Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Schedule 2 - A New Tax System (Family Assistance) Act 1999
This Schedule amends the Family Assistance Actto clarify certain aspects of the new family assistance structure.
Item 1 amends the definition of family assistance contained in the Family Assistance Act to include reference to the family tax benefit advance, which is provided by the Family Assistance Administration Act.
Item 2 repeals a definition that was set up in the Family Assistance Act but that is no longer necessary for the family assistance provisions.
Items 3 to 8, 10, 34 and 35 make technical changes to references in the Family Assistance Act to the various types of child care service that will be relevant for the new child care benefit. The changes are basically to add the word approved to the descriptions of the various types of service. This is to align the references already included in the earlier legislation with the later drafting of the substantive provisions in the Family Assistance Administration Act relating to the approval of these services.
A number of provisions in the Family Assistance Act relating to eligibility for CCB and affecting an individuals entitlement to CCB refer to a calendar year. As, in most cases, the calculation of a CCB rate is based on an individuals (and his/her partners) taxable income, amendments are made to align the working of the CCB rate and eligibility provisions so that they operate in respect of the same period. To achieve this, items 9, 18, 19, 22, 24, 30 and 31 amend paragraphs 10(4)(c), 45(2)(a), 46(1)(a), subsections 53(6), 53(7), 55(4, 55(5) and paragraphs 71(3)(c) and 71(4)(b) respectively to change the references to calendar year occurring in those provisions to financial year.
Items 11 and 26 make minor technical corrections to the drafting of subsection 24(5) and paragraphs 66(b) and 67(b).
Item 12 amends subsection 30(1) of the Family Assistance Act by omitting the words at the same time and replacing them with on the same day. This amendment clarifies that only one individual is eligible for family tax benefit in respect of a child on any given day. A consequential amendment is also made to the heading of section 30 to reflect the provision as amended.
Section 33 of the Family Assistance Act deals with the situation where, due to the death of an individual, there is an unpaid amount of FTB. The provision allows another individual to be eligible for that unpaid amount in certain circumstances. Items 13 to 15 provide that the other individual cannot claim any unpaid amounts relating to a period before the beginning of the income year preceding the income year in which the individual died. This is consistent with the restrictions on claiming that would have applied to the deceased person had that person not died and a claim for the unpaid amount was made.
Item 16 repeals and replaces subsection 42(2). The new subsection provides that the statement under paragraph 42(1)(b) (statement of amount of CCB for eligibility by instalment) must set out the amount of CCB applicable under section 70 (rate of CCB for care provided by an approved child care service). If the amount is calculated in a case where Schedule 2 applies (CCB rate in normal circumstances), the CCB percentage specified in the determination under paragraph 42(1)(a) is to be used (the CCB percentage is not used for calculation of the special circumstances CCB rate).
Item 17 repeals and replaces paragraph 42(3)(b). The new paragraph provides that the sessions of care which are relevant for the purposes of the calculation under subsection 42(2) are sessions for which a person would be eligible for CCB under section 43 (eligibility for past periods), disregarding the aspects of section 43 which are not relevant to eligibility under section 42 (immunisation requirements and the requirement that a person must not be conditionally eligible for CCB for the same period).
Items 20 and 21 amend section 52, which provides for a 20 hours per week CCB eligibility limit.
Item 20 amends subsection 52(1) to provide that the CCB eligibility limit of 20 hours child care per week does not apply to sessions of care provided outside school hours.
Under subsection 52(2), the Secretary determines which sessions of care in the week will give rise to eligibility for CCB. Item 21 amends subsection 52(2) to provide that, where the length of sessions of care provided in a week exceeds 20 hours, a person is only eligible for CCB for sessions of care worked out in accordance with a Ministerial determination under subsection (2A). The new subsection 52(2A) requires the Minister to determine how to work out which sessions of care in the week will give rise to eligibility for CCB.
Item 23 amends section 54, which provides for a 50 hour per week CCB eligibility limit. Under subsection 54(2), the Secretary determines which sessions of care in the week will give rise to eligibility for CCB. The amended subsection 54(2) now provides that, where the length of sessions of care provided in a week exceeds 50 hours, a person is only eligible for CCB for sessions of care worked out in accordance with a Ministerial determination under subsection (2A). The new subsection 54(2A) requires the Minister to determine how to work out which sessions of care in the week will give rise to eligibility for CCB.
Item 25 repeals and replaces section 56, which requires determinations to be made in accordance with rules made by the Minister under subsection 56(2). The new section 56 applies to determinations of the Secretary or an approved child care service. The section no longer applies to determinations of the Minister, as it is not necessary for this provision to apply to Ministerial determinations. Item 25 also inserts a new section 56A, which replaces the previous subsection 56(3). New section 56A provides that a determination under subsection 52(2A), 53(1), 54(2A) or 56(2) is a disallowable instrument.
Items 27 to 29 and 32 amend section 71 (CCB rate in special circumstances). Item 27 amends paragraph 71(1)(a) to cross-refer to subsection 42(2) (section 42 deals with eligibility of an individual for CCB by instalment). This is to make it clear that section 71 does not apply in calculating the CCB rate in cases of eligibility under section 43 for lump sum CCB for a past period.
Items 28 and 29 makes consequential amendments to paragraph 71(1)(b) to make it clear that the child or individual referred to in the provision is the child or individual in respect of whom the CCB rate is calculated under section 42.
Item 32 makes a further consequential amendment to subparagraph 71(4)(c)(iii) which inserts a cross-reference to subparagraph (1)(b)(ii) (as amended by item 29 ). Again this is to make it clear that the provision only applies where an individual is the individual in respect of whom the CCB rate is calculated under section 42.
Item 33 effectively exempts a person whose adjusted taxable income exceeds the higher income free area (under clause 2 of Schedule 1 to the Family Assistance Act) from the income test during any period of receipt by the person or partner of a social security pension, a social security benefit or a service pension.
This is done by providing in the substituted paragraphs (a) and (b) of subclause 1(2) of that Schedule that an individuals Part A rate of family tax benefit is worked out under Part 2 of the Schedule if the individual or partner is receiving income support, regardless of the individuals income. Clause 17 of that Part will then operate automatically to exempt the individual from the income test.
Items 36 and 37 add an extra indexation provision for child care benefit, relating to the $11 and $32 multiple child loadings that form part of the calculation of the rate of child care benefit (see the Maximum weekly benefit table in clause 11 of Schedule 2 to the Family Assistance Act). These loadings will now be indexed along with other components of the child care benefit rate calculation process that are already accommodated in the indexation provisions.