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Family Assistance and Other Legislation Amendment Bill 2013

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2010-2011-2012-2013

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT Bill 2013

 

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

 

 

Amendments to be moved on behalf of the Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Families, Community Services and Indigenous Affairs, Minister for Disability Reform, the Hon Jenny Macklin MP)

 

 



FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT Bill 2013

 

Amendments to be moved on behalf of the Government

 

 

OUTLINE

 

These amendments add to the Bill two measures affecting families announced in the 2013 Budget package, A More Sustainable Family Payments System .

Replacing the baby bonus - new family payment arrangements for newborns

From 1 March 2014, the baby bonus will no longer be available.  In its place, families who are eligible for family tax benefit Part A, and who are not accessing parental leave pay, will receive an additional loading on their payments to help with the upfront costs of having a new baby.

The extra family tax benefit Part A payment will deliver $2,000 for a family’s first child (and for each child in a multiple birth) and $1,000 for second and subsequent children.  It will be paid as an initial instalment of $500, with the remainder rolled into normal fortnightly payments over a three-month period.

These new arrangements more closely reflect the essential upfront costs of having a baby and better target assistance now that Australia has a national Paid Parental Leave scheme.

This measure also makes changes to the work test under the Paid Parental Leave scheme, making it easier for working mothers with children born close together to qualify for parental leave pay for subsequent children.

Reducing the claim period for family assistance lump sum claims

Families choosing to wait until the end of the financial year to claim their family tax benefit or child care benefit entitlement will now have a grace period of one year instead of two years in which to claim.  This change will start for the 2012-13 entitlement year, meaning families will have 12 months from the end of that year (until 30 June 2014) in which to claim their entitlement.

Families will also have one year in which to lodge their tax returns if they are to receive the end-of-year family tax benefit supplements, and to meet immunisation and health check requirements linked to the end-of-year family tax benefit Part A supplement.

Families will be able to access extensions in special circumstances, similar to arrangements for tax returns.  The changes bring family payment claim periods more into line with time limits for lodging tax returns before penalties may be imposed, and with the policy intent of the family assistance program, to assist parents with day-to-day costs of raising children.

Financial impact statement

 

MEASURE

FINANCIAL IMPACT

Replacing the baby bonus - new family payment arrangements for newborns

Saving of $1.1 billion over five years.

Reducing the claim period for family assistance lump sum claims

Saving of $562 million over five years.

 

 



FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT Bill 2013

 

Amendments to be moved on behalf of the Government

 

 

NOTES ON AMENDMENTS

 

Abbreviations used in this supplementary 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

 

 

Amendments (1) to (3) amend clause 2 of the Bill to set out commencement dates for the new measures added to the Bill.  The commencement dates for the new measures are discussed in the relevant passages below.

 

Amendment (4) amends the title of existing Schedule 1 to the Bill so it is now titled:  Schedule 1 - Reduction of baby bonus from 1 July 2013.  This is to differentiate the baby bonus measure introduced in existing Schedule 1 from the baby bonus measure introduced, by amendment (5) below, in new Schedule 2A - Replacement of baby bonus from 1 March 2014.

 

Amendments (5) and (6) make consequential amendments to existing Schedule 1 to the Bill in light of the new baby bonus measure.

 

Amendment (7) inserts after existing Schedule 2 to the Bill new Schedule 2A (Replacement of baby bonus from 1 March 2014) and new Schedule 2B (Time periods).  Each of these new Schedules is discussed below.

 



 

New Schedule 2A - Replacement of b aby bonus from 1 March 2014

Summary

From 1 March 2014, the baby bonus will no longer be available.  In its place, families who are eligible for family tax benefit Part A, and who are not accessing parental leave pay, will receive an additional loading on their payments to help with the upfront costs of having a new baby.

The extra family tax benefit Part A payment will deliver $2,000 for a family’s first child (and for each child in a multiple birth) and $1,000 for second and subsequent children.  It will be paid as an initial instalment of $500, with the remainder rolled into normal fortnightly payments over a three-month period.

These new arrangements more closely reflect the essential upfront costs of having a baby and better target assistance now that Australia has a national Paid Parental Leave scheme.

This measure also makes changes to the work test under the Paid Parental Leave scheme, making it easier for working mothers with children born close together to qualify for parental leave pay for subsequent children.

Background

Replacement of baby bonus

Under current legislative arrangements, baby bonus is available to families following the birth (including stillbirth), entrustment to care or adoption placement of a child.

The current baby bonus rate is $5,000 per eligible child, paid in 13 fortnightly instalments, and is limited to families whose estimated combined adjusted taxable income is $75,000 or less in the six months following the birth of the child or the child’s entry into the family’s primary care.  From 1 July 2013, amendments in Schedule 1 to this Bill will reduce the rate for second and subsequent children to $3,000.

From 1 March 2014, baby bonus will be abolished and replaced with an increase to family tax benefit and a separate stillborn baby payment. 

The change to family tax benefit will involve an increase to the family tax benefit Part A rate for a 13-week period, with a newborn supplement component included in both the maximum rate (clause 3 of Schedule 1 to the Family Assistance Act), and the base rate (clause 25 of Schedule 1 to that Act).  This will apply to parents, to families entrusted with the care of a child (for example, foster carers), and to adopting parents. 

There will also be a ‘newborn upfront amount’ of $500, if eligibility for the newborn supplement is established, so that part of the new assistance is delivered as an upfront lump sum.

There will also be a separate stillborn baby payment.

