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2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT BILL 2013
REVISED EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Hon Kevin Andrews MP)
THIS EXPLANATORY MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE
OF REPRESENTATIVES TO THE BILL AS INTRODUCED, AND PROVIDES A REVISED
REGULATION IMPACT STATEMENT
SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT BILL 2013
OUTLINE
Encouraging responsible gambling
As foreshadowed during the 2013 election campaign, this Bill will implement
the first stage of a different approach to addressing problem gambling,
reducing bureaucracy and the duplication of functions between the
Australian Government and State and Territory Governments.
The Bill will repeal the position and functions of the National Gambling
Regulator, along with those provisions relating to the supervisory and
gaming machine regulation levies, the automatic teller machine withdrawal
limit, dynamic warning provisions, the trial on mandatory pre-commitment,
and matters for Productivity Commission review. The Bill will also amend
the pre-commitment and gaming machine capability provisions, to express
clearly the Government's commitment to the development and implementation
of these measures in the near future, informed fully by consultations with
industry, State and Territory Governments, and other stakeholders.
Charities
The Charities Act 2013 defines charity and charitable purpose for the
purposes of all Commonwealth legislation.
The Bill delays the commencement of the Charities Act 2013 by nine months,
from 1 January 2014 to 1 September 2014. The delay will allow for further
consultation on the legislation in the broader context of the Government's
other commitments in relation to the civil sector.
Continuing income management as part of Cape York Welfare Reform
The Bill amends the Social Security Administration Act to enable a two-year
continuation of income management as part of the continuation of Cape York
Welfare Reform. The continuation of income management until the end of
2015 as a key element of the reforms will continue to assist in stabilising
people's circumstances and fostering behavioural change, particularly in
the areas of school attendance, parental responsibility and increasing
individual responsibility.
Family tax benefit and eligibility rules
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.
Period of Australian working life residence
From 1 January 2014, age pensioners and certain other pensioners with
unlimited portability, will be required to have been Australian residents
for 35 years during their working life (from age 16 to age pension age) to
receive their full means-tested pension after 26 weeks' absence from
Australia. The current requirement is 25 years. The change will also
apply to all pensioners paid under social security agreements outside
Australia, except those with Greece and New Zealand due to the specific
terms of those agreements.
The change recognises that Australia's social security system differs
markedly from the contributory systems that operate overseas, and that
payments are made from general tax revenue and based on the concepts of
residence and need. Other countries generally require 35 to 45 years of
pension contributions to receive a full pension.
Pensioners who are living overseas immediately before 1 January 2014 will
continue to be paid under the current 25-year rule, unless they return to
Australia for longer than 26 weeks and leave again, when the new rules will
start to apply to their pension calculation.
In an associated change, members of a couple paid outside Australia under a
social security agreement will now have their pensions calculated on the
basis of their own Australian working life residence, rather than their
partners' Australian working life residence, as already applies to
pensioners paid outside Australia under domestic portability rules in non-
agreement countries. Existing pensioners outside Australia immediately
before 1 January 2014 are exempt from this change unless they would be
eligible for a higher rate of pension under the new rules.
Interest charge
The Bill will allow for an interest charge to be applied to certain debts
relating to austudy payment, fares allowance, youth allowance payments to
full-time students and apprentices, and ABSTUDY living allowance payments.
The interest charge will only be applied where the debtor does not have or
is not honouring an acceptable repayment arrangement. Debtors who are
already making repayments, or who come to a repayment agreement with the
Department of Human Services following the implementation of the measure,
will not be charged interest.
The key purpose of the interest charge is to encourage debtors to repay
their debt, in a timely fashion, where they have the financial capacity to
do so. At present, current recipients of income support with debts have
their payments reduced until their debts are repaid. For former recipients
of income support, on the other hand, there is no incentive to repay their
debts. Once the interest charge is in place, debtors who have not been
making repayments will have an incentive to engage with the Department of
Human Services to make a repayment arrangement in order to avoid the
interest charge.
The rate of the interest charge will be based upon on the 90-day Bank
Accepted Bill rate, plus an additional seven per cent, as is currently
applied by the Australian Taxation Office for tax debts under the Taxation
Administration Act 1953. Over the last four years, this rate has averaged
11.07 per cent, and currently stands at 9.6 per cent.
Student start-up loans
The Bill establishes, from 1 January 2014, the student start-up loan.
These loans will be income-contingent, and there will be a limit of two
loans a year of $1,025 each (indexed from 2017). The loans will be
repayable under similar arrangements to Higher Education Loan Program
debts. Students will only be required to begin repaying their start-up
loan after their Higher Education Loan Program debt has been repaid.
The Bill also provides grandfathering arrangements so that recipients who
received a student start-up scholarship or Commonwealth Education Costs
Scholarship prior to 1 January 2014, and have remained continuously on
student payments, will continue to be eligible to receive the student start-
up scholarship, as a grant, until coming off student payments.
The student start-up loan and student start-up scholarship aim to assist
students with the costs of study, including the purchase of text books,
computers and internet access.
Paid parental leave
To ease administrative burdens on business, the Paid Parental Leave
legislation will be amended to remove the requirement for employers to
provide Government-funded parental leave pay to their eligible long-term
employees.
From 1 March 2014, employees will be paid directly by the Department of
Human Services, unless an employer opts in to provide parental leave pay to
its employees and an employee agrees for their employer to pay them.
Pension bonus scheme
From 1 March 2014, the Bill will end late registrations for the closed
pension bonus scheme.
The scheme provides a lump sum payment to people who are qualified for age
pension, age service pension, partner service pension after reaching
pension age, or income support supplement after reaching qualifying age -
but who choose to defer their pension and remain in the workforce.
The scheme was closed from 2009, although people remained able to register
for the scheme if they were qualified for it, but had not registered, at
the time of its closure.
However, the introduction around the same time of a work bonus for age
pensioners with earnings from employment has been more effective in
encouraging older Australians to continue contributing to the workforce
past pension age. Ending late registrations for the pension bonus scheme
will help ensure the pension system is simpler and more sustainable for
older Australians into the future.
Indexation
This Bill will extend the indexation pauses on certain higher income limits
for three further years until 30 June 2017.
This will apply to the family tax benefit Part B primary earner income
limit, the parental leave pay and dad and partner pay individual income
limits, and the higher income free area for family tax benefit Part A. In
addition, the annual end-of-year family tax benefit supplements will remain
at current levels for three years.
This Bill will also maintain the annual child care rebate limit at $7,500
for three further income years starting from 1 July 2014, with the first
indexation of this amount occurring on 1 July 2017. As a result, an
individual will be able to receive up to the maximum amount of $7,500 per
child per financial year for out-of-pocket child care costs for those three
income years.
Changes to the rules for receiving payments overseas
From 1 July 2014, the length of time that families can be temporarily
overseas and continue to receive family and parental payments will reduce
from three years to 56 weeks.
In some circumstances, (such as where certain Australian Defence Force and
Australian Federal Police personnel are deployed overseas) a person will
continue to be eligible for family and parental leave payments for up to
three years while temporarily absent from Australia.
Extending the deeming rules to account-based income streams
The Bill will align the income test treatment of account-based
superannuation income streams, for products assessed from 1 January 2015,
with the deemed income rules applying to other financial assets. Account-
based income streams held by income support recipients immediately before 1
January 2015 will continue to be assessed under the previous rules unless
recipients choose to change to a product that is assessed under the new
rules.
Other amendments
Other amendments include improving the administration of debt recovery
under the Student Financial Supplement Scheme, clarifying the provisions
relating to the time period for lodging tax returns for family assistance
purposes, and ensuring that funding under the National Disability Insurance
Scheme paid into a person's account, which is set up for the purpose of
managing the funding for supports for a participant's plan, cannot be
garnisheed for debt recovery purposes.
Financial impact statement
|MEASURE |FINANCIAL IMPACT |
|Encouraging responsible |Abolition of the National Gambling |
|gambling |Regulator may result in savings. |
|Charities |The financial implications of this |
| |amendment are unquantifiable in 2013-14 |
| |and 2014-15, and nil in the outyears. |
|Continuing income management |Cost of $4.2 million over two years. |
|as part of Cape York Welfare | |
|Reform | |
|Family tax benefit and |Saving of $76.6 million over four years.|
|eligibility rules | |
|Period of Australian working |Saving of $50.8 million over four years.|
|life residence | |
|Interest charge |Saving of $33.5 million over three |
| |years. |
|Student start-up loans |Saving of $1,214.0 million over five |
| |years. |
|Paid parental leave |Cost of $7.0 million over five years. |
|Pension bonus scheme |Saving of $80.5 million over three |
| |years. |
|Indexation - child care rebate|Saving of $105.8 million over three |
| |years. |
|Indexation - remaining |Saving of $1,213.7 million over four |
|amendments |years. |
|Reduction of period for |Saving of $18.8 million over four years.|
|temporary absence from | |
|Australia | |
|Extending the deeming rules to|Saving of $161.7 million over four |
|account-based income streams |years. |
|Other amendments |Nil |
REGULATION IMPACT STATEMENT
The regulation impact statement for the paid parental leave measure appears
at the end of this explanatory memorandum.
STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS
The statements of compatibility with human rights appear at the end of this
explanatory memorandum.
SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT BILL 2013
NOTES ON CLAUSES
Abbreviations used in this explanatory memorandum
. Family Assistance Act means the A New Tax System (Family Assistance)
Act 1999
. Family Assistance Administration Act means the A New Tax System
(Family Assistance) (Administration) Act 1999
. Paid Parental Leave Act means the Paid Parental Leave Act 2010
. Social Security Act means the Social Security Act
. Social Security Administration Act means the Social Security
(Administration) Act 1999
. Student Assistance Act means the Student Assistance Act 1973
. Taxation Administration Act means the Taxation Administration Act 1953
Clause 1 sets out how the new Act is to be cited - that is, as the Social
Services and Other Legislation Amendment Act 2013.
Clause 2 provides a table that sets out the commencement dates of the
various sections in, and Schedules to, the new Act.
Clause 3 provides that each Act that is specified in a Schedule is amended
or repealed as set out in that Schedule.
Schedule 1 - Encouraging responsible gambling
Summary
As foreshadowed during the 2013 election campaign, this Schedule will
implement the first stage of a different approach to addressing problem
gambling, reducing bureaucracy and the duplication of functions between the
Australian Government and State and Territory Governments.
The Schedule will repeal provisions no longer required and make amendments
to express clearly the Government's commitment to the development and
implementation of appropriate measures in the near future, informed fully
by consultations with industry, State and Territory Governments, and other
stakeholders.
Background
In broad terms, this Schedule repeals the position and functions of the
National Gambling Regulator, along with provisions relating to the
supervisory and gaming machine regulation levies, the automatic teller
machine withdrawal limit, dynamic warning messages on gaming machines, the
trial of mandatory pre-commitment, and matters for Productivity Commission
review. All related compliance and enforcement provisions are also
repealed.
This Schedule also replaces existing provisions relating to pre-commitment
systems with provisions that recognise the Government's commitment to
responsible gambling and its support for voluntary pre-commitment as a part
of a broader plan to assist all gamblers.
Explanation of the changes
Amendments to the National Gambling Reform Act 2012
Item 1 repeals the long title of the Act and substitutes a new title, 'An
Act in relation to measures to encourage responsible gambling, and for
related purposes'. This new title reflects the new object of the Act, as
described in new section 4 (inserted by item 6).
Item 2 repeals the Chapter 1 heading, consistent with the revised structure
of the Act.
Item 3 omits the words, 'National Gambling Reform', from the short title of
the Act set out in section 1, and substitutes the words, 'Gambling
Measures'. This amendment reflects the substituted long title of the Act
(referred to in item 1).
Item 4 repeals the note from section 2. The note refers the reader to Part
2, which deals with the application of the Act. As Part 2 is also
repealed, the note becomes redundant.
Item 5 repeals section 3, setting out the Guide to the Act.
Item 6 repeals and substitutes section 4 to provide the new object of the
Act, which is to recognise the Commonwealth's commitment to the development
and implementation of voluntary pre-commitment in venues nationally in
order to encourage responsible gambling by all gamblers.
Item 7 repeals and substitutes section 5 to remove redundant definitions
and provide definitions of Australian Institute of Family Studies and
Director of the Australian Institute of Family Studies.
Item 8 is a technical amendment.
Item 9 repeals subsections 6(2) to (4) to simplify the definition of gaming
machine.
Item 10 repeals sections 7 to 12, which are no longer required due to the
other changes made by this Schedule.
Item 11 repeals Part 2 (Application of the Act), which is also not required
due to the other changes made by this Schedule.
Item 12 repeals Chapter 2 and substitutes a new Part 2, which sets out the
measures that are to be taken to encourage responsible gambling.
Under new section 19, the Commonwealth recognises the importance of
meaningful measures to encourage responsible gambling. The provision also
acknowledges the Commonwealth support for venue-based voluntary pre-
commitment (which allows a person to set voluntarily a limit on the amount
they are prepared to lose from playing gaming machines).
New section 20 sets out the Commonwealth's commitment to work with State
and Territory Governments and relevant stakeholders including the gaming
industry to:
. develop and implement a voluntary pre-commitment system in venues
nationally and to develop a realistic implementation timeframe for
this measure; and
. ensure that gaming machines are capable of supporting a venue-based
voluntary pre-commitment system and to develop a realistic
implementation timeframe.
In new section 21, the Commonwealth commits to working with State and
Territory Governments on the most appropriate way of administering the
voluntary pre-commitment measure.
Item 13 repeals Chapters 3 to 8.
Item 14 repeals the heading Chapter 9, consistent with the revised
structure of the Act.
Item 15 repeals Part 1 of Chapter 9, setting out the Guide to Chapter 9.
Item 16 repeals the heading of Part 2 of Chapter 9 and substitutes a new
heading for new 'Part 3 - Research and other provisions,' consistent with
the revised structure of the Act.
Item 17 repeals the heading of Division 1 of Part 2 of Chapter 9,
consistent with the revised structure of the Act.
Item 18 repeals sections 193 to 195 to remove provisions relating to the
Productivity Commission review.
Item 19 repeals subsection 196(2) to remove the limitation in use of the
supervisory levy. This amendment is consequential to the repeal of the
supervisory levy provisions by item 13.
Item 20 repeals the heading of Division 2 of Part 2 of Chapter 9,
consistent with the revised structure of the Act.
Item 21 repeals sections 198 to 200 and substitutes a new section 198 to
provide that the Act does not create rights or duties that are legally
enforceable in judicial or other proceedings.
Item 22 makes a technical amendment subsection 201(1).
Item 23 repeals subsection 201(2), to remove the express power to make
regulations prescribing offences and civil penalty provisions.
Item 24 repeals the National Gambling Reform (Related Matters) Act (No. 1)
2012. This Act becomes redundant with the repeal of the supervisory levy.
Item 25 repeals the National Gambling Reform (Related Matters) Act (No. 2)
2012. This Act becomes redundant with the repeal of gaming machine
regulation levy.
Schedule 1A - Charities
Summary
This Schedule delays the commencement of the Charities Act 2013 by nine
months, from 1 January 2014 to 1 September 2014.
Background
The Charities Act 2013 defines charity and charitable purpose for the
purposes of all Commonwealth legislation. The nine-month delay to the
commencement of the Act will allow for further consultation on the
legislation in the broader context of the Government's other commitments in
relation to the civil sector.
The amendment in this Schedule, to the commencement provision of the
Charities Act 2013, commences on the day of Royal Assent to this Bill.
Explanation of the changes
Item 1 amends section 2 of the Charities Act 2013 to omit the current
commencement date of 1 January 2014, and substitute the new commencement
date of 1 September 2014.
Schedule 2 - Continuing income management as part of
Cape York welfare reform
Summary
This Schedule amends the Social Security Administration Act to enable a two-
year continuation of income management as part of the continuation of Cape
York Welfare Reform. The continuation of income management until the end
of 2015 as a key element of the reforms will continue to assist in
stabilising people's circumstances and fostering behavioural change,
particularly in the areas of school attendance, parental responsibility and
increasing individual responsibility.
Background
Cape York welfare reform is a partnership between the communities of
Aurukun, Coen, Hope Vale and Mossman Gorge, the Australian Government, the
Queensland Government and the Cape York Institute for Policy and
Leadership. It aims to restore local Indigenous authority, rebuild social
norms, encourage positive behaviours, and improve economic and living
conditions.
To date, Cape York welfare reform has made a real difference in the lives
of Indigenous people in the four communities. Since it began in July 2008,
the Cape York welfare reform communities have seen improved school
attendance, care and protection of children and community safety.
A 2012 evaluation of Cape York welfare reform found that progress has been
made at the foundational level in stabilising social circumstances and
fostering behavioural change, particularly in the areas of sending children
to school, caring for children and increasing individual responsibility.
The Family Responsibilities Commission, which is established under
Queensland Government legislation, is a key plank of Cape York welfare
reform. Local Commissioners hold conferences with community members, refer
people to support services and, when necessary, arrange income management.
Income management acts both as a means to ensure financial stability for
families and as an incentive for the individual to engage with support
services and observe behavioural obligations.
Currently, a person can be subject to income management under Cape York
welfare reform only after a decision by the Family Responsibilities
Commission made before 1 January 2014.
This Schedule amends the Social Security Administration Act to extend this
date to 1 January 2016, enabling income management to continue in the four
Cape York welfare reform communities for two further years.
Explanation of the changes
Amendments to the Social Security Administration Act
Paragraphs 123UF(1)(g) and 123UF(2)(h) of the Social Security
Administration Act currently provide that a person can be subject to income
management under section 123UF only after a decision by the Family
Responsibilities Commission made before 1 January 2014.
Item 2 omits the references to 1 January 2014 in paragraph 123UF(1)(g)
and paragraph 123UF(2)(h), and substitutes references to 1 January 2016.
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:
. there is no locally accessible course (including a distance education
course); or
. if there is a course:
o there is no place available on the course; or
o the individual is not qualified to undertake the course; or
o 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
. 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.
Schedule 4 - Period of Australian working life residence
Summary
From 1 January 2014, age pensioners and certain other pensioners with
unlimited portability, will be required to have been Australian residents
for 35 years during their working life (from age 16 to age pension age) to
receive their full means-tested pension after 26 weeks' absence from
Australia. The current requirement is 25 years. The change will also
apply to all pensioners paid under social security agreements outside
Australia, except those with Greece and New Zealand due to the specific
terms of those agreements.
Pensioners who are living overseas immediately before 1 January 2014 will
continue to be paid under the current 25-year rule, unless they return to
Australia for longer than 26 weeks and leave again, when the new rules will
start to apply to their pension calculation.
In an associated change, members of a couple paid outside Australia under a
social security agreement will now have their pensions calculated on the
basis of their own Australian working life residence, rather than their
partners' Australian working life residence, as already applies to
pensioners paid outside Australia under domestic portability rules in non-
agreement countries. Existing pensioners outside Australia immediately
before 1 January 2014 are exempt from this change unless they would be
eligible for a higher rate of pension under the new rules.
Background
Strengthening Australian working life residence requirements
Domestically-qualified pensioners
Currently, some Australian pensions may continue to be paid to a pensioner
who is overseas for an unlimited period. However, after 26 weeks, such
pensions are paid at a rate which is a proportion of the domestic rate of
pension where the pensioner has less than 25 years of Australian working
life residence.
A person's working life is the period beginning when the person turns 16
and ending when the person reaches age pension age (as defined in the
Social Security Act). A pensioner's period of Australian working life
residence is the aggregate of periods during the person's working life
during which the person has been an Australian resident.
Where the person has an Australian working life residence of 25 years or
more, their pension is not reduced. However, if they have an Australian
working life residence of less than 25 years, their pension is reduced to
the percentage of the full means-tested rate of pension represented by
dividing the number of years of their Australian working life residence by
25 years. For example, a person with 15 years of Australian working life
residence will have their maximum payment rate reduced to 60 per cent - a
percentage calculated on the basis of 15 years divided by 25 years.
This has been significantly more generous than the pension rules of other
OECD countries, which generally require 35 to 45 years of pension
contributions to receive a full pension. For example, France, Denmark,
Japan and Canada require 40 years of pension contributions, and New Zealand
has a 45-year working age residence requirement for payment overseas.
These amendments increase the required working life residence to receive a
full means-tested rate of pension overseas from 25 to 35 years.
Pensions affected are age pension and, in some circumstances, disability
support pension, wife pension and widow B pension.
The change will apply from 1 January 2014 to absences from Australia
commencing on or after that day. In general, the change will not apply to
pensioners who are already overseas on 1 January 2014, unless they
subsequently return to Australia for a period of more than 26 weeks.
Special arrangements will also be made for pensioners who reside overseas,
but are temporarily in Australia on 1 January 2014. Provided such
pensioners again leave Australia to return overseas before the expiry of
26 weeks from 1 January 2014, their pension rate will continue to be
calculated by reference to a period of 25 years' working life residence.
Pensioners paid under international agreements
In some circumstances, an Australian pension is paid to a pensioner as a
result of the operation of one of Australia's various social security
agreements with other countries. In this case, a scheduled international
social security agreement under the Social Security (International
Agreements) Act 1999 (the Social Security International Agreements Act) may
override the ordinary provisions of the social security law. For
pensioners who are outside Australia, and receive an Australian social
security payment solely because of the operation of a scheduled
international agreement, where the rate of payment is to be determined
under the agreement according to the law of Australia, Australian working
life residence is also relevant. For a small number of Australia's
international agreements, calculation of pension rate for a pensioner who
is in Australia may also be subject to Australian working life residence.
To align with the change from 25 to 35 years for domestically-qualified
pensioners, the Social Security International Agreements Act is also
amended to increase the base Australian working life residence from 25 to
35 years.
The change will similarly apply to absences or to the rate of pensions
granted under an international agreement from 1 January 2014. However, if
a pensioner is outside Australia at this date and is receiving a social
security payment under a scheduled international agreement at a rate worked
out taking into account the person's period of Australian working life
residence, the amendments will not apply unless the person subsequently
returns to Australia for a period of at least 26 weeks. Similarly, where
such a pensioner resides overseas, but is temporarily in Australia on
1 January 2014, their pension rate will continue to be calculated by
reference to a period of 25 years' working life residence, provided they
again leave Australia to return overseas before the expiry of 26 weeks from
1 January 2014.
Paying pensioners qualified under international agreements based upon their
own working life residence
In a related change, members of a couple paid outside Australia under a
social security agreement will have their pensions calculated on the basis
of their own Australian working life residence, rather than their partner's
or former partner's Australian working life residence.
Currently, partnered age and disability support pensioners, or former
members of age or disability support pension couples, paid under the Social
Security International Agreements Act, are able to be paid according to the
higher Australian working life residence duration of either partner. A
person receiving, under the Social Security International Agreements Act,
either carer payment in respect of their care for their partner or wife
pension, is deemed to have a period of Australian working life residence
that is equal to the Australian working life residence of their partner
(even if that is less than their own). Basing these people's pensions upon
their own Australian working life residence will mean that these pensioners
are treated the same as pensioners paid outside Australia under domestic
portability rules.
This change will also apply to periods of absence commencing on or after
1 January 2014, such that pensioners already overseas at that date will not
be affected unless they return to Australia for at least 26 weeks.
However, for some wife pensioners or carer payment recipients already
overseas, the change may result in a higher rate of payment. If so,
despite the fact they are already overseas, the amendments will apply to
the calculation of their pensions from 1 January 2014.
Explanation of the changes
Amendments to the Social Security Act
Module C of the Pension Portability Rate Calculator at section 1221
provides for the calculation of the residence factor, as part of the
process of generating a rate of pension for portable pensions. Point 1221-
C1 provides that, if a person's period of Australian working life residence
is 300 months (25 years) or more, the person's residence factor is 1.
Item 2 omits the reference in this point to 300 months (25 years) and
substitutes 420 months (35 years). Item 1 updates the heading to the
point, to refer to 35 years, rather than 25 years.
Point 1221-C2 provides the formula for calculating the residence factor.
The formula divides the person's period of Australian working life
residence by 300 months (25 years) if the person's period of Australian
working life residence is less than 25 years. Items 4 and 5 omit the
references to 300 months (25 years) in this point and the related formula,
and substitute references to 420 months (35 years). Item 3 updates the
heading to the point, to refer to 35 years, rather than 25 years.
Item 6 provides for the application of these changes. Subitem 6(1)
provides that the change from 25 to 35 years' Australian working life
residence applies to periods of absence from Australia starting on or after
1 January 2014. However, the other subitems qualify this general case.
Subitem 6(2) deals with a situation where a person receiving a portable
pension which may be subject to a proportional calculation based upon
Australian working life residence, is in Australia immediately before
1 January 2014, although is not at that date residing in Australia.
Provided such a person departs Australia before the end of the period of
26 weeks beginning on 1 January 2014, and remains in receipt of that
pension at the point of departure, then the amendments do not apply
(subject to subitem (5)).
Subitem 6(3) deals with a person who came within the situation covered by
subitem (2), who again returns to Australia on or after 1 January 2014.
Where such a person again leaves Australia within the period of 26 weeks of
returning, and remains in receipt of that pension, then the amendments do
not apply. However, this is subject to subitem (5).
Subitem 6(4) deals with the situation where a person receiving a portable
pension which is subject to a proportional calculation based upon
Australian working life residence, was outside Australia immediately before
1 January 2014. The amendments do not apply to such a person by virtue of
subitem (1). If such a person later returns to Australia, but again leaves
Australia within 26 weeks of returning having remained in receipt of their
pension, then subitem (4) provides that the amendments will not apply to
the later absence, subject to subitem (5).
The above items may prevent application of the amendments for successive
returns to and departures from Australia. Subitem 6(5) then provides a
general rule which will end this saving if the person at any time returns
to Australia and their subsequent departure is not covered by any of
subitems (1) to (4). In this case, the particular departure will be
subject to the new rules applying a 35-year Australian working life
residence. This subitem continues to apply the new 35-year rule to any
subsequent departures from Australia despite the fact they may otherwise
have been covered by one of the earlier subitems.
Amendments to the Social Security International Agreements Act
Strengthening Australian working life residence
Division 3 of Part 3 of the Social Security International Agreements Act
(calculation of international agreement portability rates) provides for the
calculation of the residence factor, as part of the process of generating a
rate of pension for portable pensions paid because of the operation of
scheduled international social security agreements. Section 23 provides
that, if a person's period of Australian working life residence is
300 months (25 years) or more, the person's residence factor is 1.
Item 10 omits the reference in this section to 300 months (25 years), and
substitutes a reference to 420 months (35 years). Item 9 updates the
heading to the section, to refer to 35 years, rather than 25 years.
Section 24 provides the formula for calculating the residence factor.
The formula divides the person's period of Australian working life
residence by 300 months (25 years) if the person's period of Australian
working life residence is less than 25 years. Items 12 and 13 update the
references to 300 months (25 years) in the section and the related formula,
substituting references to 420 months (35 years). Item 11 updates the
heading to the section, to refer to 35 years, rather than 25 years.
Item 14 provides for the application of these amendments for periods of
absence from Australia. Subitem 14(1) provides that the change from 25 to
35 years' Australian working life residence applies to periods of absence
from Australia starting on or after 1 January 2014. However, the other
subitems qualify this general case.
Subitem 14(2) deals with a situation where a person receiving a social
security payment under a scheduled international social security agreement
is in Australia immediately before 1 January 2014, although is not at that
time residing in Australia. Provided such a person departs Australia
before the end of the period of 26 weeks beginning on 1 January 2014, and
remains in receipt of that payment at the point of departure, then the
increase in working life residence to 35 years does not apply. This is
subject to exceptions dealt with in subitems (5) and (6).
Subitem 14(3) deals with a person who came within the situation covered by
subitem (2), who again returns to Australia having previously departed on
or after 1 January 2014. Where such a person again leaves Australia within
the period of 26 weeks of returning, and remains in receipt of that
pension, then the amendments do not apply. However, this is subject to
subitem (5), and subitem (6) (dealt with under paying agreement pensioners
based upon their own working life residence below).
Subitem 14(4) deals with the situation where a person receiving a portable
pension which is subject to a proportional calculation based upon
Australian working life residence at a rate worked out under Part 3 of the
Social Security International Agreements Act was outside Australia
immediately before 1 January 2014. The amendments do not apply to such a
person by virtue of subitem (1). If such a person later returns to
Australia, but again leaves Australia within 26 weeks of returning, having
remained in receipt of their pension, then the amendments will not apply to
the later absence, subject to subitems (5) and (6).
The above items may prevent application of the amendments for successive
returns to and departures from Australia. Subitem 14(5) then provides a
general rule which will end this saving if the person at any time returns
to Australia and their subsequent departure is not covered by any of
subitems (1) to (4). In this case, the particular departure will be
subject to the new rules applying a 35-year Australian working life
residence. This subitem continues to apply the new 35-year rule to any
subsequent departures from Australia despite the fact they may have
otherwise been covered by one of the earlier subitems on a previous
occasion.
Subitem 14(7) provides an additional overarching case for people who claim
a pension, generally from outside Australia, under a social security
agreement and whose start date for payment is on or after 1 January 2014.
Regardless of when such a person's absence from Australia began, the new
rules applying a 35-year Australian working life residence apply.
Paying internationally qualified pensioners based upon their own working
life residence
Division 2 of Part 3 of the Social Security International Agreements Act
(Australian working life residence) establishes the rules for determining a
person's period of Australian working life residence. Sections 18 to 20
and section 22 provide for the calculation of a person's Australian working
life residence by reference to another person's Australian working life
residence (generally the person's partner) for age pension, disability
support pension, wife pension and carer payment. Item 8 repeals these
sections. As a result, a person's Australian working life residence for
the purposes of calculating the rate of these payments is calculated on an
individual basis.
Item 7 makes a consequential change to section 16.
In alignment with the change to increase Australian working life residence
requirements from 25 to 35 years, this change applies to periods of absence
from Australia starting on or after 1 January 2014 (subitem 14(1)) and to
persons whose start day for their social security payment under a scheduled
international agreement is on or after 1 January 2014 (subitem 14(7)).
However, subitem 14(6) provides an additional application for wife pension
or carer payment recipients who are overseas immediately before
1 January 2014 where the amendments made by items 7 and 8 would result in a
higher rate of pension. For these pensioners, the amendments will apply
from 1 January 2014. Similarly, where the temporary return of a person
provided for in subitem 14(2), 14(3) or 14(4) would otherwise apply the old
rules, subitem (6) ensures that the amendments made by items 7 and 8 apply
despite the return.
Schedule 5 - Interest charge
Summary
This Schedule will allow for an interest charge to be applied to certain
debts relating to austudy payment, fares allowance, youth allowance
payments to full-time students and apprentices, and ABSTUDY living
allowance payments. The interest charge will only be applied where the
debtor does not have or is not honouring an acceptable repayment
arrangement. Debtors who are already making repayments, or who come to a
repayment agreement with the Department of Human Services following the
implementation of the measure, will not be charged interest.
The rate of the interest charge will be based upon on the 90-day Bank
Accepted Bill rate, plus an additional seven per cent, as is currently
applied by the Australian Taxation Office for tax debts under the Taxation
Administration Act. Over the last four years, this rate has averaged 11.07
per cent, and currently stands at 9.6 per cent.
Background
The key purpose of the interest charge is to encourage debtors to repay
their debt, in a timely fashion, where they have the financial capacity to
do so.
Once the interest charge is in place, debtors who have not been making
repayments will have an incentive to engage with the Department of Human
Services to make a repayment arrangement in order to avoid the interest
charge. The design of the repayment arrangement will mean that the
interest charge will only be applied to debts of those debtors who have the
capacity to repay their debt but are not doing so. There will also be
provision for concessions, in the form of reduced repayment rates or
temporary halts to repayment arrangements, for people experiencing
financial hardship and other special circumstances.
These amendments will mean that the existing penalty interest charge scheme
contained in the Social Security Act and the Student Assistance Act will no
longer apply to debtors covered by the new arrangements.
The amendments made by this Schedule commence on 1 January 2014.
Explanation of the changes
Part 1 - Amendments
Amendments to the Social Security Act
Item 1 makes technical amendments for the purpose of identifying what
methods of recovery will be available for the interest charge.
Item 2 inserts new section 1228B(2A) to clarify that a 10 per cent penalty
added to a debt for the understatement of income is part of the debt. For
the purposes of imposing an interest charge, this will mean that a
reference to 'debt' will include the amount of the payment that a person
has obtained to which they were not entitled, as well as any additional 10
per cent penalty added to the debt under section 1228B.
Item 3 amends subsection 1228B(5) so that an additional 10 per cent penalty
imposed for the understatement of income does not apply to a debt due to
the Commonwealth under section 1229G (as inserted by item 6).
The purpose of this amendment is to clarify that an additional 10 per cent
penalty cannot apply to an interest charge under section 1229G. This is
because section 1229B only imposes an additional 10 per cent penalty where
a person has refused or failed to provide information in relation to the
person's income or knowingly or recklessly provided false or misleading
information in relation to the person's income. The interest charge debt
due to the Commonwealth under section 1229G is not dependent on an
individual providing information on their income, so an additional 10 per
cent penalty cannot apply to an interest charge debt under section 1229G.
Item 4 inserts new paragraph 1229(1)(ea) to ensure that a notice in respect
of a debt given to a person under section 1229 specifies the effect of an
interest charge if it is applied to their debt. This will ensure that the
person is fully informed of how the new interest charge will operate.
Item 5 inserts subsection 1229(5) to provide that the existing penalty
interest scheme, as provided for in sections 1229A and 1229AB, does not
apply if an interest charge applies in relation to a person and a social
security debt under section 1229E or 1229F.
Item 6 inserts new sections 1229D to 1229H, which relate to the interest
charge.
New section 1229D - Interest charge payable under section 1229E or 1229F on
certain social security debts
New subsection 1229D(1) provides that an interest charge will apply to a
person and a debt if the debt has not been wholly paid and the debt relates
to either youth allowance (student and apprentices), austudy payment, fares
allowance or any other social security payment prescribed in a legislative
instrument. The power to prescribe other social security payments in a
legislative instrument will provide the flexibility to extend the interest
charge, at a later point in time, to debts relating to other payments under
social security law.
This subsection further clarifies that the interest charge will only apply
to youth allowance students who undertake full-time study or are new
apprentices.
New subsection 1229D(1) also provides that the interest charge will apply
to a person and a debt where qualification for youth allowance was in
circumstances prescribed by a legislative instrument. This will allow the
flexibility to extend the interest charge, at a later point in time, to
debts relating to youth allowance payments where qualification for the
payment was in circumstances other than where the student was undertaking
full time study or was a new apprentice.
As any extension of these rules would be made through a legislative
instrument, it would be subject to Parliamentary scrutiny and disallowance.
New subsections 1229D(2) and (3) provide that the Minister may make the
above mentioned legislative instruments.
For the purposes of discussion in this explanatory memorandum, the debts
that relate to the payments prescribed in paragraphs 1229D(1)(b)
and 1229(1)(c) are referred to as 'relevant social security debts'.
New section 1229E - No repayment arrangement in effect
New subsection 1229E(1) provides that, if a person has an unpaid amount on
a relevant social security debt and, by the end of the due day, has not
entered into an arrangement for the repayment of the debt (under section
1234), then the person is liable to pay, by way of penalty, an interest
charge on the debt for each day in a period.
New subsections 1229E(2) and (3) allow for the Minister to make a
legislative instrument to prescribe circumstances in which the interest
charge would not apply if a person has an unpaid amount on a relevant
social security debt and, by the end of the due day, has not entered into
an arrangement for the repayment of the debt.
It is envisaged that the instrument would prescribe circumstances in which
a person would not have an interest charge applied to their debt if the
amount that is being withheld from their payments (under current section
1231 of the Act) is satisfactorily repaying the debt. This instrument
would also allow flexibility to exempt the application of the interest
charge in prescribed circumstances at a later point in time.
In the event that a person is no longer in the circumstances prescribed in
the legislative instrument, subsection 1229E(4) allows the Secretary to
give a notice to the person, specifying the information provided in
paragraphs 1229E(4)(a)(i) to (iv). It also provides that the outstanding
amount of the debt is due and payable on the 28th day after the day on
which the notice was issued.
New subsection 1229E(5) provides that, if a person has been given such a
notice, the person has an outstanding debt at the end of the due date, and
has not entered into an arrangement for the repayment of the debt, then the
person is liable to pay, by way of penalty, an interest charge on the debt
for each day in a period.
New subsection 1229E(6) provides that the period for which the interest
charge will be applied to the debt starts at the beginning of the day after
the due day. It further provides that the period will end on the earliest
of either the last day on which the unpaid amount (and any interest charge
on the unpaid amount) remains unpaid or the day before the first day on
which the person makes a payment under an arrangement for repayment of the
debt.
This subsection is intended to ensure that a person will be able to end the
application of the interest charge by entering into, and making a payment
under, an arrangement for repayment of the debt. This, in addition to
entering into an arrangement before the due date, will mean that the person
can entirely avoid the interest charge applying to their debt.
New subsection 1229E(7) provides that the interest charge on any unpaid
amount is worked out by multiplying the interest charge rate for that day
by the sum of the remaining unpaid amount and the interest charge from
previous days. This provision ensures that the interest is compounded on a
daily basis. New section 1229H prescribes the calculation of the 'interest
charge rate' for that day, and is explained below.
New subsection 1229F - Failure to comply with or termination of repayment
arrangement
New subsection 1229F(1) provides that, if a person has an unpaid amount on
a relevant social security debt, the person has entered into a repayment
arrangement under section 1234, and the person fails to make a payment
under the arrangement, then the person is liable to pay, by way of penalty,
an interest charge for each day in a period.
New subsection 1229F(2) provides that the period for which the interest
charge will be applied to the debt starts at the beginning of the day after
the due day. It further provides that the period will end on the earlier
of the last day on which the outstanding amount (and any interest charge on
any of the outstanding amount) remains unpaid, the day before the first day
on which the person has paid all the payments that have so far become due
and payable under the arrangement, or the day before the day the
arrangement is terminated.
This subsection is intended to ensure that a person may end the application
of the interest charge to their debt at the point where they catch up on
any missed payments under the arrangement. To avoid doubt, while the
interest charge will apply to the debt during the period, a person is only
required to pay an amount equal to the missed payments (rather than an
amount equal to the missed payments and the interest charge) to end the
period of the application of the interest charge. The interest charge will
otherwise be payable as a debt due to the Commonwealth, as explained below.
New subsection 1229F(3) prescribes the calculation of an interest charge
for a day. The interest charge is calculated in the same way as in new
subsection 1229E(7), which is explained above.
Repayment arrangement is terminated
New subsection 1229F(4) provides that, if a person has an unpaid amount on
a relevant social security debt, the person has entered into an arrangement
under section 1234, and the arrangement is terminated, then the outstanding
debt, and any interest charge on the outstanding debt, is due and payable
on the 14th day after the termination. If, at the end of the 14th day, any
amount remains unpaid, the person is liable to pay, by way of penalty, an
interest charge each day in a period.
New subsection 1229F(5) provides that the period for which the interest
charge will be applied to the debt starts at the beginning of the day after
the 14th day. It further provides that the period will end on the earliest
of the last day on which the outstanding amount (and any interest charge on
the outstanding amount) remains unpaid or the day before the first day
after the 14th day on which the person makes a payment on another
arrangement for the repayment of the debt.
This subsection is intended to ensure that a person may end the application
of the interest charge at the point where they enter into another
arrangement for repayment of the debt.
New subsection 1229F(6) prescribes the calculation of an interest charge
for a day. The interest charge is calculated in the same way as in new
subsection 1229E(7), which is explained above.
New section 1229G - Other rules for interest charge
New subsection 1229G(1) provides that the interest charge under section
1229E or 1229F for a day is due and payable to the Commonwealth at the end
of that day.
New subsection 1229G(2) provides that an interest charge under section
1229E or 1229F for a day is a debt due to the Commonwealth by the person.
New subsection 1229G(3) clarifies that subsection 1229(1) and
paragraph 1229D(1)(b) do not apply to a debt which is also an interest
charge (as provided for under new sections 1229E and 1229F). This means
that, for the interest charge, a notice in respect of a debt is not
required to be issued under subsection 1229(1) and it is not a debt to
which new section 1229D would apply. This avoids a situation where an
interest charge is subject to further interest charges.
New section 1229H - What is the interest charge rate?
New section 1229H provides for the calculation of the interest charge rate.
New subsections 1229H(1) and 1229H(2) provide that the rate is based upon
the 90-day Bank Accepted Bill rate, plus an additional seven per cent, as
is currently applied by the Australian Taxation Office for tax debts under
the Taxation Administration Act. This is an appropriate method for
calculating the rate of the interest charge to apply to income support
debts because the rate is high enough to encourage repayment without being
punitive, it provides a return to the Commonwealth (commensurate with the
time value of the monies overpaid) and it will help align tax and income
support debt recovery policy.
New subsection 1229H(2) specifies what the base interest rate is, with
reference to the monthly average yield of 90-day Bank Accepted Bills. The
rate is currently published by the Reserve Bank of Australia in the
'Interest Rates and Yields - Money Market - Monthly' table on the Bank's
website. This subsection also provides a table identifying the appropriate
monthly average to be used for each quarter.
Where the Reserve Bank of Australia has not published the specified rate by
the start of a quarter, new subsection 1229H(3) substitutes the last
published monthly average.
New subsection 1229H(4) provides for the rounding of the base interest rate
to the second decimal place.
Item 7 is to clarify that, if a person has entered into an arrangement for
the payment of a debt, it is a statutory requirement for the person to make
a payment under an arrangement before the end of the day that the
arrangement requires such a payment.
Amendments to the Student Assistance Act
Item 9 inserts into section 38 a definition of ABSTUDY debt, which means an
amount paid under the ABSTUDY Scheme (which is also known as the Aboriginal
and Torres Strait Islander Study Assistance Scheme) that should not have
been paid.
An ABSTUDY debt is a special educational assistance scheme overpayment (or
a debt under paragraph 38(a)), which, under section 39, is a debt owed by
the person to the Commonwealth.
Item 10 amends paragraph (c) of the definition of debt in section 38 to
ensure that an interest charge, imposed under section 41CA or section 41CB,
is an amount payable to the Commonwealth and is therefore a debt.
In view of these amendments, item 8 makes a technical amendment to simplify
the heading to section 38.
Item 11 inserts new sections 41A to 41H.
New section 41A - Sections 40 and 41 do not apply to ABSTUDY debts
New section 41A provides that sections 40 and 41 do not apply in relation
to a person and an ABSTUDY debt owed by the person the Commonwealth. This
will have the effect that a person and an ABSTUDY debt will not be subject
to the existing provisions in the Student Assistance Act relating to late
payment charges and interest in relation to an overpayment of a benefit,
but will instead be subject to the interest charge provisions contained in
new sections 41CA and 41CB.
New section 41B - Notice in respect of ABSTUDY debt
New section 41B provides for a notice in respect of an ABSTUDY debt. This
section mirrors the notice of debt provisions in the Social Security Act
(that is, subsections 1229(1) and (2), as amended by this Schedule), and
ensures consistent treatment of debts relating to ABSTUDY payments and
relevant social security debts.
New subsection 41B(1) provides that, if an ABSTUDY debt has not been wholly
paid, the Secretary must provide a notice specifying the information
contained in paragraphs 41B(1)(a) to 41B(1)(h), which mirrors the notice of
debt provisions in the Social Security Act. The subsection also provides
that the outstanding amount of the debt is due and payable on the 28th day
after the date on the notice.
New section 41C - Interest charge payable on ABSTUDY debts
New section 41C provides that the interest charges (provided by sections
41CA and 41CB) only apply if the debt is an ABSTUDY debt that has not been
wholly paid.
New section 41D - No repayment arrangement in effect
New section 41D mirrors the operation of new section 1229E of the Social
Security Act (as inserted by item 6 of this Schedule), but with respect to
an ABSTUDY debt that has not been wholly paid.
New section 41E - Failure to comply with or termination of repayment
arrangement
New section 41E mirrors the operation of new section 1229F of the Social
Security Act (as inserted by item 6 of this Schedule), but with respect to
an ABSTUDY debt that has not been wholly paid.
New section 41F - When interest charge becomes due and payable
New section 41F mirrors the operation of new subsection 1229G(1) of the
Social Security Act (as inserted by item 6 of this Schedule), but with
respect to an ABSTUDY debt that has not been wholly paid.
New section 41G - What is the interest rate charge
New section 41G mirrors the operation of new section 1229H of the Social
Security Act (as inserted by item 6 of this Schedule) to provide the
calculation of the interest rate charge referred to in sections 41CA and
41CB.
New section 41H - Arrangement for payment of ABSTUDY debt
New section 41H provides that the Secretary may, on behalf of the
Commonwealth, enter into an arrangement with a person for payment of an
ABSTUDY debt. This section mirrors subsections 1234(1) to 1234(4) of the
Social Security Act to ensure consistent treatment of debts related to
ABSTUDY payments and relevant social security debts.
Item 12 amends paragraph 51(1)(b) to ensure that a certificate by the
Secretary (stating that, on a specified day, a notice, to a specified
effect, in respect of an ABSTUDY debt, was given to a specified person by
the Secretary) is prima facie evidence of the matters stated in the
certificate.
Part 2 - Application and transitional provisions
Subitem 13(1) provides that section 1229D, as inserted by this Bill, only
applies in relation to a debt that arises on or after the commencement of
item 13 and a pre-existing debt that is outstanding immediately before the
commencement of the Bill. This will mean that the amendments contained in
item 7 will not apply to debts that are no longer outstanding immediately
before the commencement of item 13.
Subitem 13(2) provides that paragraph 1229E(1)(b), as inserted by this
Bill, applies to a notice given on or after the commencement of item 13.
This will mean that a person is not liable to pay an interest charge under
section 1229E if there was not a notice given to a person under
subsection 1229(1) on or after the commencement of item 13.
Subitem 13(3) provides that, if section 1229D, as inserted by this Bill,
applies to a debt that arose before the commencement of item 13 and, before
the commencement of this item, the Secretary gave a person a notice under
subsection 1229(1) of the Social Security Act, the Secretary must give the
person another notice under section 1229(1) of that Act, as amended by this
Bill. This means that the person will be informed in the new notice of the
effect of the application of the interest charge, and that the Secretary
can issue a second notice under subsection 1229(1) of the Social Security
Act.
Subitem 13(4) provides that paragraph 1229F(1)(c), as inserted by this
Bill, only applies in relation to a failure that occurs on or after the
commencement of item 13, regardless of whether the arrangement was entered
into before, on or after that commencement. This means that a person is
not liable to pay an interest charge under section 1229F if a failure
occurs before the commencement of item 13. It also means that an
arrangement that was entered into prior to commencement of the Bill will
continue in effect after commencement.
Subitem 13(5) provides that paragraph 1229F(4)(c), as inserted by this
Bill, only applies to a termination that occurs on or after the
commencement of item 13, regardless of whether the arrangement was entered
into before, on or after that commencement. This means that a person is
not liable to pay an interest charge under section 1229F if a termination
occurs before the commencement of item 13. It also means that an
arrangement that was entered into prior to commencement of the Bill will
continue in effect after commencement.
Item 14 provides that interest charges under sections 41A to 41H, as
inserted by this Bill, apply to an ABSTUDY debt that arises on or after the
commencement of item 14, and to one that arose before the commencement of
item 14, to the extent that the debt is outstanding immediately before that
commencement.
Schedule 6 - Student start-up loans
Summary
This Schedule establishes, from 1 January 2014, the student start-up loan.
These loans will be income-contingent, and there will be a limit of two
loans a year of $1,025 each (indexed from 2017). The loans will be
repayable under similar arrangements to Higher Education Loan Program
debts. Students will only be required to begin repaying their start-up
loan after their Higher Education Loan Program debt has been repaid.
The Schedule also provides grandfathering arrangements so that recipients
who received a student start-up scholarship or Commonwealth Education Costs
Scholarship prior to 1 January 2014, and have remained continuously on
student payments, will continue to be eligible to receive the student start-
up scholarship, as a grant, until coming off student payments.
The student start-up loan and student start-up scholarship aim to assist
students with the costs of study, including the purchase of text books,
computers and internet access.
Background
This Schedule amends both the Social Security Act and the Student
Assistance Act to provide for the student start-up loan and ABSTUDY student
start-up loan from 1 January 2014. Each version of the loan will be an
income-contingent loan, and will be repayable under similar arrangements to
Higher Education Loan Program (HELP) debts, as provided for under the
Higher Education Support Act 2003.
The qualification provisions for the student start-up loan and ABSTUDY
student start-up loan are similar to the existing qualification provisions
for the student start-up scholarship contained in Division 1 of Part 2.11B
of the Social Security Act.
To the extent that it is possible, the provisions in Schedule 6 that amend
the Social Security Act mirror the amendments made to the Student
Assistance Act for the purpose of ensuring consistency between the
administration of the student start-up loan and ABSTUDY student start-up
loan. To ensure consistency with HELP, to the extent possible, the
provisions in Schedule 6 relating to the recovery of the student start-up
loans and ABSTUDY student start-up loans reflect the relevant provisions in
the Higher Education Support Act 2003.
Schedule 6 also contains consequential amendments to the Social Security
Administration Act, the Income Tax Assessment Act 1936, the Income Tax
Assessment Act 1997, the Taxation Administration Act, and the Taxation
(Interest on Overpayment and Early Payments) Act 1983, for the purpose of
ensuring consistent administration between the student start-up loans and
HELP.
Explanation of the changes
Amendments to the Income Tax Assessment Act 1936
Item 1 amends subsection 82A(2) to ensure that a payment made in respect
of, or in the reduction or discharge of any indebtedness under Chapter 2AA
of the Social Security Act or under Part 2 of the Student Assistance Act
are not included within the definition of expenses of self-education.
Items 2 and 3 amend section 202, which establishes the system of tax file
numbers, and outlines the object of the system, to allow for the
administration of Chapter 2AA of the Social Security Act and Part 2 of the
Student Assistance Act with regard to the provision of student start-up
loans and ABSTUDY student start-up loans and the recovery of these debts.
Item 4 amends subsection 202F(1)(fb) to provide that a decision of the
Commissioner to give a notice under subsections 1061ZVHD(1) and 1061ZVHE(1)
of the Social Security Act (as inserted by item 25 of this Schedule) and
sections 10D(1) and 10E(1) of the Student Assistance Act (as inserted by
item 67 of this Schedule) can be reviewed by the Administrative Appeals
Tribunal.
Amendments to the Income Tax Assessment Act 1997
Items 5 and 6 amend section 12-5 to include student start-up loans in the
list of provisions about deductions.
Item 7 amends section 26-20 to ensure that a payment made in respect of, or
in the reduction or discharge of any indebtedness under Chapter 2AA of the
Social Security Act or Part 2 of the Student Assistance Act is not a
payment that can be deducted under the Act. This amendment will ensure
that there is a consistent treatment between HELP and the student start-up
loan under section 26-20.
Items 8 and 9 amend paragraphs 52-132(a) and 52-140(3)(a) respectively to
ensure that payments received to assist in the discharge of a compulsory
SSL or ABSTUDY SSL repayment amount are deemed to be exempt income under
the Act.
Items 10 and 11 insert definitions of accumulated ABSTUDY SSL debt and
accumulated SSL debt into the Act.
Amendments to the Social Security Act
Item 12 inserts section 19AAA, which provides a series of definitions for
the purpose of Chapter 2AA. The definitions in section 19AAA relate solely
to the provisions in the Act that deal with the student start-up loan.
Items 13 to 19 insert definitions under section 23, including accumulated
SSL debt, approved scholarship course, enrolment test day, scholarship-
entitled person and student start-up loan.
Item 17 will ensure that a student start-up loan will be a social security
payment for the purposes of the Act.
Items 20 and 21 insert paragraph 592F(1)(a) and 592F(2)(a) to amend the
qualification provisions of the student start-up scholarship to allow a
person who currently receives a student start-up scholarship to continue to
receive this payment.
In order to continue to qualify for and receive a student start-up
scholarship on the basis of youth allowance, a person must have received
either a student start-up scholarship payment, an ABSTUDY student start-up
scholarship payment or a Commonwealth Education Costs Scholarship with
respect to a period before 1 January 2014.
A person must also be receiving youth allowance or Living Allowance under
the ABSTUDY Scheme for a continuous period since the time in which they
received at least one of the above mentioned scholarships.
The qualification to receive a student start-up scholarship on the basis of
austudy is the same as the qualification for a student start-up scholarship
on the basis of youth allowance, except that a person can still be
qualified if the person continuously received a youth allowance, a Living
Allowance under the ABSTUDY Scheme or austudy.
A person will be treated as continuously receiving either youth allowance,
a Living Allowance or austudy even though the person did not actually
receive such payments if they comply with section 38B of the Act. In
addition, a person will be continuously regarded as receiving such payments
even if these payments are temporarily reduced to nil.
Items 22 and 23 make minor amendments to ensure that the definition of an
approved scholarship course will apply to all references in the Act, rather
than just within Part 2.11B.
Item 24 provides that a legislative instrument that determines the approved
scholarship courses (made prior to the commencement of the Bill) will
continue to be in force after the amendment in item23, and will have the
effect for the whole of the Act and not just for the purposes of Part
2.11B. This will ensure that an approved course for the purposes of the
student start-up scholarship is an approved course for the purposes of the
student start-up loan.
Item 25 inserts new Chapter 2AA - Student start-up loans.
Section 1061ZVAA - Simplified outline of this Part
Section 1061ZVAA outlines broadly the qualification criteria and operation
of the student start-up loan. Full-time students who are receiving youth
allowance or austudy may qualify for a student start-up loan if they meet
the qualification criteria in subsections 1061ZVAB(1) and 1061ZVAB (2). A
student can qualify for up to two loans per calendar year.
Section 1061ZVAB - Qualification for student start-up loan
Section 1061ZVAB provides the qualification requirement for a student start-
up loan. These qualification requirements are similar to the qualification
requirements for the student start-up scholarship contained in section 592F
of the Social Security Act.
To qualify for a student start-up loan, each of the following must occur at
the same time:
. the person is qualified for youth allowance or austudy payment;
. youth allowance or austudy payment is payable to the person;
. the person is receiving youth allowance or austudy payment;
. the person is receiving part of the basic rate component of youth
allowance or austudy payment, or youth disability supplement (that is,
the person is not receiving only that component of youth allowance or
austudy payment that consists of pharmaceutical allowance and rent
assistance);
. the person is receiving youth allowance or austudy payment because the
person is enrolled in an approved scholarship course;
. the Secretary is satisfied that the person is not likely to receive
the amount or value of a Commonwealth Education Costs Scholarship in
the period of six months starting immediately after the time: and
. at the time of qualification, the person has notified their tax file
number to the Secretary and the Secretary has verified the person's
tax file number or obtained the correct tax file number.
Under paragraphs 1061ZVAB(1)(a) to (b) and 1061ZVAB(2)(a) to (b), while a
person must be receiving youth allowance or austudy payment to qualify for
a scholarship payment, the person must also be qualified for youth
allowance or austudy payment, and youth allowance or austudy payment must
be payable to the person.
This provision is designed to ensure that if a person is later found not to
be qualified for the youth allowance or austudy payment that the person was
receiving (or the allowance was not payable), a debt may also be raised for
any student start-up loan payment that paid for that time.
A person must also be in receipt of youth allowance or austudy payments
even if the payments did not include an amount for rent assistance or
pharmaceutical allowance. Under section 1210, a reduction for income is
applied first against the maximum basic rate component of a rate plus youth
disability supplement, then against rent assistance and pharmaceutical
allowance. If a person's rate of payment has been reduced so that only
rent assistance or pharmaceutical allowance is paid, the person will not be
qualified for a student start-up loan payment.
Under paragraphs 1061ZVAB(1)(c) and 1061ZVAB(2)(c), approved scholarship
courses will be approved by the Minister under section 592N.
Paragraphs 1061ZVAB(1)(d) and 1061ZVAB(2)(d) mean that a Commonwealth
Education Costs Scholarship (CECS) takes precedence over a student start-up
loan. If a person is likely to receive a CECS payment within six months of
receiving a student start-up loan, the person will not be entitled to a
student start-up loan.
Paragraphs 1061ZVAB(1)(e) and 1061ZVAB(2)(e) require a person to notify his
or her tax file number to the Secretary. The Secretary will be obliged to
verify the person's tax file number with the Commissioner or obtain the
correct tax file number. As the student start-up loan is an income-
contingent loan to be collected through the taxation system, similar to the
operation of the Higher Education Loan Program (HELP) under the Higher
Education Support Act 2003 (Higher Education Support Act), the correct tax
file number is necessary for the Australian Taxation Office to be able to
administer the recovery of the loans effectively.
Subsection 1061ZVAB (3) operates such that a person does not qualify for a
loan until the Secretary so determines, unless the determination occurs
after the course or the qualification period has finished, in which case
the person qualifies from the earlier of those dates. This is to ensure
that loans are only paid to people who are continuing their qualifying
study or have studied for the duration of their course or qualification
period.
