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Family and Community Services and Veterans' Affairs Legislation Amendment (Further Assistance for Older Australians) Bill 2001

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1998-1999-2000-2001

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

SENATE

 

 

 

 

 

 

 

 

 

FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT

(FURTHER ASSISTANCE FOR OLDER AUSTRALIANS) BILL 2001

 

 

 

 

 

 

 

 

 

 

 

 

REVISED EXPLANATORY MEMORANDUM

 

 

 

 

 

THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED

 

 

 

 

 

(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Amanda Vanstone)



FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT

(FURTHER ASSISTANCE FOR OLDER AUSTRALIANS) BILL 2001

 

 

OUTLINE AND FINANCIAL IMPACT STATEMENT

 

 

The Family and Community Services and Veterans’ Affairs Legislation Amendment (Further Assistance for Older Australians) Bill 2001 forms a part of the measures announced in the 2001-2002 Budget to give effect to the Government’s appreciation and acknowledgment of the contribution made by older Australians to society.

 

The Bill:

 

·          amends the Social Security Act 1991 to exempt superannuation from the social security means test for people aged between 55 and age pension age, from 1 July 2001;

 

·          amends the Social Security Act 1991 and the Veterans’ Entitlements Act 1986 to extend the telephone allowance to holders of seniors health cards, from 1 September 2001; and

 

·          amends the Social Security Act 1991 and the Veterans’ Entitlements Act 1986 to increase the income limits under which a person may qualify for the seniors health card, from 1 July 2001.

 

 

Schedule 1 -Beneficial treatment of superannuation assets for people aged between 55 and pension age

 

This beneficial measure, to commence on 1 July 2001, provides for the exemption of superannuation assets from the social security means test for people aged between 55 and age pension age.

 

This responds to a recommendation made in the report of a recent parliamentary inquiry into issues concerning mature aged workers (the “Nelson Report”).  It is consistent with directions for the mature aged unemployed contained in the Australians Working Together initiative, to promote active engagement of mature age unemployed.

 

It is estimated that some 55,000 people will benefit from this measure either through an increase in the rate of their social security pension or benefit or through becoming entitled to receive a social security pension or benefit.

 

Date of effect:

 

1 July 2001



 

Financial Impact:

 

The additional costs of exempting superannuation from the social security means test for people aged between 55 and age pension age are as follows:

 

Family and Community Services portfolio

 

                                                                2001-02                 2002-03                 2003-04                 2004-05

                                                                $m                          $m                          $m                          $m

 

Measure                                Administered        85.0                        86.7                        88.4                        90.2                                        Departmental                  4.2                          1.7                          1.7                          1.7       

 

                                Total                      89.2                        88.4                        90.1                        91.9       

 

Health and Aged Care portfolio

 

                                                                2001-02                 2002-03                 2003-04                 2004-05

                                                                $m                          $m                          $m                          $m

 

Measure                                Administered          9.6                        10.5                        11.5                        12.5                                        Departmental                  0.1                          0.1                          0.1                          0.1       

                                                                                                                                                                               

                                Total                        9.7                        10.6                        11.6                        12.6       

 

 

Schedule 2 - Extension of telephone allowance to holders of seniors health cards

 

This beneficial measure provides for seniors health card holders to be able to receive a telephone allowance - currently $17.20 per quarter (for both singles and couples) and paid in January, March, July and September - if they are a telephone subscriber.

 

Previously, only social security and service pensioners, certain social security beneficiaries and certain veterans could receive telephone allowance.  As a result of the measure, self-funded retirees of age pension age who qualify for a seniors health card will be able to claim telephone allowance.

