House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)

Chapter 8: 2022 cost of living payment

Outline of Schedule

8.1 Schedule 8 to the main Bill provides for the payment of 2022 cost of living payment of $250 to around 5.9 million Social Security and Veterans' income support and compensation recipients, Farm Household Allowance recipients, and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Veteran Gold Card. The cost of living payment is exempt from income tax and not assessed as income for the purposes of the social security law or Veterans' Entitlement Act.

8.2 To be qualified for the 2022 cost of living payment, a person must be residing in Australia and be receiving one of the qualifying payments or hold or have claimed and qualified for one of the qualifying concession cards on 29 March 2022.

Summary of new law

8.3 This Schedule provides for the payment of new 2022 cost of living payment to a range of income support payment recipients, compensation payment recipients and concession card holders.

Comparison of key features of new law and current law

Table 8.1 Comparison of new law and current law

Detailed explanation of new law

Amendments to the Income Tax Assessment Act 1997

8.4 Items 1 to 9 amend sections 11-15, 52-10, 52-40, 52-65, 52-75, 52-131 and 52-150 of the ITAA 1997 to ensure that 2022 cost of living payment under the Social Security Act, Veterans' Entitlements Act and ABSTUDY scheme is tax exempt.

Amendments to the Social Security Act 1991

8.5 Item 10 inserts paragraph 8(8)(yp) of the Social Security Act to ensure that a payment of a 2022 cost of living payment under the Veterans' Entitlements Act is not assessed as income for the purposes of the social security law.

8.6 Item 11 inserts paragraph 23(4AA)(af) into the Social Security Act before paragraph 23(4AA)(b) of that Act. The new paragraph contains a reference to new Part 2.6D of the Social Security Act.

8.7 The effect of this amendment is that a person qualifies for a 2022 cost of living payment under section 314 of the Social Security Act if on 29 March 2022 they are taken to be receiving a social security benefit or pension under subsection 23(4A) of the Social Security Act on that day.

8.8 Subsection 23(4A) of the Social Security Act treats a person as still 'receiving' a social security pension or benefit (for the purposes of receiving certain supplementary payments listed in subsection 23(4AA) of the Social Security Act) if they ceased to be paid their pension or benefit because employment income reduced the rate of their pension or benefit to nil.

8.9 Item 12 inserts Part 2.6D into the Social Security Act after Part 2.6C.

8.10 New section 314 in Division 1 of the new Part provides for qualification for a 2022 cost of living payment. A person is so qualified if new subsection 316(2)(3) or (4) applies to the person on 29 March 2022, and the person is residing in Australia on that day.

8.11 Subsection 314(2) provides that a person may only receive one payment regardless of how many times the person qualifies under section 314.

8.12 Subsection 314(3) prevents a 2022 cost of living payment under section 314 being paid to a person if such payment has already been paid under the ABSTUDY Scheme or under the Veterans' Entitlements Act.

8.13 New section 315 sets the amount of a person's 2022 cost of living payment at $250.

8.14 New Division 2 of Part 2.6D includes new section 316. Section 316 applies for the purposes of subsection 314(1). Subsection 316(2) lists the payments, the receipt of which will give rise to qualification for the 2022 cost of living payment. The listed payments are:-

•

age pension;

•

disability support pension;

•

carer payment;

•

parenting payment;

•

youth allowance;

•

austudy payment;

•

jobseeker payment;

•

special benefit;

•

carer allowance; and

•

double orphan pension.

8.15 A note to subsection 316(2) alerts the reader that references to youth allowance and jobseeker payment include references to farm household allowance: see section 93 of the Farm Household Support Act 2014.

8.16 Subsection 316(3) provides for qualification for a 2022 cost of living payment if the person has claimed a seniors health card on 29 March 2022, has not withdrawn that claim, and is ultimately found to be qualified for the card on that day, is also qualified for a payment.

8.17 Subsection 216(4) provides for qualification for a 2022 cost of living payment if the person is qualified for a pensioner concession card on that day.

8.18 Item 13 inserts new table item 4M after table item 4L in subsection 1222(2), relating to the manner of recovery of debts. This is consequential to item 28 which inserts new debt provisions in respect of 2022 cost of living payment. The new table item alerts readers to the manner of recovery of any debts of the payment raised.

