House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Social Services, the Hon Christian Porter MP)

Outline

This Bill will introduce the 2015 Budget measures set out below.

Portability of family tax benefit

From 1 January 2016, the Bill will reduce to six weeks the length of time for which family tax benefit Part A, and additional payments that rely on family tax benefit eligibility, will be paid to recipients who are outside Australia (known as portability). Portability extension, and exemption provisions that allow longer portability under special circumstances, will continue to apply.

This measure will align the portability rules for family tax benefit Part A with those for family tax benefit Part B and most income support payments. Reducing portability to six weeks is consistent with the purpose of family assistance payments, which is to assist Australian families with the costs of raising children in Australia. Strengthening family tax benefit residence requirements will better ensure family assistance payments are targeted to those families who have a stronger residence connection to Australia.

Cease the large family supplement

The large family supplement will be ceased from 1 July 2016. The supplement is a component of family tax benefit Part A, and is currently paid at a rate of $324.85 per year (or $12.46 per fortnight) for the fourth and each subsequent FTB child in the family.

This measure will simplify payments by removing a non-essential component of family tax benefit. Cessation of the supplement is consistent with reports by the National Centre for Social and Economic Modelling in 2002, 2007 and 2013, finding that larger families do not face higher per-child costs compared to other families, and with recommendations of both the Henry Tax Review in 2010 and the Commission of Audit in 2014 to abolish the supplement. Families will continue to receive adequate assistance through the per-child rate of family tax benefit Part A for each eligible child.

Financial impact statement

Statements of Compatibility with Human Rights

The statements of compatibility with human rights appear at the end of this explanatory memorandum.