House of Representatives

Explanatory Memorandum

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

Schedule 2 - Election commitments

Summary

This Schedule gives effect to three measures related to CCTR payments announced by the Prime Minister as election promises.

The first measure increases the percentage of allowable out-of-pocket child care expenses that an individual can be paid as CCTR in an income year from 30 per cent to 50 per cent from 1 July 2008.

The second measure increases the annual CCTR limit from $4,354 for the income year ending 30 June 2008 to $7,500 for the year ending 30 June 2009 with the first indexation to occur on 1 July 2009.

The third measure provides CCTR as a quarterly payment, from 1 July 2008, to those eligible individuals who claim CCB by fee reductions.

Part 1 - Increasing allowable percentage and annual limit

Amendments to the Family Assistance Act

Background

CCTR is currently delivered as a family assistance annual lump sum payment after the end of the income year in which the individual incurred the child care expenses. It allows individuals to be paid an amount equal to 30 per cent of out-of-pocket child care expenses. The out-of-pocket child care expenses represent the difference between the amount of child care fees incurred by the individual for care provided to a child by one or more approved child care services and the amount of CCB entitlement that the individual and child has for an income year and the Jobs Education and Training (JET) Child Care fee assistance (if any) that the individual is entitled to receive for the child. The maximum amount is limited to $4,354 for the income year ending 30 June 2008. This limit is indexed annually in line with movements in the Consumer Price Index.

These amendments commence on 1 July 2008.

Explanation of the changes

Item 1 amends the formula in step 4 of the method statement in section 84A, which provides for the calculation of the amount of the rebate, by increasing the percentage of allowable out-of-pocket child care expenses that an individual can be paid from 30 per cent to 50 per cent.

Item 2 amends subsection 84F(1), which provides for the definition of the formula component relating to the child care tax rebate limit for a child for an income year and sets the annual limit for the income year ending on 30 June 2009 at $7,500.

Item 3 amends subsection 84F(2), which deals with the indexation of the child care tax rebate annual limit and provides for the first indexation to commence on 1 July 2009.

Item 4 amends subclause 3(6) of Schedule 4, which specifies that the first indexation of this amount is to take place on 1 July 2009.

Item 5 is an application provision relating to the amendment made by item 1 , dealing with the increase of the percentage of allowable out-of-pocket child care expenses. It specifies that the amendment applies to care provided by an approved child care service to a child on or after 1 July 2008.

Part 2 - Paying child care tax rebate quarterly

Division 1 - Amendments

Amendments to the Family Assistance Act

Background

Eligibility for CCTR for an income year is linked to the entitlement to CCB by fee reduction or for a past period. A determination of entitlement to CCTR for an individual, a child and an income year is made after the CCB entitlement determination has been made in respect of that income year, the individual and the child, whether it is an entitlement to CCB by fee reduction or to CCB for a past period. This results in a CCTR lump sum amount relating to expenses incurred for child care in a particular income year being paid sometime in the following year as the CCB entitlement determination cannot be made until a tax assessment has been issued for the individual for the particular income year. The out-of-pocket child care expenses, to which the rebate applies, relate to weeks of care during which the individual and the individual's partner meet either the work/training/study test or other requirements, such as being entitled to grandparent CCB or special CCB.

Amendments made in this Part provide for paying quarterly CCTR amounts to individuals who made a claim for CCB by fee reduction in respect of care provided by one or more approved child care services to a child and in respect of whom a determination of conditional eligibility for CCB by fee reduction is in force. The quarterly payments will not be available to individuals claiming CCB for a past period.

The quarterly CCTR payments are to be made in lieu of the individual's CCTR entitlement for the income year, the individual and the child determined after the end of the income year and after the individual's entitlement to CCB by fee reduction for the child for that income year has been determined.