Counting previous PPL period etc. for work test

The Paid Parental Leave scheme commenced on 1 January 2011, and provides eligible primary carers (usually the mother) of children born or adopted from 1 January 2011 with up to 18 weeks’ parental leave pay at the rate of the national minimum wage.  The Paid Parental Leave scheme was extended to introduce a new payment, called dad and partner pay, for eligible fathers and partners, including adopting parents and parents in same-sex couples, who are caring for a child born or adopted from 1 January 2013. 

Under the current rules, to be eligible for parental leave pay or dad and partner pay, a person needs to satisfy a number of different criteria, including the work test.

In the case of parental leave pay, the work test applies by reference to work undertaken in the work test period, which is the 392 days prior to the day the claimant becomes the primary carer of the child (in most cases, upon birth of the child for the birth mother).  The test operates similarly for dad and partner pay, where it applies by reference to work performed prior to the DAPP period.  The work test requires a person to have performed at least 330 hours of qualifying work during a qualifying period of 295 consecutive days in the 392 days, with no more than a 56-day gap between two working days.  An exception to the work test applies where a person would have met the work test but for a premature birth or pregnancy-related complication or illness.

In some cases, where there is short birth spacing between children, or children enter a family close together, it may be difficult for a person to satisfy the work test for a subsequent child.  For example, a primary claimant may have claimed and received parental leave pay for a previous child, and will have a PPL period of up to 18 weeks during which they cannot engage in paid work under eligibility criteria.  A previous PPL period that occurs in the work test period for a new claim cannot currently contribute to the work test for a new claim for a second or subsequent child.

These measures address this issue by allowing a person to count a day in their previous PPL period and/or DAPP period towards satisfying the work test for a new claim.

These amendments apply to PPL periods and DAPP periods taken for a previous child.  Sections 36B and 115CF of the Paid Parental Leave Act already allow a person to satisfy the work test if they are already eligible for parental leave pay or dad and partner pay for that same child.

Commencement

The amendments made by new Schedule 2A give effect to these changes, and commence on 1 March 2014.

Explanation of the changes

Part 1 - Newborn supplement for Part A rate of family tax benefit

Amendments to the Family Assistance Act

Newborn upfront payment

Item 2 inserts a new section 58AA into the Family Assistance Act.  This new provision sets out the circumstances in which an individual is entitled to a newborn upfront payment of family tax benefit in respect of an FTB child and the circumstances in which the payment cannot be paid. 

New subsection 58AA(1) provides that an individual is entitled to be paid, as family tax benefit, an amount of $500 in respect of an FTB child if an amount of newborn supplement in respect of that child is added in working out their rate of family tax benefit Part A. 

A note at the end of this provision refers to the reader to new section 24A, which provides that this $500 amount - the ‘newborn upfront payment’ - is to be paid as a single lump sum.

However, two members of the same couple cannot each receive the newborn upfront payment in respect of the same FTB child (new subsection 58AA(2) refers). 

New subsection 58AA(3) enables the Minister to prescribe, by legislative instrument, other circumstances in which the newborn upfront payment cannot be paid.  The instrument would be made under new subclause 35A(12) of Schedule 1 to the Family Assistance Act (as inserted by item 6 ).

New subsection 58AA(4) makes it clear that an individual cannot receive more than one newborn upfront payment of family tax benefit in respect of an FTB child.

Item 1 makes a consequential change by including the new $500 payment in the definition of family tax benefit .

Newborn supplement

The method statement in clause 3 of Schedule 1 to the Family Assistance Act sets out the method for calculating an individual’s maximum Part A rate.  Item 3 ensures that the individual’s newborn supplement is included as a component of their maximum rate. 

Item 4 includes the newborn supplement as another relevant amount in the method statement in clause 24N, which is then used for the purposes of working out an individual’s maintenance income ceiling for income received by the individual or their partner in relation to child support.

The method statement in clause 25 of Schedule 1 to the Family Assistance Act sets out the method for calculating an individual’s Part A base rate.  Item 5 ensures that the individual’s newborn supplement is included as a component in the calculation of their base rate. 

Item 6 inserts a new Division 1A into Part 5 of Schedule 5.  This new Division sets out the circumstances in which an amount of newborn supplement is to be added in working out an individual’s Part A rate (new clause 35A) and how to calculate an individual’s annual amount of newborn supplement (new clause 35B).

New clause 35A deals with eligibility for the newborn supplement.

New subclause 35A(1) provides that an amount of newborn supplement is to be added for a day in working out an individual’s Part A rate, if the individual is eligible for the newborn supplement on that day.  The maximum period of eligibility would be 13 weeks.

There are three broad eligibility categories - parent, child entrusted to care and adoption. 

Parent of child

New subclause 35A(2) sets out the conditions that need to be satisfied for a parent to be eligible for the newborn supplement.

An individual would be eligible for the newborn supplement for a day in respect of their FTB child if, on that day, the individual or their partner is a parent of the child, the child is aged less than one and the individual’s Part A rate (including the newborn supplement but disregarding specified deductions) would be greater than nil.  The day would also need to occur within a period of 13 weeks after these conditions are first met and before the child’s first birthday. 

Generally an individual would become eligible for the newborn supplement in the 13-week period following the child’s birth.  However, an individual who is ineligible for the newborn supplement in the income year in which the child is born (because their Part A rate is nil due to income) may become eligible for the newborn supplement in the next income year (if their Part A rate then exceeds nil because their income is lower).  Eligibility would cease upon the child turning one, even where the 13-week period has not yet ended.

