House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP)

Schedule 1 - 2007 one-off payments to older Australians

Summary

This Schedule provides for a one-off payment to be made to a person who has reached pension age on or before Budget night 2007 (8 May 2007) and receives income support payments for a period that includes 8 May 2007 under the Social Security Act. Provision is also made for one-off payments to be made to members of the veteran community who have reached qualifying age on or before Budget night 2007 (8 May 2007) and who are receiving service pension or income support supplement under the Veterans' Entitlements Act for a period that includes 8 May 2007.

In addition, provision is made for a one-off payment to persons who are currently qualified for seniors concession allowance on 8 May 2007 under the Social Security Act or would so qualify because the person has lodged a claim for the seniors health card on or before 8 May 2007 and the person is eligible for the card on 8 May 2007. Similarly, provision is made for a one-off payment to members of the veteran community who are currently eligible for seniors concession allowance on 8 May 2007 under the Veterans' Entitlements Act, or who would be so eligible because the person has lodged a claim for the seniors health card on or before 8 May 2007 and is eligible for the card on 8 May 2007.

Finally, provision is made for a one-off payment to persons who are receiving a widow allowance, a mature age allowance, or a partner allowance for a period that includes 8 May 2007 because of a claim made on or before 8 May 2007.

Background

In broad terms, this Schedule introduces new 2007 one-off payments for older Australians, to be paid as a lump sum payment, generally before 30 June 2007. There would not be a claim process attached to the 2007 one-off payment. The amount of one-off payment is $500 per person.

Explanation of the changes

Part 1 - Main amendments

Amendments of the Social Security Act

Item 1 inserts new Part 2.2D into Chapter 2 of the Social Security Act.

New Part 2.2D contains the provisions relevant to the 2007 one-off payment to older Australians.

New section 93ZA contains the qualification criteria for the 2007 one-off payment to older Australians.

New subsection 93ZA(1) provides that a person is qualified for a 2007 one-off payment to older Australians if subsection 93ZA(2), (3) or (4) applies to the person.

New subsection 93ZA(2) applies where a person is qualified for the 2007 one-off payment because of certain income support payments. Subsection 93ZA(2) provides that a person is qualified for a 2007 one-off payment if the person meets the following criteria:

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the person has reached pension age on or before 8 May 2007 (The pension age is 65 for males and currently age 63 for females according to age equalisation rules set out in subsection 23(5C) of the Social Security Act); and

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the person was receiving an income support payment, as defined in section 23(1) of the Social Security Act (other than a service pension or income support supplement paid under the Veterans Entitlements Act) in respect of a period that includes 8 May 2007; and

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the person was paid an instalment of that payment because of a claim the person made on or before 8 May 2007; and

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on 8 May 2007 the person:

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was in Australia; or

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was temporarily absent from Australia and had been so for a continuous period not exceeding 13 weeks.

Subsection 93ZA(2) reflects the intention to pay the one-off bonus only in circumstances where the income support payment (other than service pension or income support supplement) was payable to the person in respect of a period that includes 8 May 2007. Subsection 23(2) of the Social Security Act provides that a person is taken to be receiving a payment under this Act from the earliest day on which the payment is payable to the person even if the first instalment of the payment is not actually paid until a later day. Subsection 93ZA(2) therefore applies to people who are granted the relevant payments after 8 May 2007 provided that the payments in question are payable to the person for a period that includes 8 May 2007.

New subsection 93ZA(3) applies where the person is qualified for the 2007 one-off payment because of being qualified for seniors concession allowance. Subsection 93ZA(3) provides that a person is qualified for a 2007 one-off payment to older Australians if:

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the person was qualified for seniors concession allowance under section 1061U of the Social Security Act on 8 May 2007 (seniors concession allowance is provided under Part 2.25B of the Social Security Act); or

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the person meets both of the following criteria:

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the person made a claim for the seniors health card and had not withdrawn that claim on or before 8 May 2007; and

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on 8 May 2007, the person was either qualified for the card or would have been so qualified but for being temporarily absent from Australia for a continuous period not exceeding 13 weeks.

Subsection 93ZA(4) applies where the person is qualified for the 2007 one-off payment because he or she is receiving a widow allowance, a mature age allowance or a partner allowance in respect of a period that includes 8 May 2007. In addition, the claim must be made on or before 8 May 2007 and on 8 May 2007, the person has to be in Australia or temporarily absent from Australia for a period that does not exceed 13 weeks.

Subsection 93ZA(5) clarifies that a person is entitled to only one one-off payment under section 93ZA, regardless of how many times the person qualifies under this section.

Subsection 93ZA(6) clarifies that a person is not qualified for a one-off payment under section 93ZA if the person is eligible for a payment under section 118ZZG of the Veterans' Entitlements Act.

Section 93ZB provides that the amount of the one-off payment under section 93ZA is $500

Item 2 clarifies that the effect of a decision of the Secretary made after 8 May 2007 for the purposes of section 15 of the Social Security Administration Act (dealing with certain incorrect or inappropriate claims) is to be disregarded. This is intended to restrict access to the one-off payments to cases where any relevant decision for the purposes of section 15 is made before or on 8 May 2007. If this provision was not inserted, there would be potential for persons to seek to establish that they have made an incorrect or inappropriate claim solely for the purposes of obtaining a one-off payment.

Items 3 to 11 make consequential amendments to section 1223ABAA (which deals with debts arising in respect of one off payments to older Australians) to include references to the 2007 one-off payments to older Australians and related provisions.

Item 3 amends subsection 1223ABAA(1) to introduce the concept of the 'relevant payment' which is either the 2006 one-off payment to older Australians under Part 2.2C or 2007 one-off payment to older Australians under Part 2.2D.

