House of Representatives

Explanatory Memorandum

(Circulated By The Authority of the Minister for Education and Minister for Employment and Workplace Relations the Honourable Julia Gillard MP)

General outline and financial impact

Outline

Child care rebate amendments

The Bill makes amendments to the family assistance law as it relates to child care rebate to:

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change the name of the rebate from 'child care tax rebate' (CCTR) to 'child care rebate' (CCR) in recognition of the fact that the rebate is no longer a tax offset under the taxation legislation but it is a benefit paid under the family assistance law;

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align the operation of CCR provisions with child care benefit (CCB) provisions by extending payment of CCR for care provided by an approved child care service to a child of a deceased individual to an individual who is eligible for CCB in respect of that care in substitution for the deceased individual;

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provide the Secretary with a discretion not to make a separate payment to an individual of a quarterly CCR amount for the fourth quarter of an income year but to include the calculation relevant to that quarter in the determination of the individual's entitlement for CCR for the income year in which the fourth quarter falls.

Recovery of debts

Amendments are made to CCR debt creation provisions in the family assistance law to take into account the introduction of quarterly CCR payments from July 2008 and the amendments made in this Bill providing for payment of CCR to an eligible individual in substitution for the deceased individual. The amendments ensure that if an individual was paid an amount by way of quarterly CCR payments or by way of CCR in substitution and the individual was not entitled to that amount or was entitled to a lower amount, the amount, or the overpayment amount, is a debt due to the Commonwealth by the individual.

Compliance with child care services' obligations

Child care services approved for the purposes of the family assistance law are required to comply with various obligations imposed by the family assistance law. Civil penalties specified in the A New Tax System (Family Assistance) (Administration) Act 1999 apply for failure to comply with some of those obligations. Amendments made by this Bill enable the imposition of civil penalties in regulations made under that Act.

An operator of an approved child care service must, as a condition of the service's continued approval, notify the Secretary of an intention to cease operating the service at least 30 days before the operator ceases to operate the service. Amendments are made to require the notice to be provided in a form, manner or way approved for this purpose by the Secretary. A further amendment imposes an additional obligation to give further information about the intended cessation upon written request from the Secretary.

The legislative intention behind the imposition of obligations, or conferment of permissions, on approved child care services, has been clarified by the amendment specifying that the obligations and permissions are taken to be imposed on the person who operates the service.

CCB % provisions

The Bill makes amendments to the family assistance law consequential to the removal of the minimum CCB rate from 7 July 2008. The amendment enables reconsideration of a determination of no entitlement to CCB for a past period or entitlement to CCB by single payment/in substitution made in respect of a claimant who opted for a zero CCB rate or who did not provide the specified information required to calculate the CCB rate. The reconsideration may occur if the claimant provides the documentation relevant to the recalculation of his/her entitlement by the end of the second year following the year in which the determination of no entitlement was made.

Financial impact

Nil

Notes on clauses

Clause 1 - Short title

Provides for the Act to be cited as the Family Assistance Legislation Amendment (Child Care) Act 2009.

Clause 2 - Commencement

Subclause 2(1) inserts a three column table setting out commencement information for various provisions in the Act. Each provision of the Act specified in column 1 of the table commences (or is taken to have commenced) in accordance with column 2 of the table and any other statement in column 2 has effect according to its terms.

The table has the effect of providing for sections 1-3, Schedules 1, 2 and 3 and Parts 1, 2 and 3 of Schedule 5 to commence on Royal Assent; Schedule 4, Part 1 to commence on the day after Royal Assent; Schedule 4 Part 2 to commence on a single day to be fixed by Proclamation; and Part 4 of Schedule 5 to commence on the 28th day after the day on which this Act receives Royal Assent.

Clause 3 - Schedule(s)

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 abbreviations:

'Family Assistance Act' means the A New Tax System (Family Assistance) Act 1999; and

'Family Assistance (Administration) Act' means the A New Tax System (Family Assistance) (Administration) Act 1999.

Schedule 1 - Changing name of rebate

Part 1 - Specific amendments

A New Tax System (Family Assistance) Act 1999

Item 1 - Subsection 3(1)

Inserts the new definition child care rebate . This definition provides that child care rebate means a rebate for which a person is eligible under Division 5 of Part 3.

Item 2 - Subsection 3(1) (definition of child care tax rebate)

Repeals the definition of child care tax rebate .

Items 3 to 6

Repeal references to child care tax rebate occurring in the specified division and subdivision headings and substitute references to child care rebate .

Items 7 to 10

Repeal references to child care tax rebate limit and CCTR limit occurring in the specified clauses and substitute with references to child care rebate limit and CCR limit .

A New Tax System (Family Assistance) (Administration) Act 1999

Items 11 to 14

Repeal references to child care tax rebate in the specified subdivision and division heading and insert references to child care rebate .

Part 2 - Bulk amendments

Items 15 to 41 make bulk amendments to the specified provisions of the Family Assistance Act, the Family Assistance (Administration) Act, the Income Tax Assessment Act 1997 and the Family Assistance Legislation Amendment (Child Care Budget and Other Measures) Act 2008 in which references to the term child care tax rebate occur, by omitting the term child care tax rebate and substituting child care rebate .

Part 3 - Transitional

Item 42 - Operation of laws

Inserts a transitional provision. Subitems (1) and (2) provide that if a thing was done or omitted to be done before the commencement of the Schedule in relation to child care tax rebate, the thing is taken to be done or omitted to be done in relation to child care rebate for the purposes of the operation of any law of the Commonwealth after the commencement of the Schedule.

Subitem (3) provides that subitems (1) and (2) do not have the effect of changing the time at which a thing was done or omitted to be done under subitems (1) and (2).

Subitem (4) provides that the Minister may, by writing, determine that subitem (1) does not apply in relation to a specified thing done or that subitem (2) does not apply in relation to a specified thing omitted to have been done.

Subitem (5) provides that a determination made under subitem (4) is not a legislative instrument. This provision is included to assist readers, as the instrument is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003. In other words, this provision is merely declaratory of the law.

Subitem (6) provides definitions of doing and omitting for the purposes of this item, which includes making of an instrument or failing to make an instrument, respectively.

Item 43 - References in instruments

Inserts transitional provisions relating to instruments. Subitem (1) provides that where an instrument was in force prior to commencement of this Schedule and the instrument refers to child care tax rebate (including by abbreviation) the reference has effect after commencement as if it were a reference to child care rebate.

Subitem (2) provides that the Minister may declare in writing that subitem (1) does not apply in relation to a specified reference.

Subitem (3) provides that a determination made under subitem (2) is not a legislative instrument. This provision is included to assist readers, as the instrument is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003. In other words, this provision is merely declaratory of the law.

Item 44 - Regulations

Allows the Governor-General to make regulations regarding matters of a transitional nature relating to this Schedule.

Schedule 2 - Child care rebate in substitution

Part 1 - Amendments

A New Tax System (Family Assistance) Act 1999

Item 1 - After subsection 57F(1)

Inserts new subsection (1A) in section 57F dealing with eligibility for child care rebate for an income year. This new subsection provides the eligibility criteria for an individual for child care rebate in respect of a child, in substitution for a deceased individual.

Currently, if an individual is conditionally eligible for child care benefit by fee reduction for care provided to a child by an approved child care service, or is eligible for child care benefit for a past period for care provided to a child by an approved child care service, and that individual dies before an entitlement determination to be paid child care benefit has been made, the legislation provides that another individual may be eligible for child care benefit by single payment/in substitution for care provided to the child, for which the deceased individual would have been eligible.

The amendments made by this Schedule will align the operation of child care rebate with the operation of child care benefit by extending the eligibility for child care rebate in respect of care provided to a child of a deceased individual to the individual who is entitled to be paid child care benefit by single payment/in substitution in respect of that care.

New subsection 57F(1A) deals with eligibility for the rebate relating to child care benefit in substitution. It provides that an individual is eligible for child care rebate in substitution for a period in respect of a child where:

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care is provided by one or more approved child care services to a child during at least one week in the period;

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the care is covered by a determination under section 53D or subsection 53E(1) of the Family Assistance (Administration) Act (that the individual is entitled to be paid child care benefit by single payment/in substitution for that care because of the death of another individual or that the individual is not so entitled because the amount of the entitlement would be nil); and

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the weekly limit of 50 hours, more than 50 hours, or the 24 hour care limit applies to the deceased individual in the week under Subdivision G of Division 4 dealing with the limits on eligibility for child care benefit.

A note at the end of new subsection 57F(1A) informs the reader that if the specified limit of hours applies in a week, the condition relating to the limit of hours is met even if the deceased individual has used fewer hours of care in the week.

Note 1 alters the heading to section 57F to reflect the fact that it now also deals with eligibility for the rebate for a period.

Note 2 inserts a heading to subsection 57F(1) reflecting the fact that this section deals with eligibility for the rebate relating to child care benefit by fee reduction or for a past period.

Items 2, 3, 4 and 5 make amendments to subsections 57F(2) and (3) consequential to the amendment made by item 1. The conditions specified in those subsections apply currently to the individual who is the claimant for the rebate. In the context of eligibility for child care rebate in substitution, those conditions are to apply to the deceased individual, not to the individual whose eligibility is being considered. Amendments are therefore made to make this distinction clear.

Item 2 - Paragraph 57F(2)(a)

Repeals and substitutes paragraph 57F(2)(a) to insert a reference to new paragraph (1A)(c) and 'the individual concerned'.

Item 3 - Subsection 57F (2) (note)

Repeals the note contained at the end of subsection 57F(2) and inserts two new notes.

Note 1 clarifies that 'the individual concerned' referred to in new paragraph (1A)(c) refers to the deceased individual.

Note 2 clarifies that 'the individual concerned' would not satisfy paragraph (1)(c) or (1A)(c) where the only limit applicable to that individual is the limit of 24 hours under subsection 53(3).

Item 4 - Subsection 57F(3)

Inserts into subsection 57F(3) a reference to new subsection (1A)(c) and to 'the individual concerned'.

Item 5 - At the end of subsection 57F(3)

Inserts a note which clarifies that, for the purposes of (1A)(c), the individual concerned is the deceased individual.

Item 6 - Subsection 84B(2)

Repeals and substitutes subsection 84B(2).

Subsection 84B(1) defines approved child care fees for a base week, required to be worked out when calculating the amount of child care rebate as the fees for which the individual or the individual partner is liable to pay. Subsection 84B(2) provides a special rule where the base week for the individual and the child is shared with the individual's partner who may be eligible for the rebate in his or her own right. This amendment will extend the rule in this section to the situation where the base week is shared with the individual who may be eligible for child care rebate in substitution.

For example, the rule in subsection 84B(2) would apply in the situation when one member of a couple has died and the surviving member has both an entitlement to the rebate in his/her own right and a separate entitlement to the rebate in substitution.

Item 7 - After subdivision B of Division 4A of Part 4

Inserts new Subdivision BA dealing with the calculation of child care rebate relating to child care benefit in substitution. New subdivision BA provides for the calculation of the amount of child care rebate to which an individual is entitled in substitution for a deceased individual.

New section 84DA provides that, if a determination of entitlement for child care rebate is made under section 65ECA of the Family Assistance (Administration) Act in respect of a period (the entitlement period ), an individual (the substitute individual ), and a deceased individual, for child care provided by one or more approved child care services to a child during that period, the amount of child care rebate is worked out as provided by the method statement contained in this new section.

The method statement sets out the steps to be followed to calculate the rebate amount.

Step 1 of the method statement involves working out the rebate periods. The rebate period is the entitlement period where the period falls wholly within one income year. Where the entitlement period is spread over two income years, the part of the entitlement period in each of those years will be a rebate period .

Step 2 requires the calculation of the total amount of the deceased individual's approved child care fees that the service charged the deceased individual for the child in each base week in each rebate period.

Approved child care fees is defined in new section 84DB and base week is defined in new section 84DC.

Step 3 requires the calculation of the total amount of the substitute individual's entitlement to child care benefit by single payment/in substitution for the care for the child in each base week that is a base week for the deceased individual and the child, in each rebate period.

The amount of a substitute individual's child care benefit entitlement is defined in new section 84DD.

Step 4 requires the calculation of the deceased individual's entitlement to Jobs Education and Training (JET) Child Care fee assistance (if any) that the deceased individual was eligible to receive for the child in each rebate period.

Jobs Education and Training (JET) Child Care fee assistance is defined in section 84E.

Step 5 requires the calculation of, for each rebate period, the lesser amount of: an amount worked out using the formula contained in this step and the child care rebate limit for the income year that includes the rebate period. If there are 2 rebate periods, the obtained results are to be added.

Step 6 provides that the amount calculated using the method statement is the amount of the substitute individual's child care rebate for the child for the entitlement period.

New section 84DB defines approved child care fees referred to in Step 1 of the method statement in new section 84DA.

New subsection 84DB(1) provides that the amount of approved child care fees for the base week for the deceased individual and the child is the amount of fees, for which the deceased individual or the deceased individual's partner is liable to pay for care provided to the child by an approved child care service during the base week. Subject to subsection (2), it is irrelevant to the calculation of the amount of approved child care fees for the week of care whether or not the individual is entitled to child care benefit for all of that care.

New subsection 84DB(2) provides a special rule relating to the calculation of approved child care fees where the base week for the deceased individual and the child is also the base week for the deceased individual's partner and the child (these are the situations where somebody else is eligible for the rebate in substitution for that partner - paragraph 2(a), or where the surviving partner is eligible for the rebate for the week in his/her own right - paragraph 2(b)). Where this special rule applies, the deceased individual's fees for the week do not include any fees that the deceased individual's partner is liable to pay for care provided to the child.

New subsection 84DB(3) ensures that the amount of fees to be worked out under Step 1 of the method statement in new section 84DA takes into account the full fees for which the deceased individual is liable in respect of the base week and the child (before the child care benefit reduction is applied), and not the reduced amount. If child care benefit fee reductions have been passed onto the deceased individual under section 219B of Division 1 of Part 8A of the Family Assistance (Administration) Act, then a reference to those fees for which the individual is liable is taken to be a reference to the fees for which the individual or the individual's partner would have been liable for the care if the fees had not been so reduced.

New section 84DC provides a definition of base week referred to in the method statement in new section 84DA.

A week is a base week for a deceased individual for a child in a rebate period if:

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it either fully or partly falls within the rebate period; and

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the care to the child is provided by one or more approved child care services during the week; and

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for the income year in which the base week falls, a determination of entitlement for child care benefit by single payment/in substitution has been made for a substitute individual and the child under section 53D of the Family Assistance (Administration) Act or a determination of no entitlement has been made under the subsection 53E (due to the nil entitlement amount); and

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new paragraph 57F(1A)(c) is satisfied for the week.

New paragraph 57(1A)(c) relates to the required level of the weekly limit of hours applicable to the deceased individual and the child.

New section 84DD provides the definition of amount of the substitute individual's entitlement to child care benefit referred to in the method statement in new section 84DA.

The amount of a substitute individual's entitlement to child care benefit by single payment/in substitution for care of a child in a base week is so much of the child care benefit amount determined under section 53D or subsection 53E(1) of the Family Assistance (Administration) Act as it is attributable to that week, and it is a nil amount if a determination of no entitlement made under subsection 53E(1) of the Family Assistance (Administration) Act is in force for the substitute individual.

Item 8 - Section 84E

Inserts a reference to new section 84DA into section 84E. This extends the application of the definition of Jobs Education and Training (JET) Child Care fee assistance in section 84E to new subsection 84DA relating to calculation of the amount of child care rebate in substitution. This is a consequential amendment relating to item 7 .

Item 9 - At the end of section 84E

Inserts a note at the end of section 84E. This note clarifies that a reference in this section to an individual being able to qualify for Jobs Education and Training (JET) Child Care fee assistance may be a reference to a deceased individual. This amendment is consequential to amendments made by item 7.

Item 10 - Subsection 84F(1)

Inserts a reference to new section 84DA into section 84F, which specifies child care rebate limits. This extends the application of child care rebate limits specified in that section to the amount of child care rebate in substitution calculated under new section 84DA. This is a consequential amendment relating to item 7 .

A New Tax System (Family Assistance) (Administration) Act 1999

Item 11 - After section 65EC

Inserts new section 65ECA relating to determination of entitlement, or no entitlement, for child care rebate relating to eligibility for child care benefit in substitution.

New subsection (1) operates to the effect that the Secretary must make a determination under this section for an individual and a child if the Secretary has made:

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a determination under section 53D that the individual is entitled to child care benefit in substitution for the child; or

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a determination under subsections 53E(1) or (2) that the individual is not entitled to child care benefit in substitution for the child and a period.

New subsection (2) operates to the effect that if the Secretary is satisfied that the individual is eligible for child care rebate in substitution under subsection 57F(1A) of the Family Assistance Act in respect of a child and a period, and if the individual were to be entitled to that rebate for the child and the period, the amount of the rebate would be more than a nil amount, then the Secretary must determine the amount of the rebate which the Secretary considers the individual is entitled to for the child and the period because of the death of the other individual. The determination must include the amount of rebate the Secretary considers the individual to be entitled.

