House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing, the Hon Michael Sukkar MP)

General outline and financial impact

Schedule 1 - Medicare levy and Medicare levy surcharge income thresholds

Schedule 1 to the Bill amends the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 to increase:

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the Medicare levy low-income thresholds for individuals and families (along with the dependent child/student component of the family threshold) in line with movements in the CPI;

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the Medicare levy low-income thresholds for individuals and families eligible for SAPTO (along with the dependent child/student component of the family threshold), in line with movements in the CPI; and

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the Medicare levy surcharge low-income threshold in line with movements in the CPI.

Date of effect: This Schedule applies to the 2020-21 income year and later income years.

Proposal announced: This Schedule fully implements the measure to increase the Medicare levy low-income thresholds from the 2021-22 Budget.

Financial impact: The measure is estimated to decrease receipts by $250 million over the forward estimates period comprising:

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: This Schedule will not have any ongoing compliance cost impact or additional impact on regulatory burden.

Schedule 2 - Family Home Guarantee

Schedule 2 to the Bill amends the NHFIC Act to expand the objects of the Act in establishing NHFIC to improve housing outcomes for Australians by assisting earlier access to the housing market by single parents with dependants. The amendments to the objects of the NHFIC Act enable the Minister to issue directions to NHFIC concerning the Family Home Guarantee through the NHFIC Investment Mandate.

Date of effect: The amendments apply from the later of 1 July 2021 and the day after Royal Assent to allow, subject to timing of passage of the Bill, for the issuing of guarantees as soon as possible from 1 July 2021.

Proposal announced: This Schedule implements the Family Home Guarantee measure from the 2021-22 Budget.

Financial impact: It is not anticipated that guarantees would be called on until at least the 2023-24 financial year. Estimated default claim costs are around $0.3 million over the two financial years from 2023-24 or around $7 million over the life of the program where up to 10,000 guarantees are expected to be issued.

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: Participating in the Family Home Guarantee will involve minor compliance costs for business (lenders and mortgage brokers). Compliance costs have been estimated at $0.4 million per year.

Schedule 3 - Payments to Thalidomide survivors

Schedule 3 to the Bill amends the ITAA 1997, the SS Act and VEA to provide that annual and lump sum payments made by the Commonwealth to thalidomide survivors are exempt from income tax and do not count as income for the purposes of any income support payments.

Date of effect: 1 July 2021.

Proposal announced: This Schedule partially implements the measure Support for Australia's Thalidomide Survivors from the 2020-21 Budget.

Financial impact: The amendments to make the payments exempt from income tax, the social security income test and the veterans' entitlements income test will not have a financial impact.

Human rights implications: This Schedule is compatible with human rights as it supports a person's right to social security. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: Nil.

Schedule 4 - Recovery grants for 2021 floods and storms

Schedule 4 to the Bill amends the ITAA 1997 to make disaster recovery grant payments in relation to the storms and floods that occurred in February and March 2021 non-assessable non-exempt income.

Date of effect: This Schedule applies to payments made in the 2020-2021 income year and later income years.

Proposal announced: This Schedule fully implements the measure to make disaster recovery grant payments in relation to the New South Wales storms and floods non-assessable non-exempt income from the 2021-22 Budget.

Financial impact: This measure is estimated to have no impact on receipts over the forward estimates period.

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: This Schedule is unlikely to have more than a minor regulatory impact.

Schedule 5 - Deductible gift recipients-new specific recipients

Schedule 5 to the Bill amends the ITAA 1997 to allow the following entities to be deductible gift recipients under the income tax law:

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Alliance for Journalists' Freedom Ltd;

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The Andy Thomas Space Foundation Limited;

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Youthsafe;

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RAS Foundation Limited;

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The Judith Neilson Institute for Journalism and Ideas; and

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The Great Synagogue Foundation.

Schedule 5 to the Bill amends the ITAA 1997 to extend the period in which the following entities are deductible gift recipients under the income tax law:

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The Centre for Entrepreneurial Research and Innovation Limited; and

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Sydney Chevra Kadisha.

Date of effect: The amendments apply to gifts made on and after 1 July 2020 to:

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Alliance for Journalists' Freedom Ltd;

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The Andy Thomas Space Foundation Limited;

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Youthsafe;

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RAS Foundation Limited; and

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The Judith Neilson Institute for Journalism and Ideas.

The amendments apply to gifts made on and after 1 July 2020 and before 1 July 2025 to:

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The Great Synagogue Foundation.

The amendments extend the period of the listing of The Centre for Entrepreneurial Research and Innovation Limited so that it applies on and after 2 January 2017.

The amendments extend the period of the listing of the Sydney Chevra Kadisha so that applies on and after 1 January 2018 until 30 June 2022 (inclusive).

Proposal announced: This Schedule partially implements the measure 'Philanthropy - updates to the list of specifically listed deductible gift recipients' from the 2020-21 Budget and the 2019-20 MYEFO.

Financial impact: Specifically listing the Alliance for Journalists' Freedom Ltd, The Andy Thomas Space Foundation Limited, Youthsafe, RAS Foundation Limited, The Judith Neilson Institution for Journalism and Ideas, The Great Synagogue Foundation, and extending the specific listing of The Centre for Entrepreneurial Research and Innovation Limited and Sydney Chevra Kadisha, was part of the 2020-21 Budget measure 'Philanthropy - updates to the list of specifically listed deductible gift recipients'. The measure was estimated to decrease receipts by $4.1 million over the then forward estimates period to 2023-24.

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: Low.