 

Date of effect:

 

1 September 2001



 

Financial Impact:

 

The additional costs of extending telephone allowance to holders of seniors health cards are as follows:

 

Family and Community Services portfolio

 

                                                                2001-02                 2002-03                 2003-04                 2004-05

                                                                $m                          $m                          $m                          $m

 

Measure                                Administered        22.5                        23.0                        23.7                        24.2                                        Departmental                  8.2                          0.8                          0.8                          0.8       

 

                                Total                      30.7                        23.8                        24.5                        25.0       

 

Veterans’ Affairs portfolio

 

                                                                2001-02                 2002-03                 2003-04                 2004-05

                                                                $m                          $m                          $m                          $m

 

Measure                                Administered          4.0                          4.1                          4.1                          4.2                                        Departmental                  3.2                          0.1                          0.1                          0.1       

 

                                Total                        7.2                          4.2                          4.2                           4.3      

 

 

Schedule 3 - Increase in income limits for seniors health card

 

This beneficial measure increases the allowable income limits for the seniors health card to $50,000 for single people and $80,000 for couples.

 

Date of effect:

 

1 July 2001

 

Financial Impact:

 

The additional costs of increasing the allowable income limits for the seniors health card are as follows:

 

Family and Community Services portfolio

 

                                                                2001-02                 2002-03                 2003-04                 2004-05

                                                                $m                          $m                          $m                          $m

 

Measure                                Administered          0.0                          0.0                          0.0                          0.0                                        Departmental                  1.5                          0.0                          0.0                          0.0       

 

                                Total                        1.5                          0.0                          0.0                          0.0       



 

Veterans’ Affairs portfolio

 

The costs are negligible.

 

Health and Aged Care portfolio

 

                                                                2001-02                 2002-03                 2003-04                 2004-05

                                                                $m                          $m                          $m                          $m

 

Measure                                Administered        22.5                        24.7                        27.0                        29.3                                        Departmental                  0.0                          0.0                          0.0                          0.0       

                                                                                                                                                                               

 

                                Total                      22.5                        24.7                        27.0                        29.3       

 



FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT

(FURTHER ASSISTANCE FOR OLDER AUSTRALIANS) BILL 2001

 

 

NOTES ON CLAUSES

 

 

Clause 1 - Short title

 

This clause specifies that the short title of the Bill, when enacted, will be the Family and Community Services and Veterans’ Affairs Legislation (Further Assistance for Older Australians) Act 2001 .

 

 

Clause 2 - Commencement

 

This clause specifies that:

 

·          clauses 1, 2 and 3 of the Bill commence on Royal Assent;

 

·          Schedules 1 and 3 commence on 1 July 2001; and

 

·          Schedule 2 commences on 1 September 2001.

 

 

Clause 3 - Schedules

 

This clause gives effect to the Schedules to the Bill.

 



Schedule 1 - Beneficial treatment of superannuation assets for people aged between 55 and pension age

 

 

Summary of proposed changes

 

As the Social Security Act 1991 (the Social Security Act) currently stands, the provisions operate so that a person below age pension age (in the Social Security Act referred to as “pension age”) has their superannuation assets assessed under the social security means test if they have received income support payments for a total period of 39 weeks after turning 55.

 

This Schedule amends the Social Security Act to provide for the exemption of superannuation assets from the social security means test for all people aged between 55 and age pension age.

 

The social security means test treatment of superannuation assets of people under 55 years of age or who have reached age pension age is not affected by this measure.

 

 

Explanation of the changes

 

Clause 2 provides that the amendments commence on 1 July 2001.

 

Subsection 8(1) of the Social Security Act contains a definition of “income” for the purposes of the Social Security Act.  The definition excludes certain amounts by reference to specified subsections of section 8.

 

Subsection 8(7A) provides the general rule that a return on a person’s investment in a superannuation fund, an approved deposit fund, a deferred annuity or an ATO small superannuation account is not income for the purposes of the Social Security Act if the person has not either reached pension age or started to receive a pension or an annuity out of the relevant fund.  However, subsection 8(7A) is subject to subsection 8(7B).

 

Subsection 8(7B) modifies this exclusion, by stating that subsection 8(7A) does not exclude a return on a person’s investment if the person is between 55 and age pension age and has received income support for a total of 39 weeks since turning 55.