New subsection (3) provides that subsections 65EA(3) and 65EB(3) do not limit the operation of subsection 65ECA(2). Therefore, a child care rebate determination under subsection 65ECA(2) must be made even if a determination of no entitlement to child care rebate for the individual and the child is in force under subsection 65EA(3) or 65EB(3) (relating to the rebate for the child in the individual's own right, not as a substitute individual). This may apply where, for example, the individual may be entitled to child care rebate in substitution for a child and a period and may also be entitled to child care rebate relating to the individual's own entitlement to child care benefit by fee reduction for the child for the same period but for different sessions of care.

New subsection (4) operates to the effect that if the Secretary is not satisfied that the individual is eligible for child care rebate in substitution under subsection 57F(1A) in respect of a child and a period, or the individual is eligible but the amount of the individual's child care rebate entitlement would be a nil amount, the Secretary must determine that the individual is not entitled to be paid child care rebate for the child and the period because of the death of the other individual.

Item 12 - Paragraphs 65EE(1)(a) and (b)

Repeals and replaces paragraphs 65EE(1)(a) and (b). Subsection 65EE(1) imposes an obligation on the Secretary to give notice of determinations of entitlement, or no entitlement, to child care rebate and specifies the information that must be contained in these notices.

New paragraph 65EE(1)(a) provides that, for a determination made under a provision other than 65ECA relating to child care rebate in substitution, the notice of a determination must specify the income year in respect of which the determination is made and whether the individual is entitled to be paid chid care rebate in respect of the income year.

New paragraph 65EE(1)(b) provides that, for a determination made under new section 65ECA relating to child care rebate in substitution, the notice of a determination must specify the period in respect of which the determination is made and whether the individual is entitled to be paid child care rebate in respect of that period.

Item 13 - After subsection 65EF(2C)

Inserts new subsections 65EF(2D) and (2E). These amendments concern the payment of child care rebate resulting from a determination of entitlement to child care benefit in substitution.

New subsection (2D) provides that, where a determination is made under new section 65ECA that an individual is entitled to child care rebate in substitution for a period, the Secretary must pay the amount of child care rebate to which the person is entitled to a bank account nominated and maintained by the individual at such time as the Secretary considers appropriate.

New subsection (2E) provides that any amount paid under new subsection (2D) must be reduced by any amount of child care rebate already paid in respect of the deceased individual and the child for a quarter wholly or partly included in the period.

Item 14 - Subsection 65EF(3)

Inserts a reference to new subsection 65EF(2D) into subsection 65EF(3). This is a consequential amendment relating to item 13.

Items 15, 16 and 17 - Subsection 109A(1) (note), 111(1) (note) and 142(1) (note)

Repeal and substitute notes contained in subsections 109A(1), 111(1) and 142(1). These are consequential amendments resulting from the amendments made by item 18.

Item 18 - Section 152A

Section 152A provides for automatic (without an application) review of a determination of entitlement relating to child care rebate for an income year in respect of an individual and a child if an application is made for review of a decision relating to child care benefit entitlement of the individual for care provided by an approved child care service to the child during the income year. Section 152A does not operate so as to automatically review a child care rebate determination of no entitlement. In the current form, this section would not operate to mandate an automatic review of determinations relating to child care rebate in substitution.

Amendments made by item 18 ensure that:

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an application for review of a determination of entitlement, or no entitlement, for child care benefit by fee reduction relating to an individual, the child and the period, triggers a review of a determination of entitlement, or no entitlement, to child care rebate for the individual and the child arising from the determination of child care benefit by fee reduction; and

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an application for review of a determination of entitlement, or no entitlement, for child care benefit for a past period relating to an individual and the child, triggers a review of a determination of entitlement, or no entitlement, to child care rebate for the individual and the child arising from the child care benefit determination for that period; and

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an application for review of a determination of entitlement, or no entitlement, for child care benefit by single payment/in substitution relating to an individual, the child, and a period triggers a review of a determination of entitlement, or no entitlement, to child care rebate for the individual and the child arising from the determination for child care benefit in substitution.

As is currently the case, automatic review of a child care rebate determination does not need to occur if child care benefit entitlement is not affected by the outcome of the review (in such a case, child care rebate entitlement does not change so there is no need to review the child care rebate determination).

Item 18 repeals section 152A and substitutes new sections 152A and 152B.

New sections 152A and 152B specify when an automatic review of a child care rebate decision is to occur.

New section 152A provides that where the following conditions are met:

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an application for review has been made under section 109A (internal review), 111 (SSAT review) or 142 (AAT review) for review of a decision relating to an individual's child care benefit entitlement (whether it is a determination of entitlement under section 51B or 52E or no entitlement under section 51C or 52G); and

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the child care benefit determination was in respect of one or more sessions of care provided to a child during a period in an income year; and

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a determination relating to the individual's entitlement to child care rebate (whether a determination of entitlement or no entitlement) for the child for the period in an income year to which child care benefit determination applied was made under section 65EA (child care rebate for an income year for child care benefit by fee reduction) or 65EB (child care rebate for child care benefit for a past period in an income year) or 65EC (a replacement child care rebate determination for additional periods of care covered by an additional child care benefit determination for the same income year); and

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the child care benefit entitlement is affected by the review;

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the Act has the effect as if the original application for review of the child care benefit determination included an application for review of a determination under section 65EA, 65EB or 65CA relating to child care rebate.

New subsection 152B provides for an automatic review of a determination made under section 65ECA in relation to an individual's entitlement to child care rebate in substitution, for a child and a period (this period may include more than one income year), if an application was made for review of a determination relating to the individual's entitlement to child care benefit by single payment/in substitution in respect of the child and the period. New section 152B mirrors the conditions for automatic review in section 152A.

Item 19 - Paragraph 154(4A)(c)

Inserts a reference to new subsection 57F(1A) into section 154(4A)(c). This is a consequential amendment relating to item 1. It provides the Secretary with the power to request a person (under section 154) to provide information relevant to eligibility of an individual for child care rebate in substitution.

Part 2 - Application and transitional

Item 20 - Application

Inserts an application provision, which provides that amendments made by this Schedule, other than by items 15 to 18, apply in relation to care provided by an approved child care service on or after 1 July 2007. These amendments relate to the introduction of the payment of child care rebate in substitution.

Amendments made by items 15 to 18, relating to automatic review of child care rebate determinations where a corresponding child care benefit determination is reviewed under Part 5 of the Family Assistance (Administration) Act, apply in relation to applications for review of an individual's child care benefit entitlement, under section 109A, 111 or 142, made after the commencement of those items. Those items commence on Royal Assent.

Items 21 and 22 are transitional provisions relevant to the operation of new subsection 84DB(3), inserted by item 7, which provides that the amounts of fee reductions passed onto the deceased individual (or the partner, as applicable) by the service in respect of a particular week of care are not to be counted when working out the approved child care fees amount for that week needed for the calculation of child care rebate.

New subsection 84DB(3) refers to section 219B as the provision which requires an approved child care service to pass fee reductions onto the individuals who are eligible for fee reductions. Section 219B applies to an approved child care service, in respect of which the Secretary has determined an application day under item 91 of Schedule 1 to the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007. If an application day has not been determined for an approved child care service, the reduction of fees for care provided by the service occurs under Division 1 of Part 8A of the Family Assistance (Administration) Act as it applies to those services (not under section 219B as currently in force).

The transitional provisions in items 21 and 22 modify subsection 84DB(3) so, in the situations specified by those provisions (when fee reductions relate to sessions of care provided before the application day of a service), the reference to fee reductions passed on under section 219B by the service is substituted with the reference to reduction of fees under Division 1 of Part 8A of the Family Assistance (Administration) Act as it applies to the service in respect of sessions of care provided before the service's application day.

Item 21 - Transitional - service's application day happens after the period for which child care rebate is applicable

Subitem (1) provides that this item applies if one or more sessions of care are provided by an approved child care service during a week that falls wholly or partly in a rebate period and the service's application day has not happened before the last week that falls wholly or partly in that period.

Subitem (2) provides that, if subitem (1) applies, the Family Assistance Act has the effect (in relation to the care) as if new subsection 84DB(3) were substituted with the subsection contained in this subitem.

Substituted subsection 84DB(3) contained in subitem (2) provides that if fees for child care by an approved child care service have been reduced under Division 1 of Part 8A of the Family Assistance (Administration) Act, then a reference to the fees for which a deceased individual or the deceased individual's partner is liable is a reference to the fees the deceased individual or the deceased individual's partner would have been liable if they had not been reduced.

Item 22 - Transitional - service's application day happens during the period for which child care rebate is applicable

Subitem (1) provides that this item applies if one or more sessions of care are provided to an approved child care service during a week that falls wholly or partly in a rebate period and the service's application day happens during that period (other than during the last week that falls wholly or partly in that period).

