Explanatory Memorandum
(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Amanda Vanstone)Schedule 2 - Language, literacy and numeracy supplement
Summary
From 20 September 2002, people on specified income support payments who are undertaking approved language, literacy and numeracy training programs will be paid a fortnightly supplement of $20.80 to help with the incidental costs associated with the training.
The specified income support payments are newstart allowance, youth allowance, parenting payment, mature age allowance, widow allowance, partner allowance and disability support pension.
Background
This measure assists with the additional costs associated with undertaking language, literacy and numeracy training.
Poor language, literacy or numeracy skills make it more difficult to get a job. This training is necessary to help people with these difficulties to re-enter the workforce and gain valuable day-to-day living skills.
People on income support are likely to need extra financial assistance to help with the incidental costs of attending language, literacy and numeracy training. This measure will encourage and support people whilst they undertake that training.
Explanation of the changes
Part 3 - Amendment of the Income Tax Assessment Act 1997
The new language, literacy and numeracy supplement will be tax exempt. In broad terms, this is achieved by including the supplement within the definition of "supplementary amount" in section 52-15 of the Income Tax Assessment Act 1997 (the ITAA). Supplementary amounts are then exempted from income tax by operation of section 52-10 of the ITAA.
To this end, item 5 repeals the table in section 52-15 of the ITAA and reinserts a new table. The language, literacy and numeracy supplement is included as a "supplementary amount" (along with existing supplementary amounts) for all social security designated payments.
The opportunity has also been taken to make some minor technical changes to the table so that it accurately reflects the supplementary amounts that are available in respect of the different social security payments. For example, incentive allowance is not available to special beneficiaries. This is reflected in the new table.
Section 52-40 of the ITAA lists social security payments that are wholly or partly exempt from tax and corresponding provisions in the Social Security Act. Item 22A in the Table in section 52-40 refers to pensioner education supplement under Part 2.27 of the Social Security Act. This Part reference is incorrect - pensioner education supplement is paid under Part 2.24A. Item 6 makes this correction.
Item 7 makes it clear that these amendments to the taxation legislation apply in relation to assessments for the first tax year ending after commencement of the new supplement and for all following tax years.