 

As returns on superannuation investments held by all people below age pension age are now to be excluded, subsection 8(7B) is no longer relevant and is to be repealed.  The rule currently set out in subsection 8(7A) is to be maintained but relocated in subsection 8(8) that sets out a list of amounts excluded from income from the social security means test.

 

Items 2 and 3 provide for this.  Item 1 is consequential to the amendments made by Item 2 .

 



Section 9 of the Social Security Act contains certain definitions that are relevant to the concept of “investment income”.  Subsection 9(1B) provides specific guidance in relation to “managed investments”.  The notes to paragraphs 9(1B)(d), (e), (f) and (g) refer the reader to provisions in subsection 9(1C) that apply to exclude certain investments from the definition of managed investments (and, therefore, from the operation of extended deeming) to persons who have not reached age pension age and are not “prescribed pre-pension age persons”.  Since the effect of the amendments made by the Schedule is to remove the restriction in relation to anyone under age pension age, Items 4, 5, 6 and 7 amend the notes to paragraphs 9(1B)(d), (e), (f) and (g), respectively, to reflect this.

 

For similar reasons, Items 8, 9, 10 and 11 amend paragraphs 9(1C)(a), (b), (c) and (ca), respectively.

 

Item 12 omits a note to subsection 9(1C) that is no longer necessary because of the effect of the amendments made by the Schedule.

 

Item 13 repeals the definition of “prescribed pre-pension age person”, as it is no longer necessary.  It is no longer necessary because all people aged between 55 and age pension age are now to be treated in the same way.

 

Section 1096 provides for how income is to be assessed when a person makes a withdrawal from a superannuation fund, an approved deposit fund, a deferred annuity or an immediate annuity prior to the person reaching age pension age and does not roll the amount over.  In such a case, one fifty-second of the assessable growth component of the withdrawn (realised) amount is attributed to them as ordinary income each week for 12 months commencing from the day on which the withdrawal is made.  Although this section does not apply for a person below age pension age who has turned 55 and been in receipt of income support for a total of 39 weeks or more, it does apply to other people between 55 and age pension age.

 

Item 14 amends paragraph 1096(aa) so that the rule set out in section 1096 (which will now become subsection 1096(1) because of the amendment made by Item 16 ) will not now apply to anyone between 55 and age pension age.  This is necessary to achieve the full exemption of superannuation assets from the means test for all people between age 55 and age pension age.

 

Item 15 repeals the notes to section 1096 as they are no longer necessary because of the effect of the amendments made by the Schedule.

 

Item 16 inserts new subsection 1096(2) to deal with the situation if a person makes a withdrawal from a superannuation fund, an approved deposit fund, a deferred annuity or an immediate annuity in the 12 months prior to the person turning 55.  The new subsection makes it clear that if this occurs, then from the week in which the person turns 55, the rule set out in subsection 1096(1) will no longer apply to them (that is, even if the 12 month attribution period has not ended).

 



As the amendments made by the Schedule commence on 1 July 2001, this means that a person who has turned 55 and who, in the absence of the amendments made by the Schedule would have “serving” the 12 month attribution period, will immediately cease to be subject to the attribution on 1 July 2001.

 

Section 1118 provides that certain assets are to be disregarded for the purposes of calculating the value of a person’s assets.

 

Item 17 inserts new paragraph 1118(1)(f) to provide that the value of a person’s assets in a superannuation fund, an approved deposit fund, a deferred annuity or an ATO small superannuation account is to be disregarded until such time as the person reaches age pension age or starts to receive a pension or annuity out of the fund.

 

This replaces the current rule set out in section 1118A that also provides that the value of such assets are to be disregarded until a person becomes a “prescribed pre-pension age person”, that is, has turned 55 and been in receipt of income support for a total of 39 weeks or more.

 



Schedule 2 -Extension of telephone allowance to holders of seniors health cards

 

 

Summary of proposed changes

 

This measure provides for holders of seniors health cards to be able to receive a telephone allowance if they are a telephone subscriber.  The allowance is currently $17.20 per quarter (for both singles and couples) and paid in January, March, July and September.