Subitem (2) provides that if subitem (1) applies, it has the effect in relation to the care as though new subsection 84DB(3) were substituted with the subsection contained in this subitem.

Substituted 84DB(3) contained in subitem (2) provides that if fees for child care by an approved child care service have been reduced under Division 1 of Part 8A of the Family Assistance (Administration) Act, then a reference to the fees for which a deceased individual or the deceased individual's partner is liable is a reference to the fees the deceased individual or the deceased individual's partner would have been liable if they had not been reduced.

Schedule 3 - Recovery of debts

A New Tax System (Family Assistance) (Administration) Act 1999

This Schedule amends debt creation provisions relating to payments made by way of child care rebate, which create a debt due to the Commonwealth out of the amount paid where the recipient was not entitled to that rebate under the family assistance law, or out of the overpaid amount of the rebate, where the amount paid was higher than the amount the recipient should have been paid under the family assistance law.

Item 1 makes amendments to sections 65EA, 65EB and 65EC that are necessary for the proper operation of new child care rebate debt provisions in sections 71CAA, 71CAB and 71CAC. Sections 65EA, 65EB and 65EC require the Secretary to make determinations relating to an individual's entitlement to child care rebate for a child for the income year, in respect of which a determination relating to an individual's entitlement for child care benefit by fee reduction, or for a lump sum child care benefit, for the child has been made for that year.

Amendments made by item 1 clarify the periods covered by any of those child care rebate determinations, and the connections between a particular determination and the corresponding determination relating to entitlement to child care benefit, to ensure that any child care rebate debt amount is properly identified.

Item 3 makes amendments to current sections 71CAA and 71CAB to ensure that:

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an amount paid to an individual by way of child care rebate in substitution (amendments made by Schedule 2 introduce payment of child care rebate in substitution) in respect of a child and a period is a debt repayable by the individual to the Commonwealth if the individual is not entitled to that rebate for that child for that period; and

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the difference between the amount paid to an individual by way of child care rebate in substitution in respect of a child and a period and the amount which the individual should have been paid in respect of that child and that period under the family assistance law is a debt repayable by the individual to the Commonwealth.

Item 3 also amends sections 71CAA and 71CAB to ensure that these provisions apply to quarterly payments of child care rebate made under Subdivision AA of Division 4AA of Part 3 to an individual in respect of whom a determination of conditional eligibility for child care benefit by fee reduction for a child is in force under section 50F of the Family Assistance (Administration) Act. The quarterly payments are made to an individual in lieu of the entitlement amount to be determined for the individual in respect of the period of conditional eligibility after the determination relating to the individual's entitlement for child care benefit by fee reduction for the income year within which the quarter falls has been made after the end of that income year.

The amendments in this Schedule made in relation to quarterly payments of child care rebate ensure that:

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an amount paid to an individual by way of quarterly payments of child care rebate in respect of a child during a period of conditional eligibility for child care benefit by fee reduction is a debt repayable by the individual to the Commonwealth if the individual is not entitled to child care rebate in connection with eligibility for child care benefit by fee reduction (that is, for the period of conditional eligibility in an income year in which the quarter falls); and

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the difference between the amount paid to an individual by way of quarterly payments of child care rebate in respect of a child during a period of conditional eligibility for child care benefit by fee reduction and the amount which the individual should have been paid in respect of that child and that period under the family assistance law is a debt repayable by the individual to the Commonwealth.

Further, item 3 makes other amendments to child care rebate debt creation provisions consequential on the amendments required for the purposes of quarterly payments of child care rebate and child care rebate in substitution.

Item 1 - Sections 65EA, 65EB and 65EC

Repeals and substitutes:

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sections 65EA relating to a determination of entitlement, or no entitlement, to child care rebate relating to eligibility for child care benefit by fee reduction; and

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section 65EB relating to determination of entitlement, or no entitlement, to child care rebate relating to eligibility for child care benefit for a past period; and

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section 65EC relating to later determinations of entitlement to child care rebate in respect of an individual and a child for an income year resulting from an additional child care benefit determination relating to the individual, the child and the period in the income year.

New section 65EA Determining entitlement, or no entitlement, to child care rebate - eligibility for child care benefit by fee reduction

New subsection (1) provides that the Secretary must make a determination under this section for an individual and a child for a period in an income year if the Secretary has made a determination under section 51B that the individual is entitled to child care benefit by fee reduction for sessions of care provided to a child during the period or a determination under subsections 51C(1) or (2) that the individual is not entitled to child care benefit by fee reduction for sessions of care provided to the child during the period.

New subsection (2) provides when a determination of entitlement is made under this subsection. It states that the Secretary must determine the amount of the individual's entitlement for the child and the income year if the Secretary is satisfied that:

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the individual is eligible for child care rebate under subsection 57F(1) of the Family Assistance Act in respect of a child for the income year and the care provided during that period; and

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if the individual were to be entitled to child care rebate for the child for the income year under this subsection the amount of the rebate would be more than a nil amount; and

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an earlier determination under this subsection or subsection 65EB(2) (relating to the rebate for the period in the income year that is relevant to the individual's eligibility for CCB for a past period) has not already been made in respect of the individual and the child for the income year.

The Secretary's determination under subsection (2) must include the amount of rebate the Secretary considers the individual to be entitled to.

A note at the end of new subsection (2) informs the reader that, if a determination under subsection (2) or under subsection 65EB(2) has already been made, a determination of entitlement to child care rebate for a child and an income year may be made under section 65EC.

New subsection (3) provides for when a determination of no entitlement is made under this subsection. It states that if the Secretary is not satisfied that the individual is eligible for child care rebate under subsection 57F(1) in respect of the child and an income year for care provided during the period in the income year (this is the period covered in the individual's determination relating to entitlement to child care benefit by fee reduction for the child, referred to in subsection (1)), or the Secretary is satisfied as to the eligibility for child care rebate but the amount of the entitlement would be a nil amount, the Secretary must determine that the individual is not entitled to be paid child care rebate in respect of care provided to the child during the period.

New section 65EB Determining entitlement, or no entitlement, to child care rebate - eligibility for child care benefit for past period

New subsection (1) provides that the Secretary must make a determination under this section for an individual, a child and care provided to the child during a period in an income year if the Secretary has made a determination under section 52E that the individual is entitled to child care benefit for the period of care provided to the child, or a determination under subsections 52G(1) or (2) that the individual is not entitled to child care benefit for the period in respect of the child.

New subsection (2) provides for when a determination of entitlement is made under this subsection. It states that the Secretary must determine the amount of the individual's entitlement for the child and the income year if the Secretary is satisfied that:

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the individual is eligible for child care rebate under subsection 57F(1) of the Family Assistance Act in respect of a child for the income year and the care provided during the period (that is, the period covered by the corresponding child care benefit determination); and

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if the individual were to be entitled to child care rebate for the child for the income year under this subsection the amount of the rebate would be more than a nil amount; and

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an earlier determination under this subsection, or subsection 65EA(2) (relating to the rebate for the income year that is relevant to the individual's eligibility for CCB by fee reduction for the child) has not already been made in respect of the individual and the child for the income year.

A note at the end of new subsection (2) informs the reader that, if a determination under new subsection (2) or under subsection 65EA(2) has already been made, a determination of entitlement to child care rebate for a child and an income year may be made under section 65EC.

The Secretary's determination under subsection (2) must include the amount of rebate the Secretary considers the individual to be entitled.

New subsection (3) provides for when a determination of no entitlement is made under this subsection. It states that if the Secretary is not satisfied that the individual is eligible for child care rebate under subsection 57F(1) in respect of the child and an income year and the care provided during the period (this is the period covered in the individual's determination relating to entitlement to child care benefit for a past period, referred to in subsection (1)), or the Secretary is satisfied as to the eligibility for child care rebate but the amount of the entitlement would be a nil amount, the Secretary must determine that the individual is not entitled to be paid child care rebate in respect of care provided to the child during the period.

New section 65EC Later determinations of entitlement to child care rebate

New section 65EC requires a replacement child care rebate determination to be made for an individual, a child and an income year where the first determination relating to that year did not include all periods of child care rebate entitlement. It requires a child care rebate entitlement determination to be made in respect of an income year where a determination of entitlement to child care rebate for the individual, the child and the income year was previously made under either new section 65EA or 65EB, or where an earlier determination under new section 65EC was made in respect of the individual, the child and the income year (the earlier rebate determination) (new paragraph 65EC(1)(a) refers).