The quarterly payments will be calculated after the end of a quarter, starting from the first quarter of 2008-09, and paid directly to eligible individuals. The total amount of quarterly payments made to an individual during an income year will be compared with the amount of the individual's CCTR entitlement for the year. If the amount received in quarterly payments is less than the entitlement amount for the income year, a top-up will be paid; if the amount received in quarterly payments is more than the entitlement amount for the income year, the difference will be a debt to be paid by the individual.

The quarterly CCTR payments are to be calculated with reference to the amount of fee reduction applicable to the individual and the child in the week for which eligibility for quarterly payments arise. As a result of the amendments made to the CCB rate in Schedule 1 (removal of the minimum CCB rate), an amount of fee reductions for the week may be nil. Generally, in this case, the CCTR amount for the eligible weeks of care starting from 7 July 2008 will be 50% of all child care fees for which the individual was liable to pay during this week.

The quarterly CCTR amounts are to be calculated by the Secretary. Generally, the trigger for the quarterly calculation of CCTR depends on whether, in the particular week of care for which CCTR should be calculated, the service providing care operated under the Child Care Management System (CCMS) or not.

If an approved child care service operates under the CCMS (that is, an 'application day' has been determined in respect of the service under item 91 of Schedule 1 to the CCMS Act), the service is required under section 219N of the Family Assistance Administration Act to provide fortnightly reports for each week of care specifying child care usage relevant to the calculation by the Secretary of fee reductions for those weeks. In this case, the trigger for the calculation of quarterly CCTR for an individual is the calculation of fee reductions by the Secretary under section 50Z of the Family Assistance Administration Act, for at least one week of care falling in the quarter.

If an approved child care service does not operate under the CCMS (that is, an 'application day' has not been determined in respect of the service under item 91 of Schedule 1 to the CCMS Act), the service is required to give the Secretary a report for a 'reporting period' (defined in section 3 of the Family Assistance Administration Act which by default is a calendar quarter) specifying among other things, the amount of fee reductions the service calculated and by which the individual's child care fees in the quarter were reduced. In this case, the trigger for the calculation by the Secretary of quarterly CCTR for an individual is the giving of the quarterly report by the service.

If a service does not provide a report for an individual and a child in respect of at least one week in a quarter, the quarterly CCTR for this quarter will not be calculated.

The timely provision of reports underpinning the calculation of quarterly CCTR payments is a condition for continued approval of an approved child care service. Legislative sanctions and criminal penalties may apply to an approved child care service for failure to comply with this condition.

These amendments commence on 1 July 2008.

Explanation of the changes

Item 6 inserts new section 57EA -Eligibility for child care tax rebate for a quarter.

New Subsection 57EA - Eligibility for child care tax rebate - for a quarter

New subsection 57EA sets out the eligibility criteria to be met for an individual for CCTR for a quarter in respect of a child. These criteria generally follow the current child care tax rebate criteria for the annual payment.

The criteria are as follows:

(a)

a determination of conditional eligibility for CCB by fee reduction must be in force in respect of the individual and the child under section 50F of the Family Assistance Administration Act; and

(b)

one or more sessions of care must be provided to the child by one or more approved child care services during at least one week that falls wholly or partly in a quarter; and

(c)

in respect of the week, the weekly limit of hours applicable under Subdivision G of Division 4 of the Family Assistance Act to the individual and the child is 50 hours (under section 54 of the Family Assistance Act ) or more than 50 hours (under section 55) or a 24 hour care limit (under section 56), regardless of whether all of the hours within the limit are used or not; and

(d)

the Secretary has calculated the rate and amount of fee reductions under subsection 50Z(1) of the Family Assistance Administration Act for the individual and child for at least one of the sessions in the week and the amount calculated is either greater than nil or is nil because the CCB% applicable is zero %.

This criterion is modified by subitems 35(1) and 39(2 ) of 'respectively' Divisions 3 and 4 of this Schedule for application when care is provided by an approved child care service during a week before the service's 'application day' has been determined in respect of the service under item 91 of Schedule 1 to the CCMS Act.