8.19 Item 14 provides for debts in respect of 2022 cost of living payment. A debt of the payment will only arise when its payment is paid as a result of the recipient knowingly making a false or misleading statement or knowingly providing false information. This may result in a change, revocation, setting aside or superseding of the underlying determination giving rise to qualification for the underlying payment. In this case, the whole amount of the payment is a debt. Other provisions of Part 5 relating to raising debts more broadly do not apply to the payment.

Amendments to the Social Security (Administration) Act 1999

8.20 Item 15 inserts new section 12AH before section 12B, providing that a claim is not required for a 2022 cost of living payment provided for by the main social security Act.

8.21 Item 16 inserts reference to the 2022 cost of living payment into new paragraph 47(1)(gk), which provides for the payment of lump sum benefits to individuals, to require the amount be paid to the person.

8.22 Item 17 inserts new section 47AI after section 47AH to provide for the timing of the payment to the person. Section 47AI provides for the payment to be made in a single lump sum on the date on or after 29 March 2022 that the Secretary considers to be the earliest date on which it is reasonably practicable for the payment to be paid; and in such manner as the Secretary considers appropriate. However, the payment must not be paid on or after 1 July 2023. It would be expected that all persons qualified for the payment would have been paid before this date.

8.23 Item 18 amends provisions relating to the income management regime. The 2022 cost of living payment will be subject to income management if the person receiving the payment is subject to income management. Item 32 inserts a definition of the 2022 cost of living payment into section 123TC, by reference to new part 2.6D of the Social Security Act, or such payment under the ABSTUDY scheme.

8.24 Item 19 modifies the heading to Subdivision DB of Division 5 of Part 3B, to include reference to cost of living payment.

8.25 Item 20 inserts new section 123XPE into Subdivision DB of Division 5 of Part 3B. This provides for 100 percent of the payment to be withheld and subject to income management where the person qualified for the payment is otherwise subject to income management.

8.26 Item 21 amends the definition of restrictable payment in subsection 124PD(1) of the Social Security (Administration) Act to insert reference to the 2022 cost of living payment' under the Social Security Act and the ABSTUDY Scheme. The insertion of these terms into the definition of restrictable payment, in conjunction with existing subsection 124PJ(2) of the Social Security (Administration) Act, will mean that 100 per cent of the payment will be subject to the cashless welfare card if the recipient of the payment is a participant in the cashless welfare card trial in Part 3D of the Social Security (Administration) Act.

Amendments to the Veterans' Entitlement Act 1986

8.27 Item 22 amends subsection 5H(8) of the Veterans' Entitlement Act to specify the 2022 cost of living payment under new Part IIIK (Division 1) in the list of excluded amounts for the purposes of that Act. This amendment in effect ensures that the 2022 cost of living payment does not count as income for income testing purposes under that Act, but instead is an excluded amount. Specifically, item 22 inserts a new paragraph (zzap) in subsection 5H(8) to include the 2022 payment payable under new Part IIIK (Division 1) so that it is not counted as income.

8.28 Item 23 inserts a new Part IIIK into the Veterans Entitlement Act. New Part IIIK provides for the 2022 cost of living payment of $250. Division 1 sets out who are eligible for the payment, the amount of payment, entitlement for the payment and makes it clear that a claim is not required for the payment. Division 2 provides details and list of persons receiving specified payments or who hold the appropriate card as being eligible for the payment.

8.29 The amendments to the Veterans' Entitlements Act will allow the 2022 cost of living payment to be paid to persons receiving the following payments or who hold the appropriate card listed below:

•

service pension;

•

income support supplement;

•

disability compensation payment under the Veterans' Entitlements Act;

•

war widow(er)s pension under the Veterans' Entitlements Act;

•

veteran payment;

•

permanent impairment compensation under the Military Rehabilitation and Compensation Act 2004;

•

special rate disability pension under the Military Rehabilitation and Compensation Act 2004;

•

wholly Dependent Partner payments under the Military Rehabilitation and Compensation Act 2004;

