Senate

Explanatory Memorandum

(Circulated by the authority of the Minister for Family and Community Services, Senator the Hon Amanda Vanstone)

Schedule 1 - Amendments

Summary of proposed changes

This Schedule contains two items amending section 102 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Family Assistance Administration Act).

The purpose of the amendments is to enable effect to be given to the Governments decision to allow a $1,000 tolerance for FTB and CCB overpayments because of incorrectly estimated income or shared care in the 2000-2001 income year. Under the decision, up to $1,000 of an overpayment will be waived to help families make the transition to the new FTB and CCB system, which completed its first year of operation on 30 June 2001.

The decision will be put into effect through a disallowable instrument, in keeping with the model for dealing with class debts under the family assistance law. The Bill provides the enabling capacity for that instrument.

Explanation of the changes

Items 1 and 2 amend section 102 of the Family Assistance Administration Act. Section 102 is the existing family assistance waiver provision that allows debts to be waived if they are included in a class of debts specified by the Minister in a disallowable instrument. It is the most appropriate legislative avenue for implementing the Governments tolerance decision.

However, section 102 needs to be adapted to allow for the Governments decision to be put into effect comprehensively.

Firstly, section 102 currently allows only whole debts to be waived, not parts of debts. Therefore, as the section stands, it would not be possible to waive only $1,000 of a debt that exceeds that amount. Also, if one debt has a part covered by the Governments decision (eg, resulting from underestimated income) and another part resulting from a completely different entitlement matter (eg, an FTB child leaving the debtors care), it would not be possible to waive only that part covered by the Governments decision.

Secondly, the provision in section 102 that enables the Minister to make a disallowable instrument currently allows only the class of debts to be prescribed, not conditions and/or limitations on the waiver. Therefore, for example, although the Minister would be able to specify that the class of debts constitutes debts arising from incorrectly estimated income or shared care in the 2000-2001 income year, it would not be possible to specify that only up to $1,000 of a debt falling in the class of debts is to be waived.

Section 102 is therefore being amended so that it allows:

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parts of debts, as well as whole debts, to be waived if they are included in a class of debts specified by the Minister in a disallowable instrument; and

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conditions and/or limitations on the waiver to be specified by the Minister in the instrument.

Therefore, the amendments will make it possible for the Governments tolerance decision to be detailed comprehensively in the disallowable instrument so that the waiver can be applied to individual families by delegates of the Secretary under section 102.

As soon as possible after the commencement of this measure, the Minister will make a disallowable instrument so that the Governments decision may be applied.

The amendments to section 102 commence on Royal Assent.