This new section applies when, after the first determination relating to child care rebate entitlement relevant to a period of care in an income year was made under new section 65EA or 65EB, an additional child care benefit determination is made in respect of the individual, the child and the income year under section 51B or subsection 51C(1) (relating to entitlement to child care benefit by fee reduction) or section 52E or subsection 52G(1) (relating to entitlement to child care benefit for a past period) for one or more sessions of care provided to the child during a period in the income year, as a result of which the amount of the entitlement to child care rebate for that income year would increase (new paragraphs 65EC(1)(b) and (d) refer). In that situation, the Secretary is required to make a new determination of entitlement to child care rebate for the individual, the child and the income year under new section 65EC to replace the previous determination.

For example, a new determination may be made where an additional child care benefit entitlement determination relevant to the same income year is made. Once the first determination of entitlement to child care benefit has been made for the individual, the child and the income year (for example, a determination under section 51B), a determination of entitlement to child care rebate is to be made under either new section 65EA or 65EC, as appropriate. If another (additional) determination of entitlement to child care benefit is subsequently made for the individual, the child and the income year (for example, under section 52E), this may make the individual entitled to child care benefit for additional periods of care not included in the scope of the previous child care benefit determination. Therefore, a replacement determination relating to entitlement to child care rebate for the individual, the child and the income year is required to be made under section 65EC for child care rebate for the additional periods, if the replacement determination would result in the increase of the child care rebate entitlement amount for the income year.

If a child care benefit entitlement determination is changed as a result of a review process, the child care rebate entitlement determination may need to be reviewed (for example, to reduce the child care rebate entitlement amount). The replacement mechanism in new section 65EC does not operate to change a child care rebate entitlement determination following a change in the child care benefit entitlement resulting from review (new paragraph 65EC(1)(c) refers). In such a case, the child care rebate entitlement determination has to be reviewed under Part 5.

New subsection 65EC(2) provides that, where there has been a determination made under this section, an earlier determination ceases to have force.

Item 2 - Transitional - entitlement to child care rebate

A transitional provision which clarifies that determinations relating to child care rebate (made under sections 65EA, 65EB or 65EC before their amendment by item 1 and in force immediately before the commencement of item 2) are to be treated as if they had been made under these sections as amended by item 1.

Item 3 - Sections 71CAA and 71CAB

Repeals sections 71CAA and 71CAB and substitutes new sections 71CAA, 71CAB and 71CAC.

New section 71CAA - debts arising in respect of child care rebate where no entitlement

New section 71CAA creates a debt where an amount by way of child care rebate was paid where there is no entitlement to the rebate. The circumstances in which a 'no entitlement' child care rebate debt is created are as follows.

No entitlement to rebate arising from CCB by fee reduction (quarterly rebate paid)

New subsection (1) creates a debt due by an individual to the Commonwealth if an amount has been paid to the individual by way of child care rebate for a quarter (under Subdivision A of Division 4AA of Part 3) in respect of a period during which the individual is conditionally eligible for child care benefit by fee reduction in respect of a child, and the individual is not entitled to rebate in respect of the child and the period.

Note 1 at the end of new subsection (1) specifies that, for the purposes of paragraph (1)(b), the individual will not be entitled to child care rebate if a determination of no entitlement to the rebate has been made under subsection 65EA(3) in respect of the child and the period. Note 2 clarifies that a determination of no entitlement under that subsection could arise as a result of a decision substituted on review under Part 5.

No entitlement to rebate arising from CCB by fee reduction due to review

New subsection (2) creates a debt due by an individual to the Commonwealth if an amount has been paid to the individual by way of child care rebate for an income year (as determined by a determination of entitlement under subsection 65EA(2) or 65EC(1)) in respect of a child and a period of care covered by a determination under section 51B or subsection 51C(1) (relating to the individual's entitlement for CCB by fee reduction for the child), and the individual is not entitled to the rebate for the child and that period. This section covers the situation where a determination of entitlement to child care rebate under 65EA(2) or 65EC(1) was reviewed under Part 5 with the effect that there is no entitlement.

No entitlement to rebate arising from CCB for a past period

New subsection (3) creates a debt due by an individual to the Commonwealth if an amount has been paid to the individual by way of child care rebate for an income year in respect of a child and a period of care (as determined by a determination of entitlement under subsection 65EB(2) or 65EC(1)) as a consequence of a determination relating to the individual's entitlement for CCB for a past period covered by a determination under section 52E or subsection 52G(1)), and the individual is not entitled to the rebate for the child and that period. This section covers the situation where a determination of entitlement to child care rebate under subsections 65EB(2) or 65EC(1) was reviewed under Part 5 with the effect that there is no entitlement.

No entitlement to rebate arising from CCB by fee reduction or for a past period - other situations

New subsection (4) creates a debt due by an individual to the Commonwealth if an amount has been paid to the individual by way of child care rebate for an income year, or for a quarter in an income year, in respect of a child and a period and the individual is not entitled to the rebate for that year (or for the quarter) in respect of the child.

This subsection does not apply in the circumstances to which new subsections (1), (2), (3) or (5) apply.

This section may apply where an amount has been paid to an individual by way of child care rebate by fee reduction or for a past period, or for a quarter as a result of an error where there has been no determination of entitlement, or determination of no entitlement, to such rebate made in respect of the individual, the child and the period (eg a period of conditional eligibility, or a past period or a quarter), or when an amount has been paid where there is a determination of no entitlement to a rebate in respect of the individual, the child and the period.

No entitlement to rebate arising from CCB by single payment/in substitution

New subsection (5) creates a debt due by an individual to the Commonwealth if an amount has been paid to the individual by way of child care rebate in respect of a child and a period (as determined by a determination of entitlement under subsection 65ECA(2)), as a consequence of a determination relating to the individual's entitlement for CCB by single payment/in substitution in respect of the child and the period (determination under section 53D or subsection 53E(1)), and the individual is not entitled to the rebate for the child and the period. This section covers the situation where a determination of entitlement to child care rebate under 65ECA(2) was reviewed under Part 5 with the effect that there is no entitlement.

New subsection (5) also creates a debt due by an individual to the Commonwealth if an amount has been paid to the individual by way of child care rebate in substitution in respect of a child and a period (otherwise than in accordance with a determination under subsection 65ECA(2)) and the individual is not entitled to the rebate for the child and the period. This may apply where an amount has been paid to an individual by way of child care rebate in substitution as a result of an error where there has been no determination of entitlement, or of no entitlement, to such rebate made in respect of the individual, the child and the period, or when an amount has been paid where there is a determination of no entitlement to such a rebate in respect of the individual, the child and the period.

New section 71CAB - Debts arising in respect of child care rebate where overpayment

New section 71CAB creates a debt where an amount by way of child care rebate has been paid to the individual and the amount paid is higher than the amount to which the individual is entitled. The circumstances in which a debt arises relating to overpayment of child care rebate is created are as follows.

Overpayment of rebate arising from CCB by fee reduction - for a quarter

New subsection (1) deals with overpayments of quarterly payments of child care rebate for child care benefit by fee reduction.

New subsection (1) provides that if an amount (the received amount) has been paid to an individual by way of child care rebate for a quarter under section 65EAA in respect of a period during which the individual is conditionally eligible for child care benefit by fee reduction in respect of a child and the received amount is greater than the amount of the rebate to which the individual is entitled under subsection 65EA(2) or 65EC(1) in respect of the child and that period (the correct amount), the difference between the received amount and the correct amount is a debt due to the Commonwealth by an individual.

A note at the end of new subsection (1) informs the reader that a determination of entitlement under subsection 65EA(2) or 65EC(1) could arise as a decision resulting from a review under Part 5.

Overpayment of rebate arising from CCB by fee reduction - for an income year

New subsection (2) deals with overpayments of child care rebate for child care benefit by fee reduction.

New subsection (2) provides that if an amount (the received amount) has been paid to an individual by way of child care rebate in respect of a child for an income year in respect of a period of care covered by a determination relating to CCB by fee reduction for the individual and the child, and the received amount is greater than the amount of the rebate to which the individual is entitled under subsection 65EA(2) or 65EC(1) in respect of the child and the period (the correct amount), the difference between the received amount and the correct amount is a debt due to the Commonwealth by an individual.

A note at the end of new subsection (2) informs the reader that a determination of entitlement under subsection 65EA(2) or 65EC(1) could arise as a decision resulting from a review under Part 5.

Overpayment of rebate arising from CCB for a past period

New subsection (3) deals with overpayments of child care rebate for child care benefit for a past period.

New subsection (3) provides that if an amount (the received amount) has been paid to an individual by way of child care rebate in respect of a child for an income year in respect of a period of care covered by a determination relating to CCB for a past period in respect of the individual and the child, and the received amount is greater than the amount of the rebate to which the individual is entitled under subsection 65EB(2) or 65EC(1) in respect of the child and the period (the correct amount), the difference between the received amount and the correct amount is a debt due to the Commonwealth by an individual.