Section 1061ZVAC - Circumstances in which person is not qualified for
student start-up loan
Section 1061ZVAC(1) provides the circumstances in which a person is not
qualified for a student start-up loan.
A person is not qualified for a student start-up loan for a qualification
period at a time in that period if:
. it has already been determined that the person is qualified for a
student start-up loan or ABSTUDY student start-up loan for that
qualification period; or
. the person is a scholarship entitled person; or
. in the period of six months ending immediately before what would
otherwise be the person's qualification time one of the following
circumstances apply:
o the person has received a payment known as a student start-up
scholarship payment under the Veterans' Children Education
Scheme; or
o the person has received a payment known as a student start-up
scholarship payment under the Military Rehabilitation and
Compensation Act Education and Training Scheme; or
o the person has received the amount or value of a Commonwealth
Education Costs Scholarship; or
o the person was entitled to the amount or value of a Commonwealth
Education Costs Scholarship but has not received the full
entitlement only because the scholarship was suspended.
Subsection 1061ZVAC(2) defines a scholarship-entitled person as someone who
has received a student start-up scholarship payment by virtue of receiving
youth allowance, austudy or ABSTUDY or received the amount or value of a
Commonwealth Education Costs Scholarship in respect of a time before
1 January 2014 and the student has been receiving these payments for a
continuous period. This prevents students who have been grandfathered to
continue receiving the student start-up scholarship from also qualifying
for a student start-up loan while they remain on student payments.
Section 1061ZVAD - Amount of student start-up loan
Section 1061ZVAD provides that the amount of the student start-up loan
payment is $1,025. The amount of the student start- up loan payment will
be indexed on 1 January 2017 and each later 1 January in line with CPI
increases.
Section 1061ZVBA - Simplified outline of this Part
Section 1061ZVBA outlines broadly how student start-up loan debts are
incurred in Part 2AA.2.
Section 1061ZVCA - SSL debts
Section 1061ZVCA establishes the student start-up loan as an income-
contingent loan that is recovered and administered in a similar way to
HELP. As explained below, the student start-up loan is only treated as an
income-contingent loan if the person remains in their course for 35 days
after being qualified for the loan or after the commencement of their
course. If this does not occur, section 1223ABF (as inserted by Item 30 of
Schedule 6) will provide that the student start-up loan is a debt due to
the Commonwealth and, under current section 1229, is due and payable 28
days after the person receives a debt notice.
Subsection 1061ZVCA(1) provides a person incurs a debt to the Commonwealth
if the person has received a student start-up loan for a qualification
period and the amount of the loan is not a debt in respect of student start-
up loan under section 1223ABF, or as a result of the person obtaining
benefit where they were not entitled for any reason to obtain that benefit.
Subsection 1061ZVCA (2) provides that the SSL debt is incurred by the
person either on the day the person received the loan or the day after the
person's enrolment test day for the qualification period. Enrolment test
day is defined by subsection 1223ABF(2).
Subsection 1061ZVCA(3) clarifies that the amount of the SSL debt is the
amount of loan reduced by any amount repaid before the day on which the
debt is incurred. This will mean that if a student initially enrols in a
course or part of a course, receives a payment and withdraws from the
course, then they will be able to reduce their debt if they make a
repayment.
Subsection 1061ZVCA (4) provides that an SSL debt is not incurred if the
loan has been fully repaid before the day on which the loan would have
otherwise been incurred or if the Secretary has formed an opinion under
subsection 1223ABF(3) in relation to the loan that the person ceased
studying due to exceptional circumstances beyond the person's control. In
this case, if a person ceases to be enrolled in an approved scholarship
course or is no longer enrolled full-time before the enrolment test day,
neither a social security debt nor an SSL debt will be incurred. This
provision will ensure that there is flexibility and equity respect to
incurring a student start-up loan.
Section 1061ZVCB - SSL debt discharged by death
Section 1061ZVCB provides that, upon the death of a person who owes a SSL
debt to the Commonwealth, the debt is taken to have been paid.
Division 2 - Working out accumulated SSL debts
This Division provides for the calculation of a SSL debt and largely
mirrors the calculation of a HELP debt under Division 140 of the Higher
Education Support Act.
Section 1061ZVDA - Simplified outline of this Division
Section 1061ZVDA is an information provision, which provides an outline as
to how accumulated SSL debts are worked out for any given financial year.
There are two stages to working out a person's accumulated SSL debt. Stage
1 of the process is to work out a person's former accumulated SSL debt for
the preceding financial year by taking account of a range of specified
matters. Stage 2 of the process of working out a person's accumulated SSL
debt is to take into account a range of specified matters. .
Section 1061ZVDB - Working out a former accumulated SSL debt.
Subsection 1061ZVDB(1) provides that a person's former accumulated SSL
debt, in relation to the person's accumulated SSL debt for a financial year
is worked out by multiplying the amount worked out using a six step method
statement (set out in the table in the subsection) by the HELP debt
indexation factor for 1 June in that financial year.
The HELP debt indexation factor is defined in section 19AAA (as inserted by
item 12 of Schedule 6) and has the same meaning as in section 140-10 of the
Higher Education Support Act. As the calculation of the index numbers and
the method of publication of HELP debt indexation factors are factors in
calculating the HELP debt indexation factor, then by reference, the
definition of HELP debt indexation draws on section 140-10 to 140-20 of the
Higher Education Support Act. For this reason, equivalent provisions in
the Social Security Act are not required.
Subsection 1061ZVDB(2) provides that, for the purposes of section 1061ZVDB,
an assessment (or an amendment of an assessment) is taken to have been made
on the day specified in the notice of assessment (or notice of amended
assessment) as the date of issue of that notice.
Section 1061ZVDC - Working out an accumulated SSL debt
Subsection 1061ZVDC(1) provides that a person's accumulated SSL debt, for a
financial year is equal to the persons former accumulated SSL debt plus the
SSL debts incurred minus the person's SSL repayments, where:
. a former accumulated SSL debt is the person's former accumulated SSL
debt in relation to that accumulated SSL debt;
. SSL debt repayments are the sum of all voluntary SSL repayments paid
on or after 1 July in the financial year and before 1 June in that
year, in reduction of the SSL debts incurred in that year; and
. SSL debts incurred are the sum of all SSL debts (if any) that the
person has incurred during the first 6 months of the financial year.
Subsection 1061ZVDC(2) provides that the person incurs the accumulated SSL
debt on 1 June in the financial year.
Subsection 1061ZVDC(3) provides that the first financial year for which a
person can have an accumulated SSL debt is the financial year starting on 1
July 2014. This is because the SSL provisions contained within the Bill
commence on 1 January 2014 and, due to subsection 1061ZVDC(2), an SSL debt
can only be incurred on 1 June in a financial year.
Section 1061ZVDD - Rounding of amounts
Subsection 1061ZVDD(1) provides that, if (apart from this section) a
person's accumulated SSL debt is $1 or above, then that debt will be
rounded down to the nearest whole dollar.
Subsection 1061ZVDD(2) provides that, if (apart from this section) a
person's accumulated SSL debt is below $1, then that debt is rounded down
to zero.
Section 1061ZVDE - Accumulated SSL debt discharges earlier debt
Subsection 1061ZVDE(1) provides that the accumulated SSL debt a person
incurs on 1 June in a financial year discharges (or discharges the unpaid
part of) any SSL debt that the person incurred during the calendar year
immediately preceding that day and any accumulated SSL debt that the person
incurred on the preceding 1 June. This is because accumulated SSL debt
incurred on 1 June in a financial year is calculated to include any new SSL
debt incurred the calendar year as well as any outstanding accumulated SSL
debt that was incurred immediately preceding 1 June.
Subsection 1061ZVDE(2) clarifies that subsection 1061ZVDE(1) does not
affect the calculation of accumulated SSL debts.
Section 1061ZVDF - Accumulated SSL debt discharged by death
Subsection 1061ZVDF(1) provides that, when a person who has an accumulated
SSL debt dies, the accumulated SSL debt is taken to have been discharged.
Subsection 1061ZVDF(2) provides that subsection 1061ZVDF(1) does not affect
any compulsory SSL repayment amounts required to be paid in respect of the
accumulated SSL debt, whether or not those amounts were assessed before the
person's death.
Part 2AA.3 - Discharge of indebtedness
Division 1 of Part 2AA.3 provides for the voluntary and compulsory
discharge of SSL repayments. These provisions mirror the discharge of
indebtedness provisions of Divisions 148 to 154 of the Higher Education
Support Act 2003.
Section 1061ZVEA - Simplified outline of this Part
Subsection 1061ZVEA provides an outline of Part 2AA.3-Discharge of
indebtedness.
Section 1061ZVEB - Debts under this Chapter
Section 1061ZVEB(1) provides that debts under this Chapter are SSL debts
and accumulated SSL debts. Debts that arise under sections 1223 (Debts
arising from a lack of qualification, overpayment etc.) and 1223ABF (Debts
in respect of student start-up loans) are not debts under Chapter 2AA of
the Act
Section 1061ZVFA - Voluntary SSL repayments in respect of debts
Section 1061ZVFA allows a person to may make a voluntary payment, at any
time, in respect of a debt that the person owes to the Commonwealth under
Chapter 2AA. This payment must be made to the Commissioner for Taxation as
a debt under this Chapter a debt that is administered by the Australian
Taxation Office.
Section 1061ZVFB - Application of voluntary SSL repayments
Subsection 1061ZVFB(1) provides that a person who makes voluntary payments
to the Commonwealth in respect to debts under Chapter 2AA may give a
direction as to which debt they are paying off.
Subsection 1061ZVFB(2) provides that if the person has not given an
adequate direction, then the money will firstly be paid to the discharge or
reduction of any accumulated SSL debt of the person and secondly to the
discharge or reduction of any SSL debts of the person.
Section 1061ZVFC - Refunding of payments
Section 1061ZVFC ensures that a person cannot pay more money than they owe
to the Commonwealth by providing that if a person pays an amount to the
Commonwealth under Division 2 of Part 2AA.3 and the amount is greater than
the amount required to discharge all debt under Chapter 2AA and the total
amount of the person's primary tax debts (within the meaning of Part IIB of
the Taxation Administration Act), then the Commonwealth must refund to the
person an amount equal to that excess.
Section 1061ZVGA - Liability to repay amounts
Subsection 1061ZVGA(1) provides that, if:
. a person's repayment income for an income year is greater than their
minimum repayment income for that income year; and
. the person had an accumulated SSL debt on the 1 June immediately
preceding an assessment of the person's income of that year; and
either:
o the person does not have an outstanding accumulated HELP debt;
or
o the amount required to be paid would fully discharge the HELP
debt;
then the person is liable to pay to the Commonwealth the amount worked out
in section 1061ZVGE in reduction of the person's repayable debt. The
effect of this subsection is that the repayment of any existing HELP debt
is paid back before a SSL debt. It also ensures that in a year where an
amount payable is more than what is remaining of the accumulated HELP debt,
the remainder of what is payable to the Commonwealth is paid to reduce a
person's SSL debt.
Subsection 1061ZVGA(2) provides that a person is not liable to pay an
amount under this section for an income year if no Medicare levy is payable
by the person on their taxable income for that year or if the amount of the
Medicare levy payable by the person on their taxable for the income year is
reduced.
Section 1061ZVGB - Repayment income
Section 1061ZVGB provides repayment income has the same meaning as under
section 154-5 of the Higher Education Support Act.
Section 1061ZVGC - Minimum repayment income
Section 1061ZVGC provides that the minimum repayment income has the same
meaning as section 154-10 of the Higher Education Support Act. As the
calculation of the indexation of an income year and the method of
publication of indexed amounts are factors in calculating the minimum
repayment income, then by reference, the definition of minimum repayment
income draws on sections 154-25 and 154-30 of the Higher Education Support
Act. For this reason, equivalent provisions in the Social Security Act are
not required.
Section 1061ZVGD - Repayable SSL debt for an income year
Subsection 1061ZVGD(1) provides that a person's repayable SSL debt for an
income year is their accumulated SSL debt immediately preceding 1 June in
that income year or the amount (if any) remaining after deducting the total
amount paid or assessed to be payable.
Subsection 1061ZVGD(2) clarifies that, in the calculation of a person's
repayable debt, if the amount assessed to be payable has been increased, or
reduced by an amendment, then the amendment amount is the amount payable.
Section 1061ZVGE - Amounts payable to the Commonwealth
Section 1061ZVGE provides that the amount that person is liable to pay
under section 1061ZVGA in respect of an income year.
If the person does not have an accumulated HELP debt on 1 June immediately
preceding an assessment of the SSL debt, then the person is liable to pay
an amount that is applicable under the table in section 154-20 of the
Higher Education Support Act.
If a person is required to pay an amount that would fully discharge their
accumulated HELP debt, then the amount the person is liable to pay in
respect of the SSL debt is an amount that is applicable under the table in
section 154-20 of the Higher Education Support Act minus the amount that
they have been required to pay in respect of their accumulated HELP debt
for that income year.
This section will mean that a person will only repay an amount of SSL debt
if they meet the same income thresholds as under HELP (as contained in
section 154-20 of the Higher Education Support Act). It will also mean
that the amounts payable with respect to a SSL debt are consistent with
amounts payable with respect to an accumulated HELP debt.
This section will also mean that a SSL debt will only be payable if an
accumulated HELP debt has been fully discharged. In the event that a
person is able to discharge their accumulated HELP debt in an income year,
then if the person would otherwise be liable to pay an amount under the
table in section 154-20 of the Higher Education Support Act, then this
amount will be compulsorily payable with respect to their SSL debt.
It is also important to note that a person will repay their SSL debt if
there is no accumulated HELP debt. This may mean that if, for whatever
reason, a person has no accumulated HELP debt at the point of an
assessment, and they otherwise incur a HELP debt that has not become an
accumulated HELP debt under that assessment, then this section will operate
so that a person will repay an amount of their SSL debt. In these
circumstances, the person will then repay that HELP debt only when it is an
accumulated HELP debt at the point of an assessment.
Section 1061ZVGF - Commissioner may make assessments
Section 1061ZVGF allows the Commissioner to make an assessment of the
person's accumulated SSL debt on the 1 June immediately before making the
assessment. The Commissioner may also make an assessment of the amount
that is required to be paid in respect of that debt. In making this
assessment, the Commissioner may use any information in his or her
possession.
Section 1061ZVGG - Notification of notices of assessment of tax
Section 1061ZVGG allows the Commissioner to provide an additional notice of
an assessment of a SSL debt if the Commissioner did not provide this with
an assessment that he has severed with respect to a person's income under
section 174 of the Income Tax Assessment Act 1936. This additional notice
of assessment must also contain the amounts that have been provided in the
notice under section 174 of that Act.
Section 1061ZVGH - Commissioner may defer making assessments
Subsection 1061ZVGH(1) provides that a person may apply in an approved form
to the Commissioner for deferral of the making of an assessment in respect
of the person under section 1061ZVGF.
Subsection 1061ZVGH(2) provides that the application must specify the
income year for which the deferral is being sought and the reasons for
seeking the deferral.
Subsection 1061ZVGH(3) provides that the income year specified in the
application must be the income year in which the person makes the
application, the immediately preceding income year or the immediately
succeeding income year.
Subsection 1061ZVGH(4) provides that, on application by a person under
section 1061ZVGH(1), the Commissioner may defer making an assessment in
respect of the person under section 1061ZVGF if the Commissioner is of the
opinion that if the assessment were made, payment of the assessed amount
would either cause serious hardship to the person, or there are other
special reasons that make it fair and reasonable to defer making the
assessment.
Subsection 1061ZVGH(5) provides that the Commissioner may defer making the
assessment for any period that he or she thinks appropriate.
Subsection 1061ZVGH(6) provides that as soon as practicable after an
application is made under section 1061ZVGH(1), the Commissioner must
consider the matter to which the application relates and notify the
applicant of the Commissioner's decision on the application.
Section 1061ZVGJ - Commissioner may amend assessments
Subsection 1061ZVGJ(1) provides that a person may apply in an approved form
to the Commissioner for an amendment of an assessment made in respect of
the person under section 1061ZVGF so that the amount payable under the
assessment is reduced or no amount is payable under the assessment.
Subsection 1061ZVGJ(2) provides that the application must be made no later
than two years after the day the Commissioner to which the assessment
relates or must specify the reasons justifying a later application.
Subsection 1061ZVGJ(3) provides that, on application by a person under
section 1061ZVGJ(1), the Commissioner may amend an assessment made in
respect of the person under section 1061ZVGF so that the amount payable
under the assessment is reduced or no amount is payable under the
assessment if the Commissioner is of the opinion that payment of the
assessed amount has caused (or would cause) serious hardship to the person
or there are other special reasons that make it fair and reasonable to make
the amendment.
Subsection 1061ZVGJ(4) provides that, as soon as practicable after an
application is made under section 1061ZVGJ(1), the Commissioner must
consider the matter to which the application relates and notify the
applicant of the Commissioner's decision on the application.
Part 2AA.4 - Tax administration matters
Section 1061ZVFHA Simplified outline of this Part
Section 1061ZVFHA outlines the purpose of Part 2AA.4 - Tax administration
matters.
Section 1061ZVHB - Verification of tax file numbers
Section 1061ZVHB(1) allows the Secretary, when determining a claim for a
student start-up loan for a person receiving youth allowance or austudy, to
verify the person's tax file number with the Commissioner.
Section 1061ZVFHB(2) allows the Commissioner, if they are satisfied with
the person's tax file number, to notify the Secretary, via a written
notice, accordingly.
Section 1061ZVHC - When person with tax file number incorrectly notifies
number
Subsection 1061ZVHC provides that, if the Commissioner is satisfied that
the tax file number that was given to the Secretary in order to become
qualified for a student start-up loan has been at any time cancelled or
withdrawn, or is otherwise wrong, and the person does have a tax file
number, then the Commissioner may give a notice of this to the Secretary.
The Commissioner may also provide the Secretary with the person's tax file
number. For the purposes of qualification, the new tax file number is the
one that is taken to have been given to the Secretary.
This provision ensures that a person will not be disqualified from the
student start-up loan because of providing an incorrect tax file number.
Section 1061ZVHD - When person without tax file number incorrectly notifies
number
Subsection 1061ZVHD(1) provides that, if the Commissioner is satisfied that
the tax file number that was given to the Secretary in order to become
qualified for a student start-up loan has been cancelled or for any other
reason is not the persons' tax file number and the Commissioner is not
satisfied that the person has such a number, then the Commissioner may give
to the Secretary a written notice informing the Secretary accordingly.
The Commissioner must also give a copy of any notice to the person
concerned containing a statement of reasons for the decision to give the
notice.
In addition, section 75 of the Social Security Administration Act allows
the Secretary to request a tax file number from a person who is receiving a
social security payment.
Section 1061ZVHE - When tax file numbers are cancelled
Section 1061ZVHE provides that if the Commissioner cancels a tax file
number that a person has given to the Secretary in order to become
qualified for a student start-up loan, then the Commissioner may give to
the Secretary a written notice of the cancelation.
The Commissioner must also give a copy of any notice to the person
concerned containing a statement of reasons for the decision to give the
notice.
In addition, section 75 of the Social Security Administration Act allows
the Secretary to request a tax file number from a person who is receiving a
social security payment.
Section 1061ZVHF - Return assessments, collection and recovery
Section 1061ZVHF provides that, subject to Parts 2AA.3 and 2AA.4 of the Act
(as inserted by Schedule 6 of the Bill), Part VI of the Income Tax
Assessment Act 1936, Division 5 of the Income Tax Assessment Act 1997 and
Part 4-15 in Schedule 1 to the Taxation Administration Act apply (so far as
they are capable of application) in relation to a compulsory SSL repayment
amount of a person as if it were income tax assessed to be payable by a
taxpayer by an assessment made under Part IV of the Income Tax Assessment
Act 1936.
Section 1061ZVHG - Charges and civil penalties for failing to meet
obligations
Section 1061ZVHG provides that Part 4-25 in Schedule 1 to the Taxation
Administration Act has effect as if any compulsory SSL repayment amount of
a person were income tax payable by the person in respect of the income
year in respect of which the assessment of that debt was made, and Part
2AA.1 so far as it relates to tax file numbers, and Part 2AA.2, 2AA.3 and
this Part were an income tax law.
This does not have the effect of making a person liable to a penalty for
any act or omission that happened before the commencement of this section.
Section 1061ZVHH - Pay as you go (PAYG) withholding
Section 1061ZVHH provides that Part 2-5 (other than section 12-55 and
Subdivisions 12-E, 12-F and 12-G) in Schedule 1 to the Taxation
Administration Act applies (so far as it is capable of application) in
relation to the collection of amounts of a person's compulsory SSL
repayment amount of a person as if the compulsory SSL repayment amount were
income tax.
Section 1061ZVHJ - Pay as you go (PAYG) instalments
Section 1061ZVHJ provides that Division 45 in Schedule 1 to the Taxation
Administration Act applies (so far as it is capable of application) in
relation to the collection of a person's compulsory SSL repayment amount as
if the compulsory repayment amount were income tax.
Section 1061ZVHK - Administration of this Chapter
Section 1061ZVHK provides that the Commissioner of Taxation has general
administration of Part 2AA.1 in so far as it relates to tax file numbers,
Parts 2AA.2 and Part 2AA.3 of the Act (as inserted by this Schedule) and
Division 2A of Part 4 of the Administration Act.
The purpose of this provision is to allow the Commissioner of Taxation to
administer the recovery of SSL debts.
It is important to note that, while the Commissioner of Taxation has
general administration of Part 2AA.1, it is the Secretary who, under
subparagraph 1061ZVCA(4)(b)(ii), is responsible for forming an opinion as
to whether a person ceased to be enrolled in an approved scholarship course
because of exceptional circumstances beyond the person's control.
Items 26 and 27 insert items 69A and 41A into the tables contained in
section 1190 and subsection 1191(1) respectively to provide for the
indexation of the student start-up loan amount. This is not to be confused
with the indexation of the accumulated SSL debt.
Item 28 inserts subsection 1192(8B) to provide that the student start-up
loan payment is not indexed on 1 January 2014, 1 January 2015 and 1 January
2016. This will ensure that the amount of the student start-up scholarship
payment and the student start-up loan will remain equal in value.
Item 29 is a technical amendment for the purpose of section 1223ABG (as
inserted by item 30).
Item 30 inserts sections 1223ABF and 1223ABG.
Section 1223ABF - Debts in respect of student start-up loans
Subsection 1223ABF(1) provides that if a person:
. has received a student start-up loan for which the person qualified at
the time in a qualification period; and
. at any time on or before the person's enrolment test day, the person
is not enrolled in an approved scholarship course;
then the amount of the loan is a debt due to the Commonwealth and the debt
is taken to have arisen when the person received the loan.
Subsection 1223ABF(2) defines a person's enrolment test day for a
qualification period, which is the earliest of the following days:
. the last day of the approved scholarship course, if the approved
scholarship course ends during that qualification period;
. the last day of the relevant qualification period;
. the 35th day of the period starting on either the first day of the
approved scholarship course (if the person's qualification time was
before the first day of the relevant approved scholarship course, for
example where a person is beginning their course) or the day on which
the person qualifies for the loan.
The purpose of these rules is to ensure that the loans are targeted to
people who have a genuine commitment to continuing their study.
Subsection 1223ABF(3) states that a debt will not arise under this section
if the Secretary determines that a person is no longer enrolled full-time
in an approved scholarship course because of exceptional circumstances
beyond the person's control.
Section 1223ABG - Student start-up loan previously treated as part of
accumulated SSL debt
Section 1223ABG is a mechanism by which the Commissioner can amend a
student start-up loan if it is found to be a debt under section 1223 or
1223ABF and is therefore not an income-contingent loan. This is to ensure
that where a person was discovered to have not been qualified for a student
start-up loan, then the indexation can be applied to the amount of the loan
by way of the Commissioner amending the amount of debt.
Subsection 1223ABG(1) clarifies that this section applies to debts that
arise under section 1223 or 1223ABF in relation to a student start-up loan
and the Commissioner has been treating them as if they were part of an
accumulated SSL debt, but at a time since (to be known as the cessation
time) has ceased to do so.
Subsection 1223ABG states that the amount of the debt arising under section
1223 or 1223ABF is the amount of the accumulated SSL debt as is immediately
before the cessation time.
Item 31 inserts subparagraph 1229D(1)(b)(iiia) to provide that a student
start-up loan, as contemplated under section 1223ABF, is a debt to which an
interest charge may be applied to under section 1229E or 1229F of the
Social Security Act (as inserted by Schedule 1 of the Bill).
Amendments to the Social Security Administration Act
Item 32 amends subsection 10(1) to exclude Divison 2A from the jurisdiction
of the Social Security Appeals Tribunal. This is because decisions under
Division 2A are made by the Commissioner and, consistent with other
decisions by the Commissioner, are reviewable by the Administrative Appeals
Tribunal.
Item 33 inserts section 26C, which provides a time limit for claiming the
student start-up loan.
Subsection 26C(1) provides that a person's claim for a student start-up
loan for a qualification period must be made before the end of the
qualification period.
Section 26C(2) provides that a person's claim for a student start-up loan
for a qualification period must be made at least 35 days before the course
end date if the student is expected to complete the approved scholarship
during that qualification period.
Item 34 inserts subsection 36(4) and (5) which provide obligations of the
Secretary in determining claims and intend to give the Secretary
flexibility in when to determine claims.
Subsection 36(4) states that, if a person claims a student start-up loan
for a qualification period, the Secretary may determine the person's claim
at a time the Secretary considers appropriate. The Secretary should have
regard to the principle that the time should be close to the start of the
period of study concerned for the relevant approved scholarship course.
Subsection 36(5) provides that nothing in subsection 36(4) affects the
operation of section 39 which provides that if the Secretary does not make
a determination regarding a claim within the period of 13 weeks after the
day on which the claim was made, the Secretary is taken to have made a
determination rejecting the claim.
Item 35 is a minor amendment for the purposes of item 36.
Item 36 inserts subsection 39(9) to provide an exception to the requirement
in subsection 39(1). Subsection 39(1) deems that a claim that has not been
decided upon by the Secretary within a 13 week period of making the claim
is refused.
Subsection 39(9) provides that, if, at any time, a person has lodged more
than one claim for a student start-up loan for a qualification period that
has not yet been determined and a person has not yet actually qualified for
a claim, then the 13-week period will start on the day when the person does
become qualified. This will ensure that a person can validly put in a
claim in advance of being qualified.
Item 37 provides that the student start-up loan is within the definition of
a lump sum benefit for the purposes of section 47 of the Act.
Item 38 makes technical amendments to subsection 47(4) to allow for
sections 47DA and 47DB.
Item 39 inserts section 47DB, which provides that, where a person qualifies
for a student start-up loan because the person is receiving youth allowance
and all or part of that person's youth allowance is being paid to the
person's parent or another person, the whole amount of the SSL, or the
proportion of youth allowance that is being paid to the person's parent or
other person, may be paid by the Secretary to the person's parent or other
person.
Item 40 amends the heading of section 58 to 'Payment of social security
payment after death'.
Item 41 amends section 58 to include reference to the student start-up
loan.
Item 42 inserts subsection 127(4) to provide that the Secretary must not
review a decision that is a reviewable decision under section 138A. As
discussed with respect to section 138A, the purpose of this amendment is to
ensure that reviewable decisions under the student start-up loan provisions
are reviewed in the same way that the equivalent decisions in the Higher
Education Support Act that relate to HELP are reviewed. Under the recovery
of HELP the decision maker for reviewable decisions is the Commissioner.
This amendment appropriately ensures that the Commissioner, who administers
the recovery of HELP is the relevant decision maker.
For the same reason, item 42 will ensure the Secretary will not be able to
review a decision relating to the student start-up loan that is reviewable
by the Commissioner.
Item 43 inserts paragraph 129(4)(da) to provide that a person may not apply
to the Secretary for a decision that is reviewable under section 138A. As
discussed in relation to item 42, it is intended that the Commissioner
reviews decisions under section 138A, rather than the Secretary, and
therefore a person cannot apply to the Secretary for such a review.
Item 44 inserts Division 2A - Internal review of Commissioner decisions
relating to student start-up loans - which contains sections 138A to 138G.
These provisions are intended to ensure that the system of review for the
student start-up loan is consistent with the system of review for HELP
under the Higher Education Support Act.
Section 138A - Decisions reviewable under this Division
Section 138A provides that the decisions by the Commissioner to defer
making an assessment or to amend an assessment are reviewable decisions.
Section 138B - Commissioner must give reasons for reviewable decisions
Section 138B provides that, if the Commissioner is required to notify a
person of the making of a reviewable decision, then the notice must include
the reasons for the decision. This will mean that if the Commissioner
makes a reviewable decision under 138A, then he or she will have to include
the reasons for the decision. This section will not affect any other legal
obligation to give reasons for a decision.
