House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families and Social Services, Senator the Hon Anne Ruston)

OUTLINE

This Bill implements the Budget 2019-20 measure 'Changing the Social Security Income Assessment Model'.

This Bill changes the way employment income is used to determine a person's rate of payment under the social security law. Currently, the Social Security Act 1991 assesses employment income in the social security instalment period in which it is earned, derived or received. In practice, because employment income is usually earned before it is paid, a person is required to estimate and report the amount of employment income they have earned in a social security instalment period, with this estimate being used to determine their rate of payment. In most cases, a person will not know exactly how much employment income they will be paid for an instalment period until they are paid at a later date. This frequently results in social security recipients over-estimating or under-estimating their total employment income for an instalment period, with the consequence that recipients are either underpaid or overpaid their social security entitlements.

This Bill amends the Social Security Act 1991 to ensure that employment income is assessed once it is paid to a social security recipient. This will provide a more accurate picture of the amounts of employment income paid to social security recipients and minimise the number of social security overpayments resulting from misreported employment income.

To facilitate this new assessment model, Services Australia will use data collected by the Australian Taxation Office (primarily information from the Single Touch Payroll system). The Bill amends the Social Security (Administration) Act 1999 to remove any doubt that this may be done.

The Bill also amends the A New Tax System (Family Assistance) (Administration) Act 1999 to remove any doubt that Services Australia can use information from the Single Touch Payroll system to administer the family assistance law. It further amends the Student Assistance Act 1973 to remove any doubt that Services Australia can use this information to administer that Act and the ABSTUDY scheme.

This Bill also amends the provisions in the Veterans' Entitlements Act 1986 regarding the work bonus and pension bonus scheme.

The amendments made by this Bill commence as follows:

(a)

if the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Act 2020 (the Act) receives the Royal Assent before 15 May 2020- on 1 July 2020;

(b)

if the Act receives the Royal Assent on or after 15 May 2020-the first day of the first calendar month that occurs after the end of the period of 2 months beginning on the day this Act receives the Royal Assent.

This means that if the Bill received the Royal Assent on 16 May 2020, the Bill would commence on 1 August 2020.

Financial impact statement

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

The statement of compatibility with human rights appears at the end of this Explanatory Memorandum.