Explanatory Memorandum
Circulated By the Authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MPSchedule 1 - Age of FTB child for family tax benefit
Summary
This Schedule lowers the maximum child age of eligibility for family tax benefit Part A from 24 to 21 on 1 January 2012. This will align with the age at which a person becomes independent for the purposes of youth allowance from 1 January 2012.
Background
Sections 22 and 34 of the Family Assistance Act set out when an individual is an FTB child of another individual or an approved care organisation respectively. Subsection 22(6) provides that, where a child has turned 21 but is aged under 25, they may be an FTB child of an adult if they are undertaking full-time study, meet the residency requirements and are in the care of the adult. Similarly, subsection 34(1) provides that a child who has turned 21, but is aged under 25, may be an FTB child of an approved care organisation if they are undertaking full-time study, meet the residency requirements and the child is a client of the approved care organisation.
Subsection 1067A(4) of the Social Security Act sets out when a person becomes 'independent' for the purpose of youth allowance. From 1 January 2012, this will be when the person is 22 years of age.
To ensure consistency between family tax benefit (FTB) and youth allowance, this measure will reduce the age at which an individual ceases to be an FTB child to when they turn 22. This will be consistent with youth allowance because, from 1 January 2012, a person who has turned 22 will be independent for youth allowance purposes.
This measure includes a saving provision for students who are already enrolled in a course of education and are aged 22 to 24 years.
This measure is intended to commence on 1 January 2012, immediately after related amendments made by item 6 of Schedule 2 to the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Election Commitments and Other Measures) Act 2011.
Explanation of the changes
Amendments to the Family Assistance Act 1999
Item 1 amends paragraph 22(6)(a) of the Family Assistance Act to limit the application of this provision to individuals who are aged 21. This reflects the reduction in the FTB maximum child age from children aged 24 to children aged 21.
The note at the end of this item provides that the change to this provision will also be reflected in changes to the heading to subsection 22(6).
Item 2 repeals and substitutes paragraph 31(3)(a). This is a consequential change to reflect the amendment made by item 1.
Item 3 amends subparagraph 34(1)(a)(iii) of the Family Assistance Act to limit the application of this provision to individuals who are aged 21. This reflects the reduction in the FTB maximum child age from children aged 24 to children aged 21.
Item 4 repeals and substitutes paragraph 65(2)(a). This is a consequential change to reflect the amendment made by item 1.
Item 5 amends item 5 of the table in clause 7 of Schedule 1 to the Family Assistance Act, to reflect the reduction in the FTB maximum child age from children aged 24 to children aged 21. This amendment takes into account the proposed amendment to the table in clause 7 of Schedule 1, from 1 January 2012, made by item 6 of Schedule 2 to the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Election Commitments and Other Measures) Act 2011.
Application and saving provisions
Item 6 sets out the application and saving provision for this measure. The application provision explains how the amendments made by this Schedule apply in working out a person's eligibility for FTB. The saving provision preserves the operation of former rules for students who are already enrolled in a course of education and are aged 22 to 24 years.
Subitem 6(1) provides that the amendments in this Schedule apply in working out entitlement for FTB and rate of FTB for a day on or after 1 January 2012.
Subitem 6(2) provides that the amendments made by this Schedule do not apply to an individual or approved care organisation entitled to FTB in respect of a child who meets the criteria set out in subitem 6(3) and for the period set out in subitem 6(4). This means that the previous rules will apply to an affected child for the period set out in subitem 6(4).
Subitem 6(3) provides that the amendments made by this Schedule do not apply to a child if, immediately before 1 January 2012, the child was an FTB child of an adult or a client of an approved care organisation, had turned 22 but was aged under 25, and was enrolled in and undertaking a course of full-time study.
The note after subitem 6(3) clarifies when a child is a client of an approved care organisation.
Subitem 6(4) provides that, if the application provision in subitem 6(2) applies to a child, this will continue to apply from 1 January 2012 until the child stops being enrolled in, or stops undertaking, the course as provided for in subitem 6(3). As the previous rules will continue to apply to these children, subsection 22(6) and 34(1) of the Family Assistance Act provide that, for these children, they will also cease to be an FTB child of an individual or a client of an approved care organisation, for the purpose of FTB, when they turn 25, even where they continue to be enrolled in, and undertaking, the relevant course of study.