House of Representatives

Explanatory Memorandum

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

Schedule 7 - Portability of family tax benefit

Summary

Changes are being made to allow the FTB portability period of 13 weeks for full payment to be extended for members of the Australian Defence Force (ADF) and certain Australian Federal Police (AFP) personnel of the International Deployment Group (IDG) who are deployed overseas as part of their duties and, as a result, remain overseas for longer than 13 weeks.

A minor technical change is also made to the heading of a table in the rent assistance provisions relevant for FTB Part A.

Background

Portability of FTB

Section 62 of the Family Assistance Act modifies the way in which an individual's rate of FTB is calculated where the individual has been absent from Australia for longer than 13 weeks. Such an individual can only attract the base rate of FTB Part A and cannot receive rent assistance or FTB Part B while they remain overseas. The maximum period of eligibility while overseas is three years (section 24 of the Family Assistance Act refers).

Section 63A of the Family Assistance Act enables the Secretary to extend the 13 week portability period where the person is unable to return to Australia within the portability period because of a prescribed event (such as war in the country in which the person is located). However, the 13 week period cannot be extended unless the event occurred or began during the initial 13 week period of absence and, in the case of political or social unrest, industrial action or war, the person is not willingly involved, or willingly participating, in the event. This restriction is set out in subsection 63A(2).

This means that FTB customers who are members of the ADF and have been deployed overseas for longer than 13 weeks may have their FTB entitlements reduced after 13 weeks because there is no capacity to extend their portability period under section 63A. The situation is similar for certain AFP personnel of the IDG who are deployed overseas. The IDG was established within the AFP to manage the deployment of Australian and Pacific Island police offshore and to contribute to regional stability and security on behalf of the Australian Government by contributing to offshore law enforcement initiatives and participating in capacity development programs within the law and justice sector. The reduction of FTB is not an appropriate outcome for these groups.

Amendments are therefore made to the portability rules for FTB to enable the 13 week portability period to be extended for uniformed members of the ADF and certain AFP personnel of the IDG who are deployed overseas, where they remain otherwise eligible for FTB.

Technical amendment to clause 38D of Schedule 1

Part 1 of Schedule 8 to the New Formula Act makes amendments relating to FTB for regular care children, with effect from 1 from July 2008.

The amendments include new clause 38D in Schedule 1 to the Family Assistance Act. Clause 38D applies to set the rate of rent assistance for an individual who has at least one FTB child and who is not a relevant shared carer. The heading of the table in clause 38D refers to '(Part A-Method 1 or 3)'.

Method 1 is the calculation process that it used to determine an individual's rate of FTB (including rent assistance) where, among other things, the individual has at least one FTB child. Rent assistance is not available under Method 2. Method 3 applies where the individual does not have an FTB child (but has a regular care child). Method 3 cannot apply to cases covered by clause 38D.

The reference to Method 3 in the heading of the table to clause 38D is misplaced and is therefore omitted.

Explanation of the changes

Item 1 inserts new subsection 63A(4) into the Family Assistance Act. This new provision enables the Secretary to extend an individual's 13 week portability period (as referred to in subsection 62(2)) if the Secretary is satisfied that the individual is unable to return to Australia within that period in prescribed situations.

The first situation is where a member of the Defence Force is deployed outside Australia under conditions specified in a determination made under the Defence Act 1903 that relates to such deployment.

The second situation is where a member, a special member or a protective service officer of the AFP is deployed outside Australia for the purposes of capacity-building or peacekeeping functions. This wording reflects the functions of the IDG as opposed to any broader activities that the AFP might be involved in overseas.

The amendment commences on 1 July 2007 and applies to individuals whose deployment starts on or after that date ( item 2 refers).

Item 3 omits the superfluous reference to 'or 3' from the heading to the table in clause 38D of Schedule 1.