirement

Section 49E requires that the specified tax file number requirements be satisfied for a CCB claim for a past period to be effective. Subsection 49E(8) provides exemption from the tax file number requirement if the claimant opts in the claim for having CCB% calculated using the minimum taxable %. Item 18 amends subsection 49E(8) to provide exemption from the tax file number requirement if the claimant opts in the claim for having CCB% of zero % applicable to him or her.

Section 49F requires that the specified tax file number requirements be satisfied for a CCB claim by single payment/in substitution to be effective. Subsection 49F(9) provides exemption from the tax file number requirement if the claimant opts in the claim for having CCB% calculated using the minimum taxable %. Item 19 amends subsection 49F(9) to provide exemption from the tax file number requirement if the claimant opts in the claim for having CCB% of zero % applicable to him or her.

Claim for CCB by fee reduction - determination of conditional eligibility or no entitlement

Section 50B provides that, in the specified circumstances, if an effective claim was made for CCB by fee reduction, and a determination of conditional eligibility, or no entitlement (as the case may be) must be made as soon as practicable (no restrictions on determining the claim apply). One of the circumstances in which a determination of the claim is made as soon as practicable is if the claimant opts in the claim for having CCB% calculated using the minimum taxable % (paragraph 50B(1)(c)). Item 20 amends paragraph 50B(1)(c) to ensure that it applies when the claimant opts in the claim for having CCB% of zero % applicable to him or her.

Claim for CCB by fee reduction - determination of CCB %

Subsection 50J(2) provides that while determining CCB% for a conditionally eligible individual, the Secretary must use the provisions of Schedule 2 to the Family Assistance Act as if the references there to 'eligible' person were references to a 'conditionally' eligible person. While preserving the current content, item 21 amends subsection 50J(2) to clarify that in certain situations, the Secretary must determine a percentage of zero %. These situations are specified in subsection 55(2), 55(B(1) and 55C and explained further in the context of amendments made by items 36 and 38 .

Calculating amount of fee reduction and revising the amount

Sections 50Z and 50ZA require the Secretary to calculate and revise, as prescribed, fee reduction rate and amount for a conditionally eligible individual, and to notify the relevant approved child care service. Items 22 and 23 insert a note at the end of subsection 50Z(1) and 50ZA(1) respectively to draw the reader's attention to the fact that the rate may be zero and that the amount may be nil.

Claim for CCB by fee reduction - determination of entitlement

Subsection 51B(1) provides that if sessions of care occurred in an income year while a determination of conditional eligibility was in force in respect of an individual, and the individual is eligible under section 43 of the Family Assistance Act for CCB by fee reduction, the Secretary must determine that the individual is entitled to CCB by fee reduction for the income year. Item 24 amends subsection 51B(1) to the effect that the individual will be so entitled only if the CCB rate of the individual would be more than a zero rate.

Claim for CCB by fee reduction - determination of entitlement

Section 51C provides that if the Secretary is not satisfied that the claimant is eligible under section 43 of the Family Assistance Act for CCB by fee reduction, the Secretary must determine that the individual is not entitled to CCB by fee reduction for the income year. Item 25 amends section 51C to provide that no entitlement determination must be made in two situations: when an individual is not eligible under section 43 of the Family Assistance Act for CCB by fee reduction (new subsection 51C(2)) and when the individual is so eligible but the CCB rate would be zero (new subsection 51C(1)).

Claim for CCB for a past period - restriction on determining where tax assessment not made

Section 52D operates to the effect that if the tax assessment is not made at the time of the claim and the claimant did not opt in the claim for having CCB% calculated using the minimum taxable %, the claim cannot be determined until after the tax assessment has been made. Item 26 amends paragraph 52D(b) to ensure that this provision operates in the same way if the claimant did not opt in the claim for having CCB% of zero % applicable to him or her.

Claim for CCB for a past period - determination of entitlement

Section 52E provides that if the Secretary is satisfied that the claimant is eligible under section 44 of the Family Assistance Act for CCB for a past period, the Secretary must determine that the individual is entitled to CCB for the past period. Items 27 and 28 amend section 52E to provide that an entitlement determination must only be made if the individual is so eligible and the amount of the entitlement would be more than nil (new paragraph (c)).