Finally, if the individual is responsible for registering the child’s birth under the law of a State or Territory, the Secretary must be notified, or become aware, within a certain time limit, that the birth registration requirement has been met.

The birth registration requirement, as set out in new subclause 35A(3), is that the birth of the child has been registered in accordance with the relevant law or that the individual or their partner has applied to register the birth. 

The time limit for registration of the birth would generally be the end of the first income year after the income year that includes the last day on which the newborn supplement could be paid for the child.  For example, if the last day the newborn supplement could be paid for the child was 10 July 2014, the time limit for a parent to advise of birth registration and still be eligible for the newborn supplement would generally be 30 June 2016.  This time limit coincides with the time limit for a past period claim.  However, if the Secretary grants the individual a special circumstances extension for lodging an family tax benefit claim in relation to the child and the relevant income year, the Secretary would also be able to extend the time limit for meeting the birth registration requirement, but to no later than the end of the second income year following the income year in which the ‘last day’ occurs (new subclause 35A(4) refers).

Child entrusted to care

New subclause 35A(5) sets out the conditions that need to be satisfied for an individual to be eligible for the newborn supplement under the child entrusted to care category of eligibility.

An individual would be eligible for the newborn supplement for a day in respect of their FTB child if, on that day, neither the individual or their partner is a parent of the child but the child has been entrusted to the care of the individual or their partner, the child is aged less than one and the individual’s Part A rate (including the newborn supplement but disregarding specified deductions) would be greater than nil.  The day would also need to occur within a period of 13 weeks after these conditions are first met and before the child’s first birthday. 

However, the individual would not be eligible for any amount of newborn supplement if the child is not in their care for a period of at least 13 weeks (new subclause 35A(6) refers). 

Adoption

New subclause 35A(7) sets out the conditions that need to be satisfied for an adoptive parent to be eligible for the newborn supplement.

An individual would be eligible for the newborn supplement for a day in respect of their FTB child if, on or before that day, the child became entrusted to the care of the individual or their partner by an authorised party as part of the process of adoption and the individual’s Part A rate (including the newborn supplement, but disregarding specified deductions) would be greater than nil on the day.  The day would also need to occur within a period of 13 weeks after these conditions are first met and before the end of the period of 12 months beginning on the day that the child became entrusted to the care of the individual or their partner. 

For adoptive parents, there is no age limit for children to attract the newborn supplement, apart from the FTB child age limit. 

The situations in which an individual cannot be eligible for the newborn supplement are set out in new subclauses 35A(8), (9) and (10).

New subclause 35A(8) ensures that an individual cannot be eligible for a newborn supplement in respect of their FTB child if parental leave pay is payable at any time to the individual for that child. 

New subclause 35A(9) ensures that an individual cannot be eligible for a newborn supplement in respect of their FTB child if parental leave pay in respect of that child is payable to another person who was their partner for at least 13 weeks of the person’s PPL period or, if the person’s PPL period was less than 13 weeks, the whole of the PPL period.

New subclause 35A(10) 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 the newborn supplement in respect of that child. 

New subclauses 35A(11) and (12) enable the Minister, by legislative instrument, to prescribe circumstances in which an amount of newborn supplement is not to be added for one or more days in relation to an individual and an FTB child.  The instrument can also prescribe circumstances in which the related newborn upfront payment of family tax benefit (under section 58AA) cannot be added.  The circumstances prescribed in the instrument in relation to the individual and their FTB child must relate to payability of parental leave pay, or the addition of a newborn supplement to another individual for the same child, or the individual being a member of a couple or a former member of a couple (new subclause 35A(13) refers).  The instrument may deal with situations where an individual is eligible for the newborn supplement for less than 13 weeks, because they were partnered to another person who was paid either parental leave pay or newborn supplement for the child but separated from that other person before they received the full benefit of the other payment.

In clause 35A, a parent includes a relationship parent (new subclause 35A(14) refers). 

New clause 35B sets out the annualised rate of newborn supplement for a first or subsequent child, and in situations of multiple birth or where two or more children are entrusted to care as part of the same process. 

The annualised amount of newborn supplement for a parent in respect of an FTB child who is the first child born alive to the woman who gave birth is the amount worked out using the formula:

$1,501.50 x 365/91

The annualised amount of newborn supplement is the same for an individual who is eligible under the entrusted to care and adoption categories where the child is the first child that is entrusted to the care of the individual or their partner. 

The amount of $1,501.50 is the total amount of newborn supplement that can be added in respect of a first child in working out the individual’s maximum rate or base rate for the 13-week maximum period of eligibility. 

This amount of newborn supplement would also apply where two or more children are born during the same multiple birth, or where two or more children become entrusted to the care of an individual or their partner as part of the same entrustment to care process or adoption process.

Otherwise, the amount of newborn supplement for an individual in respect of an FTB child who is not a first child born or entrusted to the care of a family is worked out using the formula:

$500.50 x 365/91

The amount of $500.50 is the total amount of newborn supplement that can be added in respect of a child who is not a first child in working out the individual’s maximum rate or base rate for the 13-week maximum period of eligibility. 

The note at the end of new subclause 35B(1) explains that the formula annualises the newborn supplement because it forms part of the process of working out an individual’s annual rate of family tax benefit.  The rate of family tax benefit for a day is the annual rate divided by 365 (see section 58 of the Family Assistance Act).  That daily rate will only include the newborn supplement for a maximum period of 13 weeks.

Indexation

Clause 2 of Schedule 4 to the Family Assistance Act lists the amounts to be indexed or adjusted and provides an abbreviation for easy reference.  The abbreviation is then used in clause 3, which sets out how certain amounts are to be indexed in accordance with the Consumer Price Index.