Section 138C - Reviewer of decisions
Subsection 138C(1) provides that Commissioner is the reviewer of reviewable
decisions under Division 2A unless subsection 138C(2) applies.
Subsection 138C(2) provides that, where a delegate of the Commissioner
makes a reviewable decision, any delegate of the Commissioner who
reconsiders the decision must not have been involved in the making of the
decision and must be more senior to the decision maker.
Section 138D - Reviewer may reconsider reviewable decisions
Section 138D provides a mechanism by which a reviewer can reconsider a
reviewable decision. Unlike section 138E, a reviewer can review a decision
under this section whether or not a person requests such reconsideration.
Subsections 138D(1) and (2) provide that the reviewer of a reviewable
decision may reconsider the decision if they are satisfied that there is a
sufficient reason to do so. The reviewer will be able to do so even if the
application for reconsideration was made on request or the decision had
been confirmed, varied or set aside and an application had otherwise been
made to the Administrative Appeals Tribunal.
Subsection 138D(3) provides that, after reconsidering the decision, the
reviewer must either confirm, vary or set aside the decision. If the
decision is set aside a new decision must be substituted.
Subsection 138D(4) provides that decision of the reviewer to confirm vary
or set aside the original decision takes effect either on the day that is
specified in the decision of the review or if it is not specified, the day
on which the new decision was made.
Subsection 138D(5) provides that the reviewer must give written notice of
the decision on review to the person to whom the decision relates.
Subsection 138D(6) provides that the notice must be given within a
reasonable period of time after the decision has been made and must contain
a statement of the reason for the reviewer's decision on review. In
addition to this requirement, section 27A of the Administrative Appeals
Tribunal Act 1975 will also require the person to be notified of the
person's review rights.
Section 138E - Reconsideration of reviewable decisions on request
Section 138E provides a mechanism by which a person can require a reviewer
to confirm, vary or set aside a decision that is to be reconsidered.
Subsection 138E(1) provides a right of a person whose interests are
affected by a reviewable decision to request the reviewer to reconsider the
decision.
Subsection 138E(2) provides that such a request must be in a written notice
given to the reviewer within 28 days (or longer, if the reviewer allows it)
from when the person first received the notice of decision.
Subsection 138E(3) provides that the notice must set out the reasons for
making the request.
Subsections 138E(4) to 138E(7) operate in the same way as subsections
138D(3) to 138D(6) but with respect to a decision reconsidered on request.
Subsection 138E(8) provides that, if a reviewer does not give a notice of a
decision to the person within 45 days after receiving the person's request,
then the original decision is taken to be confirmed. In addition to this
requirement, section 27A of the Administrative Appeals Tribunal Act 1975
will also require the person to be notified of the person's review rights.
Section 138F - AAT review of the reviewable decisions
Section 138F provides that, if a reviewable decision has been confirmed,
varied or set aside by a reviewer has reconsidered the decision, then a
person may apply to the AAT for review of the decision.
Item 45 amends section 144 to provide that the reviewable decision under
138A or decisions under section 138E or 138F cannot be reviewed by the
Social Security Appeals Tribunal (SSAT). This is because the reviewable
decisions under section 138A are reviewable decisions made by the
Commissioner relating to the deferral and amendments of assessment of SSL
debts. To ensure that the student start-up loan is administered in a way
that is consistent with the administration of HELP under the Higher
Education Support Act, such reviewable decisions will not be reviewed by
the SSAT. This will not prohibit any other decision contained in
Chapter 2AA of the Social Security Act (as inserted by item 25) from being
reviewed by the SSAT subject to the existing provisions in the Social
Security Administration Act.
Amendments to the Student Assistance Act
Items 46 to 66 amend subsection 3(1) to include definitions of terms
relating to the ABSTUDY student start-up loan.
Item 67 inserts Part 2 - ABSTUDY student start-up loans.
Section 6A - Simplified outline of this Division
Section 6A briefly outlines the qualification for and amount of ABSTUDY
student start-up loan.
Section 6B - ABSTUDY Scheme
Section 6B provides clarity that ABSTUDY student start-up loans are made
under the ABSTUDY scheme.
Section 6C - Qualification for ABSTUDY student start-up loan
Section 6C operates in a similar way to section 1061ZVAB of the Social
Security Act (as inserted by item 25) but with respect to the ABSTUDY
student start-up loan.
The difference between these provisions is that, in order to be qualified
for a student start-up loan under section 6C, rather than being qualified
on the basis of youth allowance or austudy, a person at the qualification
time has to be qualified for a payment known as Living Allowance under the
ABSTUDY Scheme and Living Allowance must be payable to the person.
Section 6D - Circumstances in which person is not qualified for ABSTUDY
student start-up loan
Section 6D mirrors the operation of section 1061ZVAC of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 6E - Amount of ABSTUDY student start-up loan
Subsection 6E(1) provides that the amount of the ABSTUDY student start-up
loan is $1,025.
Subsection 6E(2) provides that the ABSTUDY student start-up loan is indexed
under Division 2 of Part 3.16 of the Social Security Act on 1 January 2017
and each subsequent 1 January, as if it were a student start-up loan amount
referred to in the table in subsection 1191(1) of that Act.
Section 7A - Simplified outline of this Division
Section 7A briefly outlines the process for incurring ABSTUDY SSL debts.
Section 7B - ABSTUDY SSL debts
Section 7B mirrors the operation of section 1061ZVCA of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 7C - ABSTUDY SSL debt discharged by death
Section 7C mirrors the operation of section 1061ZVCB of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 8A - Simplified outline of this Division
Section 8A mirrors the operation of section 1061ZVDA of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 8B - Working out a former accumulated ABSTUDY SSL debt
Section 8B mirrors the operation of section 1061ZVDB of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 8C - Working out an accumulated ABSTUDY SSL debt
Section 8C mirrors the operation of section 1061ZVDC of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 8D - Rounding of amounts
Section 8D mirrors the operation of section 1061ZVDD of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 8E - Accumulated ABSTUDY SSL debt discharges earlier debts
Section 8E mirrors the operation of section 1061ZVDE of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 8F - Accumulated ABSTUDY SSL debt discharged by death
Section 8F mirrors the operation of section 1061ZVDF of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9A - Simplified outline of this Division
Section 9A mirrors the operation of section 1061ZVEA of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9B - Debts under this Part
Section 9B provides that a debt within the meaning of section 39 of the Act
is not a debt that arises under Part 2. This is because these debts relate
to the ABSTUDY student start-up loans which are income-contingent loans and
are therefore administered differently to other debts arising under the
Student Assistance Act.
Section 9C - Voluntary ABSTUDY SSL repayments in respect of debts
Section 9C mirrors the operation of section 1061ZVFA of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9D - Application of voluntary ABSTUDY SSL repayments
Section 9D mirrors the operation of section 1061ZVFB of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9E - Refunding of payments
Section 9E mirrors the operation of section 1061ZVFC of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9F - Liability to repay amounts
Section 9F mirrors the operation of section 1061ZVGA of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9G - HELP repayment income
Section 9G provides that for the purposes of Part 2 of the Act, the term
HELP repayment income has the same meaning as repayment income in the
Higher Education Support Act.
Section 9H - Minimum repayment income
Section 9H provides that for the purpose of Part 2, the term minimum HELP
repayment income has the same meaning as minimum repayment income in the
Higher Education Support Act.
Section 9J - Repayable ABSTUDY SSL debt for an income year
Section 9J mirrors the operation of section 1061ZVGD of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9K - Amounts payable to the Commonwealth
Section 9K mirrors the operation of section 1061ZVGE of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9L - Commissioner may make assessments
Section 9L mirrors the operation of section 1061ZVGF of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9M - Notification of notices of assessment of tax
Section 9M mirrors the operation of section 1061ZVGG of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9N - Commissioner may defer making assessments
Section 9N mirrors the operation of section 1061ZVGH of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 9P - Commissioner may amend assessments
Section 9P mirrors the operation of section 1061ZVGJ of the Social Security
Act (as inserted by item 25) but with respect to an ABSTUDY student start-
up loan.
Section 10A - Simplified outline of this Division
Section 10A briefly outlines tax administration matters with regards to the
ABSTUDY student start-up loan.
Section 10B - Verification of tax file numbers
Section 10B mirrors the operation of section 1061ZVHB of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10C - When person with tax file number incorrectly notifies number
Section 10C mirrors the operation of section 1061ZVHC of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10D - When person without tax file number incorrectly notifies
number
Section 10D mirrors the operation of section 1061ZVHD of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10E - When tax file numbers are cancelled
Section 10E mirrors the operation of section 1061ZVHE of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10F - Returns, assessments, collection and recovery
Section 10F mirrors the operation of section 1061ZVHF of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10G - Charges and civil penalties for failing to meet obligations
Section 10G mirrors the operation of section 1061ZVHG of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10H - Pay as you go (PAYG) withholding
Section 10H mirrors the operation of section 1061ZVHH of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10J - Pay as you go (PAYG) instalments
Section 10J mirrors the operation of section 1061ZVHJ of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Section 10K - Administration of this Part
Section 10K mirrors the operation of section 1061ZVHK of the Social
Security Act (as inserted by item 25) but with respect to an ABSTUDY
student start-up loan.
Item 68 amends the definition of ABSTUDY debt to include an ABSTUDY student
start-up loan overpayment. This amendment is necessary given item 71 of
this Schedule inserts section 38A, which provides for the meaning of
ABSTUDY student start-up loan overpayment.
Item 69 amends the definition of debt to include an ABSTUDY student start-
up loan overpayment.
Item 70 makes technical amendments for the purposes of the amendment
contained in item 71.
Item 71 inserts section 38A - ABSTUDY student start-up loans overpayments.
Section 38A operates in a similar way to section 1223ABF of the Social
Security Act (as inserted by item 30) as it sets out circumstances in which
the ABSTUDY start-up loan will not be treated as an income-contingent loan
but as a debt owed by the person to the Commonwealth under section 39 of
the Act.
Items 72 and 73 make minor amendments for the purposes of item 74.
Item 74 amends section 39 to provide that, where an ABSTUDY student start-
up loan payment becomes a debt recoverable by the Commonwealth, the ABSTUDY
student start-up loan overpayment is taken to have arisen when the person
received the loan to which the overpayment relates.
Item 75 inserts section 39AAA (ABSTUDY student start-up loan), previously
treated as part of accumulated ABSTUDY SSL debt. This section mirrors
section 1223ABG of the Social Security Act (as inserted by item 30), but
with respect to an ABSTUDY student start-up loan overpayment.
Item 76 makes a minor amendment for the purposes of item 77.
Item 77 amends subsection 44A(7) to provide that subsection 44A(5) does not
apply in relation to recovery of an amount relating to an ABSTUDY student
start-up loan. This will mean that a student will have to provide their
actual tax file number, rather than lodging an application for a tax file
number with the Department, in order to meet the qualification requirements
for the ABSTUDY student start-up loan.
Item 78 amends subsection 55A to clarify that payments made in relation to
ABSTUDY student start-up loans are be to made out of the Consolidated
Revenue Fund, which is appropriated accordingly.
Item 79 makes a minor amendment for the purposes of item 80.
Item 80 amends section 302 to provide that Division 1 of Part 9 does not
apply to a decision that is reviewable under section 308A.
Item 81 inserts new Division 1A - Internal review of Commissioner decisions
relating to ABSTUDY student start-up loans.
Section 308A - Decisions reviewable under this Division
Section 308A mirrors the operation of section 138A of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable
decisions in relation to ABSTUDY student start-up loan.
Section 308B - Commissioner must give reasons for reviewable decisions
Section 308B mirrors the operation of section 138B of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable
decisions in relation to ABSTUDY student start-up loan.
Section 308C - Reviewer of decisions
Section 308C mirrors the operation of section 138C of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable
decisions in relation to ABSTUDY student start-up loan.
Section 308D - Reviewer may reconsider reviewable decisions
Section 308D mirrors the operation of section 138D of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable
decisions in relation to ABSTUDY student start-up loan.
Section 308E - Reconsideration of reviewable decisions on request
Section 308E mirrors the operation of section 138E of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable
decisions in relation to ABSTUDY student start-up loan.
Section 308F - AAT review of reviewable decisions
Section 308F mirrors the operation of section 138F of the Social Security
Administration Act (as inserted by item 44) but with respect to reviewable
decisions in relation to ABSTUDY student start-up loans.
Item 82 mirrors the operation of subsection 144(t) of the Social Security
Administration Act (as inserted by item 45) but with respect to ABSTUDY
student start-up loans.
Amendments to the Taxation Administration Act
Item 83 inserts a definition of compulsory ABSTUDY SSL repayment amount
into the Act.
Item 84 inserts a definition of compulsory SSL repayment amount into the
Act.
Item 85 amends section 8AAZLD to provide that any compulsory SSL repayment
amount of the entity and then any compulsory ABSTUDY SSL repayment amount
will be prioritised in that order after any compulsory repayment amount but
before any FS assessment debt when the Commissioner applies a credit that
arises under the Pay As You Go system.
Item 86 amends section 6-1 in Schedule 1 to allow for the Pay As You Go
system to collect amounts that go towards meeting liability to repay debts
in relation to student start-up loans and ABSTUDY student start-up loans.
Item 87 amends the objects in section 11-1 of Schedule 1 to ensure that the
object Part 2-11 is to ensure the efficient collection of amounts of
liabilities to the Commonwealth under Chapter 2AA of the Social Security
Act or under Part 2 of the Student Assistance Act.
Item 88 amends section 15-30 of Schedule 1 to ensure that the Commissioner
must have regard to the applicable percentages in section 1061ZVGE of the
Social Security Act and the equivalent provision in the ABSTUDY scheme when
making a withholding schedule.
Item 89 amends the object in section 45-5 of Schedule 1 so that the object
Part 2-10 is to ensure the efficient collection of amounts of liabilities
to the Commonwealth under Chapter 2AA of the Social Security Act or under
Part 2 of the Student Assistance Act.
Item 90 amends section 45-340 in Schedule 1 to insert steps 3AA and 3AB to
the method statement on adjusted taxable income or on adjusted withholding
income.
Item 91 makes technical amendments to step 4 of the method statement in
section 45-340 in Schedule 1 to take account of new steps 3AA and 3AB as
inserted by item 90.
Item 92 amends the method statement in section 45-375 in Schedule 1 to
insert steps 3AA and 3AB for adjusted assessed tax on adjusted assessed
taxable income.
Item 93 makes a technical amendment to step 4 of the method statement in
section 45-375 in Schedule 1 to take account of new steps 3AA and 3AB as
inserted by item 92.
Item 94 amends the table in subsection 250-10(2) to include any compulsory
SSL and ABSTUDY SSL repayment amount in the adjusted taxable income
calculation.
Item 95 amends subsection 355-65(2) to include that records or disclosures
relating to social welfare, health or safety can be made for or disclosure
can be made to an Agency Head (within the meaning of the Public Service Act
1999) of an agency (within the meaning of that Act) dealing with matters
relating to the social security law, including the Student Assistance Act
so far as it relates to ABSTUDY student start-up loans (within the meaning
of that Act) and debts relating to such loans, along with the Social
Security Act.
Amendments to the Taxation (Interest on Overpayment and Early Payments)
Act 1983
Items 96 and 97 insert a definition of compulsory ABSTUDY SSL repayment
amount and compulsory SSL repayment amount into the Act.
Item 98 amends the table in subsection 3C(1) so that compulsory SSL
repayment amounts and ABSTUDY SSL repayment amounts are identified as
relevant tax law for the purposes of the Act.
Items 99 and 100 amend subsections 8A(1) and 8A(2) to ensure compulsory SSL
repayment amounts and ABSTUDY SSL repayment amounts are payments for which
interest is payable by the Commissioner to the person on the payment,
calculated in respect of the period applicable under section 8B at the rate
specified in section 8C.
Items 101 and 102 amend paragraphs 8E(1)(d) and 8E(2)(d) to ensure that
interest can be paid when crediting amounts in excess of any compulsory SSL
repayment amounts and compulsory ABSTUDY SSL repayment amounts.
Items 103 and 104 amend subparagraph 12A(1) to ensure that interest
entitlement arises in respect of refunds of payments made on account of
compulsory SSL repayment amounts and compulsory ABSTUDY SSL repayment
amounts These items otherwise amend subparagraph 12A(1) to ensure this
provision is written in a way that reflects current drafting techniques.
This is a minor, technical amendment.
Item 105 is a minor amendment for the purposes of item 103.
Schedule 7 - Paid parental leave
Summary
To ease administrative burdens on business, the Paid Parental Leave
legislation will be amended to remove the requirement for employers to
provide Government-funded parental leave pay to their eligible long-term
employees.
From 1 March 2014, employees will be paid directly by the Department of
Human Services, unless an employer opts in to provide parental leave pay to
its employees and an employee agrees to their employer paying them.
Background
Currently under the Paid Parental Leave Act, in the majority of cases,
employers are required to provide parental leave pay to their eligible long-
term employees. The Secretary must make an employer determination that a
person's employer is to pay the person's instalments of parental leave pay,
if the Secretary is satisfied that certain conditions are met.
However, an employer determination can be made despite not all of the
conditions being satisfied if an employer has made an election to 'opt-in'
to pay instalments of parental leave pay to the employee and the employee
consents to the employer paying the instalments. If an employer
determination is in force for an employer and their employee, the employer
must pay instalments of parental leave pay to their employee.
From 1 March 2014, payments of parental leave pay will be made by the
Department of Human Services, unless an employer chooses to 'opt in' to
manage the payment of parental leave pay to their employees and their
employee agrees for the employer to pay them. This will go some way
towards easing the administrative burden on business.
The amendments will only require an employer to provide instalments of
parental leave pay to a person if an employer determination is in force for
the employer and the employee. An employer determination can only be made
if the employer has made an election to pay instalments, that election
applies to the person, and certain other conditions are met, including the
employee agreeing to their employer paying them. PPL funding amounts will
then be transferred to the employer from the Department of Human Services
for payment to the employee, consistent with current arrangements.
If an employer determination is made for a particular employer and
employee, but the employer no longer wishes to pay parental leave pay for
that particular employee, the employer can decline the paymaster role. If
this happens, the Department of Human Services will pay the employee.
To reflect the non-mandatory nature of this role, employers who do not
respond to a notice of an employer determination will no longer be
potentially subject to a compliance notice. Review of an employer
determination is no longer required because the employer can simply decline
the paymaster role.
The amendments made by this Schedule commence on 1 March 2014.
Explanation of the changes
Part 1 - Amendments
Amendments to the Paid Parental Leave Act
Items 1, 2 and 3 amend section 4, which is the Guide to the Act, to reflect
the changes made by this Schedule.
Item 4, 5 and 8 amend certain definitions in section 6, to reflect the
changes made by items 11, 21, 22 and 32 of this Schedule.
Item 6 repeals the definition of employer determination decision in
section 6, as this was only relevant to review of these decisions and is no
longer required as a consequence of the amendment made by item 41.
Item 7 inserts a new definition of non-acceptance notice in section 6,
which is defined in paragraph 103(1)(b), as amended by item 21.
Item 9 amends the note under subsection 64(1) by removing the reference to
'section 93', consequential to repeal of that section by item 15.
Item 10 amends the third paragraph in section 83, which is the Guide to
Part 3-3, relating to payment of instalments by the Secretary.
Item 11 repeals subsection 84(3), to omit reference to an employer having
made an application for review of the decision to make an employer
determination.
Item 12 repeals and substitutes a new heading for section 85, titled
'Payment of arrears - employer determination revoked before coming into
force'. This item is consequential to item 13.
Item 13 repeals and substitutes new subsection 85(1), omitting reference to
subsection 84(3), but otherwise re-enacting the subsection unchanged.
Item 14 amends subsection 85(3) and is consequential to items 12 and 13.
Item 15 repeals section 93, and removes the requirement for the Secretary
to pay instalments because an employer has sought review of an employer
determination.
Item 16 repeals and substitutes a new section 100, which is a guide to
Part 3-5 of the Paid Parental Leave Act and gives a brief outline of the
matters dealt with in the Part, relating to employer determinations. The
changes to section 100 reflect the amendments made by items 17 to 32.
Item 17 repeals and substitutes new paragraphs 101(1)(b) and (c).
Subsection 101(1) provides that the Secretary must make an employer
determination that a person's employer is to pay the person instalments if
the Secretary is satisfied that certain conditions have been met.
New paragraph 101(1)(b) provides that, when making an employer
determination, one of the conditions of which the Secretary must be
satisfied is that the person's employer has made an election (or 'opted
in') under section 109 to pay instalments and that election applies to the
person.
New paragraph 101(1)(c) provides that, when making an employer
determination, the Secretary must also be satisfied that the person has
consented in the claim form to the employer paying instalments of parental
leave pay to the person.
Item 18 repeals paragraph 101(1)(e), which removes the condition that an
employer has an ABN, when the Secretary makes an employer determination.
The requirement to have an ABN is now provided by subsection 109(1)
(item 31).
Item 19 amends paragraph 101(1)(f), and is consequential to
items 17 and 18.
Item 20 repeals subsection 101(2), and is consequential to the changes made
by item 17.
Item 21 repeals and substitutes new section 103, which sets out the
required employer response to a notice of an employer determination.
New subsection 103(1) provides that, if an employer is given a notice under
section 102 that an employer determination has been made, the employer may,
within the period referred to in subsection 103(2) (which is normally 14
days):
. give the Secretary a written notice (the acceptance notice) that
complies with section 104; or
. give the Secretary a non-acceptance notice, orally or in writing,
declaring that the employer does not accept the employer's obligations
to pay instalments to the person.
New subsection 103(2) provides that, for the purposes of subsection (1),
the period is 14 days, or such longer period allowed by the Secretary,
after the date of the notice given under section 102.
Item 22 repeals subsections 104(2) and (5), which provide the requirement
to have bank account information in the acceptance notice. This
requirement is now provided in paragraph 109(2)(b) (item 32).
Item 23 repeals section 105, removing the requirement for the employer to
give bank account and pay cycle information etc. after an internal review
or review by the SSAT, as this is no longer relevant.
Item 24 amends subsection 107(1), and is consequential to item 27.
Item 25 repeals the heading to subsection 107(2).
Item 26 amends subsection 107(2) by omitting the reference to 'a compliance
notice given under section 157'.
Item 27 repeals subsection 107(3), and is consequential to item 23.
Item 28 inserts a new item 1A in the table in subsection 108(1). New table
item 1A provides that the Secretary must revoke an employer determination
made for a person and the person's employer if the Secretary is satisfied
that the employer has given a non-acceptance notice for the person under
paragraph 103(b). In this situation, the revocation comes into force on
the day of the revocation.
Item 29 amends item 2 in column 1 of the table in subsection 108(1), and is
consequential to item 21.
Item 30 repeals subsection 108(6), which relates to the notice of
revocation of an employer determination to the SSAT, when the Secretary
revokes an employer determination, as a review would no longer occur in
this situation (consequential to item 41).
Item 31 amends subsection 109(1) by adding the requirement for an employer
to have an ABN, before the employer may choose to 'opt in' to pay
instalments of parental leave pay to an employee.
Item 32 repeals and substitutes new paragraph 109(2)(b), which sets out the
requirements of an election notice (or notice to 'opt in').
New paragraph 109(2)(b) provides that the election notice must be in the
approved form and contain information (bank account information) about an
account held and maintained by the employer into which PPL funding amounts
can be paid.
Item 33 repeals items 10 and 11 in the table in section 146, relating to
what constitutes a civil penalty provision. This is consequential to
items 21 and 23.
Item 34 repeals and substitutes new subsection 157(1), which relates to
compliance notices given by the Secretary, to omit reference to failing to
respond to an employer determination or failing to provide certain
information after a review. New subsection 157(1) provides that
section 157 applies if the Secretary reasonably believes that a person has
contravened subsection 82(2), which deals with an employer notifying the
Secretary if certain events happen.
Item 35 amends subsection 159(1), and is consequential to item 36.
Item 36 repeals paragraphs 159(1)(b) and (c), relating to infringement
notices the Secretary may give in relation to section 103 (which deals with
responding to an employer determination) and subsection 105(3) (which deals
with giving bank account and pay cycle information etc. after a review).
Item 37 repeals and substitutes a new last paragraph of the Guide to Part 5-
1 (relating to internal review of decisions) in section 202. This change
reflects the changes made by item 41.
Item 38 repeals the first note under subsection 203(2), which is
consequential to the repeal of section 207 by item 41.
Item 39 changes the heading of 'Note 2' to 'Note' under subsection 203(2),
which is consequential to item 38.
Item 40 amends subsection 205(1) by removing the reference to
section '207', which is consequential to item 41.
Item 41 repeals section 207, removing the right for an employer to make an
application for internal review of an employer determination, as an
employer can now simply decline the employer determination instead.
Item 42 amends subsection 209(2) by omitting the reference to 'an
application under section 207'. This item is consequential to item 41.
Item 43 amends paragraphs 210(2)(a) and (b) by removing the references to
'an employer determination decision', which is consequential to item 41.
Item 44 repeals paragraph 212(1)(c), relating to a notice of a decision
relating to an employer determination decision, which is consequential to
item 41.
Item 45 amends subsection 212(5), and is consequential to item 44.
Item 46 amends paragraphs 223(1)(a), (b), (c) and (d) by omitting the
references to 'an employer determination decision', which is consequential
to item 41.
Item 47 repeals subsection 224(1), which allowed an employer to apply to
the SSAT for review of an employer determination decision. This item is
consequential to the changes made by item 41.
Item 48 amends subsection 224(2) by omitting the reference to 'if the
decision is an employer funding amount decision'.
Item 49 amends subsection 224(3), and is consequential to item 47.
Item 50 repeals paragraph 225(2)(b), which is consequential to item 47.
Item 51 amends subsection 278(1), which relates to Commonwealth employees
and is consequential to item 52.
Item 52 repeals subsection 278(2), which relates to Commonwealth employees
and is consequential to item 17.
Item 53 repeals subsection 299(1) and substitutes a new subsection.
New subsection 299(1) provides that the PPL Rules or the regulations may
provide that a person may make an election under section 109 to pay
instalments to another person if both persons are in a relationship that is
similar to the relationship between an employer and an employee.
Part 2 - Application and transitional provisions
Item 54 is an application provision, which provides that the amendments
made by Part 1 of this Schedule apply in relation to an employer
determination that is made on or after the commencement of this Schedule in
relation to a claim for parental leave pay that is made before, on or after
that commencement.
Item 55 is a transitional provision relating to elections made before
commencement. This item provides that an election under section 109 of the
Paid Parental Leave Act that is in force immediately before the
commencement of this Schedule ceases to be in force at that commencement.
Item 56 is a transitional provision relating to revoking employer
determinations made before commencement.
Subitem 56(1) provides that this item applies if:
. an employer determination was made before the commencement of this
Schedule for a person and the person's employer; and
. the determination had not been revoked before that commencement; and
. the person's PPL period had not started before that commencement.
Subitem 56(2) provides that the Secretary must revoke any determination
captured under subitem 56(1).
Subitem 56(3) provides that the Paid Parental Leave Act applies as if a
revocation under subitem 56(2) were made under subsection 108(1) of that
Act.
Schedule 8 - Pension bonus scheme
Summary
From 1 March 2014, this Schedule will end late registrations for the closed
pension bonus scheme.
The scheme provides a lump sum payment to people who are qualified for age
pension, age service pension, partner service pension after reaching
pension age, or income support supplement after reaching qualifying age -
but who choose to defer their pension and remain in the workforce.
The scheme was closed from 2009, although people remained able to register
for the scheme if they were qualified for it, but had not registered, at
the time of its closure.
However, the introduction around the same time of a work bonus for age
pensioners with earnings from employment has been more effective in
encouraging older Australians to continue contributing to the workforce
past pension age. Ending late registrations for the pension bonus scheme
will help ensure the pension system is simpler and more sustainable for
older Australians into the future.
Background
Both the social security law and the Veterans' Entitlements Act provide for
a pension bonus scheme.
The pension bonus scheme under the social security law is established by
Part 2.2A of the Social Security Act. It allows a person registered for
the scheme, who qualifies for age pension but defers claiming it, to claim
a single lump-sum pension bonus.
A person must apply to register in the pension bonus scheme (section 92D),
and be registered (section 92J) in order to become a member of the scheme
and accrue a pension bonus. Section 92H imposes time limits on when a
person can lodge an application for registration, depending on the person's
date of qualification for age pension.