Claim for CCB for a past period - determination of no entitlement

Section 52G operates to the effect that if the Secretary is not satisfied that the claimant is eligible under section 44 of the Family Assistance Act for a past period for care provided by an approved child care service or under section 45 for care provided by a registered carer, the Secretary must determine that the individual is not entitled to CCB for the past period. Item 29 substitutes a new section 52G to provide that no entitlement determination relating to a CCB claim for past period must be made in three situations: if the claimant is eligible under section 44 but the amount of the entitlement would be nil (new subsection 52G(1)), if the claimant is not eligible under section 44 (new subsection 52G(2)) and if the claimant is not eligible under section 45 (new subsection 52G(3)).

Items 30 and 31 make consequential amendments to paragraphs 52H(2)(b) and 52H(3)(b) to adjust cross-references in those paragraphs to the redrafted subsections of section 52G.

Claim for CCB by single payment/in substitution - determination of entitlement

Section 53D provides that if the Secretary is satisfied that the claimant is eligible under section 46 of the Family Assistance Act for CCB by single payment/in substitution, the Secretary must determine that the individual is entitled to CCB by single payment/in substitution. Item 32 substitutes new section 53D to provide that an entitlement determination must only be made if the individual is so eligible and the amount of the entitlement would be more than nil.

Claim for CCB by single payment/in substitution - determination of no entitlement

Section 53E operates to the effect that if the Secretary is not satisfied that the claimant is eligible under section 46 of the Family Assistance Act for CCB by single payment/in substitution, the Secretary must determine that the individual is not entitled to CCB by single payment/in substitution. Item 33 substitutes a new section 53E to provide that no entitlement determination relating to a CCB claim by single payment/in substitution must be made in two situations: if the claimant is eligible under section 46 but the amount of the entitlement would be nil (new subsection 53E(1)) or if the claimant is not eligible under section 46 (new subsection 53E(2)).

Items 34 and 35 make consequential amendments to paragraphs 53F(2)(b) and 53E(3)(b) to adjust cross-references in those paragraphs to the redrafted subsections of section 53E.

Matters relating to determinations - determination of CCB %

Subsection 55(2) provides the authority to calculate the CCB% using the minimum taxable % if the claimant for CCB by fee reduction does not give the Secretary an estimate of the amount needed to calculate the CCB% that the Secretary considers reasonable. Item 36 repeals this subsection and substitutes it with new subsection (2) specifying that the subsection applies if the claimant does not give the Secretary an estimate of the amount needed that the Secretary considers reasonable. A note inserted at the end of section 55 informs the reader that this means that the Secretary must determine the CCB% of the claimant to be zero %.

Determination of rate for CCB by single payment/in substitution

Subsection 55A(2) provides the authority to calculate the rate of CCB by single payment/in substitution using the minimum taxable % if the claimant does not give the Secretary an estimate of the amount needed to calculate the CCB% that the Secretary considers reasonable. Item 37 amends this subsection so, if the claimant does not give the Secretary an estimate of the amount needed that the Secretary considers reasonable, the CCB% is to be zero %.

CCB % applicable when certain other information not provided in a claim

Section 55B mandates the calculation of CCB% using the minimum taxable income % for the purposes of the calculation of CCB% on a claim for CCB by fee reduction or for the purposes of the calculation of entitlement for CCB for a past period for care provided by an approved child care service or for CCB by single payment/in substitution. The requirement applies if the claimant does not give the Secretary the information required to work out the number of children the individual had in care of a particular kind or the claimant opted for having CCB% calculated using the minimum taxable %.

Item 38 substitutes new sections 55B and 55C.

New section 55B - CCB % applicable to individual is zero % when certain other information not provided

New subsection 55B(1) relates to a claim for CCB by fee reduction; it specifies that this subsection applies if the claimant does not give the Secretary the information required to work out the number of children the individual had in care of a particular kind or the claimant opted for having CCB% of zero % applicable to him or her. A Note inserted at the end of section 55B directs the reader to new subsection 50J(2) amended by item 21 and informs that this means that the Secretary must determine the CCB% of the claimant to be zero %.

New subsection 55B(2) relates to a claim for CCB for a past period for care provided by an approved child care service and to a claim for CCB by single payment/in substitution; it specifies that if the claimant does not give the Secretary the information required to work out the number of children the individual had in care of a particular kind or the claimant opted for having CCB% of zero % applicable to him or her, the CCB% is zero %.