Note 1 specifies that if the individual satisfies the conditions for the relevant weekly limit of care, the number of hours of care actually used by the child in the week is not relevant.

Note 2 specifies that for the purposes of paragraph 57EA(1)(d), which refers to the calculation of the fee reduction amount by the Secretary under section 50Z of the Family Assistance Administration Act, it does not matter that the amount is later recalculated under section 50ZA of that Act.

New subsection 57EA(2) provides that if a weekly limit of hours mentioned in paragraph (1)(c) (i.e. 50 hours, more than 50 hours or 24 hour care) does not apply to the individual in the week but there are circumstances in which such a limit applies in the week, then that limit will be taken to be the weekly limit of hours applicable to the individual for that week. This is to overcome the situation where a determination of the limit of hours in force in respect of the individual and the child for the week specified 24 hours only but circumstances were such that the individual satisfied the conditions for the higher limit of hours in a particular week.

The note at the end of subsection 57EA(2) makes it clear that where a limit of only 24 hours is applicable to the individual in a week, the limit of hours condition for CCTR for that week is not satisfied. Generally, an individual is eligible for a default limit of 24 hours (subsection 53(3) refers).

New subsection 57EA(3) replicates current subsection 57F(3) relating to eligibility for CCTR for an income year, which results in a less stringent requirement being applied when considering whether the 50 hour limit applies to an individual. It ensures that the 50 hour limit is taken to have been met for a week if the individual would have met the conditions for the limit but for the fact that he/she failed to meet the more stringent requirements for 50 hours limit specified in paragraph 17A(1)(b). This arrangement is consistent with the work/training/study test requirements prior to the changes to the test introduced from 1 July 2005 as part of the Welfare to Work amendments by the Family and Community Services legislation Amendment ( Welfare to Work ) Act 2005 .

The note at the end of subsection 57EA(3) specifies a new heading for section 57F.

Item 7 inserts new Subdivision A in Division 4A of Part 4 which deals with the calculation of child care tax rebate.

New Subdivision A - Child care tax rebate for a quarter

New section 84AA - Amount of the child care tax rebate - for a quarter

New section 84AA provides for the calculation of the amount of CCTR for which an individual is eligible in respect of care provided to a child in a quarter. It provides that if the Secretary must calculate the amount of CCTR for a quarter under new subsection 65EAA(1) of the Family Assistance Administration Act in respect of an individual and a child for a quarter in the income year, the amount of rebate is worked out as provided by the method statement contained in this new section.

The method statement sets out the steps to be followed to calculate the rebate amount.

Under step 1, the total amount of 'approved child care fees' (defined in section 84AB) that the service charges the individual for the child in each 'base week' in the quarter (defined in new subsection 84AC(1)) are to be worked out.

Under step 2, the total CCB fee reduction amount (if any) calculated by the Secretary under subsection 50Z(1) of the Family Assistance Administration Act or recalculated under subsection 50ZA(1) is worked out for the individual and the child for each base week in the quarter.

If the individual is eligible to receive the 'Jobs Education and Training (JET) Child Care fee assistance' (defined in section 84E) for care provided to the child in any base week, step 3 is used to work out the total amount of JET Child Care fee assistance for the child for those base weeks in the quarter.

Under step 4, a formula is provided for the calculation of the amount of the quarterly rebate, which, once followed, will result in the total amount of the rebate (step 5). Under the formula, the amount of CCB fee reductions worked out in step 2 (and the JET Child Care fee assistance amount worked out in step 3, (if applicable) is deducted from the amount of full fees worked out in step 1. This produces an amount representing the individual's total out-of-pocket child care expenses in all the base weeks in the quarter. This amount is multiplied by 50 per cent. If any previous quarterly amounts of CCTR were paid to the individual in the income year, these are subtracted from the CCTR limit for the income year ($7,500). The individual's rebate for the child for the quarter is the lesser of the amount resulting from the application of the formula and the annual CCTR limit less any quarterly payments made in previous quarters (step 5).

