House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP)

Schedule 1 - 2008 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 2008 (13 May 2008) and receives income support payments under the Social Security Act for a period that includes 13 May 2008. 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 2008 (13 May 2008) and who are receiving service pension or income support supplement under the Veterans' Entitlements Act for a period that includes 13 May 2008.

In addition, provision is made for a one-off payment to people who are qualified on 13 May 2008 for seniors concession allowance under the Social Security Act or would so qualify because the person has lodged a claim for the seniors health card on or before 13 May 2008 and is eligible for the card on 13 May 2008. Similarly, provision is made for a one-off payment to members of the veteran community who are eligible for seniors concession allowance on 13 May 2008 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 13 May 2008 and is eligible for the card on 13 May 2008.

Finally, provision is made for a one-off payment to people who are receiving a widow allowance, a mature age allowance, a partner allowance, a wife pension or a widow B pension for a period that includes 13 May 2008 because of a claim made on or before 13 May 2008.

Background

In broad terms, this Schedule introduces new 2008 one-off payments for older Australians, to be paid as a lump sum payment, generally before 30 June 2008. There will not be a claim process attached to the 2008 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 Division 4 at the end of Part 2.2B of Chapter 2 of the Social Security Act.

New Division 4 contains the provisions relevant to the 2008 one-off payment to older Australians.

New section 93ZC contains the qualification criteria for the 2008 one-off payment to older Australians.

New subsection 93ZC(1) provides that a person is qualified for a 2008 one-off payment to older Australians if subsection 93ZC(2), (3) or (4) applies to the person.

New subsection 93ZC(2) applies where a person is qualified for the 2008 one-off payment because of certain income support payments. Subsection 93ZC(2) provides that a person is qualified for a 2008 one-off payment if the person meets the following criteria:

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the person has reached pension age on or before 13 May 2008 (the pension age is 65 for males and currently age 63.5 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 subsection 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 an instalment period that includes 13 May 2008; and

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the person was paid an instalment of that payment because of a claim the person made on or before 13 May 2008; and

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on 13 May 2008 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 93ZC(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 13 May 2008. 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 93ZC(2) therefore applies to people who are granted the relevant payments after 13 May 2008, provided that the payments in question are payable to the person for a period that includes 13 May 2008.

New subsection 93ZC(3) applies where the person is qualified for the 2008 one-off payment because of being qualified for seniors concession allowance. Subsection 93ZC(3) provides that a person is qualified for a 2008 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 13 May 2008 (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 13 May 2008; and

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on 13 May 2008, the person either was 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 93ZC(4) applies where the person is qualified for the 2008 one-off payment because he or she is receiving widow allowance, mature age allowance, partner allowance, wife pension or widow B pension in respect of an instalment period that includes 13 May 2008. In addition, the claim must be made on or before 13 May 2008 and, on 13 May 2008, the person has to be in Australia or temporarily absent from Australia for a period that does not exceed 13 weeks.

Subsection 93ZC(5) clarifies that a person may receive only one one-off payment under section 93ZC, regardless of how many times the person qualifies under this section.

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

Section 93ZD provides that the amount of the one-off payment under section 93ZC is $500.

Item 2 is concerned with determining whether a person has made a claim, or should be taken to have made a claim, on or before 13 May 2008. In determining whether this has occurred, the effect of section 12 and section 15 of the Social Security Administration Act is to be disregarded.

In relation to section 12, subitem 2(a) provides that a person should not be paid a one-off payment where he or she has claimed a payment (for example, newstart allowance), has subsequently become qualified for another payment (for example, widow allowance), and, after 13 May 2008, is transferred to that latter payment by virtue of section 12 of the Social Security Administration Act.

In relation to section 15, subitem 2(b) clarifies that the effect of a decision of the Secretary made after 13 May 2008 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 the relevant decision for the purposes of section 15 is made before or on 13 May 2008.

Items 3 to 10 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 2008 one-off payments to older Australians and related provisions.

Item 3 amends subsection 1223ABAA(1) and inserts new paragraph (c) to provide that the 2008 one-off payment to older Australians under Division 4 is a 'relevant payment'.

Items 4 to 8 and 10 insert references to section 93ZC into various provisions, to ensure that they apply with respect to the 2008 one-off payments.

Item 9 amends subsection 1223ABAA(4A) by inserting a new paragraph (c) to provide that 13 May 2008 is 'the relevant day' in respect of the 2008 one-off payment to older Australians.

Amendments of the Social Security Administration Act

Item 11 amends section 12AAA by inserting a new paragraph (c) to provide that a claim is not required for a 2008 one-off payment to older Australians.

Item 12 inserts new paragraph (gc) into the definition of 'lump sum benefit' in subsection 47(1) to clarify that the 2008 one-off payment to older Australians is to be regarded as a lump sum benefit.