The pension bonus scheme was closed to new entrants whose date of
qualification for age pension occurred on or after 20 September 2009
(subsection 92J(1A). In general, an application for registration must be
made within 13 weeks after the date of the person's qualification for age
pension (section 92H). However, subsection 92H(3) permits the Secretary to
extend the period within which a person must lodge their application. This
has allowed a person to make a late application for registration in the
pension bonus scheme and have their registration start date backdated.
This Schedule prevents an application for registration in the scheme from
being made on or after 1 March 2014. It removes capacity for the Secretary
to extend the period for an application for registration to be made on or
after 1 March 2014. As a result, it will no longer be possible for a
person to apply for registration in the scheme if their application for
such registration is not lodged before 1 March 2014. A saving provision
will allow registration applications lodged prior to 1 March 2014 to be
processed after that date, and the person registered in the scheme if
qualified.
Similarly, under the Veterans' Entitlements Act, the scheme provides a lump
sum payment to people who are registered in the scheme and eligible for
service pension or partner service pension after reaching pension age,
or income support supplement after reaching qualifying age, but who choose
to defer their pension or supplement and remain in the workforce.
The pension bonus scheme is established under Part IIIAB of the Veterans'
Entitlements Act.
Mirror amendments are made to the Social Security Act and the Veterans'
Entitlements Act.
The amendments made by this schedule commence on 1 March 2014.
Explanation of the changes
Amendments to the Social Security Act
Items 1 and 2 add new subsection (2) to section 92D, to provide expressly
that a person cannot make an application on or after 1 March 2014.
Item 3 repeals notes to subsections 92H(1) and (2) consequential upon the
main repeal made by item 4 below.
Item 4 repeals subsections 92H(3) to (7), which provided capacity for the
Secretary to extend the timeframe for an application for registration in
the pension bonus scheme.
Item 5 provides a saving provision. If an application for registration has
been made prior to 1 March 2014, then, despite the repeal of
subsection 92H(3), the Secretary may register the person in the scheme as a
result of the application, with the registration taking effect on a date
determined under that subsection. That is, applications for registration
in the scheme lodged before 1 March 2014 will be determined in line with
legislation in effect immediately before the commencement of this Schedule.
It will not be possible to lodge an application for registration in the
Scheme on or after 1 March 2014.
Amendments to the Veterans' Entitlements Act
Items 6 and 7 add new subsection 45TD(2) to provide expressly that a person
cannot make an application for registration in the pension bonus scheme on
or after 1 March 2014.
Item 8 repeals the notes to subsections 45TH(1) and (2) consequential to
the repeal made by item 9.
Item 9 repeals subsections 45TH(3) to (7), which provided capacity for the
Repatriation Commission to extend the timeframe for an application for
registration in the pension bonus scheme.
Item 10 provides a saving provision. If an application for registration
has been made prior to 1 March 2014, then, despite the repeal of
subsection 45TH(3), concerning late applications, the Repatriation
Commission may register the person in the scheme. The registration will
take effect on a date determined under the repealed subsection 45TH(3).
This provision enables the Repatriation Commission to continue to extend
the application lodgement period for registrations lodged before 1 March
2014 in accordance with the legislation that was in effect immediately
before the commencement of this Schedule. It will not be possible to lodge
an application for registration in the scheme on or after 1 March 2014.
Schedule 9 - Indexation
Summary
This Schedule will extend the indexation pauses on certain higher income
limits for three further years until 30 June 2017.
This will apply to the family tax benefit Part B primary earner income
limit, the parental leave pay and dad and partner pay individual income
limits, and the higher income free area for family tax benefit Part A. In
addition, the annual end-of-year family tax benefit supplements will remain
at current levels for three years.
This Bill will also maintain the annual child care rebate limit at $7,500
for three further income years starting from 1 July 2014, with the first
indexation of this amount occurring on 1 July 2017. As a result, an
individual will be able to receive up to the maximum amount of $7,500 per
child per financial year for out-of-pocket child care costs for those three
income years.
Background
Family tax benefit income thresholds
Schedule 4 to the Family Assistance Act sets out the arrangements for
indexation of family assistance rates and income thresholds. Amendments to
Schedule 4 will result in the continuation of indexation pauses until
30 June 2017 on the higher income free area for family tax benefit Part A
(both the basic amount of $94,316 and the additional amount for each
FTB child after the first of $3,796) and the $150,000 primary earner income
limit for family tax benefit Part B.
Family tax benefit Part A and Part B end-of-year supplements
The indexation arrangements for the end-of-year family tax benefit Part A
and family tax benefit Part B supplement amounts, also provided by Schedule
4, will be amended so that indexation of these amounts is paused until
30 June 2017. The supplement amounts are currently $726.35 for family tax
benefit Part A for each FTB child, and $354.05 for a family tax benefit
Part B recipient.
Child care rebate limit
Child care rebate is a payment assisting eligible individuals with the cost
of child care fees for sessions of care provided by an approved child care
service. The amount of child care rebate an individual may receive for a
child for an income year is 50 per cent of the difference between the
amount that the individual is liable to pay for care provided to the child
and the sum of the individual's child care benefit entitlement (if any) and
the Jobs, Education and Training Child Care fee assistance (if any)
relating to that child, up to the maximum limit legislatively set at $7,500
for 2012-14 (the CCR limit). The legislation currently provides for the
CCR limit to be indexed on 1 July 2014. Amendments in this Schedule will
maintain the annual child care rebate limit at $7,500 for three further
income years starting from 1 July 2014, with the first indexation of this
amount occurring on 1 July 2017.
Paid parental leave income limit
The Paid Parental Leave Act provides that a person can only be eligible for
parental leave pay if they meet certain requirements, which include having
adjusted taxable income for the reference income year of no more than the
relevant 'PPL income limit'. The PPL income limit before 1 July 2014 is
$150,000 and is then subject to indexation. The amendments in this
Schedule will further delay the commencement of indexation of the
PPL income limit from 1 July 2014 to 1 July 2017.
The amendments made by this Schedule commence on 1 March 2014.
Explanation of the changes
Amendments to the Family Assistance Act
Section 84F specifies the child care rebate limit applicable in respect of
a child and an income year. These amounts are relevant to the calculation
of the amount of child care rebate for a quarter (under section 84AA), and
for an income year (under section 84A), the amount of child care rebate
relating to child care benefit in substitution (under section 84DA), and
the amount of child care rebate for a week (under section 84AAA).
Paragraph 84F(ea) currently specifies the income limit of $7,500 for the
income years ending on 30 June 2012, 30 June 2013 and 30 June 2014.
Item 1 amends paragraph 84F(ea) to specify the limit of $7,500 for the
additional income years ending on 30 June 2015, 30 June 2016 and
30 June 2017.
Item 3 amends subclause 3(6B) of Schedule 4 to the Family Assistance Act to
prevent the indexation of specified child care rebate payments from
occurring on 1 July 2014, 1 July 2015 and 1 July 2016. Item 2 makes a
consequential amendment to the heading to subclause 3(6A) of Schedule 4.
Item 4 amends the note to subclause 3(6B) of Schedule 4 to state that the
indexation of the child care rebate limit resumes on 1 July 2017.
Item 5 is a transitional provision to the effect that, for the purposes of
working out the indexed amount for the child care rebate limit on 1 July
2017 under Schedule 4 to the Family Assistance Act, the current figure for
the child care rebate limit immediately before that day is taken to be
$7,500.
Item 7 amends subclause 3(7) of Schedule 4 to the Family Assistance Act.
This amendment will prevent the indexation of specified family tax benefit
income limits from occurring on 1 July 2014, 1 July 2015 and 1 July 2016.
Item 6 makes a consequential amendment to the heading to subclause 3(7).
Item 9 amends subclause 3(8) of Schedule 4 to the Family Assistance Act to
provide that indexation of the FTB gross supplement amount (A) and
FTB gross supplement amount (B) will not occur on 1 July 2014, 1 July 2015
and 1 July 2016. Item 8 makes a consequential amendment to the heading to
subclause 3(8).
Amendment to the Family Assistance Legislation Amendment (Child Care Budget
Measures) Act 2011
Item 10 repeals item 5 of Schedule 1 to the Family Assistance Legislation
Amendment (Child Care Budget Measures) Act 2011, which is a transitional
provision that is superseded by item 5 above.
Amendments to the Paid Parental Leave Act
Item 11 amends the Guide to Part 2-3 by substituting the date 30 June 2017
for the date 30 June 2014 as the date before the first indexation of the
PPL income limit.
Item 12 amends paragraph 41(a) to extend the time that the $150,000 figure
applies for the PPL income limit from 'before 1 July 2014' to 'before
1 July 2017'.
Item 13 amends subsection 42(1) to provide for the first indexation of the
PPL income limit to occur on 1 July 2017.
Item 14 amends the Guide to Part 3A-3 (Eligibility for dad and partner
pay), which states that DAPP claimants must not have income exceeding the
PPL income limit, which will not be indexed until after 30 June 2017.
Schedule 10 - Reduction of period for temporary absence from Australia
Summary
From 1 July 2014, the length of time that families can be temporarily
overseas and continue to receive family and parental payments will reduce
from three years to 56 weeks.
In some circumstances, (such as where certain Australian Defence Force and
Australian Federal Police personnel are deployed overseas) a person will
continue to be eligible for family and parental leave payments for up to
three years while temporarily absent from Australia.
Background
Currently, if an individual leaves Australia temporarily, the maximum
period for which the individual can be eligible for family tax benefit
during the absence from Australia is three years.
Similarly, the maximum period for which a person may be temporarily absent
from Australia and still be eligible for parental leave pay, or dad and
partner pay, is currently three years. If the three-year temporary absence
period is exceeded before the end of a PPL period or DAPP period, the
payment will stop from that day.
This Schedule reduces the allowed period of temporary absence from
Australia for family tax benefit, parental leave pay and dad and partner
pay recipients from three years to 56 weeks. This will also affect
payments that link to family tax benefit, such as double orphan pension.
However, in some circumstances (such as where certain Australian Defence
Force and Australian Federal Police personnel are deployed overseas), a
person will continue to be eligible for family and parental leave payments
for up to three years while temporarily absent from Australia.
The amendments made by this Schedule commence on 1 July 2014.
Explanation of the changes
Amendments to the Family Assistance Act
Items 1, 2, 3 and 4 change the allowed period of temporary absence from
Australia for an FTB or regular care child, or an individual, from three
years to 56 weeks in subsection 24(1), paragraph 24(2)(a), subsection 24(4)
and paragraph 24(5)(a).
Item 5 adds new subsections 24(7) to (10) into the Family Assistance Act.
These provisions set out the circumstances in which the 56-week temporary
absence period from Australia can be extended for an individual or child,
to a period of up to three years. The 56-week period can be extended:
. where the person is unable to return to Australia within the 56-week
period because of a specified event such as serious illness or
hospitalisation of the person or a family member, or natural disaster
or war in the country in which the person is located (see new
subsections 24(7) and (8));
. where the person is receiving financial assistance in relation to
their absence from Australia under the Medical Treatment Overseas
Program (see new subsection 24(9)); and
. where the person is unable to return to Australia within the 56-week
period because the person is deployed outside Australia as a defence
force member, or, for the purpose of capacity building or
peacekeeping, as a member or special member of the Australian Federal
Police or a protective services officer (see new subsection 24(10)).
These circumstances are consistent with the circumstances in which the six-
week temporary absence period that applies before a temporary overseas
absence affects an individual's rate of family tax benefit can be extended
(see section 63A of the Family Assistance Act).
Amendments to the Family Assistance Administration Act
Items 6 and 7 change current references to the allowed period of temporary
absence from Australia in paragraphs 30A(1)(c) and 30B(1)(c) from three
years to 56 weeks.
Item 8 is an application provision, which provides that the amendments made
by items 1 to 7 apply in relation to any absence from Australia, whether
this begins before, on or after 1 July 2014. However, the amendments only
affect an individual's eligibility for family tax benefit on and from
1 July 2014.
Amendments to the Paid Parental Leave Act
Items 9 and 11 change the allowed period of temporary absence from
Australia, for parental leave pay and dad and partner pay recipients, from
three years to 56 weeks in paragraph 46(1)(b) and paragraph 46(2)(a).
Items 10 and 12 are technical amendments to the headings to
subsection 46(2) and subsection 46(3), changing each reference to three
years to a reference to 56 weeks.
Item 13 adds new subsections 46(4) and (5) into the Paid Parental Leave
Act.
New subsection 46(4) provides for an extension of the 56-week temporary
absence period from Australia, to a period of up to three years, for a
person who is unable to return to Australia within the initial period
because the person is deployed outside Australia in certain circumstances.
This extension can be applied if the person is deployed outside Australia
as a member of the Defence Force, or if the person is deployed outside
Australia, for the purpose of capacity-building or peacekeeping functions,
as a member or a special member of the Australian Federal Police or a
protective service officer.
New subsection 46(5) provides for the PPL rules to prescribe further events
or circumstances in which the 56-week temporary absence period from
Australia can be extended, to a period of up to 3 years.
Item 14 is an application provision for items 9 to 13.
Subitem 14(1) provides that the amendments made by items 9 to 13 apply in
relation to a person's eligibility for parental leave pay and dad and
partner pay for a child born on or after 1 July 2014. For this purpose, it
does not matter whether an absence from Australia began before, on or after
1 July 2014.
Subitem 14(2) provides that the following provisions in the Paid Parental
Leave Act apply in relation to this item as if this item were a provision
of that Act:
. section 275, which deals with how the Act applies to an adopted child;
. section 276, which deals with how the Act applies to claims for
parental leave pay made in exceptional circumstances; and
. section 277A, which deals with how the Act applies to claims for dad
and partner pay made in prescribed circumstances.
Schedule 11 - Extending the deeming rules to account-based income streams
Summary
This Schedule will align the income test treatment of account-based
superannuation income streams, for products assessed from 1 January 2015,
with the deemed income rules applying to other financial assets. Account-
based income streams held by income support recipients immediately before 1
January 2015 will continue to be assessed under the previous rules unless
recipients choose to change to a product that is assessed under the new
rules.
Background
Generally, to calculate the income assessed in relation to an income
support recipient's financial investments, deeming rates are applied to the
total market value of their financial investments. That is, financial
investments are assumed to be earning a certain rate of income, regardless
of what they actually earn. The policy rationale is that, by treating all
financial investments in the same way, the deeming rules encourage people
to choose investments on their merit rather than on the effect the
investment income may have on the person's income support entitlement.
However, under the current legislation, Division 1C of part 3.10 of the
Social Security Act and Division 4 of Part IIIB of the Veterans'
Entitlements Act set out different rules for assessing income in relation
to certain income streams. Those income streams provided for in Division
1C and Division 4 are not subject to income deeming.
This measure extends the income deeming provisions to any asset-tested
income stream (long term) that is an account-based pension, or an
equivalent annuity product. The extension of the deeming rules that
currently apply to financial assets, such as bank accounts, shares and
managed funds, will ensure that people with similar financial assets are
treated consistently under the income support system.
The amendments made by this Schedule commence on 1 January 2015.
Explanation of the changes
Part 1 - Amendments
Amendments to the Social Security Act
Items 3 and 4 broaden the definition of financial investment by inserting
new paragraphs 9(1)(i) and (j) to include an asset-tested income stream
(long term) that is an account-based pension, and an asset-tested income
stream (long term) that is an annuity provided under a contract that meets
the requirements determined in an instrument under new subsection 9(1EA).
Account-based pension is defined in Part 1.03 of the Superannuation
Industry (Supervision) Regulations 1994. Annuity is defined in section 10
of the Superannuation Industry (Supervision) Act 1993.
Item 5 repeals notes 4 and 5 to subsection 9(1C). Subsection 9(1C) defines
what are not managed investments for the purposes of the Social Security
Act.
The repealed notes referred to the treatment of income streams under
Subdivision B of Division 1C of Part 3.10 prior to the amendments made by
this Schedule.
Item 6 inserts new subsection 9(1EA), which empowers the Minister to
determine the requirements to be met for an annuity to be considered a
financial investment under new paragraph 9(1)(j), inserted by item 4 above,
for the purposes of the social security law. This power may only be
exercised by the making of a legislative instrument in accordance with the
Legislative Instruments Act 2003. It is intended to apply only to
annuities equivalent to account-based pensions, such as products covered by
Regulation 1.05(11A) of the Superannuation Industry (Supervision)
Regulations 1994.
Items 24 and 25 substitute new headings to Division 1B and 1C of Part 3.10,
to indicate clearly the application of each Division to the determination
of income from financial assets and income streams.
Items 26 and 27 limit the scope of Subdivision B of Division 1C of Part
3.10, which sets out the rules for assessing income from income streams
that are not family law affected income streams, by inserting new
subsection 1097A(2). The new subsection states that Subdivision B of
Division 1C does not apply to an asset-tested income stream (long term)
that is an account-based pension, and an asset-tested income stream (long
term) that is an annuity provided under a contract that meets the
requirements determined in an instrument under new subsection 9(1EA).
Note 1 to new subsection 1097A(2) provides that an income stream of the
type referred to in the subsection will be subject to treatment under
Division 1B.
Note 2 to new subsection 1097A(2) provides a signpost to the application
provisions in item 48 of Part 2 of this Schedule, which preserve the rule
in Subdivision B in certain situations.
Item 28 substitutes new paragraph 1099DAA(1)(b), which removed the
reference to income streams that are a pension or an annuity that meets the
requirements determined by the Minister. This is because these products
are now subject to the general rules for assessing income that apply to
financial investments.
Items 29 and 30 limit the scope of Subdivision C of Division 1C of Part
3.10, which sets out the rules for assessing income from family law
affected income streams, by inserting new subsection 1099DA(2). The new
subsection states that Subdivision C of Division 1C does not apply to an
asset-tested income stream (long term) that is an account-based pension,
and an asset-tested income stream (long term) that is an annuity provided
under a contract that meets the requirements determined in an instrument
under new subsection 9(1EA).
Note 1 to new subsection 1099DA(2) provides that an income stream of the
type referred to in the subsection will be subject to treatment under
Division 1B.
Note 2 to new subsection 1099DA(2) provides a signpost to the application
provisions in item 48 of Part 2 of this Schedule, which preserve the rule
in Subdivision B in certain situations.
The combined effect of items 3 to 6 and 24 to 30 is that an asset-tested
income stream (long term) that is an account-based pension or annuity will
no longer be subject to the rules for assessing income that apply to most
income streams. Instead, by including these asset-tested income streams
(long term) in the definition of financial investment, they will be subject
to the general rules for assessing income that apply to financial
investments.
Items 1, 2, 7 to 23, and 31 make consequential amendments to parts of the
Social Security Act that refer to provisions amended by this Part.
Amendments to the Veterans' Entitlements Act
Items 32 and 33 amend notes 1 and 3 respectively to the definitions of
income and ordinary income in subsection 5H(1).
The consequential amendments revise the references to the provisions of
Part IIIB which may impact on the determination of the income and the
ordinary income of a person.
Items 34 and 35 broaden the definition of financial investment by inserting
new paragraphs 5J(1)(i) and (j) to include an asset-tested income stream
(long term) that is an account-based pension, and an asset-tested income
stream (long term) that is an annuity provided under a contract that meets
the requirements determined in an instrument made under new subsection
5J(1G).
The definition of account-based pension is located in Part 1.03 of the
Superannuation Industry (Supervision) Regulations 1994, and the definition
of annuity is in section 10 of the Superannuation Industry (Supervision)
Act 1993.
Item 36 repeals notes 4 and 5 to subsection 5J(1C). Subsection 5J(1C)
defines what are not managed investments for the purposes of the Veterans'
Entitlements Act.
The repealed notes referred to the treatment of income streams under
Subdivision B of Division 4 prior to the amendments made by this Schedule.
Item 37 inserts new subsection 5J(1G), which empowers the Minister to
determine the requirements to be met for an annuity to be considered a
financial investment under new paragraph 5J(1)(j), inserted by item 35
above, for the purposes of the Veterans' Entitlements Act. This power may
only be exercised by the making of a legislative instrument in accordance
with the Legislative Instruments Act 2003. It is intended to apply only to
annuities equivalent to account-based pensions - for example, products
covered by Regulation 1.05(11A) of the Superannuation Industry
(Supervision) Regulations 1994.
Item 38 amends note 2 to section 46, revising the references to the
provisions of Part IIIB which may impact on the determination of the
ordinary income of a person.
Items 39 and 40 substitute new headings to Divisions 3 and 4 of Part IIIB,
to indicate clearly the application of each Division to the determination
of income from financial assets and income streams.
Items 41 and 42 limit the scope of Subdivision B of Division 4 of Part
IIIB, which sets out the rules for assessing income from income streams
that are not family law affected income streams, by inserting new
subsection 46SA(2). The new subsection states that Subdivision B of
Division 4 does not apply to an asset-tested income stream (long term) that
is an account-based pension, and an asset-tested income stream (long term)
that is an annuity provided under a contract that meets the requirements
determined in an instrument made under new subsection 5J(1G).
Note 1 to new subsection 46SA(2) provides that an income stream of the type
referred to in the subsection will be subject to treatment under Division
3.
Note 2 to new subsection 46SA(2) provides a signpost to the application
provisions in item 48 of Part 2 of this Schedule, which preserve the rule
in Subdivision B of Division 4 in certain situations.
Item 43 substitutes new paragraph 46YA(1)(b), removing the reference to an
income stream that is a pension or an annuity that meets the requirements
determined by the Minister. This is because these products are now subject
to the general rules for assessing income applying to financial
investments.
Items 44 and 45 limit the scope of Subdivision C of Division 4 of Part
IIIB, which sets out the rules for assessing income from family law
affected income streams, by inserting new subsection 46Z(2). The new
subsection states that Subdivision C of Division 4 does not apply to an
asset-tested income stream (long term) that is an account-based pension,
and an asset-tested income stream (long term) that is an annuity provided
under a contract that meets the requirements determined in an instrument
made under new subsection 5J(1G).
Note 1 to new subsection 46Z(2) provides that an income stream of the type
referred to in the subsection will be subject to treatment under Division
3.
Note 2 to new subsection 46Z(2) provides a signpost to the application
provisions in item 48 of Part 2 of this Schedule, which preserve the rule
in Subdivision C of Division 4 in certain situations
The combined effect of items 34 to 37 and 41 to 45 is that an asset-tested
income stream (long term) that is an account-based pension or annuity will
no longer be subject to the rules for assessing income that apply to most
income streams. Instead, by including these asset-tested income streams
(long term) in the definition of financial investment, they will be subject
to the general rules for assessing income that apply to financial
investments.
Items 46 and 47 amend paragraphs (c) and (d) of note 2 to point SCH6-E2 of
the Rate Calculator in Schedule 6 to the Veterans' Entitlements Act.
The consequential amendments revise the references to the provisions of
Part IIIB which may impact on the determination of the ordinary income of a
person.
Part 2 - Application provisions
Item 48 contains four subitems. Subitem 48(1) provides that the amendments
made by Part 1 apply in relation to working out the ordinary income of a
person in relation to days occurring on or after 1 January 2015.
Subitems 48(2) and (3) preserve the existing rules for assessing income
from certain income streams in existence immediately before 1 January 2015.
Subitem 48(2) provides that the amendments made by Part 1 do not apply to a
person and an income stream if the following criteria are met:
a) the person was receiving an income support payment immediately before
1 January 2015;
b) either of the following was being provided to the person immediately
before 1 January 2015:
(i) an asset-tested income stream (long term) that is an
account-based pension; or
(ii) an asset-tested income stream (long term), that is an
annuity provided under a contract that meets the standards
determined in an instrument under subparagraph 1099DAA(1)(b)(ii)
of the Social Security Act;
c) the person has been continuously receiving an income support payment
since 1 January 2015; and
d) that income stream has continued to be provided to the person since
1 January 2015.
The person in subitem (2) is referred to as the primary beneficiary for the
purposes of subitem (3).
It is intended that, if a person's income support payment ceases to be
payable and, on a later date, the same or another income support payment
becomes payable to the person, that person would be subject to the
amendments made by Part 1 from the day that the income support payment
ceases to be payable to that person.
Subitem 48(3) provides that the amendments made by Part 1 do not apply in
relation to a reversionary beneficiary and an income stream if the
following criteria are met:
a) the primary beneficiary dies during a time while the amendments made
by Part 1 do not apply because of subitem (2);
b) the income stream referred to in subitem (2) reverts to the
reversionary beneficiary on the primary beneficiary's death;
c) at the time of that reversion, the reversionary beneficiary is
receiving an income support payment;
d) the reversionary beneficiary has been continuously receiving an income
support payment since the time of that reversion; and
e) that income stream has been provided to the reversionary beneficiary
since the time of that reversion.
Subitem 48(4) defines the term income support payment for the purposes of
this application provision.
Schedule 12 - Other amendments
Summary
This Schedule makes miscellaneous amendments. These include improving the
administration of debt recovery under the Student Financial Supplement
Scheme, clarifying the provisions relating to the time period for lodging
tax returns for family assistance purposes, and ensuring that funding under
the National Disability Insurance Scheme paid into a person's account,
which is set up for the purpose of managing the funding for supports for a
participant's plan, cannot be garnisheed for debt recovery purposes.
Further amendments recast and simplify the tax file number provisions in
the Family Assistance Administration Act, including to enable the
Commissioner of Taxation to provide the Secretary with income information
about an individual who is not required to lodge a tax return (that is,
Australian Taxation Office pre-fill data), using tax file numbers as the
primary matching key.
Amendments to the child support legislation ensure that provisions relevant
to child support service delivery operate consistently with the
arrangements for child support administration.
Background
Part 1 - Repayment of financial supplement through taxation system
This Schedule amends the Social Security Act and the Student Assistance Act
to allow the Commissioner of Taxation to continue administering the
recovery of debts under the Student Financial Supplement Scheme (SFSS), and
to make other minor amendments relating to the administration of the SFSS.
These amendments commence on the day after Royal Assent.
Part 2 - Time periods and FTB reconciliation conditions
Section 32A of the Family Assistance Administration Act ensures that the
family tax benefit Part A supplement and family tax benefit Part B
supplement cannot be included in determining an individual's rate of family
tax benefit unless and until the individual satisfies the family tax
benefit reconciliation conditions. These conditions are set out in
sections 32C to 32Q. Each of these sections provides when it applies and
then provides for a reconciliation time. It is possible that more than one
section applies to a particular individual, in which case section 32B
provides that the reconciliation conditions are satisfied at the latest
reconciliation time.
Sections 32C to 32H deal with cases where an individual and/or their
partner are required to lodge income tax returns. These provisions ensure
that the individual does not meet the family tax benefit reconciliation
conditions if they or their partner do not lodge tax returns within the
specified timeframe. Where the individual separates from their partner
before the period allowed for lodging tax returns, the provisions seek to
ensure that the individual's family tax benefit entitlement is not affected
by their ex-partner's failure to lodge a tax return.
The current reconciliation provisions are more complex than they need to
be. The provisions have some gaps (current section 32H does not cover all
necessary scenarios involving separations in the second income year) and
also produce unintended consequences in some scenarios. These are
addressed by the amendments.
The date of effect rules that apply in relation to review decisions
(sections 107 and 109E of the Family Assistance Administration Act) and the
time limits applicable to review of certain decisions (section 109D)
currently refer to an income tax return lodged before the end of the next
income year. These provisions are amended to allow a further period in
special circumstances if a tax return is lodged in the second income year,
consistent with the claim and reconciliation provisions that allow a
further period in special circumstances if a tax return is lodged in the
second income year.
These amendments commence on the day after Royal Assent.
Part 3 - Protection of amounts under the National Disability Insurance
Scheme
One of the objects of the National Disability Insurance Scheme Act 2013
(the National Disability Insurance Scheme Act) is to provide reasonable and
necessary supports for participants in the National Disability Insurance
Scheme. In some cases, amounts will be paid to the participant, their
nominee or a registered plan management provider for the specific purpose
of enabling the purchase of supports identified in the participant's plan.
It would be contrary to the objectives of National Disability Insurance
Scheme Act to allow amounts paid in respect of reasonable and necessary
supports to be garnisheed, sold or transferred for any other purposes.
This measure amends the National Disability Insurance Scheme Act to ensure
that amounts paid under the National Disability Insurance Scheme in
relation to funding for supports are inalienable. It also seeks to prevent
third parties from seeking to recover debts by obtaining a garnishee order
over bank accounts kept for the purpose of managing funding for supports
under the National Disability Insurance Scheme.
These amendments commence on the day after Royal Assent.
Part 4 - Use of tax file numbers
Section 154A of the Family Assistance Administration Act currently allows
for the exchange of tax file number data between the Secretary and
Commissioner of Taxation for the purpose of the Commissioner informing the
Secretary of amounts determined by the Commissioner to be included in an
individual's adjusted taxable income. There are also rules requiring
destruction of tax file number records provided by the Secretary and
covering situations where an individual is not required to lodge a tax
return. Section 154B currently allows the Secretary to provide an
individual's tax file number and other relevant information to the
Commissioner in relation to specified debt recovery actions provided for in
the Family Assistance Administration Act, which involve the Commissioner.