New section 55C - CCB % applicable to individual when tax file number information not given

Section 55C mandates the calculation of CCB% using the minimum taxable income % for the purposes of the calculation of CCB% on a claim for CCB by fee reduction if the conditional eligibility determination was made under section 50F in the circumstances referred to in subparagraphs 50D(1)(d)(ii) - to (v) or in subsection 50D(4) (when tax file number required to be given was not given within the specified time). A note inserted at the end of section 55C directs the reader to new subsection 50J(2) amended by item 21 and informs that this means that the Secretary must determine the CCB% of the claimant to be zero %.

Secretary's power to request tax file numbers in a claim

Section 57B authorises the Secretary to request in the claim form for CCB by fee reduction the provision of tax file numbers of specified persons. A claimant opting for the calculation of CCB% using the minimum taxable income % is exempt from this requirement. Item 39 amends section 57B to substitute this exemption with the exemption for a claimant who opts for having CCB% of zero % applicable to him or her.

Secretary's power to request tax file numbers of certain persons

If a claimant for CCB by fee reduction did not opt in the claim for the calculation of CCB% using the minimum taxable income %, and the claimant failed to meet specified tax file number requirements, section 57C authorises the Secretary to request the provision of tax file numbers of specified persons within 28 days from the request. Item 40 amends section 57C so it operates to the same effect if the claimant did not opt for having CCB% of zero % applicable to him or her.

Variation of CCB % - CCB by fee reduction and CCB for a past period

Section 58 authorises a variation of a determination of CCB% for a conditionally eligible individual (subsection 58(5)), or a variation of the amount of the CCB entitlement for a past period (paragraph 58(7)(a)), so that it is calculated using the minimum taxable income %, if the Secretary made a tax file number request under subsection 57D(1) and the claimant failed to comply with the request (as described in section 58). Item 41 amends subsection 58(5) so a CCB% of zero % applies in this situation.

Item 42 amends subsection 58(7) relating to a CCB determination for a past period to specify that a variation under this section has the effect that the claimant is only entitled to be paid a nil amount in respect of the period. This contrasts with the concept in section 52E under which a nil amount of entitlement results in the individual having no entitlement to CCB for the relevant period. In both situations, however, the intention is that the individual, whether entitled with nil amount because of zero rate, or whether not entitled because of zero rate, will be eligible for CCTR for the weeks falling within that period, subject to other eligibility conditions being met.

Variation of CCB % determination for failure to provide data verification form

Section 59D authorises a variation of a CCB% determination so that CCB% is calculated using the minimum taxable income % if the conditionally eligible individual fails to provide a data verification form requested by the Secretary under section 57F or provides in the form an estimate of the amount needed to calculate the CCB% that the Secretary considers is not reasonable. Item 43 amends section 59D so that, in the situation referred to in this section, the CCB% determination may be varied with the effect that the CCB% is zero %.

Variation of entitlement determination for CCB for a past period where CCB % originally calculated using minimum taxable income %

In the situations specified in section 55B (no information provided in the claim form concerning the number of children in care of a particular kind or claimant opted for having CCB% calculated using the minimum taxable income %) the CCB% of the claimant for CCB for a past period is calculated using the minimum taxable income %. If the claimant subsequently provides the information about the children or requests the change of the calculation and provides the tax file numbers as required, section 60 requires that the entitlement determination is varied so that CCB% is worked out under Schedule 2 (which may result in the percentage higher than the minimum).

As a result of the amendment made to section 55B by item 38 , when, at the time of claiming CCB for a past period, the claimant opts for having CCB% of zero % applicable to him or her or does not provide the information concerning the number of children in care of a particular kind, the applicable CCB% is zero %.

Items 44, 45 and 46 make amendments to section 60, including the amendments consequential on redrafting section 55B. The amendments ensure that, in the situation referred to in section 60, the claimant's entitlement determination for the relevant past period must be varied; that is, the CCB% must be recalculated under Schedule 2 of the Family Assistance Act. A recalculated CCB% may result in a higher percentage than zero% - if so, the claimant will be entitled to be paid for the particular income year, the difference between the recalculated amount of the entitlement and the previously determined amount. If the effect of the recalculation is that the CCB% continues to be zero % due to the individual's adjusted taxable income that reduces the CCB% to zero, no additional entitlement will result from the recalculation.