New section 84AB - Component of formula - approved child care fees

New section 84AB defines 'approved child care fees' required to be worked out in step 1 of the method statement in new section 84AA.

New subsection 84AB(1) provides that the amount of approved child care fees for the base week are those fees that the individual or the individual's partner is liable to pay for care provided to the child by an approved child care service during the base week. These are all the fees for all the hours used regardless of whether the number of those hours was below or exceeded the weekly limit of hours applicable in this week.

New subsection 84AB(2) provides a special rule where the base week for the individual and the child is the same base week as for the individual's partner and the child. This may occur in cases where each member of a couple is entitled to CCB in respect of care provided to the same child in a week, but for different sessions of care. The special rule is that the individual's fees for the week do not include any fees that the individual's partner is liable to pay for care provided to the child.

New subsection 84AB(3) specifies that relevant for the calculation of amount of 'approved child care fees' in a week is the amount of fees that the service would charge the individual if there were no fee reductions (i.e. the full child care fees that the individual is liable to pay and would have to pay if not for CCB fee reductions) - any fee reductions passed on by the service are to be disregarded for this calculation.

New section 84AC - Component of formula - base week

New section 84AC provides the definition of the formula component 'base week', relevant to the method statement in new section 84AA. A base week is the week which falls partly or fully within a quarter and in respect of which an individual satisfies the eligibility criteria in paragraphs 57EA(1)(b) to (e) (sessions of care occurred while a determination of conditional eligibility was in force and the relevant limit of hours applies to the week).

Subdivision B - Child care tax rebate for an income year

New heading - Subdivision B - Child care tax rebate for an income year - is inserted after new section 84AC and a note is included to amend the heading to section 84A to specify that the Subdivision deals with child care tax rebate for an income year.

Section 84B and 84C relate to the calculation of 'approved child care fees' for an income year and define the meaning 'base week' in the context of calculation of CCTR for an income year. Items 8 and 9 are minor technical amendments clarifying that these sections operate for the purposes of section 84A which provides a method statement for the calculation of CCTR for an income year (as distinct from calculation for a quarter).

Subdivision C - Common components of each formula

Item 10 inserts new heading: Subdivision C - Common components of each formula - after section 84D to ensure clarity that section 84E dealing with JET payment and section 84F providing for CCTR annual limit per child are relevant to the calculation of both CCTR for a quarter and CCTR for an income year.

Item 11 amends section 84E to insert references to the method statements for calculation of quarterly CCTR (section 84AA) and CCTR for an income year (section 84A) to clarify that section 84E is relevant to both CCTR for an income year and CCTR for a quarter

Item 12 amends subsection 84F(1) in a similar way.

A note at the end of section 84F alerts the reader to the alteration to the heading to section 84F.

Amendments to the Family Assistance Administration Act

Item 13 inserts a new Subdivision AA in Division 4AA of Part 3, providing for the making of determinations of entitlement for quarterly payments of CCTR; notices of these determinations; and the manner of payment of CCTR in a quarter.

New Subdivision AA - Quarterly payments of child care tax rebate

New section 65EAA - Quarterly payments of child care tax rebate

Section 65EAA deals with the calculation and payment of quarterly amounts of CCTR.

New subsection 65EAA(1) imposes an obligation on the Secretary to calculate the amount of CCTR applicable for a session of care in a quarter provided to the child by one or more approved child care services if the individual is eligible for quarterly payments of CCTR under section 57EA(1) of the Family Assistance Act and the quarter has passed.

The eligibility for quarterly CCTR under section 57EA depends on the calculation of fee reductions by the Secretary for at least one week in the quarter. The requirement for the Secretary to calculate fee reductions for sessions of care provided to a child in a particular week under subsection 50Z(1) is contingent upon the service providing the Secretary with a weekly report under section 219N. The requirement for the Secretary to calculate a quarterly CCTR amount will not arise if a service has not provided a report for at least one week in the quarter.