•

those who converted their weekly Permanent Impairment Compensation, or Wholly Dependent Partner Payments under the Military Rehabilitation and Compensation Act 2004 prior to the date their eligibility for 2022 cost of living payment is assessed and those who have received Permanent Impairment compensation under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988;

•

all Repatriation Health Card - For All Conditions (Veteran Gold Card) holders;

•

Education Allowance recipients aged 16 or over;

•

all Commonwealth Seniors Health Card and Pensioner Concession Card holders under the Veterans' Entitlements Act; and

•

claimants under section 8 of the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006 or section 9 of the Treatment Benefits (Special Access) Act 2019 and are eligible persons within the meaning of those Acts.

8.30 Division 1 sets out entitlement to, and the amount and details of, the 2022 cost of living payment for persons who will be eligible for that payment under the Veterans' Entitlement Act.

8.31 New section 67ZP provides for persons who will be eligible for the payment and the amount of the payment. Subsection 67ZP(1) provides that a person is eligible for a 2022 cost of living payment if new Division 2 of Part IIIK applies to the person on 29 March 2022. Subsection 67ZP(1) provides that the amount of the payment is $250.

8.32 New section 67ZQ specifies that a person is only entitled to one payment and prohibits multiple entitlement or payment of the 2022 cost of living payment. Subsection 67ZQ(1) makes it clear that a person can only receive one payment under Division 1, regardless of how many times the person becomes eligible under section 67ZQ. New section 67ZP provides that if a 2022 cost of living payment under the ABSTUDY Scheme or an identical payment under Division 1 of Part 2.6D of the Social Security Act is paid to the person, the 2022 cost of living payment under Division 1 of Part IIIK of the Veterans Entitlement Act cannot be paid to the person.

8.33 New section 67ZR makes it clear that a claim is not required for a person to be paid a 2022 cost of living payment under Division 1 of Part IIIK.

8.34 Section 67ZS of the Veterans' Entitlements Act provides that, where a person is eligible for a 2022 cost of living payment under Division 1, the Repatriation Commission must, subject to subsection (2), pay the payment in a single lump sum of $250 on the date occurring on or after 29 March 2022, that is reasonably practical for the payment to be made and in the manner the Repatriation Commission considers to be appropriate.

8.35 Subsection 67ZS(2) provides that the Commission must not pay the payment on or after 1 July 2023. Thus the payment can only be made between 29 March 2022 and 30 June 2023.

8.36 Division 2 of Part IIIK specifies persons who are eligible to receive the payment for the purposes of subsection 67ZP(1) of Division 1 of Part IIIK.

8.37 Section 67ZU provides for the eligibility of persons receiving specified payments under the Veterans' Entitlement Act, that include service pension, income support supplement, disability compensation payment, and war widow's/widower's pension under Part II or IV of the Act, and veteran payment.

8.38 Subsection 67ZU(1) provides that Division 1 (Eligibility) of new Part IIIK applies to a person on a particular day, if service pension or income support supplement is payable to the person on that day. Note, however, that the day on which the eligibility for the 2022 cost of living payment is determined is on 29 March 2022 (refer to subsection 67ZP(1)).

8.39 Subsection 67ZU(2) provides for circumstances where a person may not be receiving a service pension or income support supplement or such payments are not payable to the person because of a change in employment income during a specified period.

8.40 Subsection 67ZU(2) provides that those who have personal and/or partner employment income that reduces their rate to nil during the 12 week period to their service pension or income support supplement ceasing (the cessation date) on or before the "test day", are still taken to be receiving a payment on the "test day" and therefore qualifies and is eligible for the 2022 cost of living payment. The cessation day must occur no earlier than 12 weeks before the test day.

8.41 Subsection 67ZU(3) provides that a person is eligible for the 2022 cost of living payment on a day, if an amount of disability compensation payment at the general rate of pension and extreme disablement adjustment, intermediate rate, special rate of pension, temporary special rate or an increased rate or pension due to a kind of incapacity set out in section 27 of the Veterans' Entitlement Act, is payable to the veteran on the day (the amount payable being greater than nil for that day) their eligibility is determined.