Item 7 inserts references to the newborn supplement and newborn upfront payment into clause 2, and indicates where the relevant amounts are located.

Item 8 then provides for indexation of these amounts on 1 July in accordance with the Consumer Price Index.

Under subclause 3(7) of Schedule 4, specified amounts, including the baby bonus income limit, are not indexed on 1 July of the years 2009 to 2013.  Item 9 makes a consequential amendment to remove the reference to the baby bonus income limit from subclause 3(7).  Because this change commences on 1 March 2014, the existing provision will ensure that the baby bonus income limit is not indexed on 1 July 2013.  

Subclause 3(9) provides that baby bonus is not to be indexed on 1 July of 2012, 2013 or 2014.  As this provision is repealed by item 10 from 1 March 2014, baby bonus will not be indexed on 1 July 2013.

Item 10 also inserts a new subclause 3(9), which ensures that the first indexation of the newborn supplement and newborn upfront payment will be 1 July 2014.

Amendments to the Family Assistance Administration Act

As a general rule, the only way that a person can become entitled to be paid family tax benefit is to make a claim.  Item 12 amends section 5 of the Family Assistance Administration Act so that a claim is not required for a person to be paid the newborn upfront payment of family tax benefit, which can occur automatically upon the person becoming eligible for the newborn supplement.  Item 11 makes a technical consequential amendment.

Item 13 changes the heading to section 24 so that it reflects the subject matter dealt with by the provision.

Item 14 inserts new section 24A, which provides that the newborn upfront payment of family tax benefit is to be paid as a single lump sum at such time and in such manner as the Secretary considers appropriate.  Payment of the newborn upfront payment would be subject to rules which prevent payment of family tax benefit on the basis of an estimate where relevant tax returns have not been lodged, and also subject to nominee arrangements and tax-related reductions.

Item 15 inserts a reference to family tax benefit under new section 58AA (the newborn upfront payment) into the definition of relevant benefit in section 219TA of the Family Assistance Administration Act.  The effect is that the newborn upfront payment can be paid to a person’s nominee if a nominee arrangement is in place.

Part 2 - Stillborn baby payment

Amendments to the Family Assistance Act

Items 16 to 19 amend definitions in subsection 3(1) of the Family Assistance Act. These changes are consequential to the repeal of baby bonus and introduction of a new payment, the stillborn baby payment.

Item 20 inserts a new definition of stillborn baby payment .

Item 21 repeals Division 2 of Part 3 of the Family Assistance Act, which related to eligibility for baby bonus.  A new Division 2 is substituted, which sets out the eligibility criteria for the stillborn baby payment.

The eligibility criteria for the stillborn baby payment reflects the criteria that applied for an individual to be eligible for baby bonus in respect of a stillborn child, with some changes to the income test requirements to reflect other changes in this Schedule related to family tax benefit.

Where an individual has given birth to a stillborn child and the individual is already eligible for family tax benefit (in respect of another child or other children) on the day of delivery, or becomes eligible for family tax benefit within 52 weeks beginning on the day of the child’s delivery, the individual meets the income test for the stillborn baby payment.  Otherwise, to meet the income test, the individual’s and their partner’s income for the period of six months beginning on the day of the child’s delivery must be less than or equal to $60,000.   Items 25, 26 and 27 provide for the income limit of $60,000 to be indexed from 1 July 2017, consistent with the recommencement of indexation of other income limits.

New subsection 36(4) provides how the stillborn baby payment interacts with parental leave pay.  It prevents an individual being eligible for the stillborn baby payment if parental leave pay is payable to the individual, or the individual’s partner, for the child.

Item 22 repeals Division 2 of Part 4 of the Family Assistance Act, which provided for the amount of baby bonus for an individual.  A new Division 2 is substituted, which sets out the amount of stillborn baby payment for an individual.

The amount of stillborn baby payment is the sum of the amounts of the newborn supplement and newborn upfront amount defined earlier in the Schedule.

Item 24 repeals subsection85(2), referring to baby bonus.   Item 23 is consequential to item 24.

Amendments to the Family Assistance Administration Act

Items 28 to 30 amend definitions in subsection 3(1) of the Family Assistance Administration Act.  These changes are consequential to the repeal of baby bonus and introduction of a new payment, the stillborn baby payment.

Items 31 to 40 amend Division 3 of Part 3 of the Family Assistance Administration Act.  The amended Division 3 will provide for the making of claims in relation to the stillborn baby payment, the determination of those claims, and payment of the stillborn baby payment where an individual is determined to be entitled.  These provisions broadly reflect the provisions that currently apply to a claim for baby bonus in respect of a stillborn child.

Item 41 to 44 remove various references to baby bonus and substitute references to the stillborn baby payment.   Item 41 amends subsection 66(1) of the Family Assistance Administration Act, which provides for the inalienability of payments.   Item 42 amends subsection 71(1), which allows a debt to be raised where a payment is made and the individual was not entitled to that payment.   Item 43 amends subsection 93A(6) of the Family Assistance Administration Act, which defines the family assistance payments that can be recovered under section 93A from financial institutions.   Item 44 amends the definition of relevant benefit in section 219TA of the Family Assistance Administration Act, which applies to Part 8B of the Family Assistance Administration Act, relating to nominees.

Amendments to the Income Tax Assessment Act 1997

Items 45 to 47 are consequential amendments to the Income Tax Assessment Act 1997, resulting from the repeal of baby bonus and the introduction of the stillborn baby payment.  The amendments will preserve the current tax-exempt status of the baby bonus when replaced by the new stillborn baby payment.