The note at the end of this subsection specifies that the calculation of the quarterly payment is made in accordance with new section 84AA of the Family Assistance Act.

New subsection 65EAA(2) relates to the payment of CCTR and requires the Secretary to pay the amount of CCTR that has been calculated for the quarter to the credit of a bank account nominated and maintained by the individual at such time as the Secretary considers appropriate.

New subsection 65EAA(3) provides that the Secretary may direct that the payment be made in a different way than that provided for in subsection (2).

New subsection 65EAA(4) provides that the section is subject to the provisions in Part 4, which deals with overpayments and debt recovery, and Division 3 of Part 8B, which deals with payments to payment nominees.

New section 65EAB - Revising a calculation of quarterly child care tax rebate

New subsection 65EAB(1) provides the Secretary with a discretion to recalculate the provisional amount of CCTR for a quarter falling within an income year if the Secretary considers it appropriate, as long as a determination of entitlement to CCTR for the income year has not been made under Subdivision A.

For example, the Secretary may want to recalculate the quarterly payment of CCTR in order to rectify an administrative error that has occurred in the calculation or in circumstances where the service has corrected its reports on which the Secretary based the initial calculation.

New subsection 65EAB(2) provides for the situation where there has been a recalculation of the quarterly payment of CCTR amount under subsection 65EAA(1), which results in an increase in the amount of quarterly CCTR applicable. If this occurs, subsections 65EAA(2) to (4) apply to the increase as if the increase had been the amount applicable under subsection 65EAA(1).

New subsection 65EAB(3) provides for the situation where there has been a recalculation of the quarterly payment of CCTR amount under subsection 65EAA(1), which results in a decrease in the amount of quarterly CCTR applicable. If this occurs the Secretary may offset the amount of the decrease against an amount of CCTR that applies for a later quarter in the same income year.

New section 65EAC - Notices relating to quarterly payments of child care tax rebate

New subsection 65EAC(1) imposes an obligation on the Secretary, if the Secretary calculates a quarterly CCTR amount, to provide a notice to the individual stating: the name of the child and the quarter; the rebate amount; the total of the individual's child care fees for the child worked out under step 1 of the method statement in section 84AA of the Family Assistance Act when calculating the rebate amount; the total amount of fee reductions (if any) worked out under step 2 of the method statement in section 84AA of the Family Assistance Act when calculating the rebate amount; and if the rebate amount is the result of a calculation covered by subsections 65EAB(2) - the amount of the increase; and if the rebate amount is the result of a calculation covered by subsections 65EAB(3) - the amount of the decrease and whether the amount will be set off.

New subsection 65EAC(2) provides that the calculation and payment of an amount of CCTR under this section will still be effective even if any or all of the requirements of subsection (1) are not complied with.

Section 65EF deals with the payment of CCTR entitlement amounts determined under sections 65EA or 65EB or 65EC, as appropriate.

Item 14 amends subsection 65EF(1) to include a reference to section 65EC (this corrects an existing omission).

Item 15 repeals subsection 65EF(2) by substituting new subsections 65EF(2), 65EF(2A), 65EF(2B) and 65EF(2C), which specify the reductions that must be made to the entitlement amounts determined under various CCTR entitlement determinations. New subsection 65EF(2) specifies that this subsection has effect subject to the provisions in subsections (2A), (2B), and (2C).

New subsection 65EF(2A) provides that if a determination of entitlement for CCTR for an income year is made under subsection 65EA(2) (resulting from a determination relating to CCB by fee reduction), the amount to be paid must be reduced by the total amount of quarterly CCTR payments made in the same income year.

