House of Representatives

Revised Explanatory Memorandum

(Circulated by the authority of the Minister for Social Services, the Hon Kevin Andrews MP)

Schedule 3 - Family tax benefit and eligibility rules

Summary

From 1 January 2014, family tax benefit Part A will be paid to families only up to the end of the calendar year in which their teenager is completing school.

Youth allowance, with its 'learn or earn' provisions that require young people to participate in work, job search, study or training, will remain available as the more appropriate payment to help young people transition from school into work or post-secondary study.

Exemptions will continue to apply for children who cannot work or study due to physical, psychiatric, intellectual or learning disability.

Background

Currently, family tax benefit Part A can be payable to a parent or guardian, or an approved care organisation, for children aged 0 to 15, children aged 16 to 17 who are still undertaking or have completed secondary study, and dependent full-time secondary students aged 18 until the end of the calendar year they turn 19.

From 1 January 2014, this Schedule limits eligibility for family tax benefit Part A to families with children aged 0 to 15 and teenagers aged 16 to 19 (until the end of the calendar year they turn 19) who are in full-time secondary study to attain their Year 12 qualification or equivalent. Eligibility for children aged 16 to 17 who have already completed their Year 12 qualification will be removed. This Schedule also makes similar changes to eligibility for family tax benefit for approved care organisations.

Exemptions will still continue to apply for a child who lacks capacity to undertake the course due to physical, psychiatric, intellectual or learning disability so that these children may still be eligible for family tax benefit.

This Schedule also removes the child 'cut-out amount' or income limit, which is currently $14,078 per annum, as family tax benefit will no longer be paid for children who have completed school and entered the workforce.

The amendments made by this Schedule commence on 1 January 2014.

Explanation of the changes

Amendments to the Family Assistance Act

Items 1 and 2 repeal the definitions of exempt from the FTB activity test and satisfies the FTB activity test in subsection 3(1). These items are consequential to item 3.

Item 3 repeals the FTB activity test in section 17B. This concept will no longer be used as the family tax benefit participation requirements will instead be incorporated in the definition of senior secondary school child.

Item 4 repeals paragraph 22(3)(e) to remove the reference to the FTB activity test, and substitutes new paragraph 22(3)(e), containing the requirement for an FTB child aged 16 to 17 to be a senior secondary school child (defined in section 22B).

Item 5 is consequential to item 8.

Item 6 repeals and substitutes a cell at table item 1 in subsection 22A(1), to remove the concept of the 'cut-out amount', which applies to a child aged from 5 to less than 16 who is not undertaking education, but retain other current requirements before the child is considered to be an FTB child.

Item 7 repeals paragraph (a) of the cell at table item 2 in subsection 22A(1), to remove the concept of the cut-out amount for a child aged 16 or more who is not in secondary study.

Item 8 repeals subsections 22A(1A) and (2), to remove the definition of cut-out amount for an FTB child and the concept of undertaking primary education for the purposes of the cut-out amount.

Item 9 repeals and substitutes subparagraph 22B(1)(b)(ii) to provide that an individual may be a senior secondary school child if the individual has an exemption from the full-time study requirement in new subsection 22B(2), inserted by item 10.

Item 10 repeals subsection 22B(2), and substitutes new subsections 22B(2) and (2A). New subsection 22B(2) incorporates the exemptions from the full-time study requirement for a senior secondary school child that were incorporated in section 17B, now repealed by item 3. Under new subsection 22B(2), an individual may be exempt from satisfying the family tax benefit participation requirements and still be a senior secondary school child if:

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there is no locally accessible course (including a distance education course); or

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if there is a course:

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there is no place available on the course; or

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the individual is not qualified to undertake the course; or

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the individual lacks the capacity to undertake the course because they have a physical, psychiatric or intellectual disability or a learning disability, such as for example attention deficit disorder; or

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in the Secretary's opinion, special circumstances exist that make it unreasonable to require the individual to undertake an approved course of education or study.

New subsection 22B(2A) incorporates the capacity, repealed under item 3, for the Secretary to determine, for the purposes of subparagraph 22B(1)(b)(i) or (ia), that the normal amount of full-time study for the individual in respect of a course is a number of hours averaged over the duration of the period for which the individual is enrolled in the course.

Items 11 and 12 are technical amendments that insert new headings before subsections 22B(3) and (4).

Items 13 and 14 are consequential amendments to paragraphs 31(3)(a), (b) and (c) to lower the age limits for continued eligibility for family tax benefit if an FTB child or regular care child dies.

Item 15 repeals subparagraphs 34(1)(a)(ii) and (iii), and substitutes new paragraph 34(1)(a)(ii), to change an approved care organisation's eligibility for family tax benefit in respect of children who have turned 16 so that eligibility is restricted to children who are senior secondary school children.

Item 16 repeals table item 1 in subsection 35(1), consistent with the change made in item 6.

Item 17 repeals and substitutes a cell at table item 2 in subsection 35(1), consistent with the change made in item 7.

Item 18 repeals subsections 35(2A) and (3), consistent with the change made in item 8.

Items 19 to 22 are consequential amendments to the single income family supplement and family tax benefit rate calculation provisions, consistent with the changes made in items 13 and 14.

Item 23 omits the words, 'but is under 16', in table item 2 in clause 7 of Schedule 1, which sets out the family tax benefit Part A standard rates per child.

Item 24 repeals table items 3 and 4 in clause 7 of Schedule 1, consequential to item 23.

Item 25 omits the words, 'but is under 16', in table item 2 in subclause 38AA(1) of Schedule 1, which sets out the family tax benefit Part A clean energy supplement rates per child.

Item 26 repeals table items 3 and 4 in subclause 38AA(1) of Schedule 1, consequential to item 25.

Item 27 repeals and substitutes subclause 38B(3) of Schedule 1 to provide that a regular care child of an individual is a rent assistance child of the individual if the regular care child is not an absent overseas regular care child.

Items 28, 29 and 30 repeal table item 14A in clause 2 of Schedule 4, table item 14A in subclause 3(1) of Schedule 4, and subclause 3(4) of Schedule 4. These amendments are consequential to items 8 and 18.

Amendments to the Family Assistance Administration Act

Item 31 amends subsection 29(2B), and is consequential to items 3 and 4.

Item 32 removes the requirement in paragraph 32J(1)(b) to consider the income of an FTB child or regular care child in working out an individual's entitlement to family tax benefit, and is consequential to item 8.

Item 33 repeals sections 32K and 32L, and is consequential to item 8.

Item 34 amends subparagraph 32P(1)(c)(ii), and is consequential to item 35.

Item 35 repeals paragraph 32P(1)(d), and is consequential to item 8.

Item 36 sets out the application and savings provisions for this Schedule.