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INCOME TAX REGULATIONS (AMENDMENT) (BENEFICIARY REBATES) 1991 NO. 158
EXPLANATORY STATEMENTSTATUTORY RULES 1991 No. 158
Issued by authority of the Treasurer
Income Tax Assessment Act 1936
Income Tax Regulations (Amendment) (Beneficiary Rebates)
The amending regulations amend regulations 148 and 152 of Part 8 of the Income Tax Regulations to incorporate changes in categories of beneficiary consequent on amendment of the Social Security Act 1947 by the Social Security and Veterans' Affairs Legislation Amendment Bill 1990 which came into operation on 21 September 1990.. The categories of beneficiary are integral to the operation of regulation 152 which determines the levels of tax rebates and rebate thresholds to which beneficiaries are entitled. The rebates of tax are operative for 1990-91 and subsequent income years.
Section 160AAA of the Act authorises the making of regulations to determine:
(a) the amount of the rebate of tax (the pensioner rebate) allowable to the recipient of certain social security pensions, benefits or allowances (other than unemployment, sickness or special benefits) or service pensions [subsection 160AAA(2)], where the pension, benefit or allowance is included in the assessable income of the recipient; and
(b) the amount of the rebate of tax (the beneficiary rebate) allowable to the recipient of social security unemployment, sickness or special benefits, the Job Search Allowance, the Formal Training Allowance or allowances paid under certain Commonwealth education schemes [subsection 160AAA(3)], where the benefit or allowance is included in the assessable income of the recipient.
Subsection 160AAA(5) of the Act overrides the provisions of the Acts Interpretation Act 1901 which would otherwise prevent the making of regulations to apply retrospectively. As a consequence, the regulations for the purpose of section 160AAA of the Act may apply in relation to a year of income any part of which occurred before the notification of the regulations.
The amending Regulations amend the Income Tax Regulations to accommodate changes in the categories of beneficiaries eligible for the beneficiary rebate. The beneficiary rebates ascertained as a result of the amending regulations provide for different levels of rebates in respect of a year of income. The different levels are as a consequence of a person receiving a benefit or allowance if he or she is in any of the following categories:
• single, under 18 years and living at home;
• single, under 18 years and living away from home;
• single, aged 18 to 20 years and living at home;
• single, aged 18 to 20 years and living away from home;
• single, aged 21 years or over;
• single, aged 60 years to 64 years and in receipt of
• unemployment benefits for six months or more;
• married, under 18 years, no dependent children;
• married, aged 18 to 20 years, no dependent children;
• married, aged 21 years or over, no dependent
• children, spouse under 21 years and/or on AUSTUDY; and
• other married including married with dependent children.
The changes in proposed categories came in to effect as from 21 September 1990. They are as follows:
(a) Single beneficiaries aged 18 to 20 years would be divided into two categories:
(i) living at home; and
(ii) living away from home.
Category (i) would be entitled to a lower level of rebate than category (ii). However if they got the benefit after 30 June 1990 and before 21 September 1990 they would be entitled to the same level of rebate as category (ii).
(b) Married beneficiaries aged below 21 years who have no dependent children are to be entitled to the same level of rebate as single beneficiaries in the same age group.
(c) Married beneficiaries aged 21 years or more who have no dependent children and whose spouse:
(i) is aged less than 21 years; or
(ii) is in receipt of an AUSTUDY allowance
would be entitled to a lower level of rebate than those married with children; and
(d) Married beneficiaries aged over 21 years with spouse aged 21 years or over not in receipt of an AUSTUDY allowance would be entitled to the same level of rebate as those married with children.
Beneficiaries in category (b) or (c) who got the benefit after 30 June and before 21 September are entitled to the same level of rebate as those married with children.
A beneficiary eligible for more than one level of rebate is entitled to the rebate which gives the greatest benefit.
The rebates shade out at a rate of 12.5 cents for each dollar of taxable income in excess of the level of the appropriate shade-out threshold.
Details of the amending Regulations are set out below.
Commencement
Subregulation 1.1 proposes that the amendments to the Income Tax Regulations come into effect from 1 July 1990.
Amendment
Subregulation 2.1 states that the Income Tax Regulations are amended as set out in these regulations.
Interpretation
Regulation 3 amends a number of existing definitions in regulation 148 and provides some new definitions to be included in that regulation. Both the new and amended definitions are necessary for the operation of regulation 152.
Subreguulation 3.1 amends the definition of "dependant spouserate benefit" in regulation 148 to take account of amendments to Division 3 of the Social Security Act 1947. (Division 3 of that Act determines the rates of benefits and allowances under Part XIII of that Act). The term means an unemployment or sickness benefit for a married person:
(a) who:
- has turned 21
- has a spouse who has turned 21 and who does not get an AUSTUDY allowance or a prescribed pension as defined in the Regulations;
- does not have a dependent child;
(b) who has a dependent child;
(c) not included in paragraph (a) or (b) above who got the benefit after 30 June 1990 and before 21 September 1990.
The benefit, under paragraph 118(1)(f) of the Social Security Act, is now increased for eligible persons by subsection 118(2) or (2AA) of that Act, by an amount not exceeding the level of benefit provided by paragraph 118(1)(f).