Amendments are made to replace the current provisions with new
section 160A. In broad terms, new section 160A is cast more generally, is
simpler and more closely aligned with the model of tax file number
provisions used in other portfolio Acts.
The new provision allows for the exchange of tax file numbers between the
Secretary and Commissioner of Taxation for the purpose of the Commissioner
providing the Secretary with information relevant for specified family
assistance purposes relating to compliance and debt recovery. The new
provision covers the data transfer allowed under the existing rules but
would also allow the Secretary to require the Commissioner to provide
income information received by the Australian Taxation Office from third
parties (that is, pre-fill data) in relation to individuals who are not
required to lodge tax returns. This information is of relevance in
determining the adjusted taxable income of individuals who are not required
to lodge tax returns and may be relevant in verifying eligibility for
family assistance or in determining rate. The new provision also deals
with the transfer of tax file number data for debt-related purposes.
These amendments commence on the day after Royal Assent.
Part 5 - Child support amendments
Child support administration involves the Department of Social Services,
with responsibility for child support policy, and the Department of Human
Services, with responsibility for child support service delivery. The
amendments to the child support legislation ensure that certain provisions
relevant to child support service delivery will operate consistently with
these arrangements for child support administration.
A number of provisions relevant to child support service delivery will be
amended to replace references to 'the Secretary' with 'the Human Services
Secretary', replace references to 'the Department' with 'the Human Services
Department', or add reference to 'the Human Services Department'.
The relevant provisions are for the Child Support Registrar, Acting Child
Support Registrar, the use of computer programs to make decisions, the
delegation provision, the multiple secrecy provision, and the procedures on
receiving an application for a Social Security Appeals Tribunal review of
certain child support decisions.
The Child Support Registrar will be an SES employee in the Human Services
Department, appointed by the Human Services Secretary. The amendment of
the other provisions noted will ensure they relate to the Human Services
Secretary, or relate to the Human Services Department.
A number of amendments simplify provisions by replacing references to 'the
Family Assistance Secretary' with 'the Secretary', as these references
relate to the Secretary of the Department of Social Services.
The amendments made by this Schedule will commence on the 7th day after the
Act receives Royal Assent.
Part 6 - Other amendments
This Part makes some minor adjustments to provisions relating to the
newborn supplement and newborn upfront payment of family tax benefit and
the stillborn baby payment, which commence on 1 March 2014, including to:
. ensure that the newborn upfront payment of family tax benefit is
treated in the same way as the newborn supplement where the relevant
tax returns have not been lodged on time and the non-lodger provisions
apply;
. ensure that percentage determinations that allow family tax benefit to
be split in blended families and in certain situations where couples
separate, are taken into account in determining eligibility for the
newborn supplement and amount of the newborn upfront payment;
. allow a claim for stillborn baby payment to be made more than 52 weeks
after the birth of the stillborn child in further specified
circumstances;
. clarify that the higher rate of newborn supplement is available in
relation to the first child aged less than one year who is entrusted
to the care of an individual or their partner; and
. ensure that a stillborn child in a multiple birth is taken into
account in determining the amount of newborn supplement.
These amendments commence on 1 March 2014, immediately after the
commencement of Parts 1 and 2 of Schedule 2A to the Family Assistance and
Other Legislation Amendment Act 2013. Those Parts replace baby bonus with
the newborn supplement (and related newborn upfront payment) and stillborn
baby payment.
Explanation of the changes
Part 1 - Repayment of financial supplement through taxation system
Amendments to the Social Security Act
Item 1 inserts section 1061ZZENA, which provides that the Commissioner of
Taxation has the general administration of Part 2B.3 of the Social Security
Act with respect to Divisions 2, 4, 6 to 8 and 5 (except for section
1061ZZFE), as well as section 1061ZZFO. These provisions are taken to be
taxation laws for the purposes of the Taxation Administration Act.
The purpose of this provision is to allow the Commissioner of Taxation to
continue administering the recovery of debts under the SFSS.
Item 2 repeals section 1061ZZFGC as this section related to the now-
redundant provisional tax system.
Item 3 amends subsection 1061ZZFJ(1) to allow the Commissioner of Taxation
to delay the making of an assessment under section 1061ZZFH if the person
has made an application in an approved form. This gives greater
flexibility to a person to make an application as it will not have to be
strictly in written form.
Item 4 inserts subsection 1061ZZFJ(4), which provides that, for section
1061ZZFJ, an approved form has the same meaning in section 388-50 in
Schedule 1 to the Taxation Administration Act.
Item 5 amends subsection 1061ZZFK(1) to allow the Commissioner of Taxation
to amend an assessment made under section 1061ZZFH so that no amount is
payable under the assessment if the person has made an application in the
approved form. This gives greater flexibility to a person to make an
application as it will not have to be strictly in written form.
Item 6 inserts subsection 1061ZZFK(3), which provides that, for section
1061ZZFK, approved form has the same meaning in section 388-50 in Schedule
1 to the Taxation Administration Act.
Amendments to the Student Assistance Act
Item 9 inserts section 12ZEA to provide that the Commissioner of Taxation
has the general administration of Division 6 of Part 4A of the Student
Assistance Act to the extent that it relates to the Commissioner. These
provisions are taken to be taxation laws for the purposes of the Taxation
Administration Act.
The purpose of this provision is to allow the Commissioner of Taxation to
administer the recovery of debts under the SFSS.
Items 7 and 8 make technical amendments for the purpose of item 9.
Item 10 repeals section 12ZNC as this section is related to the now-
redundant provisional tax system.
Item 11 amends subsection 12ZP(1) and 12ZP(2) so that a person may apply to
the Commissioner of Taxation in an approved form, rather than strictly by
written application, under these subsections.
Item 12 inserts subsection 12ZP(4), which provides that, for section 12ZP,
approved form has the meaning given by section 388-50 in Schedule 1 to the
Taxation Administration Act.
Item 13 is a minor technical amendment.
Item 14 provides that the amendments made by items 3, 5, and 11 (which will
allow applications in an approved form, rather than in written form) will
apply to applications made on or after the commencement of those items.
This means an application in written form made before the commencement of
those items will comply with the requirements of those provisions amended
by items 5, 15 and 30.
Part 2 - Time periods and FTB reconciliation conditions
Amendments to the Family Assistance Administration Act
Replacement of sections 32C to 32H
Item 16 replaces current sections 32C to 32H with new sections 32C to 32F.
In broad terms, if the first individual is or was required to lodge a tax
return, then one provision (new section 32C) would set out the relevant
reconciliation time for that circumstance, rather than six sections
(current sections 32C to 32H). If the first individual's tax return is
lodged before the end of the first income year after the relevant income
year or such further period allowed by the Secretary, then the individual's
relevant reconciliation time is when the tax assessment is made under the
Income Tax Assessment Act 1936.
If the other member of the couple is or was required to lodge a tax return,
then three new provisions would set out the relevant reconciliation time.
New section 32D applies where the first individual has a partner who is
required to lodge a tax return and they continue to be a couple until the
end of the first income year after the relevant income year or such further
period allowed by the Secretary. If the partner's tax return is lodged
before the end of the first income year after the relevant income year or
such further period allowed by the Secretary, then the relevant
reconciliation time is when the tax assessment is made.
New section 32E covers situations where the first individual's partner is
required to lodge a tax return for the relevant income year and the couple
separate during the first income year after the relevant income year. If
the partner lodges a tax return before the end of the first income year
after the relevant income year, then the relevant reconciliation time is
when the tax assessment is made. Otherwise, it is the end of the first
income year after the relevant income year.
New section 32F covers situations where:
. the first individual's partner is required to lodge a tax return for
the relevant income year;
. the partner does not do so before the end of the next income year;
. the Secretary has allowed a further period for lodgement; and
. the couple separate after the end of the first income year but before
the end of that further period.
If the partner lodges the tax return before the separation, then the
relevant reconciliation time is when a tax assessment is made. Otherwise,
it is when the couple separate.
New sections 32C to 32F do not use the concept of a designated date.
A consequential amendment is therefore made by item 17 to repeal section
32R of the Family Assistance Administration Act (which defines designated
date).
These changes apply in relation to a relevant income year (as referred to
in subsection 32A(1) of the Family Assistance Administration Act) that is
the 2013-14 income year or a later income year (subitem 26(1) refers).
Amendments to certain review provisions
Subsections 107(3), 109D(4) and 109E(3) of the Family Assistance
Administration Act set out date of effect rules relating to certain review
decisions and time limits on seeking review of other decisions. However,
the limitations set out in these provisions do not apply where the relevant
decision is being reviewed because the Commissioner of Taxation has made or
reviewed a decision on the basis of an income tax return lodged before the
end of the first income year following the income year to which the
assessment relates.
These provisions are amended by items 18 to 25 to ensure that the
limitations also do not apply in relation to tax returns that are lodged
within such further period (if any) as the Secretary allows because of
special circumstances that prevented the income tax return being lodged
before the end of the first income year. This approach is consistent with
the claim and reconciliation provisions that allow a further period in
special circumstances if a tax return is lodged in the second income year.
These changes apply in relation to an income year as referred to in
specified provisions that is the 2013-14 income year or a later income year
(subitem 26(2) refers).
Technical amendment
Item 15 makes a technical amendment to the heading of subsection 10(2) to
reflect the content of the provision.
Part 3 - Protection of amounts under the National Disability Insurance
Scheme
Amendments to the National Disability Insurance Scheme Act
Item 27 inserts new sections 46A and 46B at the end of Division 3 of Part 2
of Chapter 3.
New subsection 46A(1) provides that an NDIS amount is absolutely
inalienable. An NDIS amount is defined under section 9 to mean an amount
paid under the National Disability Insurance Scheme in respect of
reasonable and necessary supports funded under a participant's plan. This
provision gives legal force to the intention that NDIS amounts are paid to
a participant, their nominee or a registered plan management provider for
the specific purpose of purchasing the supports identified under a
participant's plan. Such an amount cannot be transferred to another person
either by a voluntary act or by the operation of the law.
New subsection 46A(2) provides that inalienability is subject to Part 1 of
Chapter 7. The effect is that the Agency may fully exercise its powers to
recover debts due to the Agency in accordance with sections 183, 184 and
185, despite subsection 46A(1).
New subsection 46B(1) provides the general rule that a court must not make
an order in the nature of a garnishee order in respect of an account with a
financial institution if:
. one or more NDIS amounts for a particular participant have been paid
into an account; and
. the account has been kept solely for the purpose of managing the
funding for supports under the participant's plan.
New subsection 46B(2) provides an exception to the general rule in
subsection 46B(1). That is, a court may make an order in the nature of a
garnishee order in respect of an account if:
. the account is made in favour of a person in relation to a debt that
arose because of the person providing goods or services in relation to
the participant; and
. the goods and services are reasonable and necessary supports specified
in the participant's plan.
New subsection 46B(1) is intended to protect NDIS amounts paid into certain
accounts from being garnisheed by third parties for debt recovery purposes.
New subsection 46B(2) seeks to limit this protection, in the situation
where the person seeking a garnishee order should rightfully be paid from
NDIS amounts held in an account, because they have not been paid for
providing goods or services that have been identified as reasonable and
necessary supports under a participant's plan.
Item 28 provides the application provisions, such that new section 46A
applies in relation to amounts paid on or after the commencement of this
item, and new section 46B applies in relation to court orders made on or
after the commencement of this item.
Part 4 - Use of tax file numbers
Amendments to the Family Assistance Administration Act
Items 29 and 30 replace sections 154A and 154B of the Family Assistance
Administration Act with a new section 160A.
New section 160A applies in relation to a tax file number provided under
and for the purposes of the Family Assistance Administration Act (see, for
example, section 8, which sets out the tax file number requirement).
New subsection 160A(2) provides specific authority for the Secretary to
provide such a tax file number to the Commissioner of Taxation and require
the Commissioner to provide specified information, including the
individual's tax file number, back to the Secretary. This could be a
different tax file number to the one provided by the Secretary if it is not
the correct tax file number for the individual concerned. The Secretary
could also provide other relevant information about the individual to the
Commissioner, provided the disclosure is consistent with the
confidentiality provisions in the Family Assistance Administration Act.
Under new subsection 160A(3), the information provided to the Secretary by
the Commissioner can only be used by the Secretary for specified,
compliance related purposes (for example, to verify eligibility or
entitlement or to establish whether the correct rate of family assistance
is or was paid).
New subsection 160A(4) provides authority for the Secretary to provide a
tax file number to the Commissioner for specified debt related purposes
which involve the Commissioner. For example, section 87 of the Family
Assistance Administration Act allows for the application of a tax refund by
the Commissioner to satisfy the whole of part of a family assistance debt.
Section 226, on the other hand, provides for the setting off of family
assistance entitlement against a tax liability.
Item 31 sets out application and saving provisions.
Subitem 31(1) ensures that new section 160A can apply to a tax file number
provided to the Secretary before, on or after commencement of the
provision.
Subitem 31(2) preserves the operation of existing sections 154A and 154B in
relation to a record of a tax file number provided to the Commissioner
under subsection 154A(2) or 154B(1) before commencement of new section
160A.
Part 5 - Child support amendments
Amendments to the Child Support (Assessment) Act 1989
Item 32 repeals the definition of Family Assistance Secretary contained in
subsection 5(1). This definition will not be required, as other amendments
made by this Part replace references to 'Family Assistance Secretary' with
'Secretary'. Under the child support legislation, 'the Secretary' is the
Secretary of the Department of Social Services.
Item 33 amends subsection 12A(1) by omitting the words, 'The Secretary of
the Department of which the Registrar is an employee', and substituting the
words, 'The Human Services Secretary'. This amendment will enable the
Human Services Secretary to arrange for the use, under the Registrar's
control, of computer programs for the purposes of decision-making.
Items 34 to 41 omit references to 'Family Assistance Secretary', and
substitute a reference to 'Secretary' in the relevant provisions. These
items are consequential to item 32.
Item 42 amends subsection 149(1) by adding a reference to 'the Human
Services Department'. Section 149 contains the Registrar's powers of
delegation and this amendment enables the Registrar to delegate all or any
of the Registrar's powers and functions under the Act to an officer or
employee of the Department (of Social Services) or the Human Services
Department, as well as to the Chief Executive Centrelink.
Items 43 to 47 amend section 150, which regulates the use of 'protected
information'. Item 43 amends the definition of person to whom this section
applies in subsection 150(1), with the effect that it will refer to 'the
Minister' (for Social Services) and 'the Human Services Minister'.
Item 44 amends the definition of relevant Minister in subsection 150(1),
with the effect that it will refer to 'the Minister' (for Social Services)
and 'the Human Services Minister'.
Item 45 amends paragraph 150(3)(ba) by adding a new
subparagraph 150(3)(ba)(ia), which refers to 'the Human Services
Secretary'.
Items 46 and 47 amend paragraphs 150(4)(a) and 150(4C)(d), with the effect
that the provisions will refer to the Department (of Social Services) and
'the Human Services Department'.
The amendments made by items 43 to 47 ensure that the relevant provisions
apply to the persons specified and operate consistently with the
arrangements for child support administration.
Item 48 amends the definition of relevant information in subsection
150AA(3) by inserting a reference to 'the Human Services Department.
Section 150AA provides for an offence of unauthorised use of information.
This amendment ensures that section 150AA applies to the records of the
Department (of Social Services) and the Human Services Department.
Items 49 and 50 amend subparagraph 151A(1)(b)(ii) and paragraph 151A(7)(b)
by omitting the reference to 'Department' and inserting a reference to the
'Human Services Department'.
Amendments to the Child Support (Registration and Collection) Act 1988
Item 51 amends the definition of Human Services Department in subsection
4(1). This definition is simplified by omitting the words, 'Minister
administering the Human Services (Centrelink) Act 1997', and substituting,
'Human Services Minister'.
Item 51 is consequential to item 52, which inserts a new definition of
Human Services Minister into subsection 4(1). Human Services Minister
means the Minister administering the Human Services (Centrelink) Act 1997.
Item 53 inserts into subsection 4(1) a definition of Human Services
Secretary, which is defined to mean the Secretary of the Human Services
Department.
Item 54 amends subsection 4A(1) by omitting the words, 'The Secretary of
the Department of which the Registrar is an employee', and substituting the
words, 'The Human Services Secretary'. This amendment is made for similar
reasons to item 33.
Items 55 and 56 amend section 10 by replacing the reference in paragraph
10(2)(a) to 'the Department' with 'the Human Services Department', and
replacing the reference in paragraph 10(2)(b) to 'the Secretary' with "the
Human Services Secretary'. These amendments provide that the Child Support
Registrar is an SES employee in the Human Services Department and appointed
by the Human Services Secretary.
Item 57 makes corresponding amendments to section 10A, which provides for
the appointment of an Acting Child Support Registrar.
Item 58 amends subsection 15(1) by adding a reference to the Human Services
Department. This amendment is made for similar reasons to item 42.
Items 59 and 60 amend subsection 16(1) by adding references to the Human
Services Minister in the definitions of person to whom this section applies
and relevant Minister. These amendments are made for similar reasons to
items 43 and item 44.
Items 61 and 62 amend subsection 16(2AA), which applies to communication of
a Social Security Appeals Tribunal (SSAT) child support decision under Part
VIIA of the Child Support (Registration and Collection) Act 1988. Item 61
amends paragraph 16(2AA)(a) by inserting after, 'by the Secretary', the
words, 'or to the Human Services Secretary or a person authorised by the
Human Services Secretary'. Item 62 amends paragraph 16(2AA)(b) by adding
at the end of that paragraph 'or the Human Services Secretary from
communicating the reasons for a decision of the SSAT under Part VIIA to a
person authorised by the Human Service Secretary'. Both items ensure that
paragraphs 16(2AA)(a) and (b) operate in relation to the Secretary (of
Social Services) and the Human Services Secretary.
Item 63 amends subsection 16(2AB) by inserting the words, 'or the Human
Services Secretary, or a person authorised by the Human Services
Secretary', after the words, 'by the Secretary'. Subsection 16(2AB)
enables the publication of 'de-identified' SSAT child support decisions.
The amendment ensures that subsection 16(2AB) operates in relation to the
Secretary (of Social Services) and the Human Services Secretary.
Item 64 amends paragraph 16(3)(ba) by inserting a reference to the 'Human
Services Secretary' before subparagraph 16(3)(ba)(i). This amendment is
made for similar reasons to item 45.
Items 65 and 66 amend paragraphs 16(4)(a) and 16(4C)(d) by inserting
references to the Human Services Department. These amendments are made for
similar reasons as for items 46 and 47.
Item 67 amends the definition of relevant information contained in
subsection 16AA(3) by adding a reference to the Human Services Department
after 'Department'. This amendment is made for similar reasons to item 48.
Items 68 and 69 amend subsection 16AB(2). Section 16AB deals with multiple
secrecy provisions. Item 68 amends paragraph 16AB(2)(a) by replacing the
reference to 'the Secretary, the Registrar or an officer or employee of the
Department' with a reference to 'the Human Services Secretary, the
Registrar or an officer or employee of the Human Services Department'.
Item 69 makes a similar amendment to paragraph 16AB(2)(b).
Item 70 amends section 80A by omitting the reference to 'Family Assistance
Secretary', and substituting 'Secretary'. This item is consequential to
item 32.
Items 71 and 72 amend subsection 95(1) and paragraph 95(2)(b) by omitting
'Secretary', and substituting references to 'Human Services Secretary'.
Section 95 deals with procedures on receiving application for review to the
SSAT. These amendments ensure that these provisions will operate in
relation to the Human Services Secretary.
Item 73 amends paragraph 110Y(1)(a) by omitting the reference to 'Family
Assistance Secretary', and substituting, 'Secretary'. This item is
consequential to item 32.
Part 6 - Other amendments
Amendments to the Family Assistance Act
Items 74, 75 and 76 make some minor adjustments to subsection 36(2) of the
Family Assistance Act (eligibility for stillborn baby payment) to ensure
the provisions work as intended.
The amount of newborn upfront payment of family tax benefit under
subsection 58AA(1) is $500. There is no provision for splitting the
payment where family tax benefit is shared because a percentage
determination is in force under section 28 (blended families) or section 29
(eligibility for family tax benefit where a couple separates, for a period
before separation).
Item 77 inserts such a rule as new subsection 58AA(1A). New subsection
58AA(1A) applies where an amount of newborn supplement is added for a day
in relation to both members of a couple and an FTB child, there is a
percentage determination under section 28 or 29 in force in relation to the
couple and the child for that day, and the day is the first day on which an
amount of newborn supplement is added in relation to that child. In this
situation, each member of the couple is entitled to the same percentage of
$500 as is applicable under the percentage determination.
A note at the end of new subsection 58AA(1A) indicates to the reader that
the newborn upfront amount is paid as a single lump sum and cross-
references the relevant provision.
Item 84 makes a related amendment to the indexation provisions to ensure
the amount of $500 referred to in new subsection 58AA(1A) is indexed in the
same way as the amount referred to in subsection 58AA(1). To this end, a
reference to new subsection 58AA(1A) is added into item 7B of the table in
clause 2 of Schedule 4 to the Family Assistance Act.
Item 78 makes a consequential amendment, which takes account of new
subsection 58AA(1A).
Item 79 inserts new subsection 58AA(5) to ensure that the application of
section 58AA is subject to new sections 28AA and 32AEA of the Family
Assistance Administration Act, as inserted by this Part.
Subclause 35A(10) of Schedule 1 ensures that the partner of an individual
who has been paid the newborn supplement in respect of an FTB child for 13
weeks cannot also be eligible for newborn supplement in respect of that
child. This rule does not have regard to circumstances in which family tax
benefit can be shared by a couple, that is, where there is a percentage
determination in force under section 28 (blended family) or section 29
(where a couple separates, for a period before separation) of the Family
Assistance Act. Item 81 amends subclause 35A(10) to add another condition
which ensures that eligibility for the newborn supplement is not precluded
unless there is also no percentage determination in force in relation to
both members of the couple and the child.
Item 80 is a technical amendment.
Clause 35B of Schedule 1 to the Family Assistance Act sets out the
annualised rate of newborn supplement for the different eligibility
categories. A higher rate is available for a first child who is born alive
to a woman or who becomes entrusted to the care of an individual or their
partner. This amount is also applicable where two or more children are
born during the same multiple birth or come into the care of the individual
or their partner as part of the same entrustment to care or adoption
process.
Item 82 makes a minor amendment to paragraph 35B(1)(b) so the higher rate
is available in relation to a first entrustment of the care of a child who
is aged less than one on the relevant day.
Item 83 amends subclause 35B(2) to ensure that a stillborn child is taken
into account in determining the amount of newborn supplement for an FTB
child who is born alive in the case of a multiple birth. If, for example,
a multiple birth consists of a stillborn child and a child who is delivered
alive, then the child who is born alive would attract the higher rate under
subclause 35B(2). A stillborn baby payment would be available in respect
of the stillborn child, subject to the relevant eligibility conditions
being satisfied.
Amendments to the Family Assistance Administration Act
Section 28 of the Family Assistance Administration Act outlines the
consequences for family tax benefit where the relevant tax returns have not
been lodged within required timeframes. Section 28 sets out the
circumstances in which a claimant's family tax benefit entitlement
determination can be varied with the effect that the claimant is not
entitled to family tax benefit in relation to a particular income year
(which can result in a debt) and the circumstances in which that decision
can be undone. As newborn supplement is a component of the rate of family
tax benefit, section 28 can also affect entitlement to the newborn
supplement.
New section 28AA, as inserted by item 85, ensures the newborn upfront
payment of family tax benefit is affected in the same way as the newborn
supplement where section 28 applies.
If a claimant is entitled to a newborn upfront payment because an amount of
newborn supplement is added to their rate of family tax benefit and the
claimant's family tax benefit entitlement determination is varied under
section 28 with the effect that the claimant is not entitled to family tax
benefit, then new subsection 28AA(1) provides that the claimant is also not
entitled to the upfront amount. However, new subsection 28AA(2) ensures
that, if that variation is undone, then new subsection 28AA(1) ceases to
preclude entitlement to the upfront amount. New subsection 28AA(3) makes
it clear that new subsection 28AA(1) can apply more than once.
A variation under section 28 to the effect that the individual is not
entitled to family tax benefit can also affect ongoing payment of family
tax benefit on an estimated income basis under Subdivision CA of Division 1
of Part 3.
Item 86 inserts a new section 32AEA at the end of Subdivision CA. The
effect is to preclude entitlement to the newborn upfront payment if payment
of family tax benefit, worked out on an estimated income basis, is
precluded under Subdivision CA.
As a general rule, a claim for stillborn baby payment is not effective
unless it is made before the end of 52 weeks beginning on the day of the
birth of the stillborn child (subsection 39(2) of the Family Assistance
Administration Act refers). There are exceptions, as set out in
subsections 39(3) and (4).
Item 88 inserts a new exception, as new subsection 39(3A). The new rule
applies where an individual is eligible for the stillborn baby payment
because the individual or their partner is entitled to family tax benefit
that includes a Part A rate greater than nil in relation to a day during
the period of 52 weeks after the birth of the stillborn child and the
individual or their partner is notified of their rate of family tax benefit
after the end of, or during the last 13 weeks of, that 52 week period. In
these circumstances, the individual can made a claim for stillborn baby
payment up to 13 weeks after the day on which the notice is given.
Item 87 makes a consequential amendment to subsection 39(2) to take account
of new subsection 39(3A).
REGULATION IMPACT STATEMENT
Social Services and Other Legislation Amendment Bill 2013
Schedule 7 - Paid parental leave - remove mandatory employer role
This Regulation Impact Statement (RIS) has been prepared by the
Commonwealth Department of Social Services (DSS). Its purpose is to assist
the Australian Government to make decisions regarding removing the
mandatory employer role under the national paid parental leave (PPL)
scheme.
This RIS has been prepared in accordance with the Australian Government
Best Practice Regulation Handbook, July 2013, issued by the Office of Best
Practice Regulation (OBPR) in the Department of the Prime Minister and
Cabinet, and in consultation with the OBPR.
An options-stage RIS is not required for this proposal, as no decision has
been previously announced and the proposal is giving effect to an election
commitment.
1. Background
The national paid parental leave (PPL) scheme started on 1 January 2011.
The PPL scheme is designed to provide financial support to eligible working
parents to take time off work to care for a newborn or recently adopted
child.
Two payments are provided under the national scheme:
. parental leave pay (PLP) which provides up to 18 weeks' pay at the
rate of the National Minimum Wage to eligible primary carers (usually
birth mothers) since 1 January 2011;
. dad and partner pay (DAPP) which provides up to two weeks' pay at the
rate of the National Minimum Wage to eligible dads or partners caring
for a child born or adopted from 1 January 2013.
The employer role is a feature of the current PPL scheme. Under the
scheme, the Department of Human Services (DHS) funds employers to provide
PLP to their eligible long-term employees. The employer role was
recommended by the Productivity Commission to benefit employers through
improved retention rates, and to help change community attitudes by sending
a strong signal that taking leave from work around the time of birth or
adoption is seen as part of the normal course of work and life.
The employer role became a mandatory requirement from 1 July 2011 for
employers of PLP recipients who are long-term employees of the employer:
. more than 125,000 employees have received PLP from their employer
since the start of the PPL scheme from 1 January 2011 to 30 June 2013;
. in June 2013, 76 per cent of recipients were receiving their PLP from
their employer (either mandatory employees or employees for whom their
employer has opted to pay).
Employers do not have a role in the administration of DAPP payments.
In its 2013 Federal Election policy document, Our Plan: Real Solutions for
all Australians, as part of the government red tape reduction process, the
Government committed to "give employers the option of 'opting in' to
managing the administration of Paid Parental Leave to their employees. If
they choose not to be the government's paymaster, payments will be made
directly to the employee" (p27).
The Government made a further 2013 Election commitment in its 2013 Federal
Election policy document, The Coalition's Policy for Paid Parental Leave,
to enhance the PPL scheme from 1 July 2015 so that working mothers would be
able to access 26 weeks of payment at their replacement wage plus
superannuation, rather than being limited to 18 weeks of payment at
national minimum wage.
2. Problem
The Government is currently undertaking a legislated review of the PPL
scheme ('the review'), in addition to an evaluation being undertaken to
assess whether the scheme is meeting its objectives ('the evaluation').
In their feedback to the review, employer and industry groups generally did
not support the employer role, particularly in relation to small business.
These stakeholders considered the employer role places an unnecessary
administrative burden on business, and any benefits to employers in terms
of employee retention were not commensurate with the administrative burden
imposed.