Amendments to the Paid Parental Leave Act 2010

Items 48 to 52 remove references to baby bonus from the Paid Parental Leave Act.  These amendments are consequential amendments to the repeal of baby bonus.  The interaction between the newborn supplement, newborn upfront amount and stillborn baby payment, which replace the baby bonus, has been described in Parts 1 and 2 above.

Amendments to the Social Security (Administration) Act 1999

Items 53 to 61 are consequential amendments to the income management provisions in the Social Security (Administration) Act 1999 , resulting from the repeal of baby bonus and introduction of the stillborn baby payment.  Consistent with the treatment of the baby bonus, the stillborn baby payment will be fully income managed where appropriate.

Part 3 - Counting previous PPL period etc. for work test

Amendments to the Paid Parental Leave Act

Items 62 and 66 amend the guides contained in sections 30 and 115CA of the Paid Parental Leave Act to highlight the availability of the new measures.

Item 63 is consequential to item 65

Items 64 and 65 make the substantive amendments to the Paid Parental Leave Act.

Item 64 repeals subsection 34(1) and substitutes a new subsection, which provides that a person performs qualifying work on a day if at least one of the following applies on the day:

(a)       the person performs at least one hour of paid work;

(b)       the person takes a period of paid leave of at least one hour;

            (c)        the day is in the person’s PPL period for a previous child;

            (d)       the day is in the person’s DAPP period for a previous child.

Paragraphs 34(1)(a) and (b) reflect the existing rules.  Paragraphs 34(1)(c) and (d) are new rules, clarifying that a person performs qualifying work on a day if the day is in a person’s previous PPL period or DAPP period.

Item 65 inserts a new section 35A into the Paid Parental Leave Act.

New subsection 35A(1) applies if the person does not perform paid work or take paid leave in their PPL period or DAPP period for a pervious child.  In these circumstances, the person is taken to have performed on that day:

  • 7.6 hours of work, if the day is a week day; and
  • no hours of work, if the day is a Saturday or Sunday.

New subsection 35A(2) applies where the person has performed at least one hour of paid work on a day in the person’s PPL period or DAPP period for a previous child.  This will apply where a person takes parental leave pay or dad and partner pay at the same time as performing work for a permissible purpose.  In these circumstances, the person is taken to have performed on that day the greater of:

  • the hours of work the person would be taken to have performed if subsection (1) applied; and
  • the number of hours of paid work performed by the person on that day.

For example, a person may have performed two hours of paid work for a permissible purpose on a day in their PPL period.  In these circumstances, the person will be taken to have performed 7.6 hours of qualifying work.

The note to subsection 35A(2) clarifies that paid work for a permissible purpose (such as a keeping in touch day) could be performed during a person’s PPL period or DAPP period for a previous child.

New subsection 35A(3) is similar to subsection 35A(2), but applies where a person has taken paid leave of at least one hour on a day that falls in the person’s PPL period or DAPP period for a previous child.  This will apply where a person takes parental leave pay or dad and partner pay at the same time as receiving paid leave from their employer.  In these circumstances, a person is taken to have performed on that day the greater of:

  • the hours of work the person would be taken to have performed if subsection (1) applied; and
  • the number of hours of paid leave taken by the person on that day.

For example, a person may be taking eight hours’ leave at half pay. thereby using four hours of paid leave on a day in their PPL period.  In these circumstances, the person will be taken to have performed 7.6 hours of qualifying work on that day.

Part 4 - Application and transitional provisions

Item 67 sets out the application and transitional provisions for Parts 1 and 2 of this Schedule.

Subitem 67(1) saves the provisions in the Family Assistance Act and the Family Assistance Administration Act on and after commencement to the extent they relate to baby bonus for children who were born or stillborn before 1 March 2014, or entrusted to care as part of an adoption process before 1 March 2014.

Subitems 67(2), (3) and (4) provide for provisions relating to eligibility for the newborn supplement to apply to children who were born on or after 1 March 2014, or entrusted to care as part of an adoption process on or after 1 March 2014.

Subitem 67(5) is included to avoid doubt.  It makes clear that, in determining whether a child is the first child born alive to a woman, children born alive to the woman at any time (including before commencement of these amendments) are taken into account. 

Subitem 67(6) is included to avoid doubt.  It makes clear that, in determining whether a child is the first child entrusted to the care of an individual, or the partner of an individual, children entrusted to the care of the individual or their partner at any time (including before commencement of these amendments) are taken into account.  

Subitem 67(7) provides that paragraph 36(1)(a) of the Family Assistance Act, which contains the eligibility criteria for the stillborn child payment, applies in relation to a child born as a stillborn child on or after 1 March 2014.

Subitem 67(8) is included to avoid doubt.  It makes clear that, in determining whether a child is the first stillborn child of a woman, any previous stillborn child of the woman (including a stillborn child born before commencement of these amendments) is taken into account.  

Subitem 67(9) provides for the continued application of section 52-150 of the Income Tax Assessment Act 1997 in respect of any payments of baby bonus made, including payments made after commencement of these amendments.  Baby bonus could be paid after commencement in circumstances provided in subitem 67(1). 

Subitem 67(10) provides for the continued income management of baby bonus payments on and after commencement of these amendments.  This includes income management of any baby bonus paid after commencement.  Baby bonus could be paid after commencement in circumstances provided in subitem 67(1). 