A note made in item 44 informs the reader of the change to the heading to section 60.

Variation of entitlement determination for CCB in substitution where CCB % calculated using minimum taxable income %

In the situation specified in section 55A (claimant gives an estimate of income that the Secretary does not consider reasonable), the CCB% of the claimant for CCB by single payment/in substitution is calculated using the minimum taxable income %. In the situations specified in section 55B (no information provided in the claim form concerning the number of children in care of a particular kind or claimant opted for having CCB% calculated using the minimum taxable income %), the CCB% of the claimant for CCB by single payment/in substitution is calculated using the minimum taxable income %.

If the claimant subsequently provides the information about children or requests the change of the calculation and provides the tax file numbers as required, section 60A requires that the entitlement determination be varied so that the relevant CCB% is worked out under Schedule 2 (which may result in the percentage higher than the minimum).

As a result of the amendment made by item 37 to section 55A, if a claimant gives an estimate of income that the Secretary does not consider reasonable, the applicable CCB% used to calculate the entitlement is zero%. As a result of the amendment made to section 55B by item 38 , if, at the time of claiming CCB by single payment/in substitution, the claimant opts for having CCB% of zero % applicable to him or her or does not provide the information concerning the number of children in care of a particular kind, the applicable CCB% used to calculate the entitlement is zero %.

Items 47, 48 and 49 make amendments to section 60A, including the amendments consequential on redrafting sections 55A and 55B. The amendments ensure that, in the situation referred to in section 60A, the claimant's determination of entitlement for CCB by single payment/in substitution is varied; that is the CCB% must be recalculated under Schedule 2 of the Family Assistance Act. A recalculated CCB% may result in a higher percentage than zero % - if so, the claimant will be entitled to be paid in respect of the claim the difference between the recalculated amount of the entitlement and the previously determined entitlement amount. If the effect of the recalculation is that the CCB% continues to be zero % due to the relevant adjusted taxable income that reduces the CCB% to zero, no additional entitlement will result from the recalculation.

A note made in item 47 informs the reader of the change to the heading to section 60A.

Variation of CCB % determination from minimum taxable income % to the income-tested taxable income %

Section 60B provides for a variation of a CCB% determination, from that calculated using the minimum taxable income % to that calculated under Schedule 2 to the Family Assistance Act (which may result in the percentage higher than the minimum), in the following situations.

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Where, at the time of claiming CCB by fee reduction, a conditionally eligible individual does not give the Secretary an estimate of income the Secretary considers reasonable, the Secretary determines CCB% using the minimum taxable income %, as provided for in subsection 55(2). If the individual subsequently provides a reasonable estimate of income, section 60B requires that the CCB% be varied to the percentage resulting from the calculation under Schedule 2 ;

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Where, at the time of claiming CCB by fee reduction, a conditionally eligible individual does not give the Secretary information required to work out the number of children in the same kind of care, the Secretary determines CCB% using the minimum taxable income %, as provided for in subsection 55B(c)(i). If subsequently the individual provides the information, section 60B requires that the CCB% be varied to the percentage resulting from the calculation under Schedule 2.

•

Where, at the time of claiming CCB by fee reduction, a conditionally eligible individual opts for having CCB% calculated using the minimum taxable income %, the Secretary determines CCB% using the minimum taxable income %, as provided for in subsection 55B(c)(ii). If subsequently the individual requests the change of the calculation, provides a reasonable estimate of income and the tax file numbers required, section 60B requires that the CCB% be varied to the percentage resulting from the calculation under Schedule 2.

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Where, at the time of claiming CCB by fee reduction, a conditionally eligible individual does not provide the tax file number information required, the Secretary determines CCB% using the minimum taxable income %, as provided for in subsection 55C. If subsequently the individual provides the tax file numbers required, section 60B requires that the CCB% be varied to the percentage resulting from the calculation under Schedule 2.

As a result of the amendments made by item 36 to subsection 55(2) and by item 38 to section 55B and 55C, in the situations specified in these sections (as described above), the CCB% is zero %.

Items 50, 51, 52, 53 and 54 amend section 60B to ensure that when the circumstances occur which trigger the application of section 60B (as described above), the Secretary varies the CCB% calculated using the minimum taxable income % to that calculated using Schedule 2 to the Family Assistance Act (which may produce a higher percentage).