New subsection 65EF(2B) provides that if a determination of entitlement for CCTR for an income year is made under subsection 65EC and the entitlement amount includes entitlement for base weeks falling within the period of an individual's conditional eligibility, the amount to be paid must be reduced by the total amount of quarterly CCTR payments made in the same income year and by any previously paid CCTR entitlement amounts for the same income year under an earlier determination of CCTR entitlement.

New subsection 65EF(2C) operates to the effect that if a determination of entitlement for CCTR for an income year is made under subsection 65EC (resulting from a determination relating to CCB for a past period), the amount to be paid must be reduced by any previously paid entitlement amount for the year (unless subsection 65EF(2B) applies).

Item 16 amends subsection 65EF(3) dealing with the manner in which the payment of CCTR may be made by omitting reference to repealed subsection 65EF(2).

Section 66 provides for certain payments to be absolutely inalienable subject to subsection 66(2), which ensures that the specified actions under the family assistance law do not contravene inalienability provisions. Item 17 amends subsection 66(2) by inserting two new paragraphs 66(2)(aa) and 66(2)(ab). New paragraph 66(2)(aa) makes the protection of CCTR subject to subsections 65EAA(3) and 65EF(3), which provide a discretion for the Secretary to pay the amount of CCTR in a different way than to the credit of a bank account nominated and maintained by the individual. New paragraph 66(2)(ab) makes the protection of CCTR subject to subsection 65EAB(3), which provides for the setting off of a decrease in the quarterly amount of CCTR against a rebate amount for a later quarter in the same income year.

Item 18 amends the definition of family assistance payment in subsection 93A(6) by inserting new paragraph (bb) to include quarterly payments of CCTR. Section 93A sets out the rules relevant to recovery of debts from financial institutions.

Section 104 provides for the decisions that may not be reviewed by the Secretary on own initiative. Item 19 amends subsection 104(1) by inserting new paragraph 104(1)(da), which includes in the list of non-reviewable decisions a calculation of an amount of CCTR paid in a quarter under section 65EAA or a recalculation of this quarterly amount under section 65EAB. Therefore, any decision relating to the quarterly CCTR (for example, a decision whether or not to calculate the quarterly CCTR amount for a calendar quarter or a decision as to the amount calculated or revised or a decision relating to the manner of payment of quarterly CCTR including the payment of increases in the CCTR amount for a calendar quarter) will not be subject to the merit review provisions of the Family Assistance Administration Act. This is consistent with the treatment of the calculation by the Secretary of fee reductions under sections 50Z or 50ZB of the Family Assistance Administration Act or a recalculation under sections 50ZA or 50ZC (calculation of fee reduction is not reviewable).

Determinations of entitlement for CCTR for an income year are reviewable under Part 5 of the Family Assistance Administration Act.

Section 108 provides for the decisions that may not be reviewed by the Secretary on application. Item 20 amends section 108 by inserting a new paragraph 108(2)(db), which includes a calculation of an amount of CCTR paid in a quarter (under section 65EAA) or a recalculation of this amount (under section 65EAB) as non reviewable decisions.

Paragraph 154(4A)(c) provides the Secretary with a general power to obtain information or produce a document relating to the eligibility of a person for CCTR for an income year from any person. Item 21 amends paragraph 154(4A)(c) with the effect that the power extends to information regarding the eligibility for quarterly payments of CCTR.

Paragraph 154(4A)(d) provides the Secretary with a general power requiring a person to give information or produce a document relating to the amount of CCTR to which the person is entitled for an income year. Item 22 amends subsection 154(4A)(d) to extend the Secretary's information gathering power to quarterly payments of CCTR applicable to the individual under Subdivision AA of Division 4AA of Part.

Section 173 is an offence provision in Subdivision B of Division 3 of Part 6 and deals with a false statement to deceive and sets out the elements of the offence. Item 23 amends section 173(1)(d) by inserting new subparagraph (vi) which extends the offence to statements that affect the eligibility of the person for a quarterly payment of CCTR or the amount of quarterly payment of CCTR applicable under Subdivision AA of Division 4A of Part 3. A person who contravenes a provision of Subdivision B is guilty of an offence punishable on conviction by imprisonment for a term not exceeding 12 months.

