House of Representatives

Explanatory Memorandum

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

Schedule 5 - Extension of multiple birth allowance

Summary

From 1 January 2008, payment of multiple birth allowance will be extended to FTB children under 16 years of age and to older FTB children who are undertaking full-time study until the end of the calendar year in which they turn 18. Multiple birth allowance is currently available in respect of multiple births of three or more children where the children are under the age of six years.

Background

Multiple birth allowance (MBA) is a possible component of FTB Part A. Clauses 3 and 25 of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act) set out the various components of rate that make up an individual's maximum rate of FTB Part A.

Under the current rules, MBA can be added in working out an individual's maximum rate if the individual has three or more FTB children and at least three of those children were born during the same multiple birth and are under the age of six years. The relevant eligibility rule is set out in clause 36 of Schedule 1 to the Family Assistance Act. The amount of MBA is dependent on the number of FTB children born during the same multiple birth (clause 37 of Schedule 1 refers).

Families currently experience a significant drop in assistance when their multiple birth children turn six and MBA ceases to be added to their rate of FTB Part A. However, the cost of raising multiple birth children does not diminish once they turn six. The entry to full-time education is likely to result in additional costs. Families do not have the benefit of handing down school uniforms, shoes, textbooks and other school items. Instead, these costs are all incurred at the same time for three or more children. There are also multiple birth children who require extra assistance with a physical, intellectual, social or behavioural disorder due to premature birth, which is an additional expense for families.

Extending payment of MBA to include FTB children under 16 years of age and older FTB children who are undertaking full-time study until the end of the calendar year in which they turn 18 will help to ease the financial burden for these families until the children have generally completed their secondary schooling. It will also include children who turn 18 during the first year of full-time tertiary study.

Explanation of the changes

Items 1 to 3 amend clause 36 of Schedule 1 to the Family Assistance Act to expand the category of FTB children that can attract payment of MBA.

Item 1 makes a minor consequential change so that existing clause 36 becomes subclause 36(1).

Item 2 repeals the requirement for the multiple birth children to be under six years of age and inserts instead a cross reference to new subclause 36(2).

The expanded eligibility requirements for MBA are set out in new subclause 36(2), inserted by item 3 .

A multiple birth child meets those requirements if the child is aged under 16 years (new paragraph 36(2)(a) refers).

A child also meets the requirements if both:

•

the child has turned 16 and is undertaking full-time study; and

•

the calendar year has not ended in which the first born of the multiple birth children who are undertaking full-time study turns 18.

This rule is set out in paragraph 36(2)(b).

The reference in paragraph 36(2)(b) to the first born of the relevant children covers the possibility of multiple birth children turning 18 in different calendar years and makes it clear that the last calendar year for payment of MBA in respect of the relevant children is the calendar year in which the first born of those children turns 18.

Multiple birth children can be a combination of children covered by new paragraphs 36(2)(a) and (b). This might occur where, for example, triplets are born on different days and one child has not turned 16, whereas the other two children are 16 and in full-time study. In this situation, the triplets would continue to attract MBA at the rate set out in paragraph 37(a) of Schedule 1.

The concept of 'undertaking full-time study' is defined in subsection 3(1) of the Family Assistance Act by reference to the equivalent definition in the Social Security Act.

The rate of MBA is specified in clause 37 of Schedule 1 to the Family Assistance Act and is dependent on the number of FTB children born during the same multiple birth. Item 4 amends this provision to make it clear that the multiple birth children counted for the purposes of determining the rate of MBA are those children who satisfy the eligibility criteria in new subclause 36(2).

Item 5 sets out the application provision for the amendments to MBA. The amendments apply to MBA included in an individual's Part A rate of FTB on or after 1 January 2008, for the 2007-08 income year or a later income year.