 

Previously, only social security and service pensioners, certain social security beneficiaries and certain veterans could receive telephone allowance.  As a result of the measure, self-funded retirees of age pension age who qualify for a seniors health card will be able to claim telephone allowance.

 

 

Explanation of the changes

 

Social Security Act 1991

 

Clause 2 provides that the amendments commence on 1 September 2001.

 

Section 1061Q sets out the qualification criteria for telephone allowance.

 

Item 1 inserts new subsection 1061Q(4A) to give effect to the Government’s decision to extend the provision of telephone allowance to holders of seniors health cards.

 

Apart from being a telephone subscriber (already defined in subsection 1061Q(5)), the person must meet one of two alternatives.

 

The first alternative is that the person must currently be the holder of a seniors health card.

 

The second alternative applies where a person is temporarily absent from Australia for a continuous period not exceeding 26 weeks and was the holder of a seniors health card immediately before leaving Australia.  The current position is that telephone allowance is portable for 26 weeks, that is, a person may be outside Australia temporarily for up to 26 weeks before it ceases to be payable to the person.  However, a person ceases to be the holder of a seniors health card once they leave Australia.  The drafting of the second alternative gives effect to the intention that telephone allowance be portable for up to 26 weeks for all telephone allowance recipients who leave Australia temporarily.

 

Subsection 1061S(1) provides that the rate of telephone allowance payable to a person is to be worked out using the Table set out in that subsection.

 

Items 2, 3, 4, and 5 modify the Table to take account of the decision to extend telephone allowance to holders of seniors health cards.

 

Item 6 inserts new subsection 1061S(3A).  The new subsection ensures that for the purposes of working out a person’s situation and subsequently, the rate of telephone allowance payable to them, if a person’s partner is temporarily absent from Australia for a continuous period not exceeding 26 weeks and was the holder of a seniors health card immediately before leaving Australia, the partner is still taken to be a holder of a seniors health card.

 

 

Social Security (Administration) Act 1999

 

Section 48 provides for the payment of telephone allowance.  However, the current provision presumes that a recipient of telephone allowance is also receiving a social security periodic payment, for example, age pension, so that the quarterly payment of telephone allowance is paid on the person’s social security periodic payment payday on or after one of four specified dates.

 

By contrast, a holder of a seniors health card does not receive any social security periodic payments.

 

Accordingly, Item 7 amends the definition of “telephone allowance payday” in subsection 48(4).

 

As a result, holders of seniors health cards to whom telephone allowance is to be paid will receive a quarterly instalment on 1 January, 20 March, 1 July and 20 September each year (or the next working day after any of those four dates).

 

 

Veterans’ Entitlements Act 1986

 

Items 8 to 10 make similar amendments to the Veterans’ Entitlements Act to extend telephone allowance to people who are holders of senior health cards under that Act.



Schedule 3 - Increase in income limits for seniors health card

 

 

Summary of proposed changes

 

This measure increases the income limits for the seniors health card to $50,000 for single people and $80,000 for couples, from 1 July 2001.

 

 

Explanation of the changes

 

Social Security Act 1991

 

Clause 2 provides that the amendments commence on 1 July 2001.

 

One of the qualification criteria for the seniors health card under the Social Security Act is that a person must satisfy the seniors health card taxable income test.  Essentially, a person’s taxable income (as adjusted for the person’s fringe benefits, target foreign income and net rental property loss) must be less than the income limits that apply to the person.

 

The income limits depend on a person’s family circumstances and are set out in the Table in Point 1071-12.

 

The Table is to be amended by Item 1 to take account of the Government’s decision to increase the income limits.

 

Veterans’ Entitlements Act 1986

 

Amendments mirroring those made to the Social Security Act are made by Item 2 to section 118ZAA-11 of the Veterans’ Entitlements Act so as to increase the income limits for the seniors health card under that Act.