Section 175 is an offence provision in Subdivision B of Division 3 of Part 6 dealing with obtaining a payment of family assistance where there is no entitlement to that payment whether whole or part. Item 24 amends this section to qualify that quarterly payments of CCTR are not included. This is because new section 175AA deals with this situation separately.

Item 25 inserts new section 175AA which provides that a person contravenes this section if the person obtains CCTR for a quarter knowing that he or she is ineligible for the whole or part of that payment. A person who contravenes a provision of Subdivision B is guilty of an offence punishable on conviction by imprisonment for a term not exceeding 12 months.

Section 224 is a provision deeming notices described in this section to have been given when they were given in the way described in this section. Items 26, 27, 28, 29, 30 and 31 amend section 224 to ensure that section 224 applies to a notice about the CCTR quarterly amounts under Subdivision AA of Division 4AA of Part 3.

Division 2 - Application

Item 32 provides that the amendments made by this Part apply in relation to care provided by an approved child care service to a child on or after 1 July 2008.

Division 3 - Transitional : Service's application day happens after the quarter for which child care tax rebate is applicable

Division 3 modifies various provisions in the Family Assistance Act and the Family Assistance Administration Act relevant to the calculation of quarterly CCTR payments relevant to child care provided by an approved child care service if a quarter falls wholly before the service's 'application day' determined under item 91 of Schedule 1 of the CCMS Act.

Item 33 provides definitions for the purposes of this Division. 'Administration Act' means the A New Tax System ( Family Assistance )( Administration ) Act 1999 and 'Family Assistance' means the A New Tax System ( Family Assistance ) Act 1999 .

Item 34 specifies that this Division applies if one or more sessions of care provided to a child by an approved child care service falls wholly or partly in the quarter and the service's application day has not happened before the last week that falls wholly or partly in the quarter.

Item 35 modifies the following provisions of the Family Assistance Act: section 57EA, 84AA and 84AB.

Section 57EA deals with the eligibility conditions for quarterly CCTR payments. One of the conditions of eligibility is that the Secretary has calculated fee reduction for at least one week in the quarter (paragraph 57(1)(d)). Subitem 35(1 ) modifies this paragraph to refer to the service's calculation of fee reductions under section 219A (as it is applicable to the service before the service's 'application day'). Subitem 35(2 ) modifies subsection 57EA(1) to exclude note 3 from this subsection.

Section 84AA provides for the method of calculation of CCTR quarterly amount. It requires working out the amount of fee reduction calculated by the Secretary and applicable to each base week in the quarter. Subitem 35(3 ) modifies this requirement so it includes the amounts of fee reductions reported by the service under subsection 219N(1) or 219P(1) (as it is applicable to the service before the service's 'application day').

A note at the end of this subitem informs the reader that those fee reductions may be nil (as provided for in section 4A of the Administration Act) as modified by subitem 36(1 ).

Section 84AB provides rules relevant to working out the amount of fees for the purposes of the method statement for calculation of quarterly CCTR amounts. Subsection 84AB(3) requires to count the child care fees amount, for which an individual is liable, before any fee reductions calculated by the Secretary have been passed on by the service. Subitem 35(4 ) modifies subsection 84AB(3) to refer to child care fees amounts before any reduction by the service under Division 1 of Part 8A of the Family Assistance Administration Act applies (as this Division applies to the service before the service's 'application day').

Section 4A inserted by item 16 of Schedule 1 provides that the rate of fee reductions calculated by the Secretary under section 50Z or 50ZA may be zero and the amount may be nil. Item 36 modifies section 65EAA of the Family Assistance Act. Subitem 36(1 ) modifies section 4A to refer to zero rate and nil amount calculated by a service under section 219A (as it is applicable to the service before the service's 'application day').