A note at the end of new subsection (3) informs the reader that a determination of entitlement under subsection 65EB(2) or 65EC(1) could arise as a decision resulting from a review under Part 5.

Overpayment of rebate arising from CCB in substitution

New subsection (4) deals with overpayments of child care rebate for child care benefit in substitution.

New subsection (4) provides that if an amount (the received amount) has been paid to an individual by way of child care rebate in respect of a child for a period covered by a determination relating to child care benefit by single payment/in substitution in respect of the individual and the child and the received amount is greater than the amount of the rebate to which the individual is entitled under subsection 65ECA(2) in respect of the child and the period (the correct amount), the difference between the received amount and the correct amount is a debt due to the Commonwealth by an individual.

A note at the end of new subsection (4) informs the reader that a determination of entitlement under subsection 65ECA(2) could arise as a decision resulting from a review under Part 5.

New section 71CAC - debt arising in respect of child care rebate paid to wrong account

New section 71CAC replicates current subsection 71CAB(2) which creates a debt out of the payment representing child care rebate for an income year made to an incorrect account. New subsection 71CAC is essentially the same, except for the omission of the references to 'an income year' to ensure that a debt arises in this situation regardless of whether the payment was made in respect of an income year or any other period.

Item 4 - Subsection 82(3) (paragraph (a) of the definition of debt)

Makes a consequential amendment to the definition of debt in subsection 82(3) to include a reference to new section 71CAC.

Item 5 - Application

Inserts application provisions.

The amendments made by items 1 and 2 apply in relation to care provided by an approved child care service to a child on or after 1 July 2008. Items 1 and 2 make amendments to sections 65EA, 65EB and 65EC dealing with the making of determinations relating to an individual's child care rebate entitlement. These amendments are consequential on the amendments made by items 3 and 4, in so far as they are relevant to payments of quarterly rebate amounts (made under Subdivision AA of Division 4AA of Part 3) and payments of the rebate arising from determinations of child care benefit by fee reduction and determinations of child care benefit for a past period, which apply to those payments if they are made on or after 1 July 2008 (subitems 2(a) and (2(b) refer).

Amendments made by items 3 and 4 (child care rebate debt creation provisions) apply in relation to payments of quarterly rebate amounts made, or purportedly made, under Subdivision AA of Division 4AA of Part 3 on or after 1 July 2008 (subitem 2(a) refers). The payments made on or after 1 July 2008 are made in lieu of the individual's entitlement which will be determined for the income year 2008-2009 during the 2009-2010 income year (after the corresponding child care benefit by fee reduction determination for the individual and the income year has been made). A debt may ordinarily arise once an individual's entitlement to CCR for the income year for which the quarterly payments were made has been determined/considered after 1 July 2009. Consequently, these provisions do not operate retrospectively.

Amendments made by items 3 and 4 (child care rebate debt creation provisions) apply in relation to payments of child care rebate arising from child care benefit by fee reduction or from child care benefit for a past period made or purportedly made in respect of care provided on or after 1 July 2008 (subitem 2(b) refers). Child care benefit and child care rebate determinations relating to care provided in an income year 2008-2009 are made after the end of that income year, that is, after 1 July 2009. Consequently, this application provision does not operate retrospectively.

Amendments made by items 3 and 4 (child care rebate debt creation provisions) apply to payments of child care rebate in substitution made or purportedly made under subsection 65EF(2D) in respect of care provided on or after 1 July 2007 (subitem 2(c) refers). Schedule 2 of this Bill introduces payment of child care rebate in substitution, to be made after the day of Royal Assent, in respect of care provided on or after 1 July 2007. Therefore, this application provision, does not operate retrospectively.

Schedule 4 - Civil penalties

The civil penalty and infringement notice scheme for failure to comply with certain obligations imposed on approved child care services by the family assistance law was introduced on 1 July 2007, and subsequently extended on 1 July 2008. The civil penalty and infringement notice provisions are located in the Family Assistance (Administration) Act, Part 8C.

Amendments made in this Schedule amend the Family Assistance (Administration) Act so that civil penalties in relation to specific obligations of approved child care services may be imposed through the regulations made under the Family Assistance (Administration) Act. This mechanism will allow for greater flexibility in responding to compliance issues in the child care industry and, ultimately, will enhance the compliance of approved child care services with obligations imposed on them under the family assistance law (including under subordinate legislation).

Part 1 - Civil penalties in regulations

A New Tax System (Family Assistance) (Administration) Act 1999

Item 1 - Subsection 3(1)

Section 3 defines certain terms used in the Family Assistance (Administration) Act. Item 1 inserts a reference to new paragraph 235(1A)(b) into the definition of civil penalty provision . This definition sets out the provisions which are civil penalty provisions, the breach of which may attract a pecuniary penalty. This amendment is consequential to item 9.

Item 2 - Subsection 219TSD(2)

Repeals and substitutes new subsection 219TSD(2). Subsection 219TSD(1) sets out the maximum pecuniary penalty payable for a contravention of a civil penalty provision. Subsection (2) exempts contraventions of subsection 219EA(2) or 219L(3) from the operation of subsection (1) and provides a lower penalty limit for those contraventions. New subsection (2) retains the exemption for contraventions of subsection 219EA(2) or 219L(3) and extends the exemption to contraventions of provisions of the regulations declared to be civil penalty provisions.

A note at the end of new subsection 219TSD(2) informs the reader of the maximum pecuniary penalty for contravention of a provision of the regulations declared to be civil penalty provision, as specified in new subsection 235(1A) inserted by item 9.

Item 3 - Subsection 219TSK(1) (table items 1 and 2)

Subsection 219TSK(1) specifies the amount of penalty for an alleged contravention of the specified provisions that are to be specified in an infringement notice given to a body corporate. Item 3 amends cross-references in table items 1 and 2 as a consequence of the amendment made by item 4.

Item 4 - Subsection 219TSK(1) (at end of table)

Inserts two new table items, 7 and 8, into the table contained in subsection 219TSK(1). The table in subsection 219TSK(1) lists the pecuniary penalties to be specified in an infringement notice given to a body corporate for an alleged contravention, or multiple contraventions, of a civil penalty provision.

New table item 7 provides that for the alleged contravention of a civil penalty provision declared in the regulations, the pecuniary penalty to be specified in an infringement notice given to a body corporate is 24 penalty units.

New table item 8 provides that where the infringement notice relates to more than one alleged contravention of a civil penalty provision declared in the regulations, the relevant number of pecuniary penalty units is obtained by multiplying 24 by the number of alleged contraventions. If the number of alleged contraventions is 8 or more, the penalty that can be imposed is 24 penalty units multiplied by 8.

Item 5 - Subsection 219TSK(2)(table items 1 and 2)

Subsection 219TSK(2) specifies the amount of penalty for an alleged contravention of the specified provisions that are to be specified in an infringement notice given to a person other than a body corporate. Item 5 amends cross-references in table items 1 and 2 as a consequence of the amendment made by item 6.

Item 6 - Subsection 219TSK(2)(at the end of the table)

Inserts new items 7 and 8 into the table in subsection 219TSK(2). The table in subsection 219TSK(2) lists the pecuniary penalties payable under an infringement notice given to a person other than a body corporate for an alleged contravention, or multiple contraventions, of a civil penalty provision.

New table item 7 provides that for the alleged contravention of a civil penalty provision in the regulations, the pecuniary penalty that can be specified in an infringement notice given to a person other than a body corporate is 12 penalty units.

New table item 8 provides that where the infringement notice relates to more than one civil penalty provision referred to in the regulations, the pecuniary penalty is obtained by multiplying 12 by the number of alleged contraventions. If the number of alleged contraventions is 8 or more, the penalty that can be imposed is 12 penalty units multiplied by 8.

Items 7 and 8 - Subsection 235(1)

Subsection 235(1) provides for regulations to be made under the Family Assistance (Administration) Act. Items 7 and 8 make amendments to remove the reference to the regulations prescribing penalties of a fine not exceeding 10 penalty units for a breach of the regulations. These amendments are consequential to the amendments made by item 9.

Item 9 - After subsection 235(1)

Inserts new subsection 235(1A) which deals with the maximum levels of penalties imposed under the regulations.

New paragraph (1A)(a) provides that the maximum fine for an offence against the regulations is 10 penalty units.

New paragraph (1A)(b) provides that the regulations may prescribe that specified provisions of the regulations are civil penalty provisions, and limits the penalty for contravention of these provisions to 250 penalty units for a body corporate and 50 penalty units in any other case. The maximum penalties are consistent with current Commonwealth policy relating to the level of penalties imposed by the regulations (see section 5.2 of the A Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers).