The Australian Chamber of Commerce and Industry conducted a survey of
members on the PPL scheme in May 2013. In the survey, 84.3 per cent of
businesses either agreed or strongly agreed that "the Government should not
require employers to be the paymaster for the Paid Parental Leave scheme".
The evaluation of the scheme has found the employer role is generally
operating smoothly. While employers were mostly positive about the process
to make payments, quantitative data was not collected as to their attitude
towards the employer role. Quantitative data collected on process issues
did not highlight significant differences across employer organisation
size. However, a number of smaller employers were more negative in their
views during qualitative interviews.
PPL administrative data suggests that some employers may be more likely to
find the PPL role valuable or cost-effective, and therefore opt in to
provide payments beyond what is required under legislation:
. PPL administrative data for 2012-13 shows that 11.7 per cent of all
businesses opted in to provide parental leave pay to non-mandatory
employees.
o This proportion was significantly higher amongst large businesses
(27.7 per cent) than medium (10.8 per cent) and small (6.7 per cent)
businesses.
. In 2012-13, only 10 per cent of small businesses paid PLP in respect
of more than one of their employees.
3. Objectives
A removal of the mandatory employer role under the PPL scheme could assist
in meeting the following objects:
. helping to reduce administration and compliance costs on employers ,
particularly those who feel the role is not beneficial for their
organisation;
. where the employer has administrative capacity and has found the role
to be beneficial for their organisation, continue to provide an option
for employers to take on this role voluntarily.
4. Options
In terms of assessing the regulatory impact, this statement reports on
three options:
. Implementing the measure from 1 March 2014;
. Implementing the measure from 1 July 2015 as part of the broader
reforms to the PPL scheme; or
. Removing the employer role completely, with all payments under the PPL
scheme to be made by DHS.
Implementing the measure from 1 March 2014
This option would remove the PPL mandatory employer role from 1 March 2014,
while still allowing employers to opt into providing payments under the PPL
scheme to employees on voluntary basis, where both the employer and
employee agree.
Implementing the measure from 1 July 2015 as part of the broader reforms to
the PPL scheme.
This option would implement the measure with a start date of 1 July 2015,
in line with commencement of the broader reforms to the PPL scheme.
Removing the employer role completely, with all payments under the PPL
scheme to be made by DHS
A complete removal of the employer role, either from 1 March 2014 or 1 July
2015, could also be considered. Under this option, employers could no
longer make any payments to employees, with all payments to be made by DHS.
5. Impact
Impact on employers
All three options would result in the same outcome: to shift administration
costs from the employer to Government.
The evaluation Phase 2 report found the additional costs for employers were
mainly due to the extra workload, rather than purchasing a new payroll
system or hiring additional staff to administer the scheme:
. Among the 29 per cent of employers who felt additional costs were
involved, almost all (94 per cent) said these costs involved taking on
extra workload themselves, while half (51 per cent) said the workload
of current staff had been increased to implement PPL.
. In terms of staff hours needed to implement PPL, the median identified
by all organisations was 22 hours:
o 4 per cent of organisations reported that no hours were needed;
o 23 per cent of organisations reported 1-2 hours were needed;
o 34 per cent reported implementation required 3-15 staff hours;
o 30 per cent of all organisations reported the implementation of PPL
took more than 15 staff hours; and
o 9 per cent of organisations reported that they did not know.
. The median cost identified by all organisations to implement PPL was
$1,783:
o nearly half (45 per cent) of employers estimated the cost to be less
than $250;
o 21 per cent estimated the cost to be between $250-$1,000;
o 20 per cent estimated the cost to exceed $1,000; and
o 14 per cent did not know the level of costs involved.
It is possible that smaller business would have larger proportional impact,
as they do not have the same economies of scale when applying the process
for a single employee. As noted earlier, for 90 per cent of small
businesses who provided PPL to an employee in 2012-13, this employee was
the only PLP recipient in that business in the 2012-13 financial year.
Therefore, it is likely that for many small businesses, costs incurred to
administer PLP payments are mostly one-off costs.
Forty one per cent of employers felt organising payments was time consuming
and submissions to the review indicated that, even though costs may not
have been significant, the process was viewed by some as time-consuming.
Some employers find the administration of PPL problematic. A very small
number report very high monetary costs. Evaluation interviews found some
employers experienced problems, especially small, private organisations.
While there would be benefits to employers in the form of increased
workforce attachment and overall participation, these are difficult to
quantify. As raised earlier, most employers are of the view that costs to
administer the scheme outweigh any benefits that a mandatory employer role
may deliver. The evaluation results showed that most employers felt it was
too soon to tell if there would be gains but most agreed that there had
been good workplace attachment in women on parental leave.
Impact on employees
The measure has no impact on regulatory or compliance costs for employees,
as they would still undertake the same claim process as currently required.
While most of the impact in removing the mandatory employer role would be
felt by employers, there is an impact on employees with salary sacrifice
arrangements in place. Where their employer is administering the PLP
payment, these salary sacrifice arrangements are able to continue and so
the employee's tax liability would continue to be calculated on a lower
salary. However, as DHS does not offer salary sacrifice deduction
functionality, an employee's tax liability could increase if the mandatory
employer role is removed and their employer does not opt back in. This may
be a particular issue for employees in the not-for-profit sector. This
impact is not a compliance cost, but is an impact on the after-tax income a
person may receive, dependent on an employee's income and the level of
salary sacrificed under the arrangement.
Impact on Government
As noted above, the measure would result in a shift of administration costs
from employers to Government. Currently DHS administer payments for around
24 per cent of employees (non-mandatory employees or recipients who do not
have an employer), however under the measure they would be responsible for
making the majority of payments to employees. The additional cost to
Government to implement the measure is $7 million over five years.
Impacts associated with particular options
. Implementing the measure from 1 March 2014
For employers who consider the employer role to be an unnecessary burden,
this option would provide an early removal of the mandatory nature of the
current employer role.
Proceeding with this option would also provide an opportunity to monitor
employer involvement and any issues raised through an 'opt-in' role well
before commencement of the enhanced PPL scheme from 1 July 2015.
. Implementing the measure from 1 July 2015 as part of the broader
reforms to the PPL scheme.
Delaying the start date of the measure to 1 July 2015 would allow time
for further consultation with business community to occur before making
any changes, which could have interactions with other private workplace
arrangements.
However, this delayed start date would not be beneficial for employers
who no longer wish to play a role in administering PLP and incurring
related costs.
. Removing the employer role completely, with all payments under the PPL
scheme to be made by DHS
Consultation with business community would need to occur before a change
such as this could be implemented, as some businesses may have negotiated
private workplace arrangements on the understanding that they would be
the paymaster for their employees.
. Regulatory Burden Estimate Table
|Average Annual Change in Compliance Costs (from BAU) |
|Sector/Cost |Business |Not-for-prof|Individuals |Total by cost |
|Categories | |it | |category |
|Administrative Costs |$44 millio|$4 million |$ |$48 million |
| |n |(savings) | |(savings) |
| |(savings) | | | |
|Substantive |$ |$ |$ |$ |
|Compliance Costs | | | | |
|Delay Costs |$ |$ |$ |$ |
|Total by Sector |$44 millio|$4 million |$ |$48 million |
| |n |(savings) | |(savings) |
| |(savings) | | | |
|Proposal is cost neutral? ? yes * no |
|Proposal is deregulatory ? yes * no |
6. Consultation
The opposition of employer groups to the mandatory employer role was first
established during public consultations conducted in 2009, prior to
implementation of the existing scheme. An ongoing implementation working
group which is made up of representatives from small business and large
employer groups, employee, womens' and community groups (which Government
established to inform the PPL implementation process) has been specifically
asked to comment on the mandatory employer role and has provided direct
feedback indicating that it should be removed.
A public consultation process was undertaken as part of the PPL Review
including:
. A public submission phase, including a general call for submissions
and direct emails to employee, employer and community peak bodies;
. Face to face consultation with key stakeholders;
. The formation of a PPL Review steering committee made up of
representatives from employer, employee, womens' and community groups.
Feedback on the employer role has also been received through direct contact
made by members of the public, generally small business employers who have
been recently notified of their mandatory obligations.
The measure directly responds to all these forms of feedback received over
a significant period of time. As outlined earlier, employer groups have an
overwhelming and sustained opposition to the mandatory employer role, and
have put forward their own proposals to remove its mandatory nature. While
a specific implementation date for the removal of the mandatory nature of
the employer role was not discussed with concerned employers, the feedback
received was that this should occur as soon as practicable as a matter of
priority. The 1 March 2014 date is the earliest date on which the measure
could proceed, due to administrative practicalities. Employer groups did
not raise any opposition to a continuing role should an employer
voluntarily choose to do so.
Some representative bodies expressed support for the role (such as bodies
representing employees and other interest groups). The view of these
organisations is that having an employer administer the PLP payment
reaffirms the nature of the payment as an industrial entitlement, rather
than a welfare entitlement. These groups particularly view the employer
role to be beneficial in situations where employers 'top-up' PLP payments
so that parents above minimum wage continue to be paid at their normal wage
for a period, and so that parents continue to receive pay in line with
their usual pay cycle. A small number of employers have also responded that
they favour this approach. The measure directly responds to this view by
ensuring that employers who value the role can continue to have this
arrangement with their employees (should the employee wish).
Further consultation with interested parties will occur in the lead up to
commencement of the enhanced PPL scheme from 1 July 2015, to gauge the
relevance of a continued opt-in employer role under the new scheme and
whether any issues would need to be resolved to ensure effective
arrangements from 1 July 2015.
7. Conclusion
Given feedback from employers and the Government's commitment to move to an
'opt-in' role, the preferred option could be to move to an opt-in employer
role under the PPL scheme from either 1 March 2014 or 1 July 2015.
However, it is considered that an earlier start date of 1 March 2014 would
be more beneficial for employers and provide a useful indicator of the
effectiveness of the opt-in arrangements well before the commencement of
the enhanced PPL scheme on 1 July 2015.
8. Implementation and review
Under the measure to remove the mandatory employer role from 1 March 2014,
all employers registered for the PPL scheme will be "opted out" on that
date and payments of parental leave pay will be made by DHS. However, if
an employer chooses to 'opt in' to provide the payment and the employee
consents to being paid by their employer, an employer determination will be
made and payment could be provided by the employer. Where an employer is
already providing PLP to an employee on 1 March 2014, that arrangement
would not be affected.
Ongoing, where an employee consents to being paid by their employer,
employers will be sent a notice with the option to accept or decline an
employer determination. If the employer accepts the notice of the employer
determination and their obligations to pay instalments of parental leave
pay to the person, funds will be transferred to the employer in line with
current arrangements. If the employer declines or does not respond to the
notice, DHS will provide parental leave pay directly to the customer. To
reflect the non-mandatory nature of their role, employers will no longer be
potentially subject to a compliance notice for not responding to a notice
of an employer determination.
As stated earlier, take up of the opt-in arrangement will be monitored as
an indicator for the effectiveness of these arrangements as part of the
enhanced PPL scheme to commence on 1 July 2015. Key performance indicators
could include:
. number of employees who consent to their employer providing PLP;
. number of employers who accept or decline the employer determination;
. number of employers who opt-in after 1 March 2014.
STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Social Services and Other Legislation Amendment Bill 2013
Schedule 1 - Encouraging responsible gambling
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
Schedule 1 to the Bill makes a number of amendments to the National
Gambling Reform Act 2012, and repeals in full the National Gambling Reform
(Related Matters) Act (No.1) 2012 and the National Gambling Reform (Related
Matters) Act (No.2) 2012.
The Bill repeals provisions relating to: the National Gambling Regulator
(including removing all its powers and functions, and the penalties to
enforce compliance); the national supervisory levy; the automatic teller
machine (ATM) withdrawal limit; the trial on mandatory pre-commitment; and
matters for Productivity Commission review.
The Bill also amends the pre-commitment, gaming machine capability and
dynamic warning requirements to express the Commonwealth's commitment to
work towards, and intention to introduce, measures in the future. Most of
the research components in the Act will be retained.
Human rights implications
The amendments have the effect of removing the three main measures in the
Act (that is, the pre-commitment, dynamic warning, and ATM withdrawal limit
requirements) and replacing the provisions with statements setting out the
Commonwealth's commitment to the development and implementation of measures
in the future that encourage responsible gambling.
Given that the new provisions will not impose any substantive legal
obligations, Schedule 1 to the Bill will not limit any human rights. In
addition, as the amendments remove existing provisions relating to the
exercise of coercive monitoring and enforcement powers and the collection
of personal information, Schedule 1 reduces the risk of interference with a
person's right to a fair and public hearing, right against self-
incrimination and right to privacy and reputation in accordance with
Articles 14(1), 14(3)(g) and 17 of the International Covenant on Civil and
Political Rights.
Conclusion
Schedule 1 is compatible with human rights as it does not raise any human
rights issues.
Schedule 1A - Charities
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule delays the commencement of the Charities Act 2013 by nine
months, from 1 January 2014 to 1 September 2014.
The Charities Act 2013 defines charity and charitable purpose for the
purposes of all Commonwealth legislation. The nine-month delay to the
commencement of the Act will allow for further consultation on the
legislation in the broader context of the Government's other commitments in
relation to the civil sector.
Human rights implications
The amendment to the Charities Act 2013 delays the commencement of the Act
by nine months. It does not change the policy intent or application of the
Act.
Conclusion
Schedule 1A is compatible with human rights as it does not raise any human
rights issues.
Schedule 2 - Continuing income management as part of
Cape York Welfare Reform
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
The continuation of income management as part of Cape York Welfare Reform
component of the Bill introduces a minor amendment to the Social Security
Administration Act (the Social Security Administration Act).
Paragraphs 123UF(1)(g) and 123UF(2)(h) of the Social Security
Administration Act provide that a person can only be subject to income
management under section 123UF after a decision by the Family
Responsibilities Commission made before 1 January 2014.
The amendment extends to 1 January 2016 the timeframe for which a person,
after a decision by the Family Responsibilities Commission, can be subject
to income management under section 123UF.
The purpose of the amendment is to allow income management to continue in
Cape York for two further years until 1 January 2016.
Human rights implications
Eliminating racial discrimination
The amendment to the Social Security Administration Act engages Article
2(1) of the Convention on the Elimination of All Forms of Racial
Discrimination (CERD), which:
'...imposes an obligation on State parties to undertake to pursue a
policy of eliminating racial discrimination in all its forms and
promoting understanding among all races...'[1]
Equality before the law
The amendment to the Social Security Administration Act also engages
Article 26 of the International Covenant on Civil and Political Rights
(ICCPR), which states:
'...all persons are equal before the law and are entitled without any
discrimination to the equal protection of the law. In this respect,
the law shall prohibit any discrimination and guarantee to all persons
equal and effective protection against discrimination on any ground
such as race, colour, sex, language, religion, political or other
opinion, national or social origin, property, birth or other
status.'[2]
There is no incompatibility with the rights engaged as the circumstances
meet the test for legitimate differential treatment under international
law.
Legitimate differential treatment
The objective of Cape York Welfare Reform is aimed at supporting the
restoration of socially responsible standards of behaviour and assisting
community members to resume and maintain primary responsibility for the
wellbeing of their community and the individuals and families within their
community. This objective is considered sufficiently important to justify
differential treatment on the basis of a prohibited ground.
An independent Evaluation of the Cape York Welfare Reform Trial, released
in March 2013, indicates that the trial has had a positive impact in
participating communities, with increased personal responsibility and
positive behavioural changes such as increased school attendance, increased
commitment to education by parents, and greater support for local
Indigenous authority and leadership.
Moreover, results of consultations conducted to date have established
support for the welfare reforms in the four participating Cape York
communities.
The Family Responsibilities Commission (FRC), a central plank of the
reforms, operates through a conferencing model. In practice, this means an
individual will attend a number of conferences with Local Commissioners who
are respected local Indigenous elders in the community. At the
conferences, options for support are discussed, including referrals to
existing support services, prior to any income management direction being
made by the FRC. The FRC considers appropriate alternatives in conjunction
with the individual, with income management only being used as a final
measure.
The results of the reviews and consultations to date demonstrate that the
differential treatment of members of the four Cape York communities is
having a positive impact on individuals, families and the broader
communities.
Conclusion
The amendments are compatible with human rights because, to the extent that
they may limit human rights, those limitations are reasonable, necessary
and proportionate.
Schedule 3 - Family tax benefit and eligibility rules
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule makes amendments to limit family tax benefit Part A to
children aged under 16, or teenagers aged 16 to 19 (end of the calendar
year they turn 19) who are in full-time secondary study (or equivalent).
Exemptions to the study requirement will continue to apply for teenagers
who cannot study due to physical, psychiatric, intellectual or learning
disability.
Teenagers with a secondary qualification who cease to be eligible for
family tax benefit from 1 January 2014 will be able to apply for youth
allowance. 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.
Human rights implications
Article 9 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR), as well as Article 26 of the Convention on the Rights of
the Child (CRC), recognise the right of a child to benefit from social
security.
The right to social security in article 9 of the ICESCR requires a social
security system be established and that a country must, within its maximum
available resources, ensure access to a social security scheme that
provides a minimum essential level of benefits to all individuals and
families that will enable them to acquire at least essential health care,
basic shelter and housing, water and sanitation, foodstuffs, and the most
basic forms of education.
Article 26 of the CRC requires countries to recognise the right of the
child to benefit from social security. Benefits should take into account
the resources and the circumstances of the child and persons having
responsibility for the maintenance of the child.
From 1 January 2014, this Schedule will mean that teenagers aged 16 to 17
who have a Year 12 (or equivalent) qualification will no longer be eligible
for family tax benefit. This Schedule makes similar changes to eligibility
for family tax benefit for approved care organisations. These teenagers
will continue to be eligible to claim youth allowance.
This change will focus payments in the family assistance system on families
with children who are at school, while youth allowance will become the
primary form of assistance to eligible young people who have completed
secondary study. To the extent that the changes in Schedule 3 may limit
human rights, those limitations are reasonable and proportionate.
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit
access to family and parental payments, these limitations are reasonable
and proportionate.
Schedule 4 - Period of Australian working life residence
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule amends the rules for calculating pensions paid outside
Australia. It primarily affects age pension and some other pensions which
also have unlimited portability, and pensions paid under most social
security agreements. Pensioners paid under the Greek and New Zealand
agreements will continue to be paid according to the specific terms of
those agreements.
Under the change, pensioners who leave Australia on or after the start date
will be required to have been Australian residents for 35 years during
their working life (from age 16 to age pension age) to receive their full
means-tested pension if they choose to retire overseas or travel overseas
for extended periods of longer than 26 weeks. The current requirement is
25 years. Thirty-five years is considered a more appropriate period given
Australia's pension system is residence-based and taxpayer-funded.
In an associated change, members of a couple paid outside Australia under a
social security agreement will now have their pensions calculated on their
own Australian working life residence, rather than their partners'
Australian working life residence, as already applies to pensioners paid
outside Australia in non-agreement countries.
Pensioners paid under the existing rules at the date these changes
commence, and who would be adversely affected, will be grandfathered unless
they return to Australia for more than 26 weeks and subsequently leave
Australia again.
Human rights implications
This Schedule has considered the human rights implications, particularly
with reference to the right to social security as contained within Article
9 of the International Covenant on Economic, Social and Cultural Rights.
It is concluded that the proposed change to the calculation of pensions for
people who, after the start date, leave Australia or claim under a social
security agreement is reasonable, subject to due process provided for in
national law, and is permissible (under ILO Convention No.168 (1988)) in
the case of 'absence from the territory of the State'.
Conclusion
The Schedule is compatible with human rights because it does not limit or
preclude people from gaining or maintaining access to social security.
Schedule 5 (Interest charge), Schedule 6 (Student start-up loans), and
Part 1 of Schedule 12 (Repayment of financial supplement through
taxation system)
These amendments are compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
Schedule 5 - Interest charge
Schedule 5 to the Bill amends the Social Security Act 1991 (the Social
Security Act) and the Student Assistance Act 1973 (the Student Assistance
Act) in order to introduce an interest charge on debts relating to austudy,
fares allowance, youth allowance payments to full-time students and
apprentices, and ABSTUDY living allowance.
The current lack of an interest charge on student income support debt means
recipients have no incentive to repay their debts. Once the interest
charge is in place, debtors will have a pressing incentive to engage with
the Department of Human Services to make a repayment arrangement in order
to avoid the interest charge.
It is also important to note that a debt only arises under the Social
Security Act or the Student Assistance Act where a person receives a
payment to which they were not entitled. Furthermore, an interest charge
can only be applied to the person and the debt where the person has not
entered into a repayment arrangement, has failed to comply with a repayment
arrangement, or has terminated a repayment arrangement without entering
into a new repayment arrangement.
In negotiating a repayment arrangement, the Department of Human Services
will take into account the circumstances of the debtor, and will suggest
repayment amounts based on the debtor's financial capacity. Where a debtor
is experiencing financial hardship, repayment arrangements can be paused
and no interest charge applied for that period of time. Students will also
be able to continue to receive income support payments whilst repaying any
debt and interest charge incurred.
Additionally, an interest charge will not be applied where a person is in
circumstances prescribed in a legislative instrument made by the Minister.
It is envisaged that the prescribed circumstances would be where the amount
that is being withheld from the person's payments (under current section
1231 of the Social Security Act) is satisfactorily repaying the debt.
An interest charge can only be applied if the person has been issued a
notice in respect of a debt, which will outline the reason why the debt was
incurred, the outstanding amount of the debt, the effect of an interest
charge applying, and the day on which the debt is due and payable. When
the debt is initially incurred, a notice in respect of a debt will provide
that the debt is due and payable 28 days after the notice has been issued.
In the event that a repayment arrangement has been terminated, a newly
issued notice will provide that the debt is due and payable 14 days after
the notice has been issued. This will ensure that the person will have
sufficient time either to repay the outstanding debt or to enter into a
repayment arrangement and thereby avoid the application of an interest
charge.
The interest rate is calculated by adding seven percentage points to the
monthly average yield of 90-day Bank Accepted Bills (as published by the
Reserve Bank of Australia). This is considered an appropriate method for
calculating the rate of the interest charge to apply to income support debt
because the rate is high enough to encourage repayment without being
punitive, and it provides a return to the Commonwealth, commensurate with
the time value of the monies overpaid.
Schedule 6 - Student start-up loans
Schedule 6 amends the Social Security Act and the Student Assistance Act to
cease the student start-up scholarship (SSS), from 1 January 2014, for new
recipients of student payments who are participating in higher education.
Students will instead be able to receive either an ABSTUDY student start-up
loan or a student start-up loan (the loans), which are income-contingent
loans, equivalent in value to the SSS, and claimed on a voluntary basis.
These loans will be available to new full-time students who are in receipt
of youth allowance, austudy payment or ABSTUDY living allowance.
The students will be limited to two loans per year of $1,025 (indexed from
2017), in line with the current SSS arrangements, and the loans will be
repayable under similar arrangements to Higher Education Loan Program
(HELP) debts. Students will only be required to begin repaying the loans
once their earnings are above the repayment threshold (which will be
consistent with the current HELP repayment thresholds) and after any
accumulated HELP debt has been paid.
The loans also provide grandfathering arrangements so that recipients who
received an SSS or Commonwealth Education Costs Scholarship, prior to
1 January 2014, and have remained continuously on student payments will
continue to be eligible to receive the SSS, as a grant, until coming off
student payments.
Part 1 of Schedule 12 - Repayment of financial supplement through taxation
system
Part 1 of Schedule 12 to the Bill contains technical amendments to the
Social Security Act and Student Assistance Act to give the Commissioner of
Taxation increased flexibility in determining how applications for waiver
of Student Financial Supplement Scheme (SFSS) debts are to be submitted.
The amendments will also remove any doubt that the Commissioner has general
administration over the recovery of these debts.
Human rights implications
Right to education
Schedule 5 to the Bill engages the right to education contained in Article
13 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR).
In particular, article 13(2)(b) states that secondary education, in all its
different forms, including technical and vocational secondary education,
shall be made generally available and accessible to all by every
appropriate means and, in particular, by the progressive introduction of
free education.
Schedule 5 - Interest charge
Schedule 5 does not limit the right to education. The interest charge is
intended as an incentive for debtors to repay debts in a timely fashion,
where they have the financial capacity to do so. Given that a debtor's
financial capacity will be taken into account before a repayment
arrangement is agreed to, the interest charge will not limit the debtor's
ability to access education.
Schedule 6 - Student start-up loans
Schedule 6 to the Bill does not limit the right to education. While
the SSS will not be available for new recipients after 1 January 2014,
people who would otherwise be entitled to the SSS will be eligible for
the loans. The purpose of the SSS and the loans are identical as both
payments are designed to help students with the up-front costs of
textbooks and equipment. Under the loans, students will be eligible
for the same payment amounts and will be able to claim payments when
these expenses arise. In this way, students will still have access to
funds to assist them with the up-front costs of study. The fact that
the loans are repayable once the person reaches a particular income
threshold will not limit a person's right to education.
Right to social security
Schedules 5 and 6 to the Bill engage the rights to social security
contained in article 9 of the ICESCR.
The right to social security requires that a system be established under
domestic law, and that public authorities must take responsibility for the
effective administration of the system. The social security scheme must
provide a minimum essential level of benefits to all individuals and
families that will enable them to cover essential living costs.
The United Nations Committee on Economic, Cultural and Social Rights
(the Committee) has stated that a social security scheme should be
sustainable and that the conditions for benefits must be reasonable,
proportionate and transparent (see General Comment No.19).
Article 4 of ICESCR provides that countries may limit the rights such as to
social security in a way determined by law only in so far as this may be
compatible with the nature of the rights contained within the ICESCR and
solely for the purpose of promoting the general welfare in a democratic
society. Such a limitation must be proportionate to the objective to be
achieved.
Schedule 5 - Interest charge
To the extent that interest is charged on a person's debt, any impact will
be limited and will have a very marginal effect on the ability of a person
to cover essential living costs or acquire basic forms of education,
thereby engaging a person's right to social security. The provisions in
Schedule 5 are therefore unlikely to limit this right, given the
appropriate safeguards put in place to protect it.
As noted above, it is intended that the provisions introduced by Schedule 5
will allow the efficient recovery of social security payments, supporting
effective and efficient administration of the social security system. This
measure is proportionate in achieving this policy objective as all persons
can avoid an interest charge by entering into a repayment arrangement, and
these rights are safeguarded by the requirements of notice and periods of
time in which a person will be able to pay back the debt or enter into an
arrangement. Furthermore, the Secretary will have the discretion in
appropriate circumstances to waive a debt, including any interest charged
on the debt.
By allowing the efficient recovery of social security payments, Schedule 5
ensures the financial sustainability of the social security system. The
interest charge, as it applies to persons who receive payments to which
they are not entitled, is a reasonable condition on the benefits of the
system as it encourages recipients to repay those amounts and ensures that
the Commonwealth is able to recover the real value of these amounts.
The interest charge, as a condition, is also transparent as it is provided
for in legislation, will be accurately communicated through the
Department's website, and can only be applied after the recipient is given
notice. This ensures that all stakeholders will be informed of how the
interest charge will operate before it is applied to recipients.
Therefore, Schedule 5 to the Bill will be compatible with the right to
social security as the potential limitation on this right is proportionate
to the policy objective and intended to improve the administration of
social security system.
Schedule 6 - Student start-up loans
To the extent that there is an impact on a person's rights to social
security by virtue of Schedule 6, the impact is limited. In practice, a
person will still be entitled to the same amount of financial assistance
under the loans as they would have received from an SSS, and will only be
required to repay the loans once they reach the relevant threshold level of
income. This threshold is set at a level of income at which a person would
no longer require financial assistance to acquire essential health care,
housing, water and sanitation, foodstuffs, and education. Given the above
safeguards, and the fact that the loans will be given on a voluntary basis
(that is, a debtor does not need to incur debt) the measures contained in
Schedule 6 are compatible with the rights to social security.
Additionally, the Government is committed to providing continuing support
to students from regional Australia. Because of this, the Relocation
Scholarship, for dependent students who are required to move to study and
some independent students, will continue to be provided as a grant to all
eligible students. Other student income support payments will also remain
unaffected by the loans measure.
Taking into account the continued access to fund the costs of study,
together with the fact that there will be no changes to the Relocation
Scholarship and other student payments, the amendments to the SSS are
consistent with a person's rights to social security and to an adequate
standard of living.
Part 1 of Schedule 12 - Repayment of financial supplement through taxation
system
Part 1 of Schedule 12 to the Bill contains amendments which will give the
Commissioner of Taxation greater flexibility in determining how
applications for waiver of youth allowance (student and Australian
apprentice), austudy and ABSTUDY SFSS debts are to be submitted.