8.42 Subsection 67ZU(4) provides that a person is eligible for the 2022 cost of living payment on a day, if the person who is a widow or widower of a deceased veteran or a reinstated pensioner in relation to the veteran, if an amount of pension is payable to the person under Part II or Part IV of the Veterans' Entitlement Act under or by reference to subsection 30(1) of that Act, on the day their eligibility is determined and the person's rate of pension is greater than nil for that day.

8.43 Subsection 67ZU(5) provides that, a pension is deemed payable even if the rate of pension is nil, or a pension would not be payable merely because the rate is reduced, or pension is not payable because the pension has been fully offset under Division 4, 5 or 5A of Part II or section 74 of the Veterans' Entitlement Act.

8.44 Subsection 67ZU(6) provides that a person is eligible for the 2022 cost of living payment on a day, if the veteran payment is payable to the person on that day and the veteran payment is payable because of a claim made on or before that day their eligibility for that payment is determined under the Veterans' Entitlement Act.

8.45 Section 67ZV provides for the payment of the 2022 cost of living payment to be paid to certain persons who on a particular day receive payments (Education Allowance) under the Veterans' Children Education Scheme (the VCES). As provided for in subsection 67ZP(2), the day the eligibility is determined is on 29 March 2022.

8.46 According to section 67ZV, the 2022 cost of living payment is payable to a person on a day who on that day their eligibility is determined under Division 2 of Part IIIK is aged 16 or over and receiving a payment under the VCES. Where a person aged 16 or over has made a claim under the VCES and that claim is subsequently granted on a day, the person will be also considered eligible for the 2022 cost of living payment on that day.

8.47 Section 67ZW of the Veterans' Entitlement Act provides for the payment of the 2022 cost of living payment to certain people who are eligible because they hold seniors health cards or gold cards or who are eligible for fringe benefits (where a Pensioner Concession Card is issued) under that Act. As previously discussed the eligibility for the payment is determined on 29 March 2022.

8.48 Subsection 67ZW(1) provides that a person is eligible for the 2022 cost of living payment on a day, if the person makes a claim for a seniors health card under Division 2 of Part VIIC on or before that day, the person does not withdraw that claim on or before that day and the person is able to meet all requirements and become eligible for the seniors card on that day. In effect, if a person has made a successful claim on or before the day their eligibility for the payment is applicable, then that person is eligible to receive the payment. However, if the person has withdrawn their claim on or before the day their eligibility for the payment under Division of Part IIIK becomes applicable, or have ceased to be eligible for the holding of a seniors health card on a particular day, they will not be able to receive the payment. Note that individuals who hold a seniors health card under the Social Security Act cannot hold a seniors health card under the Veterans' Entitlement Act (refer to section 118X).

8.49 Subsection 67ZW(2) provides that a person is eligible for the payment under Division 1 of Part IIIK on a day, if the person is the holder of a seniors health card on that day because of the application of subsection 118XA(3) and the person is eligible for the card on that particular day. Section 118XA provides for the modification of the provisions under Division 1 of Part VIIC relating to the eligibility for a seniors health card.

8.50 A person who holds a Repatriation Health Card - For All Conditions, may be eligible for the 2022 cost of living payment. The Repatriation Health Card - For All Conditions is also known as the Veteran Gold Card and is issued to people who are eligible to be provided with treatment for all injuries or diseases under the Veterans' Entitlements Act, Military Rehabilitation and Compensation Act 2004, the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006 or the Treatment Benefits (Special Access) Act 2019.

8.51 Subsection 67ZW(3) provides that a person is eligible for the payment on a day, if the person on that day, holds a card known as the Repatriation Health Card- For all conditions that evidences the person's eligibility under the Veterans' Entitlement Act or the Military Rehabilitation and Compensation Act 2004 to be provided with treatment for all injuries or diseases, and the person is eligible for that card on that particular day.