Many obligations are imposed on approved child care services by the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (the Eligibility Determination) made under subsection 205(1) of the Family Assistance (Administration) Act. Currently, failure to comply with the obligations imposed by the Eligibility Determination may result in sanctions under section 200 of the Family Assistance (Administration) Act. The sanctions that are most effective in terms of compliance, that is, suspension or cancellation of a service's approval for the purposes of the family assistance law, also affect the parents whose children are provided with care by the service because child care benefit and child care rebate are not paid for the period during which the approval has been suspended or after the cancellation of approval. Given the affect of the sanctions on parents' eligibility for those benefits, these sanctions are rarely used.

The extension of civil penalty provisions to the obligations included in the Eligibility Determination will strengthen compliance of the services with those obligations without affecting the service's primary function under the family assistance law, that is, provision of care for which parents may be eligible for child care benefit and child care rebate. The ability to impose civil penalties in the regulations will make it possible to impose, at the same time, a new, or a changed, obligation and a civil penalty for failure to comply with this obligation. If civil penalties in relation to services' obligations were to be imposed only in the Family Assistance (Administration) Act, this would create a lengthy delay between the imposition by a legislative instrument of a new, or amended, obligation and the imposition, by an amendment in that Act effected some months later, of a civil penalty for failure to comply with this obligation. It would result in a period of time during which the operation of the new obligation would be left without the protection of an effective compliance mechanism.

As a matter of policy, it is intended that civil penalties relating to obligations in the Family Assistance (Administration) Act be imposed in that Act while civil penalties relating to obligations in a legislative instrument made under that Act be imposed in the regulations.

Part 2 - Consequential amendments

A New Tax System (Family Assistance) (Administration) Act 1999

Items 10, 11, 12, 13 and 14

Item 11 repeals section 219EA of the Family Assistance (Administration) Act as it is a civil penalty provision that imposes a penalty for non-compliance with a request for information issued by the Secretary under section 21 of the Eligibility Determination. The amendments in Part 1 will allow this penalty to be included in the regulations, thus making section 219EA redundant. This amendment results in a consequential cross- referencing amendment to section 3(1) of the Family Assistance (Administration) Act (item 10). As the result of the amendment made by item 11, further consequential amendments are made by items 12, 13 and 14.

These amendments commence on the day fixed by Proclamation.

Schedule 5 - Other Amendments

Part 1 - Child care rebate for final quarter

Amendments made in this Part provide the Secretary with discretion regarding the calculation and the payment of the amount of child care rebate for the fourth quarter of an income year for an eligible individual. Currently, the calculation of the rebate amount for the fourth quarter and the rebate entitlement amount for the income year in which this quarter falls are required to be made separately, even if both determinations are made at the same time. As a result of the amendments, the rebate for the fourth quarter will be able to be included in the amount of an individual's entitlement for the income year in which the fourth quarter falls, determined after the end of the income year.

A New Tax System (Family Assistance) Act 1999

Item 1 - Section 84AA

Section 84AA specifies how the quarterly amount of the rebate is calculated. Item 1 makes a stylistic amendment to section 84AA, consequential on the amendment made by item 2.

A New Tax System (Family Assistance) (Administration) Act 1999

Item 2 - After subsection 65EAA(1)

Subsection 65EAA(1) requires the Secretary to calculate a quarterly child care rebate amount for an individual eligible for the quarterly rebate under subsection 57EA(1) of the Family Assistance Act.

Item 2 inserts a new subsection 65EAA(1A), which provides the Secretary with a discretion not to calculate the quarterly rebate amount for the final quarter of an income year. A note at the end of this subsection informs the reader that the Secretary may pay a rebate for the last quarter as part of the individual's entitlement for the entire income year under Subdivision A of Division 4AA. Item 2 also makes a consequential amendment to the heading to subsection 65EAA(1).

Item 3 - Application

Item 3 is an application provision. It provides that the amendments made by Part 1 of this Schedule will apply in relation to the last quarter of the 2008-09 income year and to the last quarter of subsequent income years.

Part 2 - CCB% provisions

This Part amends currently inoperative sections 60 and 60A of the Family Assistance (Administration) Act relating to the variation of determinations of no entitlement for child care benefit for a past period or for child care benefit by single payment/in substitution, respectively, if such a determination was made because the claimant did not give the Secretary information needed to work out the number of children the individual has or had in care of a particular kind or the claimant opted to have a CCB% of zero% applicable to him or her, which resulted in a nil entitlement amount.

As a result of the amendment, the Secretary will be able to vary the determination of no entitlement, with the effect that the claimant will be entitled to a child care benefit amount for the period covered by the determination, if the claimant provides the missing information within two years from the end of the income year in which the determination of no entitlement was made or informs the Secretary that he/she no longer opts to have a CCB% of zero% applicable to him or her, and the amount would be more than nil.

A New Tax System (Family Assistance) (Administration) Act 1999

Items 4 and 5 make amendments to subsections 52H(1) and 53F(1), respectively, consequential on the amendments made by item 6.

Item 4 - At the end of subsection 52H(1)

Subsection 52H(1) provides that a determination of entitlement, or no entitlement, made on claim for child care benefit for a past period comes into force when it is made and remains in force at all times afterwards.

Item 4 inserts a note at the end of subsection 52H(1). This note informs the reader that a determination of no entitlement to child care benefit for a past period made under subsection 52G(1) may cease to have effect as a result of variation made under section 60.

Item 5 - At the end of subsection 53F(1)

Subsection 53F(1) provides that a determination of entitlement, or no entitlement, made on a claim for child care benefit by single payment/in substitution comes into force when it is made and remains in force at all times afterwards.

Item 5 adds a note at the end of subsection 53F(1). This note informs the reader that a determination of no entitlement to child care benefit by single payment/in substitution made under subsection 53E(1) may cease to have effect as a result of a variation made under section 60A.

Sections 60 and 60A provide for variation, in certain circumstances, of an entitlement determination for child care benefit for a past period and for child care benefit by single payment/in substitution, made when the amount of entitlement was nil. These sections are currently inoperative as the nil amount of entitlement does not result in the entitlement determination.

Item 6 - Sections 60 and 60A

Item 6 repeals inoperative sections 60 and 60A and substitutes new sections 60 and 60A.

New section 60 - Variation where no entitlement for child care benefit for a past period because CCB% is zero% and claimant gives information so that CCB% can be recalculated

New subsection 60(1) specifies when the Secretary must vary a determination of no entitlement to CCB for a past period, which was made under subsection 52G(1) because the entitlement amount would be a nil amount due to the circumstances specified in subsection 55B(2) (because the claimant did not give the Secretary information needed to work out the number of children the individual has or had in care of a particular kind or the claimant opted to have a CCB% of zero% applicable to him or her).

The Secretary must vary the determination if the claimant complies with the requirements set out for this purpose in new subsection 60(3) or 60(4) and the Secretary is satisfied that the entitlement amount would be more than a nil amount (new subsection 60(1) refers). As a result of this provision, if more than one circumstance contributes to the claimant's no entitlement determination, the determination will not be able to be varied unless the claimant complies with the variation requirements relevant to all of those circumstances.

If circumstances specified in both subparagraphs 55B(2)(i) and (ii) apply to the claimant, the Secretary will not be satisfied that the amount of entitlement after variation would be more than a nil amount unless the claimant complies with the variation requirements set out in both new subsections 60(3) and 60(4) (the note at the end of new subsection 60(1) refers).

In relation to a claimant who did not give the Secretary information needed to work out the number of children the individual has or had in care of a particular kind, the conditions are that the claimant gives the Secretary this information and the tax file number of each of the 'TFN determination persons' within 2 years after the end of the income year during which the no entitlement determination was made (new subsection 60(3) refers).

In relation to a claimant who opted for CCB% of zero %, the conditions are that the claimant informs the Secretary that he or she wants the child care benefit entitlement to be recalculated on the basis of CCB% worked out under Schedule 2 to the Family Assistance Act and gives the Secretary the tax file number of each of the 'TFN determination persons' within 2 years after the end of the income year during which the no entitlement determination was made (new subsection 60(4) refers).

If a variation determination is made, the original determination made on the claim for child care benefit for a past period ceases to be a no entitlement determination under subsection 52G(1) and becomes a determination of entitlement under section 52E (new subsection 60(2) refers).