The term also applies to other categories of rebatable benefit -including a special benefit payable under section 129 of the Social Security Act - if the benefit applies to married persons who meet the criteria set out in subparagraphs (a), (b) and (c) above.
The recipient of the benefit defined by the term will be entitled tee a beneficiary rebate determined under regulation 152. The term is necessary for the operation of regulation 152.
Subregulation 3.2 inserts a new definition, that of a "married person", which has the same meaning as in the Social Security Act. The term includes a de facto spouse but does not include a legally married person who is living separately and apart from the spouse of the person on a permanent basis. The term is used in the definition of "dependant spouse-rate benefit" as amended by amending regulation 2.1 in regulation 148. It is also used in amending regulation 3 which amends regulation 152.
Subregulation 3.3 amends the style of expression in the definition of "paragraph 118(1) (a) benefit" in regulation 148 by omitting the present definition and inserting a new definition.
Subregulation 3.4 amends the style of expression in the definition of "paragraph 118(1)(aa)-rate benefit" in regulation 148 by omitting the present definition and inserting a new definition.
Subregulation 3.5 amends regulation 148 to reflect amendments to the Social Security Act.
This subregulation omits the present definition of "118(1)(b) rate benefit" in regulation 148 and inserts a new definition which reflects the amendment of paragraph 118(1)(b) of the Social Security Act. The term means an unemployment or sickness benefit the level of which is specified in paragraph 118(1)(b) of that Act. The benefit is payable to a married person aged 16 or 17 who has no dependent child. The term will also include other categories of rebatable benefit including a special benefit under section 129 of the Social Security Act - where the recipient is a married person aged 16 or 17 who has no dependent children. The term is necessary for the operation of regulation 152.
The amending subregulation adds three new definitions to regulation 148.
"Paragraph 118(l)(ba)-rate benefit" means an unemployment or sickness benefit the level of which is specified in paragraph 118(1)(ba) of the Social Security Act. The benefit is payable to a married person aged 18 to 20 who has no dependent child. It will also include the other categories of rebatable benefit - including a special benefit paid under section 129 of the Social Security Act - where the recipient is married, aged 18 to 20 years and has no dependent children. The term is necessary for the operation of regulation 152.
"paragraph 118(1)(bb) - rate benefit" means an unemployment or sickness benefit the level of which is specified in paragraph 118(1)(bb) of the Social Security Act. The benefit is payable to an unmarried person aged 18 to 20 who has no dependent child and is living at home. It will also include the other categories of rebatable benefit - including a special benefit paid under section 129 of the Social Security Act - where the recipient is unmarried, aged 18 to 20 years, has no dependent children and is living at home with his or her parents. The term is necessary for the operation of regulation 152.
"paragraph 118(1)(bc) - rate benefit" means an unemployment or sickness benefit the level of which is specified in paragraph 118(1)(bc) of the Social Security Act. The benefit is payable to an unmarried person aged 18 to 20 who has no dependent child and is not living at home. It will also include the other categories of rebatable benefit - including a special benefit paid under section 129 of the Social Security Act where the recipient is unmarried, aged 18 to 20 years, has no dependent children and is not living at home. The term is necessary for the operation of regulation 152.
Subregulation 3.6 amends the style of expression in the definition of "paragraph 118(1)(c)-rate benefit" in regulation 148 by omitting the present definition and inserting a new definition.
Subreaulation 3.7 adds a new definition. "paragraph 118(1)(f)-rate benefit" means an unemployment or sickness benefit the level of which is specified in paragraph 118(1)(f) of the Social Security Act. The benefit is payable to a married person aged 21 and over who has no dependent child and whose spouse is under 21 and/or on AUSTUDY. It will also include the other categories of rebatable benefit -including a special benefit paid under section 129 of the Social Security Act - where the recipient is married, aged 21 years or over, has no dependent children and whose spouse is under 21 and/or a recipient of AUSTUDY. The term is necessary for the operation of regulation 152.
Subregulation 3.8 inserts a new definition, "prescribed pension" which has the same meaning as that term in the Social Security Act which means:
(a) an aged, invalid, wives' and carers' pension under Part IV ;
(b) a sole parent's pension under Part V;
(c) a class B widow's pension under Schedule 1B;
(d) an unemployment, sickness or special benefit under Part XIII;
(e) a widowed person's allowance under Part VI;
(f) a sheltered employment allowance under Part XIV;
(g) a rehabilitation allowance under Part XVI; and
(h) a service pension, a wife's service pension or a carer's service pension under Part III of the Veterans' Entitlements Act 1986.
Regulation 4 of the amending regulations amends subregulation 152(5) which provides the basis of arriving at the component "annual benefit amount" to be used in the formulae in subregulation (2) and (3). Subregulation 152(2) provides a formula for calculation of the rebate thresholds above which the rebate shades-out. Subregulation 152(3) provides a formula for calculation of the rebate amount to which recipients of rebatable benefits are entitled.