Variation of CCB % determination from the income-tested taxable income % to the minimum taxable income %

If CCB% for an individual conditionally eligible for CCB by fee reduction was worked out under Schedule 2 (which may be higher than the minimum) in the situation referred to in paragraph 50D(1)(e) (no tax file number information provided by the Commissioner for Taxation within 28 days from the claim) and subsequently the Commissioner provides a negative information, section 60C requires that the CCB% determination be varied so that CCB% is calculated using the minimum taxable income %. This variation may be undone by the end of the following income year if the Secretary finds out the tax file numbers required.

Item 55 amends section 60C so that, in the situation to which this section refers, the CCB% is varied to zero %.

Variation of entitlement determination for CCB by fee reduction where income tax return not lodged

Section 60D requires to vary the determination of entitlement for CCB by fee reduction for a particular income year so that the entitlement is recalculated using the CCB% based on the minimum taxable income % if the individuals who are required to lodge tax returns for that income year for which the entitlement is calculated have not done so by the end of the second year following the entitlement year and the tax assessment has not been made by that time. Once the tax assessments are made, the CCB% is varied again based on the income as assessed.

Item 56 amends section 60D so that, in the situation to which this section refers, the entitlement determination is varied using a CCB% of zero %.

Variation of CCB % determination - to the CCB % based on the minimum taxable income %

Section 60E requires to vary the determination of CCB% of a conditionally eligible individual, so that the CCB% is calculated using the minimum taxable income %, if the individual provides an estimate of income that is not reasonable. This variation may be undone if the Secretary finds out the actual amount needed to calculate CCB% by the end of the following income year.

Item 57 amends section 60E so that, in the situation to which this section refers, the CCB% determination is varied with the effect that CCB% is zero %.

Variation of CCB % determination for failure to provide information - to the CCB % based on the minimum taxable income %

Section 62A requires varying the determination of CCB% of a conditionally eligible individual, so that the CCB% is calculated using the minimum taxable income %, if the individual is requested to provide information relevant to the decision about CCB% of the individual or the partner and the individual or the partner refuses to comply with the request. This variation may be undone if the Secretary finds out the actual amount needed to calculate CCB% by the end of the following income year.

Item 58 amends section 62A so that, in the situation to which this section refers, CCB% determination is varied with the effect that CCB% is zero %.

Amendments to CCTR for an income year

As a result of amendments made by item 1 to section 57 of the Family Assistance Act, eligibility for CCTR arises if, among other things, a determination of entitlement for CCB for the child and the income year is in force in respect of the individual (either for CCB by fee reduction under section 51B or for CCB for a past period under section 52E of the Family Assistance Administration Act) or a determination of no entitlement to CCB by fee reduction was made under subsection 51C(1) (as amended by item 25 ) or a determination of no entitlement to CCB for a past period was made under subsection 52G(1) (as amended by item 29 ), that is, if the individual was eligible for CCB but the individual's rate was nil.

Sections 65EA, 65EB and 65EC of the Family Assistance Administration Act provide for the making of determinations of entitlement for CCTR for an individual and a child in respect of an income year.

Entitlement for CCTR for an income year - entitlement for CCB by fee reduction for the income year has been determined (section 65EA )

Section 65EA requires the Secretary to make a determination of entitlement for CCTR for an income year if the individual's CCB entitlement has been determined under section 51B of the FA Admin Act for CCB by fee reduction for that income year and the Secretary is satisfied that the individual is eligible for CCTR for the income year under section 57 of the Family Assistance Act. A determination of a CCTR entitlement cannot be made under this section if a CCTR entitlement determination for the same income year has already been made under section 65EB or 65EC.

As a consequence of the amendments made to section 57 of the Family Assistance Act by item 1 extending eligibility for CCTR to the situations when there is no CCB entitlement due to nil rate, item 59 amends section 65EA of the Family Assistance Administration Act to trigger the making of a determination of CCTR entitlement for an income year under this section if a determination of entitlement for CCB by fee reduction is in force in respect of that income year (a determination under section 51B as amended by item 24 ), the individual and the child or a determination of no entitlement for CCB by fee reduction is in force under subsection 51C(1) as amended by item 25 , where the individual is eligible but the rate is zero.