Item 13 repeals sections 47AA and 47AB of the Social Security Administration Act and substitutes new section 47AA. New section 47AA consolidates previous sections 47AA and 47AB and provides that the 2006 one-off payment to older Australians, the 2007 one-off payment to older Australians and the 2008 one-off payments 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 2008 one-off payments will be paid before the end of the financial year ending 30 June 2008.

Item 14 is an application provision, which provides that the amendment made by item 13 does not entitle a person to be paid a 2006 one-off payment to older Australians or a 2007 one-off payment to older Australians if such a payment has already been paid to the person under section 47AA or 47AB of the Social Security Administration Act as in force before the commencement of this Schedule.

Amendments of the Veterans' Entitlements Act

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

New Part VIIF gives effect to the 2008 Budget measure to provide a one-off payment to certain older Australians.

New subsection 118ZZL(1) provides that a person is eligible for a 2008 one-off payment to older Australians if subsection 118ZZL(2) or 118ZZL(3) applies to the person.

New subsection 118ZZL(2) provides that a person is eligible for a 2008 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 13 May 2008 (qualifying age is defined in subsection 5Q(1) 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 13 May 2008; 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 13 May 2008; 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 118ZZL(3) provides that a person is eligible for a 2008 one-off payment to older Australians if:

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the person was eligible for seniors concession allowance on 13 May 2008 (seniors concession allowance is provided 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 13 May 2008 and that claim had not been withdrawn on or before 13 May 2008; and

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the person was eligible for a seniors health card on 13 May 2008 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 118ZZL(4) provides that a person may receive one payment of the 2008 one-off payment only, regardless of how many times the person may be eligible under new section 118ZZL.

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

New section 118ZZN provides that a person does not have to claim for the 2008 one-off payment to older Australians.

New subsection 118ZZO provides that the Repatriation Commission must pay the 2008 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 Repatriation Commission considers appropriate.

New section 118ZZP provides for the circumstances under which a debt may arise in respect of a 2008 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 118ZZP(7) provides that the other provisions of the Veterans' Entitlements Act under which debts arise do not apply in relation to payments to which section 118ZZP applies.

New subsection 118ZZP(8) provides that a debt that arises under section 118ZZP 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 for 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 to 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

Item 17 makes a consequential amendment to the table in section 11-15 in the Income Tax Assessment Act 1997 , inserting references to the 2008 one-off payment to older Australians and payments made under the scheme determined under Schedule 2 to this bill.

The effect of items 18 and 21 is to make the 2008 one-off payment 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.

Item 19 amends subsection 52-10(1B) and is consequential to the amendment made by item 28 , which consolidates the one-off payment to the aged into Division 1 of Part 2.2B.

Item 20 repeals subsections 52-10(1CA) and (1CAA) and substitutes a new section 52-10(1CA), which provides that the 2006 one-off payment to older Australians, the 2007 one-off payment to older Australians and the 2008 one-off payment to older Australians are exempt from income tax.

Item 22 inserts reference to the 2008 one-off payment for older Australians into paragraph 52-65(1)(ba).

Item 23 repeals subsections 52-65(1B) and (1BA) and substitutes a new section 52-65(1B), which provides that the 2006 one-off payment to older Australians, the 2007 one-off payment to older Australians and the 2008 one-off payment to older Australians are exempt from income tax.

The effect of item 24 is to make payments to older Australians under the administrative scheme determined under Schedule 2 of the bill exempt from income tax.

Item 25 inserts a reference to the 2008 one-off payment to older Australians to the table in section 52-75, which lists payments that are wholly or partly exempt from income tax.

Amendments of the Social Security Act

Item 26 inserts new paragraphs 8(8)(yf) and (yg) to provide that the 2008 one-off payment to older Australians (and any payment under an administrative scheme determined under Schedule 2 to the bill) are not to be treated as income for the purposes of the Social Security Act.

Item 27 repeals the heading to Part 2.2B and substitutes a new heading.

Items 28 to 34 consolidate Parts 2.2B, 2.2C and 2.2D of the Social Security Act into new Part 2.2B. New Part 2.2B will contain the following divisions (in addition to Division 4 added by this Schedule):

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Division 1 provides for the one-off payment to the aged;

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Division 2 provides for the 2006 one-off payment to older Australians; and

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Division 3 provides for the 2007 one-off payment to older Australians.

Amendments of the 2007 One-off Payments Act

Item 35 amends paragraph 1(2)(a) of Schedule 2 to the 2007 One-off Payments Act. Item 35 is consequential to the amendments made by items 31, 32 and 34 .

Amendments to the 2006 One-off Payments Act

Item 36 amends paragraph 1(2)(a) of Schedule 2 to the 2006 One-off Payments Act. Item 36 is consequential to the amendments made by items 29, 30 and 33 .

Amendments of the Veterans' Entitlements Act

Item 37 inserts new paragraph 5H(8)(zzae) and (zzaf) to provide that the one-off payments are not to be treated as income for the purposes of the Veterans' Entitlements Act.