Subitem 67(11) preserves current rules that prevent an individual becoming eligible for parental leave pay where they are entitled to baby bonus.  Despite the repeal of baby bonus, entitlement to baby bonus could still be relevant for determination of parental leave pay eligibility after commencement of these amendments.  Individuals could have become entitled to baby bonus before commencement.  Individuals could also become entitled to baby bonus after commencement since subitem 67(1) provides for the continued application of the baby bonus provisions in certain circumstances.  In practice, the current rules that prevent an individual becoming eligible for parental leave pay where they are entitled to baby bonus only apply in respect of children who were born or stillborn before 1 March 2014, or entrusted to care as part of an adoption process before 1 March 2014. 

Subitem 67(12) contains definitions of terms used in this item.  The terms abbreviate the names of Acts referred to in this item.

Item 68 sets out application and transitional provisions for Part 3 of this Schedule.

Subitem 68(1) clarifies that the amendments made by this Part 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 March 2014.

Subitem 68(2) clarifies that the following provisions of 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 that Act applies to an adopted child);
  • section 276 (which deals with how that Act applies to claims made in exceptional circumstances);
  • section 277A (which deals with how that Act applies to claims for dad and partner pay made in prescribed circumstances).

 



New Schedule 2B - Family assistance lump sum payments

 

 

Summary

Families choosing to wait until the end of the financial year to claim their family tax benefit or child care benefit entitlement will now have a grace period of one year instead of two years in which to claim.  This change will start for the 2012-13 entitlement year, meaning families will have 12 months from the end of that year (until 30 June 2014) in which to claim their entitlement.

Families will also have one year in which to lodge their tax returns if they are to receive the end-of-year family tax benefit supplements, and to meet immunisation and health check requirements linked to the end-of-year family tax benefit Part A supplement.

Families will be able to access extensions in special circumstances, similar to arrangements for tax returns.  The changes bring family payment claim periods more into line with time limits for lodging tax returns before penalties may be imposed, and with the policy intent of the family assistance program, to assist parents with day-to-day costs of raising children.

Background

Currently, families have until the end of the second income (financial) year after the entitlement year in which to:

·          make lump sum claims for family tax benefit and child care benefit;

·          lodge a tax return (if required) to receive top-ups and end-of-year supplements following reconciliation of income for family tax benefit;

·          ensure that children have met immunisation and health check requirements for the end-of-year family tax benefit Part A supplement;

·          notify of school commencement to become eligible for schoolkids bonus payments; and

·          meet claim or tax return lodgement requirements for the single income family supplement.

This measure reduces the time available for families to complete these tasks to one income year after the entitlement year.  For example, to receive and settle their family tax benefit for the 2012-13 year, families will have until 30 June 2014 to complete their paperwork.

Families may be able to access extensions to the one-year period for an additional year if there are special circumstances, consistent with arrangements in the taxation system. 

Explanation of the changes

Part 1 - Amendments

Amendments to the Family Assistance Act

Schoolkids bonus

An individual who is entitled to family tax benefit Part A is also eligible for the schoolkids bonus on a bonus test day for children in their care who meet the schoolkids bonus study requirements in sections 35UB and 35UD of the Family Assistance Act.  In addition to meeting the study requirements, the Secretary must be notified or become aware that the child meets the study requirements before the end of the second income year after the income year in which the relevant bonus test day occurs.

Items 1, 2, 3 and 4 reduce these timeframes to the end of the first income year after the income year in which the bonus test day occurs, or such further period as the Secretary allows.  The Secretary can only allow a further period if there are special circumstances and the Secretary has allowed the individual a further period in which to lodge a past period claim for family tax benefit in respect of the child for the income year in which the bonus test day occurs.  The further period must end no later than the end of the second income year after the income year in which the bonus test day occurs.

Under section 65B of the Family Assistance Act, if an individual is eligible for a schoolkids bonus on a bonus test day, then the amount for that day is worked out by adding together applicable amounts for each eligible child in respect of the individual for the bonus test day.  For an eligible child aged under 16 on the bonus test day, the secondary school amount can be paid for the child if the study requirements in subsection 65B(4) apply to the child and the Secretary is notified or becomes aware that the study requirements are satisfied before the end of the second income year after the income year in which the test bonus day occurs.  Items 13 and 14 reduce this timeframe, consistent with amendments made by items 1, 2, 3 and 4.

Health check requirement

For families in receipt of income support, payment of the end-of-year family tax benefit Part A supplement in respect of an FTB child in the income year in which the child turns four is conditional on the child meeting the health check requirement.  However, the family tax benefit Part A supplement can be paid if, at any time before the end of the second income year after the income year in which the FTB child turned four, the Secretary becomes aware of information suggesting that the FTB child meets or is exempt from the health check requirement, or if there are special circumstances that make it inappropriate for the requirement to be imposed. 

Items 5 and 6 reduce the timeframe mentioned to the end of the first income year after the income year in which the FTB child turned four or such further time as the Secretary allows.  The further period can only be allowed if there are special circumstances and the Secretary has allowed the individual a further period in which to lodge a past period claim for family tax benefit in respect of the child for the income year in which the child turned four.  The further period must end no later than the end of the second income year after the income year in which the FTB child turned four (see new subsection 61A(2AA), as inserted by item 7 ).

If a child dies before the end of the second income year after the income year in which the child turned four, then the health check requirement does not affect payment of the family tax benefit Part A supplement in relation to the child (see new subsection 61A(3), as inserted by item 8 ).  That new subsection features a reduced timeframe to reflect changes made by items 5 to 7. 

