House of Representatives

Explanatory Memorandum

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

Schedule 2 - Family tax benefit and double orphan pension

Summary

This Schedule makes amendments to ensure families can continue to receive family tax benefit until the end of the calendar year that the child finishes secondary study or its equivalent. Additionally, the qualification period for double orphan pension is being extended so that it aligns with eligibility for family tax benefit. This means, for example, that a carer can continue to receive double orphan pension for a young person in their care until the end of the calendar year in which the young person turns 19 if they are still in secondary study, or until their 18th birthday if they have already completed secondary study.

Background

Currently, under subsection 22B(3) of the Family Assistance Act, a child continues to be a senior secondary school child until 31 December, if the day the child completes the final year of secondary school or equivalent level of education is in December of that calendar year. If the day of completion is before December, the child continues to be a senior secondary school child for a period of 28 days after completion. This allows for continued eligibility for family tax benefit until the end of the calendar year for a child who completes secondary school in December, or for a period of 28 days if the child completes school before December.

This Schedule amends the Family Assistance Act so that eligibility for family tax benefit will continue until the end of the calendar year for a child who completes secondary school in either November or December of that year. The amendments confirm access to family tax benefit until the end of the calendar year for students who complete secondary study in the usual way - for example, by sitting final examinations. The amendments also ensure continued family tax benefit eligibility for a child for a period of 28 days after completion if the child completes secondary school before November.

This Schedule also amends the definition of young person in subsection 5(1) of the Social Security Act to extend the double orphan pension qualification period for students completing study by aligning it with the family tax benefit eligibility period.

The amendments in items 1 to 5 of this Schedule commence on 1 January 2012 and those in items 6 and 7 commence on 1 January 2013.

Explanation of the changes

Amendments to the Family Assistance Act

Item 1 inserts 'November or' after 'is in' in paragraph 22B(3)(a), so that extended eligibility for family tax benefit for a child until 31 December would apply for those completing the final year of secondary school or equivalent in November, as well as for those completing in December, of a calendar year.

Item 2 omits 'December' and substitutes 'November' in paragraph 22B(3)(b). This amendment allows a child who completes the final year of secondary school or equivalent before November to continue to be a senior secondary school child for a period of 28 days after completion.

Item 3 is an application provision for items 1 and 2. The amendments made by items 1 and 2 apply in relation to working out whether an individual is a senior secondary school child for days on or after 1 January 2012. The retrospective commencement of this item is beneficial, and aligns with the commencement of the policy under the Supporting Families with Teenagers 2010 election commitment, which was implemented on 1 January 2012.

Amendments to the Social Security Act

Item 4 repeals the definition of young person in subsection 5(1) and substitutes a new definition. Item 5 provides that this new definition applies for double orphan pension qualification for days on or after 1 January 2012, in line with the changes made by item 3.

Under the new definition, a young person (except in Part 2.20, relating to double orphan pension, of the Social Security Act) has the meaning given by subsection 5(1B) (that is, the person is under 16 years of age or is a student child) - so, for all purposes other than those of Part 2.20, the definition has not changed. However, in Part 2.20 (relating to double orphan pension), a young person means a person who:

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is under 16 years of age; or

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has reached 16, but is under 22, years of age and is studying full-time; or

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has reached 16 years of age and is a senior secondary school child under the Family Assistance Act.

The changes to the definition allow a young person to qualify for double orphan pension for a period after completing study (in line with the amendments made by items 1 and 2).

Item 6 repeals paragraph (b) of the definition of young person in subsection 5(1) (inserted by item 4 above) and substitutes a new paragraph (b). Item 7 provides that this new definition applies for double orphan pension qualification for days on or after 1 January 2013. New paragraph 5(1)(b) provides that, in Part 2.20 of the Social Security Act, a young person means a person who is under 20 years of age. This allows child age qualification for double orphan pension to be fully aligned with child age eligibility for family tax benefit.