Explanatory Memorandum
(Circulated by authority of the Minister for Social Services, the Hon Christian Porter MP)Notes on Clauses
Abbreviations used in this explanatory memorandum
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- Family Assistance Act means the A New Tax System (Family Assistance) Act 1999
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- Family Assistance Administration Act means the A New Tax System (Family Assistance) (Administration) Act 1999
Clause 1 sets out how the new Act is to be cited - that is, as the Social Services Legislation Amendment (Family Measures) Act 2015.
Clause 2 provides a table setting out the commencement dates of the various sections in, and Schedules to, the new Act.
Clause 3 provides that legislation that is specified in a Schedule is amended or repealed as set out in that Schedule.
Schedule 1 - Portability of family tax benefit
Summary
From 1 January 2016, the period during which family tax benefit can be paid to an individual, or in respect of a child, who is outside Australia will be reduced from 56 to six weeks.
Background
Under the current rules, an individual cannot be eligible for family tax benefit for longer than 56 weeks while temporarily absent from Australia. A child who has been absent from Australia for longer than 56 weeks cannot be an FTB child or a regular care child (these terms are defined in subsection 3(1) of the Family Assistance Act).
The 56-week portability period is not reset if an individual, an FTB child or a regular care child returns to Australia for a period of less than six weeks and then leaves again. There is also capacity to extend the 56-week portability in prescribed circumstances (for example, where an individual cannot return to Australia because they have been hospitalised or in the case of an individual who is deployed overseas as a member of the Defence Force). These rules are in section 24 of the Family Assistance Act.
An individual's rate of family tax benefit may also be affected if the individual or their FTB child or regular care child has been absent from Australia for longer than six weeks. As with section 24, there are return rules and a capacity to extend this six-week period. The relevant rules are in sections 62 to 63A of the Family Assistance Act.
The amendments made by this Schedule reduce from 56 to six weeks the period during which family tax benefit can be paid to an individual who is outside Australia or in respect of a child who is outside Australia. The short return rules will continue to apply such that the portability period will not be reset if an individual, an FTB child or a regular care child returns to Australia after the end of their portability period, remains in Australia for less than six weeks and then leaves again. The capacity to extend the portability period will remain (modified, as necessary, to take account of the reduced portability period).
If an individual stops being eligible for family tax benefit because of an absence of longer than six weeks (or extended portability period) and returns to Australia within 13 weeks of the end of the portability period, then their family tax benefit will be restarted where appropriate without the need for a new claim.
The rules that modify an individual's rate of family tax benefit after six weeks' absence from Australia will become redundant and are therefore repealed.
Due to family tax benefit's links to other payments, this amendment will have flow-on effects to other payments that rely on family tax benefit eligibility, including child care benefit and child care rebate.
Regarding child care benefit and child care rebate, it is noted that subsections 24(4) and 24(6) of the Family Assistance Act operate to limit the eligibility of an individual for child care benefit, given the definition of FTB child for the purposes of child care benefit in subsection 3(1) of the Family Assistance Act. Specifically, in the relevant circumstances in subsections 24(4) and 24(6) of the Family Assistance Act, sections 42, 44 and 45 of the Family Assistance Act are effectively amended by these subsections. This will now mean the individual is not conditionally eligible (for the purposes of section 42) or eligible (for the purposes of sections 44 and 45) for child care benefit.
Accordingly, an individual's conditional eligibility or eligibility for child care benefit may be affected by the amendments made by this Schedule.
Explanation of the changes
Amendments to the Family Assistance Act
Section 24 of the Family Assistance Act outlines the effect of certain absences from Australia on family tax benefit. Under the current rules, the period for which family tax benefit can be paid to an individual, or in respect of a child, who is outside Australia is 56 weeks. That period can be extended in specified circumstances to a maximum period of three years.
Items 3, 4 and 6 make amendments to subsections 24(1) and (4) to reduce the 56-week portability period to six weeks.
Items 5 and 7 repeal subsections 24(2) and (5) respectively. These return rules are no longer required. The return rules in subsections 24(3) and (6) will remain.
Items 8 to 19 amend other provisions in section 24 to reflect the changed portability period and repeal of subsections 24(2) and (5).
Sections 62 to 63A currently modify the way in which an individual's rate of family tax benefit is calculated where an individual, an FTB child or a regular care child has been absent from Australia for longer than six weeks (or extended period if relevant). These provisions use the terms absent overseas FTB child, absent overseas recipient and absent overseas regular care child, which are then defined in subsection 3(1) of the Family Assistance Act.
With the reduction in the portability period, sections 62 to 63A become redundant and are repealed by item 25. During the portability period, an individual will continue to receive their full rate of family tax benefit (subject to all relevant eligibility conditions continuing to be satisfied), as is currently the case.
Item 24 makes a consequential amendment to subsection 58(1) to reflect the repeal of sections 62 to 63A.
Item 1 repeals from subsection 3(1) of the Family Assistance Act the definitions of absent overseas FTB child, absent overseas recipient and absent overseas regular care child, which are redundant because of the amendment made by item 25. Items 2, 20, 21, 22, 23 and 26 then omit references to these terms in provisions in the Family Assistance Act and make other related consequential amendments as follows.
For single income family supplement, item 23 inserts new subsections 57G(4) and (5) into the Family Assistance Act. New subsection 57G(4) provides a new definition of absent overseas recipient to ensure that an individual who has been absent from Australia for longer than six weeks cannot be eligible for single income family supplement. Subsection 57G(5) ensures that the six-week portability period is not reset if a person who has been absent from Australia for longer six weeks returns to Australia and then leaves again less than six weeks after returning. These rules are similar to the rules currently in subsections 62(2) and (3). In relation to the definition of qualifying child in subsection 57G(3), the concept of absent overseas FTB child is redundant and removed, but the current references to section 63A are replaced with references to the equivalent subsections 24(7) and (9). For the purposes of determining whether an individual has a qualifying child, any extension to an FTB child's portability period will continue to be disregarded.