These amendments are beneficial in nature as they will allow the
Commissioner to accept applications for waiver of debt without them having
to be in writing. Consequently, these amendments do not have any adverse
human rights implications.
Right to an adequate standard of living, including food, water and housing
Schedule 5 to the Bill engages the right to an adequate standard of living,
including food, water and housing, contained in article 11 of the ICESCR.
The right to an adequate standard of living, including food, water and
housing provides that everyone is entitled to adequate food, clothing and
housing and to the continuous improvement of living conditions.
Schedule 5 - Interest charge
To the extent that there is an impact on a person's right to an adequate
standard of living, including food, water and housing, by virtue of
Schedule 5, the impact is limited.
It is intended that the provisions of Schedule 5 will allow the efficient
recovery of social security payments, which will ultimately improve the
efficacy of the social security system. This measure is proportionate in
achieving this policy objective as all persons can avoid an interest charge
by entering into a repayment arrangement, and these rights are safeguarded
by the requirements of notice and periods of time in which a person will be
able to repay the debt or enter into an arrangement. The Secretary will
also have the discretion to waive a debt in appropriate circumstances,
including any interest charged on the debt.
Furthermore, by allowing the efficient recovery of social security
payments, Schedule 5 ensures the financial sustainability of the social
security system. The interest charge, as it applies to people who receive
payments to which they are not entitled, is a reasonable condition on the
benefits of the system as it encourages recipients to repay those payments
and ensures that the Commonwealth is able to recover the real value of
these amounts. The interest charge is also transparent as it is provided
for in legislation, will be accurately communicated through the
Department's website, and can only be applied after the recipient is given
written notice. This ensures that all stakeholders will be informed of how
the interest charge will operate before it is applied.
Therefore, Schedule 5 to the Bill will be compatible with the right an
adequate standard of living as the potential limitations on this right are
proportionate to the policy objective and are intended to improve the
administration of the social security system.
Right to equality and non-discrimination
To avoid doubt, Schedules 5 and 6 do not engage the right to equality and
non-discrimination contained in articles 2 and 26 of the International
Covenant on Civil and Political Rights either on the basis of race or
'other' status.
Article 2(1) of the International Covenant on Civil and Political Rights
obligates each State party to respect and ensure to all persons within its
territory and subject to its jurisdiction the rights recognised in the
Covenant without distinction of any kind, such as race, colour, sex,
language, religion, political or other opinion, national or social origin,
property, birth or other status[3].
Article 26 not only entitles all persons to equality before the law as well
as equal protection of the law, but also prohibits any discrimination under
the law and guarantees to all persons equal and effective protection
against discrimination on any ground such as race, colour, sex, language,
religion, political or other opinion, national or social origin, property,
birth or other status[4].
It is important to note, however, that not all differential treatment will
be considered discriminatory. The Committee on Economic, Social and
Cultural Rights has provided the following commentary on when differential
treatment will be considered discriminatory:
Differential treatment based on prohibited grounds will be viewed as
discriminatory unless the justification for differentiation is
reasonable and objective. This will include an assessment as to
whether the aim and effects of the measures or omissions are
legitimate, compatible with the nature of the Covenant rights and
solely for the purpose of promoting the general welfare in a
democratic society. In addition, there must be a clear and reasonable
relationship of proportionality between the aim sought to be realised
and the measures or omissions and their effects. A failure to remove
differential treatment on the basis of a lack of available resources
is not an objective and reasonable justification unless every effort
has been made to use all resources that are at the State party's
disposition in an effort to address and eliminate the discrimination,
as a matter of priority[5].
Schedule 5 - Interest charge
Discrimination on the basis of race
Schedule 5 to the Bill will apply an interest charge to all debts resulting
from student income support debts, including ABSTUDY living allowance,
which supports Indigenous Australians. However, there is no differential
treatment on the basis of race as the interest charge will apply equally to
all student debtors.
For these reasons, Schedule 5 to the Bill will not engage the right of
equality and non-discrimination.
Discrimination on the basis of 'other status'
Schedule 5 to the Bill applies an interest charge to debts with respect to
overpayments to students (rather than all social security overpayments).
This will not be a limitation on the right to equality and non-
discrimination as the differential treatment is for a reasonable and
objective purpose.
Recipients of these payments generally transition from study to employment
(and thus are no longer recipients of social security payments) before the
full amount of the debt is repaid through the social security withholding
mechanism. Once the person has left payments, many often choose not to
repay the debt, and indeed there is currently little incentive for them to
do so.
It is therefore reasonable and objective to apply an interest charge to
debts with respect to the above mentioned types of payment to ensure that
people with a debt repay the outstanding amount in a timely fashion.
Recipients of these payments will be able to avoid the interest charge
altogether by either repaying their debt within 28 days of being notified
of the debt or by entering into an acceptable repayment arrangement.
For these reasons, Schedule 5 to the Bill will not engage the right of
equality and non-discrimination.
Schedule 6 - Student start-up loans
While the provisions of Schedule 6 will establish an ABSTUDY student start-
up loan (which, given the eligibility criteria of ABSTUDY, will mean that
loan recipients are necessarily of Aboriginal or Torres Strait Islander
descent), an equivalent student start-up loan will also be established for
those who are eligible for austudy and youth allowance recipients (where
austudy and youth allowance are available to non-Indigenous and Indigenous
people). As the provisions for the student start-up loan mirror the
provisions for the ABSTUDY student start-up loan, there will be no
effective distinction between Indigenous and non-Indigenous recipients of
these loans.
For these reasons, Schedule 6 to the Bill will not engage the right of
equality and non-discrimination.
Conclusion
These amendments are compatible with human rights. To the extent that they
may have limited adverse impact on a person's access to education, social
security, an adequate standard of living or the right to equality and non-
discrimination, the limitation is reasonable, proportionate to the policy
objective and for legitimate reasons.
Schedule 7 - Paid parental leave
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
Schedule 7 makes amendments to the employer role in the Paid Parental Leave
Act 2010. The amendments will remove the requirement for employers to
provide Government-funded parental leave pay to their eligible long-term
employees. From 1 March 2014, employees will be paid directly by the
Department of Human Services, unless an employer opts in to provide
parental leave pay to its employees and an employee agrees for their
employer to pay them.
Human rights implications
The Paid Parental Leave scheme engages the right to social security in
Article 9 of the International Covenant on Economic, Social and Cultural
Rights, and the right to work in Article 10 (2) of the International
Covenant on Civil and Political Rights.
However, the amendments in this Schedule are limited to changes to the
administrative arrangements for delivering parental leave pay to customers.
They do not affect a customer's eligibility to the payment, a customer's
rate of pay, or a customer's entitlement to paid or unpaid leave from
employment before and after the birth of a child. As such, the amendments
do not engage any human rights.
Conclusion
Schedule 7 is compatible with human rights as it does not raise any human
rights issues.
Schedule 8 - Pension bonus scheme
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
From 1 March 2014, the amendments will end late registrations in the
pension bonus scheme. Subsections 92H(3) to (7) of the Social Security Act
1991 provide for late registration and backdating of the commencement date.
The amendment will repeal these sections. The amendment also inserts a
new subsection 92D(2), which states that a person cannot apply to register
in the scheme on or after 1 March 2014.
The scheme was implemented in 1998 to encourage workforce participation.
The scheme provides a lump sum payment to people registered in the scheme
who are qualified for the age pension but who choose to defer their pension
and remain in the workforce.
The scheme was closed from 20 September 2009 because the 2009
Pension Review found the pension bonus scheme did not encourage older
Australians to remain in work, with most participants saying they would
have continued working anyway. The review also found pensioners thought
the scheme was complex and inflexible.
While the scheme was closed from 20 September 2009, eligible people who
were qualified for the age pension before then have remained able to apply
for late registration in the scheme if they had not registered at the time
of its closure.
To encourage senior Australians to continue working, the work bonus was
introduced. The work bonus is a pension income test concession for age
pensioners who have earnings from employment.
Under the work bonus, eligible pensioners can earn up to $250 a fortnight
($6,500 a year) without it being assessed as income under the pension
income test. Any unused amount of the fortnightly concession can
accumulate up to a maximum of $6,500 and be used to offset future earnings.
Mirror amendments are made to the Veterans' Entitlements Act 1986.
Human rights implications
The pension bonus scheme is not a social security entitlement as described
in section 23 of the Social Security Act 1991 and, accordingly, is not
considered an income support payment. Social security income support
arrangements for senior Australians are unaffected by this legislation.
A pension bonus payment is a one-off lump sum bonus paid to senior
Australians who are registered in the scheme but who keep working and defer
their age pension receipt.
The scheme was intended to encourage workforce participation but, following
the Pension Review findings, was closed and limited to people who were
qualified before 20 September 2009. The legislation will further limit
access to the pension bonus scheme. However, eligible people will still
have until 1 March 2014 to backdate their registration in the scheme.
A work bonus was introduced when the pension bonus scheme was closed to new
entrants. It provides a clear and immediate benefit to age pensioners who
continue to work by providing a pension income test concession on
employment income.
Conclusion
This legislation does not limit human rights because it does not affect
social security income support entitlements for senior Australians.
Workforce participation by age pensioners who wish to work continues to be
well supported through the work bonus.
There are no human rights implications.
Schedule 9 - Indexation - child care rebate limit
These amendments are compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Background
The child care rebate is a payment that provides assistance for families
who use approved child care by covering half of all their out-of-pocket
fees (after child care benefit), up to a maximum limit per child per year.
The child care rebate is currently not an indexed amount, and is capped at
$7,500 until the financial year ending 30 June 2014. To be eligible for
the child care rebate, families must have used approved child care and met
the work, training, study test and be eligible for child care benefit.
Child care rebate is not income tested, and eligibility for child care
benefit includes families who are entitled to child care benefit at the
zero rate due to income.
The child care rebate payment was initially introduced to assist with up to
30 per cent of out-of-pocket costs per child per financial year, and the
payment amount was indexed. To better assist families with the
affordability of child care, the maximum child care rebate limit per child
per financial year was increased to provide up to 50 per cent of out-of-
pocket costs per child per financial year up to a maximum amount of $7,500.
Specifically, legislative amendments were made to paragraph 84F of the
A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act)
by the Family Assistance Legislation Amendment (Child Care Budget Measures)
Act 2011 (the Budget Measures Act), which took effect on 15 September 2011,
to introduce the cap and pause of the indexation of child care rebate
payment amounts.
Overview of the amendments
The purpose of the child care rebate amendments is to extend the current
child care rebate payment cap of a maximum of $7,500 per financial year
per child, and continue to pause the indexation of the child care rebate
payment amounts for a further three financial years to 30 June 2017.
That is, the amendments to paragraph 84F(ea) of the Family Assistance Act
preserve the current child care rebate payment amounts, and provide for an
extension of the cap and pause measure that were originally introduced
through the Budget Measures Act.
Human rights implications
The amendments engage the following human rights:
Rights of the child
The rights of the child are contained in the Convention on the Rights of
the Child (CRC).
Article 3 of the CRC requires that, in all actions concerning children, the
best interests of the child shall be a primary consideration.
To the extent that the amendments engage the rights of the child, it does
not limit those rights as it maintains the provision of payments to assist
the affordability of child care for families.
Right to social security
Providing additional payments to families in the context of childcare
benefits, to an extent, also engages the right to social security contained
in article 9 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR), as well as article 26 of the CRC, which specifically
recognises the right of a child to benefit from social security.
The right to social security in article 9 of the ICESCR requires a social
security system to be established and that a country must, within its
maximum available resources, ensure access to a social security scheme that
provides a minimum essential level of benefits to all individuals and
families that will enable them to acquire at least essential health care,
basic shelter and housing, water and sanitation, foodstuffs, and the most
basic forms of education.
Article 26 of the CRC requires countries to recognise the right of the
child to benefit from social security. Benefits should take into account
the resources and the circumstances of the child and persons having
responsibility for the maintenance of the child.
The right to social security is not absolute and may be subject to
permissible limitations. Article 4 of the ICESR provides that rights in
the Covenant may be subject to limitations that are determined by law which
are compatible with the nature of these rights and are solely for the
purpose of promoting the general welfare in a democratic society.
According to the Committee on Economic, Social and Cultural Rights,
the right to social security includes the right not to be subject to
arbitrary and unreasonable restrictions of existing social security
coverage.[1] Any removals in entitlements must be justified in line with
Article 4 in the context of the full use of the maximum available resources
of the State party.[2]
The Government considers that maintaining the current cap on child care
rebate payments and the pausing of indexation of child care rebate payments
until 1 July 2017 is a reasonable, necessary and proportionate measure to
ensure that the payments can continue to be realised for present and future
generations, and the measure is in the interest of the general public and
Australia's economic position.
Among other reasons, the effect of pausing indexation on child care rebate
payments until 1 July 2017 will be, in relation to each child, only a small
amount. The cap of a maximum of $7,500 per financial year is currently set
out in the legislation; the maximum amount of child care rebate payments is
not being reduced through this Schedule.
Conclusion
To the extent that the amendments engage the rights of the child and to the
extent it engages and places any limitation on the right to social
security, such limitation is reasonable, necessary and proportionate to
achieving a legitimate aim.
The amendments are compatible with human rights.
Schedule 9 - Indexation - family tax benefit, parental leave pay and dad
and partner pay amounts
These amendments are compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
These amendments will pause indexation of certain higher income limits
until 30 June 2017. The indexation pauses will apply to the family tax
benefit Part A higher income free area, the family tax benefit Part B
primary earner income limit, and the parental leave pay and dad and partner
pay individual income limits.
The Schedule also includes amendments to pause indexation of the family tax
benefit end of year supplements until 30 June 2017.
Maintaining the higher income limits and supplement rates at their current
levels until 30 July 2017 will ensure that Government assistance is
targeted to low and middle-income families. This measure will result in
savings and ensure that family and parental payments are sustainable into
the future.
Human rights implications
These amendments are likely to engage the following human right:
Right to social security
Article 9 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR) recognises 'the right of everyone to social security'.
That right requires a social security system to be established, and states
that a country must, within its maximum available resources, ensure access
to a social security scheme that provides a minimum essential level of
benefits to all individuals and families that will enable them to acquire
at least essential health care, basic shelter and housing, water and
sanitation, foodstuffs, and the most basic forms of education. Article 26
of the Convention on the Rights of the Child (CRC) ensures that right to
'every child' and requires that 'the benefits should, where appropriate, be
granted, taking into account the resources and the circumstances of the
child and persons having responsibility for the maintenance of the child'.
These amendments maintain the current income test that applies to the
higher income limits for family and parental payments. These amendments
will not affect the assistance currently provided to low and middle-income
families.
There may be families on higher incomes who do experience a reduction in
family tax benefit Part A, or who cease to be eligible for assistance if
their income exceeds:
. $94,316 plus $3,796 for each child after the first - the family tax
benefit Part A higher income free area; or
. $150,000 - the family tax benefit Part B primary earner income limit,
paid parental leave and dad and partner pay income limit.
Families at these income levels are considered to have reasonable levels of
private income which would enable them to maintain their current living
standards.
Maintaining supplements at their current rates until 30 June 2017 ($726.35
for each family tax benefit Part A child, and $354.05 for each family tax
benefit Part B family) supports the sustainability of the family assistance
program, without reducing assistance provided to low and middle-income
families. Indexation will continue to apply to all other components of
family tax benefit, ensuring that fortnightly rates continue to increase
each year, and assist families with the direct cost of raising children.
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit
access to family and parental payments, these limitations are reasonable
and proportionate.
Schedule 10 - Reduction of period for temporary absence from Australia
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule makes amendments to the allowed period of temporary absence
from Australia for accessing certain family and parental payments. The
period of allowed temporary absence will be reduced from three years to 56
weeks. The amendments will apply to individuals eligible for family tax
benefit Part A and Paid Parental Leave.
Exemptions will apply to allow some individuals to continue to access
payments while overseas for up to three years. Exemptions will apply to
individuals who are members of the Australian Defence Force or Australian
Federal Police and who are deployed overseas, assisted by the Medical
Treatment Overseas Program, or unable to return to Australia for a
specified reason (such as a serious accident, or natural disaster).
Human rights implications
These amendments are likely to engage the following human right:
Right to social security
The amendment to reduce the period of temporary period of absence to 56
weeks continues to allow families to access family and parental payments
for a reasonable period of time while overseas. The 56-week period ensures
that those individuals who may be overseas for one year for work reasons
have time to return to Australia before ceasing to be eligible for family
assistance or parental payments.
The amendments also continue to allow for a reasonable period of access
while overseas as families can become eligible for these payments again if
they return to Australia for six weeks or more. The 56-week time period
remains more than the maximum six-week period allowed for other payments of
government assistance while a person is overseas.
Exemptions to the 56-week rule will allow certain individuals who are
temporarily absent from Australia to remain eligible for family and
parental payments for up to three years. Exemptions will apply to
individuals who are members of the Australian Defence Force or Australian
Federal Police who are on an overseas deployment. Exemptions for family
assistance will also apply to individuals accessing Government-funded
medical treatment under the Medical Treatment Overseas Program, and
individuals who are unable to return to Australia due to circumstances out
of their control. Exemptions for parental payment purposes would be
available in circumstances to be prescribed under the Paid Parental Leave
Rules.
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit
access to family and parental payments, these limitations are reasonable
and proportionate.
Schedule 11 - Extending the deeming rules to account-based income streams
This Schedule is compatible with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the legislative amendments
This Schedule will change the social security and veterans' entitlements
income test treatment of account-based superannuation income streams for
new products assessed.
For account-based income stream products assessed from 1 January 2015,
the deeming provisions will apply. In effect, the deeming rates will apply
to the combined value of a person's financial assets, including the current
account balance of any account-based income streams, to calculate the
amount of deemed income that is to be assessed under the income test to
determine a person's pension entitlement.
Under the current income test rules for account-based income streams,
income received by a person is reduced by an amount reflecting 'return of
capital'. This amount is calculated by purchase price by the person's life
expectancy at purchase. These rules often result in little or no income
being assessed for these products and, accordingly, higher rates of income
support payments and social security outlays.
The current income test rules favour people who can only afford to draw
down the minimum amount from their income stream each year. Many of these
people have no income from their income stream assessed against their
pension.
People who draw down significantly larger amounts, including those who need
to, would be better off under deeming rules compared to the current income
test rules.
The change will improve the sustainability and equity of the income support
system. It will assess financial investments held within account-based
income streams in the superannuation environment in the same way as the
majority of financial investments held outside of the superannuation
system.
Account-based income streams held by income support recipients immediately
before 1 January 2015 are grandfathered, and continue to be assessed under
existing income test rules.
Human rights implications
From 1 January 2015, this change to the social security income test
treatment for account-based income streams will affect account-based income
streams held by new income support recipients, current income support
recipients who purchase a new account-based income stream, or people whose
partners are receiving income support.
These people will have their account-based income stream assessed on the
same basis as similar financial investments under the current income test
deeming rules.
A proportion of these people will receive a higher level of income support
under the change, or receive the same amount of income support.
Another proportion will receive lower income support than they otherwise
would have under the current rules. However, it is the same amount of
income support that an identical person would receive if the assets backing
the account-based income stream were held directly in financial
investments.
The change will improve the equity of the income testing of social security
payments for account-based income streams.
Conclusion
The Schedule is compatible with human rights because it does not limit or
preclude people from gaining or maintaining access to social security.
There are no human rights implications.
Parts 2, 4, 5 and 6 of Schedule 12 (Miscellaneous amendments)
These amendments are compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This Schedule makes clarifying and technical amendments to portfolio
legislation, consistent with intended policy.
Part 2 - Time periods and FTB reconciliation conditions
Amendments are made to simplify current reconciliation provisions for
family tax benefit, addressing some gaps and unintended consequences in the
operation of these provisions. For consistency, minor amendments are also
made to the review time limit provisions to reflect recent changes that
reduced the period allowed for lodgement of relevant tax returns.
Part 4 - Use of tax file numbers
Minor amendments are made to the tax file number (TFN) provisions in the
family assistance law. These provisions simplify the TFN provisions,
including to enable the Commissioner of Taxation to provide the Secretary
with income information about an individual who is not required to lodge a
tax return using TFNs as the primary matching key.
Part 5 - Child support amendments
Child support administration involves the Department of Social Services
with responsibility for child support policy and the Department of Human
Services with responsibility for child support service delivery. Minor
amendments of a technical nature to the child support law will ensure that
the provisions operate consistently with these arrangements for child
support administration.
Part 6 - Other amendments
This Schedule also makes some minor adjustments to provisions relating to
the newborn supplement and newborn upfront payment of family tax benefit
and the stillborn baby payment, which commence on 1 March 2014, including
to:
. ensure that the newborn upfront payment of family tax benefit is
treated in the same way as the newborn supplement where the relevant
tax returns have not been lodged on time and the non-lodger provisions
apply;
. ensure that percentage determinations that allow family tax benefit to
be split in blended families and in certain situations where couples
separate, are taken into account in determining eligibility for the
newborn supplement and amount of the newborn upfront payment;
. allow a claim for stillborn baby payment to be made more than 52 weeks
after the birth of the stillborn child in further specified
circumstances;
. clarify that the higher rate of newborn supplement is available in
relation to the first child aged less than one year who is entrusted
to the care of an individual or their partner;
. ensure that a stillborn child in a multiple birth is taken into
account in determining the amount of newborn supplement.
Human rights implications
This Schedule is likely to engage the following human rights:
Right to social security
Parts 2, 4, 5 and 6
Article 9 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR), and article 26 of the Convention on the Rights of the
Child (CRC) recognise the right to social security.
As the amendments are of a minor or technical nature and are designed to
ensure the legislation is consistent with the intended policy, this right
is advanced by the amendments, and to the extent that the right is limited,
the limitations are reasonable and proportionate.
Right to privacy
Part 4 - Use of tax file numbers
The disclosure of personal information engages the right to privacy under
article 17 of the International Covenant on Civil and Political Rights
(ICCPR). The protection may be limited where such limitations are
authorised by law and are not arbitrary.
The increase to the tax free threshold has increased the number of family
tax benefit recipients who are not required to lodge a tax return. This
Schedule introduces simpler TFN provisions which more closely align with
the model of TFN provisions used in other portfolio acts. The information
is relevant for determining the adjusted taxable income of individuals who
are not required to lodge tax returns and may be relevant in verifying
eligibility for family assistance or to determine an individual's correct
rate of payment. The provisions also deal with the transfer of TFN data
for debt related purposes. This information is currently provided for
individuals who are required to lodge a tax return.
The disclosure of personal information does not treat any group of persons
differently, but rather, ensures that income verification at the time of
reconciliation for all recipients of family assistance includes relevant
information available from the Commissioner of Taxation.
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit
access to family assistance, these limitations are reasonable and
proportionate.
Part 3 of Schedule 12 (Protection of amounts under the National Disability
Insurance Scheme)
These amendments are compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
This measure amends the National Disability Insurance Scheme Act 2013 (the
NDIS Act) to ensure that amounts paid under the National Disability
Insurance Scheme in relation to funding for supports are inalienable. It
also seeks to prevent third parties from seeking to recover debts by
obtaining a garnishee order over bank accounts kept for the purpose of
managing funding for supports under the National Disability Insurance
Scheme. The amendments therefore extend protection to participants to
ensure that the funding for the reasonable and necessary supports under
their individual support plans can only be used that purpose.
Human rights implications
Article 19 of the Convention on the Rights of Persons with Disabilities
(CRPD) recognises the equal right of all persons with disabilities to live
in the community, with choices equal to others, and requires that effective
and appropriate measures be taken to facilitate full enjoyment by persons
with disability of this right and their full inclusion and participation in
the community.
Article 26 of the CPRD provides that nation states should take effective
and appropriate measures to enable people with disability to attain and
maintain maximum independence, full physical, mental, social and vocational
ability, and full inclusion and participation in all aspects of life. The
Article requires that parties should organise, strengthen and extend
comprehensive habilitate and rehabilitation services and programmes,
particularly in the areas of health, employment, education and social
services. Parties should ensure that these services: are available at the
earliest possible stage; are based on a multidisciplinary assessment of an
individual's needs and strengths; support participation in society; are
voluntary; and are available as close as possible to people in their own
communities.
The NDIS will also provide opportunities for people with disability to take
part in cultural life, consistent with Article 15 of the International
Covenant on Economic, Social and Cultural Rights (ICESCR).
Participant plans
Consistent with the provisions of Article 26 outlined above, the NDIS Act
provides for the provision and funding of reasonable and necessary supports
for participants in the National Disability Insurance Scheme if:
. the support will assist the participant to pursue the goals,
objectives and aspirations included in the participant's statement of
goals and aspirations;
. the support will assist the participant to undertake activities, so as
to facilitate the participant's social and economic participation;
. the support represents value for money in that the costs of supports
are reasonable, relative to both the benefits being achieved and the
cost of alternative supports;
. the support will be, or is likely to be, effective and beneficial for
the participant, having regard to current good practice;
. the funding or provision of the support takes account of what it is
reasonable to expect families, carers, informal networks and the
community to provide;
. the support is most appropriately provided through the National
Disability Insurance Scheme, and is not more appropriately provided
through other general systems of service delivery or support services
offered by a person, agency or body, or systems of service delivery or
support services offered:
o as part of a universal service obligation; or
o in accordance with reasonable adjustments required under a law
dealing with discrimination on the basis of disability;
. the support is not specified in the National Disability Insurance
Scheme rules as a support that will not be funded or provided under
the National Disability Insurance Scheme; and
. the funding or provision of the support complies with the methods or
criteria (if any) specified in the National Disability Insurance
Scheme rules for deciding the reasonable and necessary supports that
will be funded or provided under the National Disability Insurance
Scheme.
Plans are to be approved by the CEO in accordance with prescribed rules
(disallowable instruments) and remain in effect until replaced by another
plan, or they are revoked. Participants must be provided with a copy of
the plan.
The provision and funding of support for participants are individualised
and articulated through participant plans. The NDIS Act (sections 31 to
41) requires that preparation, review and replacement of plans, and
management of funding and supports provided under them should:
. be individualised;
. be directed by the participant;
. where relevant, consider and respect the role of family, carers and
other persons who are significant in the life of the participant;
. where possible, strengthen and build capacity of families and carers
to support participants who are children;
. consider the availability to the participant of informal support and
other support services generally available to any person in the
community;
. support communities to respond to the individual goals and needs of
participants;
. be underpinned by the right of the participant to exercise control
over his or her own life;
. advance the inclusion and participation in the community of the
participant with the aim of achieving his or her individual
aspirations;
. maximise the choice and independence of the participant;
. facilitate tailored and flexible responses to the individual goals and
needs of the participant; and
. provide the context for the provision of disability services to the
participant and where appropriate coordinate the delivery of
disability services where there is more than one disability service
provider.
These individual plans must be approved by the CEO in accordance with
prescribed rules and remain in effect until replaced by another plan, or
the plan is revoked.
Managing plans
Funding for supports provided under plans must be managed. This means:
. purchasing the supports identified in the plan;
. receiving and managing any funding provided by the Agency; and
. acquitting any funding provided by the Agency.
Plans may be managed by the participant, by a registered plan management
service provider, by the Agency, or by a plan nominee. In most cases, the
plan management arrangements put in place will be those requested by the
participant.
Payments (known as NDIS amounts) will be paid either to a participant or to
the person managing the participant's plan. National Disability Insurance
Scheme rules will govern the timing and manner of payments. NDIS amounts
must be spent in accordance with the participant's plan, and records of
payments and receipts retained for a period to be specified under the
National Disability Insurance Scheme rules.
These amendments to the NDIS Act ensure that amounts paid in relation to
funding for supports are inalienable. They also seek to prevent third
parties from seeking to recover debts by obtaining a garnishee order over
bank accounts kept for the purpose of managing funding for supports under
the National Disability Insurance Scheme. The amendments therefore extend
protection to participants to ensure that the funding for the reasonable
and necessary supports under their plans can only be used that purpose.
Conclusion
These amendments are compatible with human rights and extend protections to
persons with disabilities that have been afforded by the National
Disability Insurance Scheme.
Minister for Social Services, the Hon Kevin Andrews MP
-----------------------
[1] International Convention on the Elimination of All Forms of Racial
Discrimination, Article 2(1)
[2] International Covenant on Civil and Political Rights, Article 26.
[3] CCPR General Comment No. 18
[4] CCPR General Comment No. 18
[5] CESCR, General Comment No 20
[1] Committee on Economic, Social and Cultural Rights, General Comment No.
19, 'The right to social security (art 9)', paragraph 9.
[2] Ibid, paragraph 42.
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