New section 60A - Variation where no entitlement for child care benefit by single payment/in substitution because CCB% is zero%, and claimant gives information so that CCB% can be recalculated

New section 60A specifies when the Secretary must vary a determination of no entitlement for CCB by single payment/in substitution, which was made under subsection 53E(1) because the entitlement amount would be a nil amount due to the circumstances specified in subsection 55A(2) or subsection 55B(2) (because the claimant did not provide a reasonable estimate of income, or did not give the Secretary information needed to work out the number of children the individual has or had in care of a particular kind or the claimant opted to have a CCB% of zero% applicable to him or her).

The Secretary must vary the determination if the claimant complies with the variation requirements set out for this purpose in any or all of subsections (3), (4) and (5) and the Secretary is satisfied that the entitlement amount would be more than a nil amount (new subsection 60A(1) refers). As a result of this provision, if more than one circumstance contributes to the claimant's no entitlement determination, the determination will not be able to be varied unless the claimant complies with the variation requirements relevant to all of those circumstances.

A note at the end of new subsection 60A(1) clarifies that if, for example, subsection 55A(2) and subparagraphs 55B(2)(c)(i) and (ii) all apply to the claimant, the Secretary will not be satisfied that the amount of entitlement after variation would be more than a nil amount unless the claimant complies with the variation requirements set out in all new subsections: 60A(3), 60A(4) and 60A(5).

In relation to a claimant who did not provide a reasonable estimate of income, the conditions are that the claimant gives the Secretary this information within two years after the end of the income year during which the no entitlement determination was made (new subsection 60A(3) refers).

In relation to a claimant who did not give the Secretary information needed to work out the number of children the individual has or had in care of a particular kind, the conditions are that the claimant gives the Secretary this information and the tax file number of each of the 'TFN determination persons' within two years after the end of the income year during which the no entitlement determination was made (new subsection 60A(4) refers).

In relation to a claimant who opted for CCB% of zero %, the conditions are that the claimant informs the Secretary that he or she wants the CCB entitlement to be recalculated on the basis of CCB% worked out under Schedule 2 to the Family Assistance Act and gives the Secretary the tax file number of each of the 'TFN determination persons' within two years after the end of the income year during which the no entitlement determination was made (new subsection 60A(5) refers).

If a variation determination is made, the original determination made on the claim for child care benefit by single payment/in substitution ceases to be a no entitlement determination under subsection 53E(1) and becomes a determination of entitlement under section 52D (new subsection 60A(2) refers).

'TFN determination person' referred to in new sections 60 and 60 A is defined in section 3 of the Family Assistance (Administration) Act as the claimant and/or the claimant's partner, as appropriate in each particular case.

Item 7 - Paragraphs 60B(1)(b) and (c)

Makes consequential amendments to section 60B relating to variation of a determination of a zero CCB%, relevant to a claim for child care benefit by fee reduction, which was made under section 50J in circumstances similar to those to which sections 60 and 60A apply. This item amends paragraphs 60B(1)(b) and (c) to clarify that, if more than one circumstance contributes to the claimant's zero CCB % determination, the determination will not be able to be varied unless the claimant complies with the variation requirements relevant to all of those circumstances, as set out in paragraph 60B(1)(c).

Item 8 - Application

Item 8 is an application provision. It provides that the amendments made by Part 2 of this Schedule will apply in relation to care provided by an approved child care service to a child on or after 7 July 2008.

Part 3 - Obligations and permissions of an approved child care service are those of the operator

A New Tax System (Family Assistance) (Administration) Act 1999

Item 9 - After section 195

Inserts new section 195A. New subsection 195A provides that for the purposes of family assistance law and an instrument under the family assistance law, when an obligation is imposed or a permission is conferred by that law or instrument on an approved child care service it is taken to be imposed or conferred on the person operating the service.

The operator of the service is the person on whose application (under section 194 of the Family Assistance (Administration) Act) the service was approved for the purposes of the family assistance law.

Item 10 - Application

Inserts application provisions regarding new section 195A.

Subitem (1) specifies that new section 195A applies in relation to obligations imposed, and permissions conferred, before, at or after the commencement of this Part.

Subitem (2) provides that for the purposes of new section 195A, Part 2 of Schedule 1 to the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007 is taken to form part of the family assistance law.

This amendment clarifies that the legislative intention behind the imposition and conferment by the family assistance law of obligations and permissions on an approved child care service is that the person responsible for compliance with those obligations and permissions is the operator of the service.

Given that the family assistance law has been administered in accordance with this intention, the retrospective application of this clarifying amendment does not impose any additional obligation on operators or past operators of approved child care services in relation to the retrospective period.

Item 11 - Part 8A (heading)

Amends the heading to Part 8A to read 'Obligations, and advances, relating to approved child care services'.

Item 12 - Division 1 of Part 8A (heading)

Amends the heading to Division 1 of Part 8A to read 'Obligations relating to approved child care services'.

Part 4 - Manner of Notifying Cessation of Operation

This Part amends the notification requirement in section 219M of the Family Assistance (Administration) Act, which requires an operator of a child care service to notify the Secretary of the intention to cease operating a child care centre at least thirty days before the operator ceases to operate the service. The operation of this requirement is subject to the Secretary giving individual notices to each service specifying how the notification of their intention to cease is to be given. It is impractical for the Secretary or a delegate to give individual notices to each service to specify how the notification about the cessation of operation is to be provided. Amendments made by this Part will require the notice to be provided in the form, manner and way approved by the Secretary.

Part 3 of this Schedule also introduces a new obligation on an operator of an approved child care service who notifies the Secretary under section 219M(1) of their intention to cease operating the service, to provide further information about the cessation, if requested by the Secretary in writing.

A New Tax System (Family Assistance) (Administration) Act 1999

Subsection 219M(1) requires an operator of an approved child care service to notify the Secretary of the intention to cease operating the service, at least thirty days before the operator ceases to operate the service, in the manner provided for in subsection (2). Subsection 219M(2) requires the notice to be given in the manner set out in a written notice given to the service by the Secretary. This is a civil penalty provision (Part 8C provides for pecuniary penalties for breaches of civil penalty provisions). Contravention of this requirement is an offence, for which up to 60 penalty units apply (subsection 219M(3) refers).

Item 13 - Subsection 3(1) (Paragraph (m) of the definition of civil penalty provision)

Amends the definition of civil penalty provision in subsection 3(1) of the Family Assistance (Administration) Act to include the reference to the new requirement in new subsection 219M(4) inserted by item 17.

Item 14 - Subsection 219M(2)

Amends subsection 219M(2) to specify that a notice of intended cessation must be given the form, and in the manner or way, approved by the Secretary. As a result of the operation of section 4 of the Family Assistance (Administration) Act, the Secretary will be able to approve the provision of a notice by electronic means. As a matter of administration, approved child care services will be informed about the approved form, manner or way applicable to these notices. The requirement to provide a notice in a particular form, manner or way remains to be a civil penalty provision. Failure to comply with the requirement continues to be an offence.

Notes 1 and 2 inserted by item 14 inform the reader of the consequential alterations to the heading to section 219M and subsection 219M(1), respectively.

Item 15 - Subsection 219M(3) (penalty)

Subsection 219M(3) makes it an offence to contravene the notification requirement in subsection (1). Item 15 makes a technical amendment to subsection 219M(3) to omit superfluous words.

Item 16 - At the end of section 219M

Inserts three new subsections at the end of section 219M, namely subsections (4), (5) and (6).

The new subsections impose an obligation on an operator of an approved child care service who notified of the intention to cease to operate the service to provide to the Secretary further information about the cessation if the Secretary makes a written request to the operator. The information requested by the Secretary must be given within seven days after the day on which the request was given and in the form and in the manner or way approved by the Secretary. As a result of the operation of section 4 of the Family Assistance (Administration) Act, the Secretary will be able to approve the provision of a notice by electronic means. As a matter of administration, approved child care services will be informed about the approved form, manner or way applicable to these notices.

The same penalties, at the same level, apply for contravention of this new requirement as for contravention of the existing requirement in subsection 219M(1) to notify intention to cease to operate cessation of operation of the service; that is, the new requirement is a civil penalty provision, and a criminal penalty up to 60 penalty units may apply.

Items 17 and 18 - Subsection 219TSK(1) (table items 5 and 6) and subsection 219TSK(2) (table items 5 and 6)

Subsections 219TSK(1) and (2) set out the amount of penalty to be specified in an infringement notice issued in relation to the contravention of the current notification requirement in subsection 219M(1). Items 17 and 18 make consequential amendments to these subsections, so that the same penalty level applies to contravention of the new requirement in subsection 219M(4) relating to the provision of further information on request.

Item 19 - Application

Item 19 provides that the amendments made by this Part apply in relation to notices given under subsection 219M(1) of the Family Assistance (Administration) Act after the commencement of this Part. This Part commences on the 28th day after the day of Royal Assent.