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A New Tax System (Family Assistance) (Consequential and Related Measures) Bill (No.2) 1999



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Bills Digest No. 204  1998-99

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A New Tax System (Family Assistance) (Consequential and Related Measures) Bill (No.2) 1999

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. T his Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Contents

 

 

Passage History

A New Tax System (Family Assistance) (Consequential and Related Measures) Bill ( No.2) 1999

Date Introduced: 9 June 1999

House:  House of Representatives

Portfolio:  Family and Community Services

Commencement:  For the most part immediately after the commencement of several other Acts including the A New Tax System (Family Assistance) Act 1999 and A New Tax System (Family Assistance)(Administration) Act 1999, which commence after the commencement of specified goods and services tax legislation proposed to commence on 1 July 2000. However, transitional provisions may commence as early as 1 January 2000.

Purpose

The purpose of the A New Tax System (Family Assistance)(Consequential and Related Measures) Bill (No.2) 1999 (the Bill), is to accompany three other family assistance Bills(1) to facilitate the introduction of a new simplified stru cture and delivery mechanism for the provision of family assistance from 1 July 2000.

The Bill proposes to:

  • amend the Social Security Act 1991 to omit references relating to existing payments that have been combined into the three new payments under the A New Tax System (Family Assistance) Bill 1999
  • amend the A New Tax System (Family Assistance) Act 1999 to clarify some aspects of the new family assistance structure including inserting a reference to the family tax benefit advance, and
  • amend the A New Tax S ystem (Family Assistance)(Consequential and Related Measures) Act (No.1) 1999 to insert a further transitional provision that allows the use or disclosure of information between agencies (Australian Taxation Office, Centrelink and Health Insurance Commission) for transitional purposes in respect of the family assistance package. This will facilitate a more ordered approach in preliminary correspondence and communications with recipients of family assistance.

Background - Tax Reform Package

On 13 August 19 98 the Federal Government released proposals for reform of the Australian tax system(2) of which, a goods and services tax (GST) was the centrepiece.

The tax reform plan proposes to:

  • Introduce a GST which eliminates sales tax and a range of nine other indirect taxes
  • Change Commonwealth-State financial relations by providing States and Territories with an independent revenue base
  • Implement significant changes to individual marginal tax rates
  • Implement a major rationalisation of family assistance
  • Replace the various existing taxation payment and reporting systems of company tax, provisional tax, PAYE,(3) PPS(4) and RPS(5) by one quarterly tax payment system, PAYG(6)
  • Introduce a new universal business number system
  • Move toward an entity taxation system which is directed toward the elimination of tax advantages between different business structures, and
  • Simplify the imputation system and introduce refunds for excess franking credits.

As part of the tax reform package to implement a major rationalisation of family assistance the Government proposes to simplify the structure and delivery of family assistance.  Accordingly, twelve family benefits are proposed to be reduced to three and a new Family Assistance Office will deliver the new set of simplified family assistance programs.(7)

On 25 November 1998, the Senate referred issues relating to the GST and the new tax system to a Select Committee and three of its Reference Committees.(8) In February 1999 the Senate Select Committee produced its First Report.(9) The three Reference Committees produced their reports in March 1999.(10) In April 1999 the Senate Select Committee released its second report.(11)

Background - Family Assistance Package

1. Summary of the A New Tax System (Family Assistance) Bill 1999

The A New Tax System (Family Assistance) Bill 1999 introduces a proposed new family benefits structure that will reduce the existing payment mechanisms from twelve to three.

It also relocates Maternity Allowance from the Social Security Act 1991 to the A New Tax System (Family Assistance) Bill 1999. This is to ensure that all family assistance benefits are located in one Act.

It is proposed that there will be three distinct family benefits:

  • Family Tax Benefit Part A 
     
    Family Tax Benefit Part A (FTB-Part A) will provide assistance to families to raise children.
  • Family Tax Benefit Part B, and 
     
    Family Tax Benefit Part B (FTB-Part B) will provide additional assistance for single income families with children
  • Child Care Benefit 
     
    Child Care Benefit (CCB) will provide assistance with the costs of childcare outside the home.

An individual's annual rate of family tax benefit is the sum of FTB-Part A and  
FTB-Part B.

Maternity Allowance (MA), assistance in the form of a one-off payment to meet additional costs at the time of the birth of a child, will continue to be available with some minor changes.

2. Further background information on family benefits

For further information please refer to the Bills Digest for the A New Tax System (Family Assistance) Bill 1999, No. 175 of 1998-99, and in particular to the sections on family assistance initiatives and family benefits found on pages 2 to 5 inclusive. It includes a summary of family assistance from 1941 to 1999 in table format.