Immunisation requirements

Section 61B of the Family Assistance Act sets out similar rules, which make payment of the family tax benefit Part A supplement for an FTB child in the income years in which the child turns one, two or five conditional on the child meeting the immunisation requirements.  However, the family tax benefit Part A supplement can be paid if, at any time before the end of the second income year after the income year in which the FTB child turned one, two or five, the Secretary becomes aware of information or is satisfied that the FTB child meets the immunisation requirements. 

Items 9 and 10 reduce the timeframe mentioned in each of paragraphs 61B(3)(a) and (b) to the end of the first income year after the income year in which the FTB child turned one, two or five (as relevant) or such further time as the Secretary allows.  The further period can only be allowed if there are special circumstances and the Secretary has allowed the individual a further period in which to lodge a past period claim for family tax benefit in respect of the child for the income year in which the child turned one, two or five (as relevant).  The further period must end no later than the end of the second income year after the income year in which the FTB child turned one, two or five (see new subsection 61B(3A), as inserted by item 11 ). 

If a child dies before the end of the second income year after the income year in which the child turned one, two or five, then the immunisation requirements do not affect payment of the family tax benefit Part A supplement in respect of the child (see new subsection 61B(4), as inserted by item 12 .  That new subsection features a reduced timeframe to reflect changes made by items 9 to 11. 

Amendments to the Family Assistance Administration Act

Item 15 amends paragraph 10(2)(b) of the Family Assistance Administration Act, which limits the period for making a claim for family tax benefit.  New paragraph 10(2)(b) generally requires a claim to be made before the end of the first income year after the income year containing the period to which the claim relates.  However, the Secretary may allow a further period for lodging the claim if the Secretary is satisfied that special circumstances prevented the claimant from lodging their claim within the standard timeframe.  Item 16 inserts new subsection 10(2A), which limits the further period that the Secretary can allow. The further period must end no later than the end of the second income year after the income year containing the period to which the claim relates.

Item 17  inserts new section 14A, which provides that a claim for family tax benefit for a past period in an income year (the past period income year) is taken never to have been made if the claimant and/or their partner are required to lodge tax return(s) for the past period income year, but do not do so before the periods specified in that section.  The claim will be taken never to have been made if tax returns are not lodged before the end of the first income year after the past period income year, or within such further period allowed by the Secretary in special circumstances that prevented the tax payer from lodging their tax return before the end of that first income year.  The further period must end no later than the end of the second income year after the past period income year.

Items 18 to 21 amend section 28 of the Family Assistance Administration Act.  Current section 28 provides for the variation of instalment and past period entitlement determinations where tax returns have not been lodged by the end of the income year after the entitlement year.  In these circumstances, the family tax benefit claimant's entitlement is varied to nil under subsection 28(2) or (6) due to non-lodgement of required tax returns.  If a relevant individual's actual income subsequently becomes known after relevant tax returns are lodged and income tax assessments are made, the claimant's family tax benefit entitlement is recalculated under subsection 28(3), or, if the claimant and partner separate within a set period after the determination is varied under subsection 28(2) or (6), it is recalculated under subsection 28(4).

Under the new rules, if the recalculated amount exceeds the amount the claimant was entitled to before the variation to nil, a top-up amount would generally not be payable because an income tax return was not lodged before the end of the first income year following the entitlement year.  A top-up payment can only be paid if special circumstances prevented the claimant or their partner, or both, lodging their tax returns before the end of the first income year, and if the tax return is lodged within the further period allowed by the Secretary.

Item 18 repeals paragraph 28(3)(c) of the Family Assistance Administration Act and substitutes a new paragraph 28(3)(c).

If special circumstances prevented the claimant or their partner, or both, lodging their tax returns before the end of the first income year, new paragraph 28(3)(c) allows a top-up to be paid, provided the claimant and their partner have lodged their tax returns within the timeframe that applies to them.

Item 19 amends paragraph 28(4)(a), and item 20 repeals and substitutes a new paragraph 28(4)(c), of the Family Assistance Administration Act.

Subsection 28(4) as so amended would apply where a debt is raised under section 28 in circumstances where the claimant’s partner has not lodged their tax return before the end of the first income year after the entitlement year and the Secretary allows a further period for the partner to lodge their tax return.  If the claimant separates from the partner before the end of the further period allowed for their partner to lodge their tax return, new paragraph 28(4)(c) would allow the claimant to receive a top-up, provided they have lodged their own tax return within the timeframe that applies to them.

Item 21 amends subsection 28(5) of the Family Assistance Administration Act .  This amendment is consequential to amendments to subsection 28(4) above.  As a result of those amendments, subsection 28(5) would only apply where the claimant is entitled to be paid the recalculated amount.

The family tax benefit reconciliation conditions outlined in Subdivision D of Division 1 of Part 3 are essentially the triggers for the process known as income reconciliation.  During a financial year, a family will base their entitlement for family tax benefit on an estimate of their income for that year.  After the end of the financial year, once the family meets their tax return requirements, their family tax benefit entitlements based on estimated and actual income are compared (reconciled), and the family’s entitlement to the end-of-year family tax benefit supplements is also taken into account at this time.  The reconciliation provisions set out when reconciliation occurs in particular circumstances (for example, when the individual is and remains a member of a couple).  These provisions establish a relevant reconciliation time that is then the trigger for the reconciliation review (and payment of the end-of-year supplements).

Items 22 to 36 amend the family tax benefit reconciliation conditions in the Family Assistance Administration Act.  The amendments reflect changes to the timeframe for lodging tax returns, and make some minor technical amendments to correct some pre-existing gaps in those provisions.