Section 65EAA requires the Secretary to calculate a quarterly CCTR amount if the

Secretary is satisfied that the individual is eligible for CCTR for a quarter and the quarter has passed. Subitem 36(2 ) adds an additional requirement with the effect that the calculation for a quarter may only occur if the service has given the Secretary a report under subsection 219N(1) or 219P(1) for at least one session of care provided in a week in the quarter, for which the individual is eligible for quarterly CCTR.

Division 4 - Transitional : Service's application day happens during the quarter for which child care tax rebate is applicable

Subitem 37(1 ) provides definitions for the purposes of this Division. 'Administration Act' means the A New Tax System ( Family Assistance )( Administration ) Act 1999 and 'Family Assistance' means the A New Tax System ( Family Assistance ) Act 1999 .

Subitem 37(2 ) specifies that section 219N applies for the purpose of this Division with the effect it has under item 96 of Schedule 1 to the CCMS Act (item 96 requires a service to provide the reports the service was required to provide under section 219N).

Item 38 provides for the application of this Division where one or more sessions of care are provided by an approved child care service to a child during a week that falls wholly or partly in a quarter and the service's application day (which is determined under item 91 of Schedule 1 to the CCMS Act) happens during the quarter.

Subitem 39(1 ) inserts in subsection 3(1) of the Family Assistance Administration Act, for transitional purposes, a definition of 'application day' as the day given meaning by item 91 of Schedule 1 to the CCMS Act.

Subitem 39(2 ) modifies section 57EA for the purpose of the quarter to which this Division applies so that

•

in respect of the weeks before the service's application day, it refers to the calculation of fee reductions by the Secretary under sections 50Z and 50ZA of the Administration Act , and

•

in respect of the weeks after the service's application day, it refers to the calculation of fee reductions under section 219A of the Administration Act.

Subitem 39(3 ) modifies further subsection 57EA(1) by addition of note 3 which says that for the purposes of paragraph (d)(i) as modified it does not matter if the amount is later recalculated by the Secretary under subsection 50ZA(1).

Subitem 39(4 ) modifies step 2 of the method statement in section 84AA so that, in respect of base weeks before the application day, the amount of fee reductions to be worked out under this section also included the amount of fee reductions reported by the service under subsection 219N(1) or 219P(1).

Note 1 in item 39(4 ) notes that the fee reduction amount may be nil (it refers in this respect to new section 4A replaced by subitem 40(1 )).

Note 2 notes further that in the case of the quarter dealt with under this Division there will be also weeks falling after the services application date - the amounts of fee reductions for these weeks may also be nil.

Subitem 39(5 ) modifies subsection 84AB(3) so that in respect of the weeks before the service's application day, if the service reduced fees under Division 1 of Part 8A of the Family Assistance Administration Act, the child care fees to be counted as 'approved child care fees' amount for a quarter are the unreduced fees.

Item 40 modifies the provisions of the Administration Act.

Section 4A as inserted by item 16 of Schedule 1 provides that the rate of fee reduction calculated by the Secretary under section 50Z or 50ZA may be zero and the amount may be nil. Subitem 40(1 ) modifies section 4A to refer to zero rate and nil amount calculated by a service under section 219A (as it is applicable to the service before the service's 'application day' is determined).

Section 65EAA inserted by item 13 requires the Secretary to calculate a quarterly CCTR amount if the Secretary is satisfied that the individual is eligible for CCTR for a quarter and the quarter has passed. Subitem 40(2 ) adds an additional requirement with the effect that calculation for a quarterly payment of CCTR may only occur if the individual is eligible for at least a session of care provided by an approved child care service in a week that falls before or includes the service's application day and the Secretary is given a report under subsection 219N(1) or 219P(1) (as it is applicable to the service before the service's 'application day' is determined).