Main Provisions

  1. Schedule 1 - Amendments to the Social Security A ct 1991

Schedule 1 contains amendments to the Social Security Act 1991 which:

  • omit references to repealed payments, and
  • substitute new and equivalent references to family assistance law payments and concepts.
  1. Schedule 2 - Amendments to the A New Tax System (Family Assistance) Act 1999

Schedule 2 contains amendments to the A New Tax System (Family Assistance) Act 1999 which:

  • include 'family tax benefit advance' in the definition of family assistance ( Item 1 )
  • change references to a 'calendar year' to a 'financial year' in provisions concerning Child Care Benefit ( Items 3 to 8 , 10 , 34 and 35 ), and
  • make technical amendments, including the insertion of the word 'approved' before the various types of care service, for example 'approved family day care service' rather than 'family day care service' ( Items 9 , 18 , 19 , 22 , 24 , 30 and 31 ).
  1. Schedules 3 to 9 - Consequential amendments to other Acts

Schedules 3 to 9 make amendments to seven other Acts.

  • Child Care Act 1972 ( Schedule 3 )
  • Child Support (Assessment) Act 1989 ( Schedule 4 )
  • Data-matching Program (Assistance and Tax) Act 1990 ( Schedule 5 )
  • Farm Household Support Act 1992 ( Schedule 6 )
  • Health Insurance Act 1973 ( Schedule 7 )
  • Health Insurance Commission Act 1973 ( Schedule 8 ), and
  • Veterans' Entitlements Act 1986 ( Schedule 9 )

Basically the amendments:

  • insert references to family assistance law payments and concepts including definitions of those new elements and legislative references
  • delete references to current payments and substitute equivalent references to family tax benefit, and;
  • amend terms and definitions to reflect those in the family assistance law.
  1. Schedule 10 - Tax laws

Schedule 10 makes amendments to ten taxation laws including:

  • the Income Tax Assessment Act 1936
  • to enable the Australian Taxation Office to give information to Centrelink and the Health Insurance Commission for the purpose of administering the new scheme ( Item 8 )
  • to facilitate collection of Tax File Numbers for the purpose of administering the family assistance law ( Item 22 ), and
  • to allow tax deductibility of fees and commissions related to family tax benefit claimed through the tax system, paid to recognised tax advisers ( Item 30 ).
  1. Schedule 11 - Transitional and other amendments

Item 2 of Schedule 11 amends the A New Tax System (Family Assistance)(Consequential and Related Measures) Act (No.1) 1999 to insert further transitional provisions that allow the use or disclosure of information between agencies (Australian Taxation Office, Centrelink and the Health Insurance Commission) for transitional purposes in respect of the family assistance law.

It is expected that such cooperation will enable identification of shared customers so those customers receive only one letter explaining the new arrangements instead of three.(12)

Endnotes

 

1.A New Tax System (Family Assistance) Bill 1999; A New Tax System (Family Assistance)(Administration) Bill 1999 and A New Tax System (Family Assistance)(Consequential and Related Measures) Bill (No.1) 1999.

2.Treasurer, Tax Reform: not a new tax - a new tax system ; Tax Reform Plan, 13 August 1998, Commonwealth of Australia.

3.Pay As You Earn.

4.Prescribed Payments System.

5.Reportable Payments System.

6.Pay As You Go.

7.Treasurer, Tax Reform: not a new tax - a new tax system ; Tax Reform Plan, 13 August 1998, Commonwealth of Australia, pp. 52-5.

8.Senate Select Committee on A New Tax System; Senate Community Affairs References Committee; Senate Employment, Workplace Relations, Small Business and Education References Committee and Senate Environment, Communications, Information Technology and the Arts References Committee.

9.Senate Select Committee on A New Tax System, First Report , February 1999.

10.Senate Community Affairs References Committee, The Lucky Country Goes Begging, Report on the GST and a New Tax System , March 1999; Senate Employment, Workplace Relations, Small Business and Education References Committee, Report of the Inquiry into the GST and A New Tax System , March 1999 and Senate Environment, Communications, Information Technology and the Arts References Committee, Inquiry into the GST and a New Tax System , March 1999.

11.Senate Select Committee on A New Tax System, Main Report , February 1999.

12.Warren Truss MP, A New Tax System (Family Assistance)(Consequential and Related Measures) Bill (No.2) 1999, Second Reading, 9 June 1999, p 1.

Contact Officer

Lesley Lang, Dale Daniels and Peter Yeend

24 June 1999

Bills Digest Service

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