Subregulation 4.1 omits existing paragraph 152(5)(a) of the Regulations and substitutes a new paragraph. This paragraph specifies the level of the "annual benefit amount" relating to a "dependant spouse-rate benefit"(defined by regulation 148 as amended). The annual benefit amount is the amount of benefit which would have been included in the assessable income if the taxpayer had received this benefit at the level paid by the Department of Social Security throughout the year of income. The level of benefit is that provided in paragraph 118(1)(f) of the Social Security Act as increased because of subsection 118(2) or (2AA) of that Act.
Subregulation 4.2 amends subparagraph 152(5)(c)(ii) of the Regulations to enable paragraph(5)(c) to specify the amount of the annual benefit amount where on 30 June of the income year the taxpayer is aged 16 or 17 years and received a benefit paid as:
(a) a "paragraph 118(1)(aa)-rate benefit" (paid where the taxpayer is unmarried, has no dependants and is living away from home or independent);
(b) a "paragraph 118(1)(b)-rate benefit" (where the taxpayer is married and has no dependent child); or
(c) a "paragraph 118(1)(d)-rate benefit" (where the taxpayer is unmarried with a dependant.
The amendment is necessary because of the amendment of the Social Security Act to include the new category of beneficiary in paragraph 118(1)(b) of that Act.
The amount of the annual benefit amount is the amount that would have been included in the assessable income of the taxpayer if he or she had received the benefit throughout the year of income at the level specified in paragraph 118(1)(aa) of the Social Security Act.
Subregulation 4.3 amends paragraph 152(5)(d) of the Regulations to enable paragraph 5(d) to continue to specify the annual benefit amount where on 30 June of the income year the taxpayer:
(a) a double orphan aged 16 or 17 years; and
(b) receives a living allowance under the Veterans' Children Education Scheme.
The annual benefit amount is the amount that would have been included in the taxpayer's assessable income if the unemployment benefit:
(a) specified in paragraph 118(1)(bc) of the Social Security Act for the year of income; and
(b) attributable to an unmarried person aged 18 to 20
- without dependent child; and
- living away from home;
had been received throughout the year of income.
Subregulations 4.4 and 4.5 amend subparagraph 152(5)(e)(ii) of the Regulations to enable paragraph (5)(e) to specify the amount of the annual benefit amount where on 30 June of the income year the taxpayer is unmarried, aged 18 to 20 years, has no dependent child and is living at home.
The amendment is necessary because of the amendment of the Social Security Act to apply to a new and different category of beneficiary in paragraph 118(1)(b) of that Act (married, aged 16 or 17 with no dependent child). Paragraph 118(i)(b) formerly applied to all recipients of unemployment benefits aged 18 to 20.
The annual benefit amount is the amount that would have been included in the assessable income of the taxpayer if an unemployment benefit the level of which is specified in paragraph 118(1)(bb) of the Social Security Act had been received throughout the year of income.
Subregulation 4.6 omits the existing paragraph 152(5)(f) of the Regulations. This paragraph applies to:
(a) a double orphan aged 20 years at 30 June in the income year; and
(b) who in 1989-90 received an amount paid as a living allowance under the Veterans' Children Education Scheme (VCES) at a level which applies to an unmarried unemployment beneficiary aged 21 and over.
In 1990-91, a double orphan VCES recipient who satisfies the above criteria will no longer be treated differently from other beneficiaries aged 20. Therefore it will no longer be necessary to make separate provision for this group.
Subregulation 4.6 inserts a new paragraph 152(5)(f). This paragraph specifies the annual benefit amount for a year of income of a taxpayer aged 18 to 20 years on 30 June in the income year who received:
• a paragraph 118(1)(ba)-rate benefit;
• a paragraph 118(1)(bc)-rate benefit; or
• a paragraph 118(1)(d) rate benefit;
and who is:
(a) married, with no dependent child [paragraph 118(1)(ba)-rate benefit];
(b) unmarried, with no dependent child and who is living away from home or independent [paragraph 118(1)(bc) - rate benefit]; and
(c) unmarried, with a dependant [paragraph 118(1)(d)-rate benefit].
Paragraph 152(5)(f) also specifies the level of annual benefit amount for a taxpayer aged 18 to 20 years, living at home and who began to receive the benefit after 30 June 1990 and before 21 September 1990. This person possesses the characteristics of a recipient of a paragraph 118(1)(bb)-rate benefit.
The annual benefit amount is the amount that would have been included in a taxpayer's taxable income for the year of income if the unemployment benefit specified in paragraph 118(1)(ba) or (bc) of the Social Security Act had been received throughout the year of income.
Regulation 4.7 inserts a new paragraph 152(5)(cfa) whichspecifies the annual benefit amount for a year of income for a taxpayer who:
(a) had, on 30 June in the year of income, turned 21; and
(b) is a married person who does not have a dependent child and who:
- has a spouse who has not turned 21 and/or who gets an AUSTUDY allowance or a prescribed pension;
- has assessable income for the year that includes an amount paid as a paragraph 118(1)(f)-rate benefit.
The annual benefit amount is the the amount that would have been included in the taxpayer's assessable income if the unemployment benefit, the level of which is specified in paragraph 118(1)(f) of the Social Security Act, had been received throughout the year of income.