Explanatory Memorandum
(Circulated by the authority of the Minister for Social Services, the Hon Kevin Andrews MP)Business Services Wage Assessment Tool Payment Scheme (Consequential Amendments) Bill 2014
Clause 1 sets out how the new Act is to be cited, that is, as the Business Services Wage Assessment Tool Payment Scheme (Consequential Amendments) Act 2014.
Clause 2 provides a table setting out the commencement dates of the various sections in, and the Schedule to, the new Act.
Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.
Schedule 1 - Amendments
Summary
This Bill provides the consequential amendments that need to be made to Commonwealth legislation in light of the new scheme. For example, amendments to the taxation law will ensure payments under the scheme are eligible income for the lump sum in arrears tax offset.
Amendments to the social security law and Veterans' Entitlements Act 1986 will ensure the payments are not income tested, and so will not reduce the income support payments of supported employees who receive payments under the scheme.
Lastly, the confidentiality provisions in the social security law will be adjusted to make sure personal information can be obtained and disclosed for the purpose of administering the new scheme.
Explanation of clauses
Amendments of the Income Tax Assessment Act 1936
Item 1 inserts into subsection 159ZR(1) of the Income Tax Assessment Act 1936 a definition of BSWAT payment amount. BSWAT payment amount means a payment amount paid to a person under the Business Services Wage Assessment Tool Payment Scheme Act 2014.
Item 2 inserts a new subsection (2) at the end of section 159ZR of the Income Tax Assessment Act 1936.
Income of individuals is taxed annually at progressive marginal rates, and an individual will generally need to pay more tax when they receive a lump sum payment in lieu of payment being made over time. Acceptance of an offer under the BSWAT payment scheme for some may result in a significant impact. Most people who are paid wages based on a BSWAT assessment are likely to have low enough income that they would pay little or no tax. However, when a person receives a lump sum in a single income year, it is likely that individual's total income for that year will be increased to the point where some or all of the money received is taxed at higher marginal tax rates.
The lump sum in arrears tax offset addresses this issue. Broadly, the lump sum in arrears tax offset places an individual, who receives an amount of eligible income in the form of an eligible lump sum, in the same tax position as if they had received the amounts as income over the period in which the entitlement arose. Payments of payment amounts under the Business Services Wage Assessment Tool Payment Scheme Act 2014 will be eligible income for the purposes of the lump sum in arrears tax offset.
Amendments of the Social Security Act 1991
Item 3 inserts a new paragraph (jb) into subsection 8(8) of the Social Security Act 1991. Accordingly, payments made to a person under the BSWAT payment scheme will not be income for the purposes of the social security law.
Amendments of the Social Security (Administration) Act 1999
Item 4 amends the Social Security (Administration) Act 1999 to insert a new paragraph (g) into subsection 202(1), and item 5 inserts a new paragraph (dd) into subsection 202(2).
Accordingly, there will be capacity to obtain, disclose and use personal information, for the purposes of the BSWAT payment scheme.
Amendments of the Veterans' Entitlements Act 1986
Item 6 insert a new paragraph (ma) into subsection 5H(8) of the Veterans' Entitlements Act 1986. Accordingly, payments made to a person under the BSWAT payment scheme will not be income for the purposes of that Act.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Business Services Wage Assessment Tool Payment Scheme (Consequential Amendments) Bill 2014
This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The Business Services Wage Assessment Tool Payment Scheme Bill 2014 will establish a payment scheme for supported employees with intellectual impairment in Australian Disability Enterprises who previously had their wages assessed under the Business Services Wage Assessment Tool (BSWAT).
This companion Bill provides the consequential amendments that need to be made to Commonwealth legislation in light of the new scheme. For example, amendments to the taxation law will ensure payments under the scheme are eligible income for the lump sum in arrears tax offset.
Amendments to the social security law and the Veterans' Entitlements Act 1986 will ensure the payments are not income tested, and so will not reduce the income support payments of supported employees who receive payments under the scheme.
Lastly, the confidentiality provisions in the social security law will be adjusted to make sure personal information can be obtained and disclosed for the purpose of administering the new scheme.
Human rights implications
The Bill promotes the realisation of the right to social security for eligible participants in the BSWAT payment scheme.
The Convention on the Rights of Persons with Disability (CRPD) requires countries to recognise the right of people with disability to social protection and to take appropriate steps to ensure access by people with disability to social protection and poverty reduction programs and to retirement benefits and programmes.
This consequential amendments Bill does this by ensuring a payment received under the BSWAT payment scheme by an eligible individual with intellectual impairment is not income-tested under the social security law or Veterans' Entitlements Act 1986. It also provides the benefit of a lump sum in arrears tax offset for eligible individuals where tax is payable, and ensures personal information can be obtained, disclosed and used for the purposes of administering the new scheme, thus delivering the payments, review rights, etc, to eligible individuals.
Conclusion
The Bill is compatible with human rights because it advances the protection of human rights