House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, Minister for Disability Reform, the Hon Jenny Macklin MP)

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This Bill will deliver new assistance to families to help with the costs of their child's education. This new payment - the schoolkids bonus - is a 2012-13 Budget measure that will replace the education tax refund paid through the taxation system.

About 1.3 million families will receive two instalments each year worth $410 for each child in primary school and $820 for each child in high school.

The new schoolkids bonus will be paid to help families meet education expenses for items such as uniforms, books, school excursions, stationery, music lessons and sports registration fees.

The Bill will:

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create a separate, ongoing new payment in the family assistance legislation (called a schoolkids bonus), which would be paid in two instalments in January and July each year from 2013 onwards;

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remove the education tax refund for 2011-12 and after from the taxation legislation;

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create a new payment in the family assistance and veterans' entitlements legislation (called an ETR payment), which would relate to a family's circumstances on 8 May 2012 only and replace their education tax refund entitlement for 2011-12.

The schoolkids bonus will be available to families receiving family tax benefit Part A, plus young people in school receiving youth allowance and some other income support and veterans' payments, on the test dates of 1 January and 30 June each year.

As a transition to the schoolkids bonus, the new ETR payment under the family assistance legislation will replace the education tax refund that would otherwise have been available for 2011-12.

The ETR payment will be paid to all families entitled to family tax benefit Part A on 8 May 2012 for a school aged child, and also to young people in secondary education who are receiving certain student income support payments on 8 May 2012.

The ETR payment will be $409 for a child in primary school and $818 for a secondary school child - the same amounts that would have been available through the taxation system for 2011-12, but paid earlier and with no need to lodge receipts through a tax return.

A similar ETR payment will be provided through amendments to veterans' entitlements legislation for recipients on 8 May 2012 of payments under the Veterans' Children Education Scheme or the Military Rehabilitation and Compensation Act Education and Training Scheme.

The Bill will also create an administrative scheme for an ETR payment, which would assist people who may not be able to access an appropriate ETR payment under the family assistance law or veterans' legislation.

Financial impact statement

The new measure will have an additional cost of $2.1 billion over five years. This is in addition to the $4.3 billion over five years already allocated for the education tax refund.