8.52 Subsection 67ZW(4) deals with the circumstances where a person either receives treatment or has made a claim under the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006 or the Treatment Benefits (Special Access) Act 2019 for eligibility to be provided for treatment. In essence, if a person has made a successful claim for the Repatriation Health Card - For All Conditions under either of these Acts on or before the day their eligibility under Division 2 of Part IIIK becomes applicable, then the person will be eligible to receive the payment on the day that the person is determined to be eligible to hold the card. However, if the person has withdrawn their claim on or before the day their eligibility is determined or ceased to be eligible for Repatriation Health Card - For All Conditions, the person will not be eligible to receive the 2022 cost of living payment. The day eligibility for the 2022 cost of living payment is determined is on 29 March 2022.

8.53 Subsection 67ZW(5) provides that the payment is payable to a person on a day if the person is eligible for fringe benefits under subsection 53A(1A) of the Veterans' Entitlements Act on that particular day. A person is not eligible for the payment if they are eligible for fringe benefits under other subsections of section 53A of the Veterans' Entitlements Act.

8.54 Section 67ZX of the Veterans' Entitlements Act sets out the criteria for persons who are eligible for the 2022 cost of living payment because they are in receipt of specified payments under the Military Rehabilitation and Compensation Act 2004. These payments are compensation for permanent impairment, special rate disability pension and compensation for wholly dependent partners.

8.55 A person is eligible for the payment if one or both of the following conditions is met on the day their eligibility for the payment is applicable:

•

weekly compensation for permanent impairment is payable to the person under Part 2 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004 on that day or weekly compensation for permanent impairment would have been payable under Part 2 of Chapter 4 for that day if it had not been offset under paragraph 398(3)(b) of the Military Rehabilitation and Compensation Act 2004 or subsection 13(4) of the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004; or

•

on or prior to that day, the person had received lump sum compensation for permanent impairment under Part 2 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004.

8.56 A person is eligible for the payment if Special Rate Disability Pension is payable to the person under the Military Rehabilitation and Compensation Act 2004 the day their eligibility for the payment is applicable. The payment is also payable if the Special Rate Disability Pension would have been payable for that day if it had not been offset under section 204 or paragraph 398(3)(b) of the Military Rehabilitation and Compensation Act 2004.

8.57 A wholly dependent partner is eligible for the payment if one or both of the following conditions are met on the day the person's eligibility for the payment is applicable:

•

weekly compensation as a wholly dependent partner is payable to the person under Division 2 of Part 2 of Chapter 5 of the Military Rehabilitation and Compensation Act 2004 on that day, or weekly compensation as a wholly dependent partner would have been payable to the person under Division 2 of Part 2 of Chapter 5 for that day if it had not been offset under paragraph 398(3)(b) of the Military Rehabilitation and Compensation Act 2004; or

•

on or before that day, the person had received lump sum compensation as a wholly dependent partner under Division 2 of Part 2 of Chapter 5 of the Military Rehabilitation and Compensation Act 2004 and before that date the person had not been precluded under subsection 388(6) of the Military Rehabilitation and Compensation Act 2004 from being eligible for any further compensation under the Military Rehabilitation and Compensation Act 2004 following the recovery of damages for the death of the person's partner from the Commonwealth.

8.58 Subsections (1), (2) and (3) of the Veterans' Entitlements Act all refer to the circumstances where compensation payable under the Military Rehabilitation and Compensation Act 2004 is to be regarded as being payable to the person even though the payment rate is nil due to the operation of one of the offsetting provisions in the Military Rehabilitation and Compensation Act 2004.

8.59 Section 67ZY of the Veterans' Entitlements Act provides for the payment to be paid to certain persons who receive payments under the education scheme under section 258 of the Military Rehabilitation and Compensation Act 2004. The payment is payable if the person is, on the day their eligibility becomes applicable, aged 16 or over, and receiving a payment (Education Allowance) under that education scheme. A person is also eligible for the payment where that person is aged 16 or over and has made a claim for that education scheme on the day their eligibility is determined to be applicable and that claim is subsequently granted.

8.60 A person receiving a payment of compensation under section 24 of the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 is eligible for the payment if the compensation was paid because of a claim the person made on or before the day their eligibility for the payment becomes applicable.

8.61 A person must reside in Australia on the day that their eligibility for the payment is determined to be applicable, to be eligible for the payment.

Commencement, application, and transitional provisions

The amendments commence on the day after Royal Assent.