Amendments to the Family Assistance Administration Act
Sections 30A and 30B provide for variation of an individual's instalment entitlement determination for failure to notify a departure from Australia. These provisions currently refer to 56 weeks. Consequential amendments are made by items 27 and 28 to change these references to six weeks.
Item 29 amends section 31 of the Family Assistance Administration Act to insert new subsections 31(1C), (1D) and (1E).
Subsection 31(1) currently provides for the variation of an instalment entitlement determination where an event occurs that affects an individual's eligibility for, or rate of, family tax benefit. An individual's entitlement determination would be varied with the effect that they are not entitled to family tax benefit where the individual ceases to be eligible for family tax benefit because the individual, or, in some cases, their FTB child or regular care child, has been overseas for longer than the portability period. The amendments made by this Schedule would not change this.
However, if the individual or child returns to Australia within 13 weeks after the end of their six-week portability period (or extended period if relevant) and the Secretary is satisfied that the individual is eligible for family tax benefit, then the individual's entitlement determination would again be varied to restart payment of family tax benefit from the date of the return to Australia. New subsections 31(1C) and (1D) have this effect. A note at the end of each of these provisions informs the reader that a new claim would not be required in the circumstances covered by the provision.
New subsection 31(1E) makes it clear that these new provisions do not limit any later application of subsection 31(1) in relation to the entitlement determination. An example of how this new provision works is also provided.
Item 30 inserts new subsections 65(3), (4) and (5) into the variation rules which apply in relation to child care benefit.
Under new subsection 65(3), if an individual's determination is varied because the child in respect of whom the determination has been made has been absent from Australia, the child returns to Australia within 13 weeks after the end of their six-week portability period (or extended period if relevant) and the Secretary is satisfied that the individual is conditionally eligible for child care benefit by fee relief when the child returns, then the individual's determination would again be varied to enable them to receive the benefit of fee reductions from the date of the child's return to Australia. A note at the end of this provision informs the reader that a new claim would not be required in the circumstances covered by the provision.
Under new subsection 65(4), if an individual's determination is varied because they have been absent from Australia, the individual returns to Australia within 13 weeks after the end of their six-week portability period (or extended period if relevant) and the Secretary is satisfied that the individual is conditionally eligible for child care benefit by fee relief, then the individual's determination would again be varied to enable them to receive the benefit of fee reductions from the date of their return to Australia. A note at the end of this provision informs the reader that a new claim would not be required in the circumstances covered by the provision.
New subsection 65(5) makes it clear that new subsections 65(3) and (4) do not limit any later application of subsection 65(1) if the child or the individual, respectively, is again absent from Australia for longer than six weeks. An example of how this new provision works is also provided.
Item 31 contains relevant application and saving provision.
As a general rule, subitem 31(1) provides that the amendments made by this Schedule apply in relation to absences from Australia starting on or after commencement (1 January 2016).
However, this general rule is subject to subitems 31(2) and (3), which are described below.
If a child's 56-week portability period commenced before 1 January 2016, the child returns to Australia on or after 1 January 2016 and then leaves again less than six weeks later (such that current subsections 24(2) or (3) would have applied), then the current rules continue to apply in relation to the child's subsequent absence.
Similarly, if an individual's 56-week portability period commenced before 1 January 2016, the individual returns to Australia on or after 1 January 2016 and then leaves again less than six weeks later (such that current subsection 24(5) or (6) would have applied), then the current rules continue to apply in relation to the individual's subsequent absence.
Schedule 2 - Large family supplement
Summary
From 1 July 2016, the large family supplement will cease.
Background
Large family supplement is a component of family tax benefit Part A, and is currently paid at a rate of $324.85 per year ($12.46 per fortnight) for the fourth and each subsequent FTB child in the family.
The measure to cease large family supplement from 1 July 2016 will simplify payments by removing a non-essential component of family tax benefit. It is consistent with research indicating that larger families do not face higher per-child costs compared to other families. Families will continue to receive adequate assistance through the per-child rate of family tax benefit Part A for each eligible child.
Explanation of the changes
Amendments to the Family Assistance Act
The eligibility and rate rules for large family supplement are in clauses 34 and 35 of Schedule 1 to the Family Assistance Act (Division 1 of Part 5 of Schedule 1). Under clause 34, an amount of large family supplement is added in working out an individual's Part A rate if the individual has four or more children. Clause 35 provides a formula for calculating the amount of large family supplement. Item 5 repeals these provisions.
Large family supplement is included in the rate calculation process set out in the method statements in clauses 3 and 25 of Schedule 1 to the Family Assistance Act. Items 1 and 4 repeal the steps in these method statements that relate to large family supplement.
Large family supplement is also relevant in working out an individual's income maintenance ceiling in certain circumstances for the purposes of the maintenance income test. Items 2 and 3 make consequential amendments to remove large family supplement from the maintenance income test.
Schedule 4 to the Family Assistance Act provides for indexation of specified rates and amounts. Large family supplement is currently subject to indexation within the terms of Schedule 4. Items 6 and 7 repeal relevant indexation provisions that reference large family supplement.
Item 8 provides that the amendments to cease large family supplement apply in working out the rate of family tax benefit for days on and after commencement (being 1 July 2016).