If a determination of no entitlement to CCB by fee reduction is in force under subsection 51C(2) as amended by item 25 in respect of the income year, the individual and the child, for reasons other than a zero rate (the individual is not eligible for CCB by fee reduction), a determination of no entitlement for CCTR for the income year is made under section 65EA on respect of the individual and the child.

Notes at the end of item 59 inform the reader about the change to the heading to section 65EA and insertion of subheadings to subsections 65EA(2) and 65EA(3).

Entitlement for CCTR for an income year - entitlement for CCB for a past period year has been determined (section 65EB )

Section 65EB requires the Secretary to make a determination of entitlement for CCTR for an income year if the individual's CCB entitlement has been determined under section 52E of the Family Assistance Administration Act for CCB for a past period falling in this income year and the Secretary is satisfied that the individual is eligible for CCTR for the income year under section 57 of the Family Assistance Act. A determination of a CCTR entitlement cannot be made under this section if a CCTR entitlement determination for the same income year has already been made under section 65EA or 65EC.

As a consequence of the amendments made to section 57 of the Family Assistance Act by item 1 extending eligibility for CCTR to the situations when there is no CCB entitlement due to nil rate, item 60 amends section 65EB of the Family Assistance Administration Act to trigger the making of determination of CCTR entitlement for an income year under this section if a determination of entitlement for CCB for a past period within this income year is in force (a determination under section 52E as amended by item 28 ), the individual and the child or a determination of no entitlement for CCB for a past period falling on this income year is in force under subsection 52G(1) as amended by item 29 , where the individual is eligible for CCB but the rate is zero.

If a determination of no entitlement to CCB for a past period is in force under subsection 52G(2) as amended by item 29 in respect of the income year the individual and the child, for reasons other than a zero rate (the individual is not eligible for CCB for the past period), a determination of no entitlement to CCTR for the income year is made under subsection 65EB(3) in respect of the individual and the child.

Notes at the end of item 60 inform the reader about the change to the heading to section 65EB and the insertion of subheadings to subsections 65EB(2) and 65EB(3).

Entitlement for CCTR for an income year - replacement CCTR entitlement determination for an income year following an additional CCB entitlement determination for the same income year (section 65EB )

If there is a CCTR entitlement determination in force in respect of the individual, child and income year, made under section 65EA or 65EB and a subsequent CCB entitlement determination is made under section 51B or 52E (not as a result of a review) relating to the same year, as a result of which the CCTR entitlement for the year would increase, section 65EC requires that a replacement CCTR determination (including the additional period of CCB entitlement) is made for the year.

The first CCTR entitlement determination for an income year made under section 65EC may occur as a result of a subsequent CCB determination of no entitlement due to a zero rate (for example, for a part of the income year) relating to the same income year. There may then be a subsequent CCB no entitlement determination due to zero rate (for another period in the same year) - in that situation a replacement CCTR entitlement determination would need to be made in respect of the income year as the additional periods of CCB eligibility with zero rate would increase the overall CCTR entitlement for this income year. To achieve this effect, item 61 amends paragraphs 65EC(1)(a) and (b) to include references to CCB no entitlement determinations under sections 51C and 52G of the Family Assistance Administration Act where the individual was eligible for CCB but not entitled due to a zero rate.

A note in item 61 informs the reader about the change to the heading to section 65EC.

Decisions that may be reviewed under section 109A (internal review on application )

Item 62 makes a minor stylistic amendment to subparagraph 108(2)(f)(i), consequential on the amendments made to subsection 55(2) by item 36 .

Part 2 - Application and transitional provisions

Item 63 is an application provision. It provides that amendments made by this Schedule apply in relation to care provided by an approved child care service to a child on or after 7 July 2008.

Item 64 is a transitional provision that authorises the Secretary to vary a determination of CCB% under section 50J in force in respect of an individual and a child on the commencement of this provision if the Secretary considers that, as a result of the amendments made by Schedule 1, from 7 July 2008, the CCB% of the individual would be different to the CCB% at the commencement ( subitem 64(1 )).

The Secretary may make this variation after the commencement of this transitional provision (it commences on Royal Assent) with effect from 7 July 2008 ( subitem 64(2 )).

A variation under this provision cannot be made after 6 July 2008 ( subitem 64(3 )). After that day, the variation of CCB% may be made under section 65A of the Family Assistance Administration Act.

A variation under this provision is reviewable under Part 5 of the Family Assistance Administration Act ( subitem 64(4 )).