Explanatory Memorandum
Circulated By Authority Of The Minister For Employment And Workplace Relations The Honourable Julia Gillard MpOUTLINE
This Bill amends the Income Tax Assessment Act 1997, the Social Security Act 1991 and the Social Security (Administration) Act 1999 to cease eligibility and payment of the employment entry payment. This measure will provide net savings of $60.8 million over five years.
This measure will simplify and reduce overlap in the provision of financial and other assistance to income support recipients moving into employment. It also delivers on the Government's commitment to responsible economic management.
FINANCIAL IMPACT
This measure has a total estimated net saving of $60.8 million over 5 years.
| Expense ($m) | |||||
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | 2011-12 | |
| Department of Families, Housing, Community Services and Indigenous Affairs | 0.1 | -4.2 | -4.3 | -4.2 | -4.2 |
| Department of Education, Employment and Workplace Relations | 0.9 | -10.7 | -11.5 | -11.4 | -11.3 |
| Total | 1.0 | -14.9 | -15.8 | -15.6 | -15.5 |
NOTES ON CLAUSES
Clause 1 provides for the Act to be cited as the Social Security and Other Legislation Amendment (Employment Entry Payment) Act 2008.
Clause 2 sets out that the Act will commence on 1 July 2008.
Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule and that any other item in a Schedule has effect according to its terms.
For ease of description, this explanatory memorandum uses the following abbreviation:
'Social Security Act' means the Social Security Act 1991.
Schedule 1 - Amendments
Income Tax Assessment Act 1997
Items 1 and 2 are consequential amendments which provide for the repeal of references to, and income tax exemptions for, an employment entry payment contained in the Income Tax Assessment Act 1997.
Social Security Act 1991
Item 3 repeals subparagraph 17(1)(l)(iii). Subparagraph 17(1)(l)(iii) includes the employment entry payment in the definition of 'compensation affected payment' for the purposes of the compensation recovery provisions for an employment entry payment.
Item 4 repeals Part 2.13. Part 2.13 contains the qualification and other provisions for the employment entry payment.
Item 5 repeals paragraph 1061EO(a) of the Social Security Act. Paragraph 1061EO(a) provides that a person is not eligible for a special employment advance if they are eligible for an employment entry payment and have made a claim for the employment entry payment in respect of offered employment. As the employment entry payment is being abolished, this provision will no longer be required.
Item 6 omits the phrase 'subject to section 1061EY' from subsection 1061EW(2). This is a consequential amendment as section 1061EY is being repealed by this Schedule.
Item 7 omits the phrase 'and section 1061EY' from subsection 1061EX(2). This is a consequential amendment as section 1061EY is being repealed by this Schedule.
Item 8 repeals section 1061EY. Section 1061EY provides that where a person claims a special employment advance and an employment entry payment has already been paid in respect of the employment for which the special employment advance is paid, the amount of the special employment advance that, apart from section 1061EY, would be payable to the person is reduced by the amount of the employment entry payment. This is a consequential amendment.
Social Security ( Administration ) Act 1999
Item 9 repeals paragraph (d) of the definition of supplementary payment contained in subsection 15(5). Subsection 15(5) provides a definition of supplementary payment for the purposes of deemed claims.
Item 10 repeals paragraph (e) of the definition of 'lump sum benefit' contained in subsection 47(1). Paragraph 47(1)(e) provides an employment entry payment is a lump sum benefit.
Item 11 provides transitional provisions to ensure that eligible income support recipients or former income support recipients who qualify for, but do not claim, the employment entry payment prior to 1 July 2008 will not be disadvantaged by these amendments.
Qualification for an employment entry payment may arise in a number of circumstances. This may occur where an eligible income support recipient:
- •
- commences full-time employment;
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- commences or increases their hours of work to at least 15 hours per week and sustains that level of employment for at least four consecutive weeks, where they have a part-time work requirement;
- •
- increases their income above a threshold amount; or
- •
- in certain circumstances, enters into an agreement to commence employment.
Broadly, depending on the particular payment type and the event, under the existing rules income support recipients or former income support recipients can claim an employment entry payment up to 28 or 56 days (depending on the payment and event) after the events occurs. The transitional provisions mean that an eligible income support recipient or former income support recipient will be able to receive an employment entry payment after 1 July 2008 where one of the above events occurs prior to 1 July 2008 as long as the claim is made in accordance with the rules that would have applied to the person if the employment entry payment had not been repealed.
Subitem 11(1) will also ensure that eligible income support recipients or former income support recipients who receive the employment entry payment after 1 July 2008 will retain the income tax exemption for that payment.
Subitem 11(2) provides that despite the repeal of employment entry payment from the definition of 'compensation affected payment' in subsection 17(1), employment entry payments paid before, on or after the commencement of this Act will continue to be compensation affected payments. Therefore, employment entry payments will continue to be subject to the compensation recovery provisions of the social security law.