Items 4 to 8 and 11 inserts references to various provisions in subsection 93ZA to ensure that they apply with respect to both the 2006 and 2007 one-off payments.

Item 9 inserts subsection 1223ABAA(4A) to introduce the concept of 'the relevant day' in respect to a relevant payment, which is either 9 May 2006 for the 2006 one-off payment to older Australians or 8 May 2007 for the 2007 one-off payment to older Australians.

Item 10 omits '9 May 2006' in subsection 1223ABAA(5) and substitutes with 'the relevant day' to ensure that the provision applies to both 9 May 2006 (for the 2006 one-off payments) and 8 May 2007 (for the 2007 one-off payments).

Amendments of the Social Security Administration Act

Item 12 repeals section 12AAA and substitutes a new section which clarifies that a claim is not required for either a 2006 one-off payment to older Australians or for a 2007 one-off payment to older Australians.

Item 13 inserts new paragraph (gb) into the definition of 'lump sum benefit' in subsection 47(1) to clarify that the 2007 one-off payment to older Australians is to be regarded as a lump sum benefit.

Item 14 inserts new section 47AB to provide that the 2007 one-off payment to older Australians must be paid to the individual in a single lump sum on the earliest practicable date, and in such manner, as the Secretary considers appropriate. It is anticipated that the majority of the 2007 one-off payments will be paid before the end of the financial year ending 30 June 2007.

Amendments of the Veterans' Entitlements Act

Item 15 inserts new Part VIIE into the Veterans' Entitlements Act after Part VIID.

New Part VIIE gives effect to the 2007 Budget measure to provide a one-off payment to certain older Australians.

New subsection 118ZZG(1) provides that a person is eligible for a 2007 one-off payment to older Australians if subsection 118ZZG (2) or 118ZZG (3) applies to the person.

New subsection 118ZZG(2) provides that a person is eligible for a 2007 one-off payment to older Australians if the person meets the following criteria:

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the person has reached qualifying age on or before 8 May 2007. Qualifying age is defined in subsection 118OA(2) of the Veterans' Entitlements Act; and

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a service pension or income support supplement was payable to the person in respect of a period that includes 8 May 2007; and

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the pension or supplement was payable to the person because of a claim that the person made on or before 8 May 2007; and

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the person is in Australia; or

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the person was temporarily absent from Australia and that absence was for a continuous period not exceeding 13 weeks.

New subsection 118ZZG(3) provides that a person is eligible for a 2007 one-off payment to older Australians if:

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the person was eligible for seniors concession allowance on 8 May 2007. Seniors concession allowance is provided for under section 118PA of the Veterans' Entitlements Act; or

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the person meets both the following criteria:

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the person made a claim for a seniors health card on or before 8 May 2007 and that claim had not been withdrawn on or before 8 May 2007; and

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the person was eligible for a seniors health card on 8 May 2007 or the person would have been eligible for the seniors health card except for being temporarily absent from Australia for a continuous period not exceeding 13 weeks.

New subsection 118ZZG(4) provides that a person is entitled to one payment of the 2007 one-off payment only, regardless of how many times the person may be eligible under new section 118ZZG.

New section 118ZZH provides that the amount of the one-off payment under section 118ZZG is $500.

New section 118ZZI provides that a person does not have to claim for the 2007 one-off payment to older Australians.

New subsection 118ZZJ provides that the Commission must pay the 2007 one-off payment for older Australians to an eligible individual:

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in a single lump sum; and

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on the earliest date that is reasonably practicable; and

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in such a manner as the Commission considers appropriate.

New section 118ZZK provides for the circumstances under which a debt may arise in respect of a 2007 one-off payment to older Australians. In very broad terms, a one-off payment will be a debt where it is established that the recipient knowingly made a false or misleading statement (or provided false information) and, if the true circumstances had been known, the determination in relation to the relevant payment or card (which gave rise to the qualification for the one-off payment) would not have been made.

New subsection 118ZZK(7) provides that the other provisions of this Act under which debts arise do not apply in relation to payments to which section 118ZZK applies.

New subsection 118ZZK(8) provides that a debt that arises under section 118ZZK is a recoverable amount within the meaning of subsection 205(8).

Part 2 - Related amendments

Amendments of the Income Tax Assessment Act 1936

The Separate Net Income (SNI) of the dependants of a taxpayer is used to determine the taxpayer's eligibility to certain dependant offsets. SNI is income and other specified amounts earned, derived or received, less certain expenses incurred in earning that income. Payments such as carer allowance, child care benefit and family tax benefit (FTB) are not included as part of SNI. As it is not intended that the one-off payments to older Australians (or any payment under an administrative scheme determined under Schedule 2 of the Bill) form part of SNI, item 16 makes the necessary amendments to subsection 159J(6) of the Income Tax Assessment Act 1936 to clarify this.

Amendments of the Income Tax Assessment Act 1997

The effect of items 17 to 26 is to make one-off payments to older Australians (as well as payments to older Australians under the administrative scheme determined under Schedule 2 to the Bill) exempt from income tax.

Amendments of the Social Security Act

Item 27 inserts new paragraphs 8(8)(yd) and (ye) to provide that the one-off payments (any payment under an administrative scheme determined under Schedule 2 of the Bill) are not to be treated as income for the purposes of the Social Security Act.

Amendments of the Veterans' Entitlements Act

Item 16 amends paragraph 5H(8)(zzac) and (zzad) to provide that the one off payments are not to be treated as income for the purposes of the Veterans' Entitlements Act.