House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP

Schedule 2 - Health checks for young FTB children

Summary

As one of its election commitments, the Government announced the Healthy Start for School measure for family tax benefit (FTB) recipients on income support payments. This measure will make the payment of the FTB Part A supplement for a child turning four in a particular income year conditional on the child having received a basic health assessment. The measure will commence on 1 July 2011.

Background

The objective of the Healthy Start for School measure is to encourage parents and carers on income support payments to organise a health check for their child before the child starts school. The intention is that children have a basic health check to see if they are healthy, fit and ready to learn when they start school.

Health checks may detect developmental delays and conditions, such as problems affecting hearing and vision, which are problems that make it more difficult for children to learn when they start school. These checks will allow for early identification of health issues and intervention strategies before the child starts school.

To this end, this measure would ensure that the payment of the FTB Part A supplement for a particular child for the income year in which the child turns four, would be conditional on the child having such a health check. The new requirements apply to families where either member of a couple has received income support for any part of the year.

Current legislative framework for payment of the FTB Part A supplement

An individual's rate of FTB is calculated in accordance with the relevant provisions in Schedule 1 to the Family Assistance Act. Where an individual's Part A rate is worked out under Method 1 or 2, the individual's maximum rate includes the individual's FTB Part A supplement under clause 38A of Schedule 1. The relevant method statements are set out in clauses 3 and 25 of Schedule 1.

Clause 38A of Schedule 1 to the Family Assistance Act sets the rate of the FTB Part A supplement. The amount of an individual's FTB Part A supplement is the applicable supplement amount for each FTB child of the individual. The applicable supplement amount is the FTB gross supplement amount ( currently $726.35) or a percentage of that amount if there is a shared care percentage for the child.

However, section 32A of the Family Assistance Administration Act currently requires the Secretary to disregard the FTB Part A supplement in calculating an individual's Part A rate unless and until the individual satisfies all relevant FTB reconciliation conditions (as set out in section 32B). When this occurs, the Secretary must review the individual's entitlement under section 105 of the Family Assistance Administration Act.

The FTB Part A supplement can be included in an individual's rate so long as any required tax returns are lodged before the end of two years after the relevant income year. If the FTB reconciliation conditions are not satisfied within this timeframe, the FTB Part A supplement cannot be paid.

In broad terms, the Healthy Start for School measure involves adding another condition, the health check requirement, to the payment of the FTB Part A supplement for a particular child for families who have received an income support payment in that year. The relevant rules are included in new section 61A in Part 4 of Division 1 of the Family Assistance Act (which sets out the rate rules for FTB). Consequential and related amendments are also made to the Family Assistance Act and the Family Assistance Administration Act.

Explanation of the changes

Amendments to the Family Assistance Act

Division 1 of Part 4 of the Family Assistance Act directs the reader to Schedule 1 to that Act to calculate an individual's annual rate of FTB and sets out some of the circumstances that may affect or modify that rate calculation process.

Item 3 inserts new section 61A into Division 1 of Part 4. New section 61A sets out the situations in which the health check requirement applies to an individual and how this requirement affects payment of the FTB Part A supplement to an individual in respect of a particular FTB child.

There are two situations in which the health check requirement will apply. These are described in new subsections 61A(1) and (2).

New subsection 61A(1) sets out how the new health check requirement applies to an individual who is a parent of an FTB child who turns four in a particular income year or who is partnered to a parent of the child. (Under section 27 of the Family Assistance Act, if two individuals are members of the same couple and one or both have a child from another relationship, then an FTB child of the parent is also an FTB child of their partner. This enables the non-parent partner to be paid FTB for that child.)

If an individual has an FTB child who turned four in an income year and, for one or more days in that income year, the individual or their partner is a parent of the FTB child and is receiving a social security pension, a social security benefit, a service pension or an income support supplement, then the FTB Part A supplement is not to be included in calculating the individual's Part A rate for the child for those days unless certain conditions relating to the health check requirement are met. To this end, clause 38A of Schedule 1 to the Family Assistance Act, which provides for the amount of the FTB Part A supplement to be added in working out an individual's maximum Part A rate, is disregarded for the relevant days if the relevant conditions are not met.

New subsection 61A(2) deals with non-parent carers such as foster or kinship care. This subsection relates to the situation where an individual has an FTB child who turned four in a particular income year and, for one or more days in that income year on which the child is an FTB child of the individual, neither the individual nor their partner is a parent of the child and the individual or their partner is receiving a social security pension, a social security benefit, a service pension or an income support supplement.

If the number of days in the income year that the child is both an FTB child of the individual, and the individual or their partner is receiving the relevant social security or veterans' payment, totals at least 182 days (26 weeks), and if the child is an FTB child of the individual on the last day of that year, then the health check requirement applies in relation to the child and can affect payment of the FTB Part A supplement to the individual for those days. If the health check requirement is not met, the FTB Part A supplement is disregarded in calculating the individual's Part A rate for the child for those days.

These conditions for non-parent carers ensure that there has been a sufficient period of ongoing care by the carer for it to be reasonable to expect the carer to have organised a health check for the child. In addition, if the child is no longer an FTB child of the non-parent carer at the end of the income year in which the child turned four, they would have no continuing legal responsibility in respect of the child and would therefore be unable to play a role in ensuring that the child undertakes a health check within the subsequent two years (the maximum period for meeting the relevant conditions if they apply). In these circumstances, it is unreasonable to withhold the FTB Part A supplement.

In comparison, a parent who has lost care is more likely to have an ongoing connection with the child and could be expected to play a role in ensuring that the health check requirement is met. Therefore, it is appropriate for the health check requirement to apply to a parent who ceases to have care of the child before the end of the income year.

Subsection 3(1) of the Family Assistance Act currently defines social security pension, social security benefit, service pension and income support supplement by reference to the Social Security Act.

Item 1 makes a consequential change to the definition of receiving in subsection 3(1) by inserting a reference to new section 61A into paragraph (b) of the definition. Paragraphs (a) and (c) of the definition of receiving will also apply without the need for amendment. The general effect is to incorporate the social security concept of receiving in relation to social security payments and to ensure that an individual is taken to be receiving a social security pension or benefit in certain circumstances where the pension or benefit is not being paid (such as where the application of a compliance period results in cessation of payment). This is consistent with the approach taken in other provisions in the family assistance law which refer to an individual receiving a social security pension, social security benefit, service pension or an income support supplement (for example, in relation to the application of the income test for FTB Part A).

Item 2 makes a technical correction to the definition of receiving.

New subsection 61A(9) defines parent as including an adoptive parent and a relationship parent. A relationship parent is currently defined in subsection 3(1) of the Family Assistance Act by reference to the Social Security Act.

In the two situations described above where the health check requirement applies, the FTB Part A supplement is disregarded in the FTB rate calculation process for the relevant days in the income year in which the FTB child turned four unless two things happen.

The first is that, at any time before the end of the second income year after the one in which the child turned four, the Secretary becomes aware of information suggesting that:

•

the child meets the health check requirement; or

•

the child is in a class exempted from the requirement by a determination of the Minister; or

•

the child is in a class that is taken to have met the requirement by a determination of the Minister; or

•

there are special circumstances relating to the individual or their partner that make it inappropriate for them to arrange for a health check for the child.

The second is that the Secretary is satisfied at any time (including after the two-year timeframe) that one of these conditions is met within the required two-year timeframe.

These rules enable the health check requirement to be met within two income years after the income year in which the relevant FTB child turned four. However, they also cover situations where information suggesting that the health check requirement has been met is provided within the two-year timeframe but is not considered until after that time.

While 'special circumstances' is not defined, it is a concept that is well understood due to its use in various provisions in family assistance, social security and child support legislation and decisions by courts and tribunals on its meaning. In Re Beadle and Director-General of Social Security ( 1984), the AAT (Toohey J presiding) said:

An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

New subsection 61A(3) provides that the health check requirement does not apply in relation to a child who dies before the end of the second income year after the income year in which the child turned four.

New subsection 61A(4) provides that the health check requirement for a child is that he or she must meet the requirements specified in a legislative instrument made by the Minister under new subsection 61A(5) for this purpose.

New subsection 61A(6) enables the Minister, by legislative instrument, to exempt children included in a specified class from the health check requirement, while new subsection 61A(7) enables the Minister, by legislative instrument, to determine that children in a specified class are taken to meet the health check requirement. There are similar instrument-making powers relating to the immunisation requirement for maternity immunisation allowance.

An example of a situation in which an exemption may be considered appropriate is where the child has a severe disability or a terminal illness which would make it unreasonable to expect them to undergo the required health check. A child may be taken to meet the health check requirement in certain circumstances, for example, where a comparable health check has been undertaken in an overseas country, by a qualified health practitioner.

New subsection 61A(8) makes it clear that new section 61A does not limit the application of current section 32A of the Family Assistance Administration Act (which requires the FTB Part A supplement to be disregarded from the FTB rate calculation process unless and until the relevant FTB reconciliation conditions are satisfied). This means that, if the health check requirement is satisfied in relation to an individual and FTB child but the individual does not satisfy the relevant FTB reconciliation conditions, the FTB Part A supplement cannot be included in the individual's rate of FTB.

Conversely, if an individual satisfies the FTB reconciliation conditions but has not met the health check requirement in relation to a relevant child, then the individual's FTB entitlement for the relevant income year would still be reviewed under section 105 of the Family Assistance Administration Act, but the FTB Part A supplement would be disregarded for the period or periods in the relevant income year that the individual is subject to the health check requirement in relation to the relevant child. At this time, the relevant child could attract still an FTB Part B supplement, and the FTB Part A supplement for any part of the relevant income year that the health check requirement does not apply to the individual because, for example, an income support payment was not being received. If the health check requirement is met at a later time and within two years after the end of the income year in which the relevant child turned four, then the individual's FTB entitlement can again be reviewed and the FTB Part A supplement for the relevant child included in the individual's rate of FTB as appropriate for the relevant income year.

