Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)Chapter 1 - Outer regional and remote payment
Outline of chapter
1.1 Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to ensure that the outer regional and remote payment (OR & R payment) made under the Better Start for Children with Disability initiative is exempt from income tax.
Context of amendments
1.2 The Better Start for Children with Disability initiative was announced as part of the Government's election commitments on 29 July 2010.
1.3 The Better Start for Children with Disability initiative funds early intervention for children with certain developmental disabilities. The aim of the initiative is to intervene early in the lives of such children because intervention at that stage is considered to be more effective than later treatment. In particular, early intervention will prepare this cohort of children for school.
1.4 To be eligible for funding under the initiative, the family must provide evidence of the child's age, a confirmed written diagnosis of a relevant disability, residential status and the child's Centrelink customer reference number.
1.5 In addition to benefits available to all eligible children and their parents or carers, those living in remote and regional Australia will also be eligible for a further one-off payment of $2,000. This is to reflect the additional expenses associated with accessing early intervention services, including travel and home visits.
1.6 Families will be able to register their children for the funding under the Better Start for Children with Disability initiative including the OR & R payment from 1 July 2011.
Summary of new law
1.7 These amendments provide that no income tax will be paid by recipients of the OR & R payment.
Comparison of key features of new law and current law
| New law | Current law |
| The OR & R payment made under the Better Start for Children with Disability initiative is expressly exempt from income tax. | Under the current law, payments made to recipients under the Better Start for Children with Disability initiative may be subject to income tax. |
Detailed explanation of new law
1.8 The OR & R payments made to families under the Better Start for Children with Disability initiative are exempt from income tax. [ Schedule 1, item 2, section 52 - 170 ]
Application and transitional provisions
1.9 These amendments apply for the 2011-12 income year and later years.
Consequential amendments
1.10 The checklist of ordinary income which is exempt has been updated. [ Schedule 1, item 1, section 11 - 15 ]