Child care benefit

Items 37 and 38 amend subsection 49J(2) of the Family Assistance Administration Act, to change the period available for making a claim for child care benefit.  These changes reflect changes to timeframes for lodging claims for family tax benefit made by items 15 and 16.

Single income family supplement

Items 39 and 40 amend subsection 65KD(2) of the Family Assistance Administration Act, to change the period available for making a claim for single income family supplement.  These changes reflect changes to timeframes for lodging claims for family tax benefit made by items 15 and 16, and changes to timeframes for lodging claims for child care benefit made by items 37 and 38.

Item 41 amends the period for lodging tax returns in paragraph 65KI(2)(b) of the Family Assistance Administration Act.  Item 42 makes a similar amendment to paragraph 65KI(3)(c).  Section 65KI restricts determination of claims for single income family supplement where the claimant has not lodged their tax return within the period specified in paragraph (2)(b) or their partner has not lodged their tax return within the period specified in paragraph (3)(c).  For the claim to be determined, tax returns must generally be lodged before the end of the first income year after the income year containing the period to which the claim relates.

However, the Secretary may allow a further period for the claimant or their partner to lodge a tax return if the Secretary is satisfied that special circumstances prevented lodgement of the tax return within the standard timeframe.  Item 43 limits the further period that the Secretary may allow for lodgement of tax returns.  The further period must end no later than the end of the second income year after the income year containing the period to which the claim relates.

Item 44 amends the period for lodging tax returns in paragraph 65KP(3)(a) of the Family Assistance Administration Act.  Item 45 makes a similar amendment to subparagraph 65KP(3)(b)(iii).  Subsection 65KP(3) applies to prevent an individual who is not required to lodge a claim for single income family supplement from being paid the single income family supplement where the individual has not lodged their tax return within the period specified in paragraph (3)(a), or where the individual’s partner has not lodged their tax return within the period specified in subparagraph (3)(b)(iii).

For payment to be made, tax returns must generally be lodged before the end of the first income year after the income year containing the period to which the payment relates.  However, the Secretary may allow a further period for the individual or their partner to lodge their tax return if the Secretary is satisfied that special circumstances prevented lodgement of the tax return within the standard timeframe.  Item 46 limits the further period that the Secretary may allow for lodgement of tax returns.  The further period must end no later than the end of the second income year after the income year containing the period to which the claim relates.

Other changes related to family tax benefit

Item 47 amends paragraph 95(4A)(a) of the Family Assistance Administration Act.  Currently, debts arising under subsection 28(2) or (6) of the Family Assistance Administration Act (as a result of non-lodgement of tax returns) can be written off where the claimant and their partner separate after the end of the second income year after the cancellation income year.  Consistent with the new general time limit for the lodgement of tax returns, debts arising under subsection 95(4A) can now be written off where the claimant and their partner separate after the end of the income year after the cancellation income year.

Items 48, 50 and 52 amend subparagraphs 107(3A)(b)(i), 109D(4)(d)(iii) and 109E(3)(d)(iii) of the Family Assistance Administration Act.  These provisions ensure that, where a child meets the health check requirement in section 61A of the Family Assistance Act after reconciliation occurs or after the general 52-week review time limit, the family tax benefit Part A supplement can still be paid for the child.  The periods referred to in those subparagraphs are amended to reflect the change made by item 5 to the period referred to in paragraph 61A(2A)(a) of the Family Assistance Act.

Items 49, 51 and 53 amend subparagraphs 107(3C)(b)(i), 109D(4)(f)(iii) and 109E(3)(f)(iii) of the Family Assistance Administration Act.  These provisions relate to the immunisation requirement in section 61B of the Family Assistance Act, and have similar effect to subparagraphs 107(3A)(b)(i), 109D(4)(d)(iii) and 109E(3)(d)(iii) relating to the health check requirement.  The amendments made by items 49, 51 and 53 reflect the change made by item 9 to the period referred to in paragraph 61B(3)(a) of the Family Assistance Act.

Part 2 - Application provisions

Item 54 provides how the amendments relating to the schoolkids bonus apply.  The amendments made by items 1, 2, 13 and 14 apply in relation to bonus test days on or after 1 January 2013.  For entitlement relating to bonus test days of 1 January 2013 and 30 June 2013, individuals would generally have until 30 June 2014 to meet the notification requirements.  The amendments made by items 3 and 4 apply to bonus test days occurring on or after commencement.

Item 55 provides for the application of amendments relating to the health check and immunisation requirements for family tax benefit.  The amendments apply where the child turns the relevant age in relation the 2012-13 income year or a later income year.  Only family tax benefit entitlement for the 2012-13 and later income years is affected.  For entitlement relating to the 2012-13 income year, individuals have until 30 June 2014 to meet the health check and immunisation requirements.

Item 56 provides for the application of amendments relating to the lodgement of claims and tax returns for family tax benefit.  Family tax benefit entitlement for the 2012-13 and later income years is affected.  For entitlement relating to the 2012-13 income year, individuals have until 30 June 2014 to lodge their claims and tax returns.

Item 57 provides for the application of amendments relating to lodgement of claims for child care benefit.  Child care benefit entitlement for the 2012-13 and later income years is affected.  For entitlement relating to the 2012-13 income year, individuals have until 30 June 2014 to lodge their claims.

Item 58 provides for the application of amendments relating to lodgement of claims and tax returns for the single income family supplement.  Entitlement for the 2012-13 and later income years is affected.  For entitlement relating to the 2012-13 income year, individuals have until 30 June 2014 to lodge their claims and tax returns.