Example

Mum and Dad have two FTB children, Jan and Tom. Mum receives FTB by instalment for the two children. Jan turns four in 2012-13. During 2012-13, Mum receives parenting payment from July to October 2012 and then Dad starts receiving disability support pension from March 2013. In November 2013, reconciliation for 2012-13 occurs as Mum has met the FTB reconciliation conditions and adjusted taxable income (ATI) for Mum and Dad is known. However, Jan has not had a health check at this time. In reviewing Mum's entitlement to FTB for the 2012-13 income year, Mum's rate of FTB would be recalculated using actual ATI and would include the FTB Part A supplement for Tom for the whole income year and, for Jan, for the period or periods in the income year when Mum and Dad were not receiving an income support payment (that is, from November 2012 to February 2013). If Jan has a health check which meets the requirements in the Minister's determination before 1 July 2015 (within two years after the end of the relevant income year), then Mum's FTB can again be reviewed and her rate of FTB for the relevant periods in 2012-13 recalculated to include the FTB Part A supplement for Jan.

Item 4 provides that the amendment made by item 3 applies in relation to the 2011-2012 income year and subsequent income years.

Amendments to the Family Assistance Administration Act

Section 105 of the Family Assistance Administration Act enables the Secretary to review certain decisions (as specified in section 104) on the Secretary's own initiative.

Where the Secretary reviews a decision relating to the payment of FTB by instalment and makes a favourable decision more than 52 weeks after the person concerned was given notice of the original decision, section 107 provides that the date of effect of the review decision cannot be earlier than the first day of the income year before the income year in which the review decision was made. There are exceptions where these date of effect rules do not limit the availability of arrears of FTB. One example is reconciliation, where the review is undertaken by the Secretary because an assessment of taxable income has been made by the Commissioner for Taxation on the basis of a relevant tax return lodged within two years after the end of the relevant income year.

Item 6 provides for further exceptions where these date of effect rules do not limit the availability of arrears of FTB.

Under new subsection 107(3A), the date of effect of a review decision relating to payment of FTB by instalment is not limited where two conditions are met. The first condition is that the FTB Part A supplement was disregarded under new section 61A of the Family Assistance Act in relation to an individual, an FTB child and a day (in the income year in which the child turned four). The second is that the review was undertaken because the Secretary had information before the end of the second income year after the income year in which the relevant FTB child turned four suggesting that the FTB Part A supplement should not have been disregarded and the Secretary is satisfied that the FTB Part A supplement should not be disregarded.

Under new subsection 107(3B), the date of effect of a review decision relating to payment of FTB by instalment is not limited where the FTB Part A supplement should not be disregarded because the relevant FTB child has died within two years after the year in which the child turned four (that is, the rule in new subsection 61A(3) of the Family Assistance Act applies).

A person can also seek internal review of a decision under section 109A of the Family Assistance Administration Act. As a general rule, an application for review of a decision other than an excepted decision must be made no later than 52 weeks after the applicant was notified of the decision. An excepted decision includes a decision relating to the payment of FTB by instalment (the relevant definition is in subsection 109D(6)). In addition, there are specified exceptions to the general time limit rule.

Item 7 provides for further exceptions to the 52-week time limit on applying for internal review.

Under new paragraph 109D(4)(d), an application for review of a decision relating to the payment of FTB (other than an excepted decision) can be made more than 52 weeks after the decision was notified where the FTB Part A supplement was disregarded, the application is made because the applicant considers that section 61A of the Family Assistance Act did not prevent the FTB Part A supplement being included in the applicant's rate of FTB, and the application is made before the end of the second income year after the income year in which the relevant FTB child turned four.

Under new paragraph 109D(4)(e), the 52-week timeframe for seeking review does not apply if the application for review is made because the FTB Part A supplement should not be disregarded because the relevant child died within two years after the income year in which the child turned four (that is, the rule in new subsection 61A(3) of the Family Assistance Act applies).

Where a person applies for internal review of a decision, relating to the payment of FTB by instalment, more than 52 weeks after the person concerned was given notice of the original decision, and where the Secretary or an authorised review officer makes a favourable review decision, section 109E provides that the date of effect of the review decision cannot be earlier than the first day of the income year before the income year in which the application was made. There are specified exceptions to the general date of effect rule.

Item 8 provides for further exceptions where these date of effect rules do not limit the availability of arrears of FTB.

Under new paragraph 109E(3)(d), the date of effect of a review decision relating to payment of FTB by instalment is not limited where the FTB Part A supplement was disregarded, the application is made because the applicant considers that section 61A of the Family Assistance Act did not prevent the FTB Part A supplement being included in the applicant's rate of FTB, and the application is made before the end of the second income year after the income year in which the relevant FTB child turned four.

Under new paragraph 109E(3)(e), the date of effect of a review decision is not limited if the application for review is made because the FTB Part A supplement should not be disregarded because the relevant child died within two years after the income year in which the child turned four (that is, the rule in new subsection 61A(3) of the Family Assistance Act applies).