Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
General outline and financial impact
This bill amends the ITAA 1997 and the ITAA 1936 to implement the Governments election commitment to introduce the First Child Tax Refund (Baby Bonus) in recognition of the loss of income that generally follows the arrival of a familys first child. This measure has effect from 1 July 2001 and applies to assessments for the 2001-2002 income year and later income years. As a transitional measure, the Baby Bonus is also available to families who already have children, for the arrival of their first subsequent child on or after 1 July 2001.
The main elements of the Baby Bonus are:
- it is available to parents following the birth, adoption or otherwise obtaining of legal responsibility for a child on or after 1 July 2001;
- it is a refundable tax offset of up to $2,500 per annum until the child turns 5 years of age;
- there is a minimum entitlement of $500 per annum for low income earners (those with a taxable income of $25,000 or less in the claim year) until the child turns 5 years of age;
- a person may choose to transfer their entitlement to the Baby Bonus to their spouse;
- a person is able to make a claim for the Baby Bonus as part of their tax return process; and
- a person who is not required to lodge income tax returns will be able to claim the Baby Bonus by lodging a claim form with the ATO.
Date of effect: The Baby Bonus will apply to assessments for income years commencing after 30 June 2001.
Proposal announced: The proposal was announced in Treasurers Press Release No. 89 of 28 October 2001.
Financial impact: The financial impact of the Baby Bonus is set out in the following table: