House of Representatives

Household Stimulus Package Bill (No. 2) 2009

Explanatory Memorandum

Jenny Macklin Mp (Minister for Families, Housing, Community Services and Indigenous Affairs)

Schedule 3 - Back to school bonus and single income family bonus

Summary

This Schedule will provide for two new lump sum payments for families.

A back to school bonus of $950 will be available for each FTB child in a family aged 4 to 18 who attracts FTB Part A for 3 February 2009. This bonus will also be available to people who receive disability support pension or carer payment for 3 February 2009 where the recipient is aged less than 19 on that date.

A single income family bonus of $900 will be available for a family that is entitled to FTB Part B for 3 February 2009, regardless of the age of the children.

If FTB for 3 February 2009 is shared between two people under the usual rules for that payment, the relevant new lump sum payment will be similarly shared.

Background

On 3 February 2009, the Government announced a further series of measures as part of its Household Stimulus Package to support sustained economic growth, including further financial assistance for families relating to training and education. This builds on the financial assistance delivered to families as part of the Government's Economic Security Strategy in December 2008.

This assistance is to take the form of new lump sum payments. A back to school bonus of $950 will be available for each FTB child in a family aged four to 18 who attracts FTB Part A for 3 February 2009 and people who receive disability support pension or carer payment for 3 February 2009 who are aged less than 19 on that date. A single income family bonus of $900 will be available for a family who is entitled to FTB Part B for 3 February 2009, regardless of the age of the children.

These new lump sum payments would be paid to families who receive their FTB as fortnightly instalments and to recipients of disability support pension and carer payment in March 2009. The bonus payments will also be available to families and recipients who get arrears for 3 February 2009. For the small number of recipients who receive their FTB as a lump sum for a previous income year, the bonus payments would be paid after their actual income for the 2008-09 income year is known.

The new bonus payments to families would be exempt from tax and would not be taken as income for the purposes of the social security law or the Veterans' Entitlements Act.

The back to school bonus and the single income family bonus would be provided for in the family assistance law.

The amendments made by this Schedule commence on the day of Royal Assent.

Explanation of the changes

Amendments to the Family Assistance Act

Definitions

Items 1 and 2 insert new definitions into subsection 3(1) of the Family Assistance Act. Item 1 defines back to school bonus to mean a payment to which an individual is entitled under new section 95 or new section 98. Item 2 defines single income family bonus to mean a payment to which an individual is entitled under new section 101.

Item 3 inserts new Part 7 into the Family Assistance Act, which sets out the new entitlement and payment amount rules applicable to the new back to school bonus and the single income family bonus.

In broad terms, new Division 1 of Part 7 sets out the situations in which an individual is entitled to a back to school bonus in respect of an eligible child (new Subdivision A) and the situations in which a recipient of disability support pension or carer payment is entitled to a back to school bonus (Subdivision B). New Division 2 of Part 7 sets out the situations in which an individual is entitled to a single income family bonus.

Division 1 - Back to school bonus

Subdivision A - Entitlements in relation to eligible children

When is an individual entitled to a back to school bonus ?

An individual is entitled to a back to school bonus in the circumstances set out in new section 95.

Section 16 of the Family Assistance Administration Act enables the Secretary to make an entitlement determination on a claim for FTB by instalment where the claimant satisfies the relevant eligibility rules.

An individual who is entitled to payment of FTB under a section 16 determination that includes 3 February 2009 is also entitled to a back to school bonus if the individual's rate of FTB for 3 February consisted of, or included, a Part A rate greater than nil worked out taking into account at least one FTB child who was aged four or more and less than 19 on 3 February (new subsection 95(2) refers).

Individuals who have an entitlement only to the rent assistance component of FTB Part A that is worked out using Part 3A of Schedule 1 to the Family Assistance Act because they have a regular care child only (a child for whom the individual has less than 35 per cent care) would not be entitled to a back to school bonus. The concept of 'eligible child' (in new section 96) would also operate to ensure that, where an individual has a mix of FTB and regular care children, only the FTB children aged 4 or more and less than 19 on 3 February 2009 can attract the back to school bonus. This is the position for each of the FTB categories covered under new subsections 95(2), (3) and (4).

Section 17 of the Family Assistance Administration Act enables the Secretary to make an entitlement determination on a claim for FTB for a past period where the claimant satisfies the relevant eligibility rules.

An individual who is entitled to FTB for a past period that includes 3 February 2009 under a section 17 determination is also entitled to a back to school bonus if the individual's past period entitlement is based on a claim made in 2008-09 and the individual's rate of FTB for 3 February consisted or, or included, a Part A rate greater than nil worked out taking into account at least one FTB child aged four or more and less than 19 on 3 February. If the individual's past period entitlement is based on a claim made in 2009-10 or 2010-11, then there is the additional requirement that the individual satisfy the relevant FTB reconciliation conditions for 2008-09. Subsection 95(3) is the relevant new provision. Section 32B of the Family Assistance Administration Act sets out when an individual satisfies the relevant reconciliation conditions. This generally occurs when the Tax Office has assessed the taxable income of the individual or their partner, if they are required to lodge a tax return.

This means that, where an individual makes claims in the 2008-09 income year for both FTB by instalment (prospectively) and for a past period that falls in that income year and covers 3 February 2009, the individual would be entitled to a back to school bonus if their estimated income results in payment of FTB Part A for 3 February 2009. Recipients who choose to receive their FTB as a lump sum after the end of the relevant income year would be entitled to a back to school bonus at that time if their actual income results in payment of FTB Part A for 3 February 2009.

Section 18 deals with entitlement determinations on bereavement claims. A bereavement claim can be made where an eligible individual dies and another individual claims the unpaid FTB (including for 3 February 2009) or where an individual wants to be paid a single payment that includes 3 February 2009 because of the death of an FTB child.

An individual who is entitled to payment of FTB under a section 18 determination that includes 3 February 2009 is also entitled to a back to school bonus if the rate of FTB payable under the determination for 3 February consisted of, or included, a Part A rate greater than nil worked out taking into account at least one FTB child who was, or but for the child's death would have been, aged four or more and less than 19 on 3 February (new subsection 95(4) refers).

In the case of bereavement claims, an individual will be able to access the back to school bonus based on an estimate of income for FTB Part A purposes if the actual income is not yet known.

In respect of which children is the back to school bonus payable ?

Where an individual is entitled to the back to school bonus because of their entitlement to FTB Part A, each FTB child of the individual who is aged four or more and less than 19 and taken into account in determining the individual's rate of FTB Part A in relation to 3 February 2009 would be an eligible child in relation to the entitled individual. The relevant rules are in new paragraphs 96(a), (b) and (c).

What is the amount of the bonus ?

New section 97 sets out the rules for working out the amount of an entitled individual's back to school bonus. Broadly, the amount of the back to school bonus for an entitled individual is worked out by adding together the amounts applicable for each eligible child of the individual (new subsection 97(1) refers).

New subsection 97(2) provides that the amount applicable for an eligible child is $950.

However, if the individual's rate of FTB Part A in relation to 3 February 2009 in respect of an eligible child takes account of a shared care percentage (under section 59 of the Family Assistance Act), then the amount applicable to the individual for the eligible child is that percentage of $950. The relevant rule is in new subsection 97(3).

An individual has a shared care percentage for an FTB child under section 59 where there is a pattern of care in relation to the child and the individual has been determined under subsection 22(6A) as having at least 35 per cent care but not more than 65 per cent care. An individual who has more than 65 per cent care of an FTB child can potentially receive the full amount of FTB in respect of the FTB child (and therefore the back to school bonus of $950 in respect of the FTB child).

Similarly, the amount of the back to school bonus could also be affected by a specified percentage determination due to a blended family determination under section 28 of the Family Assistance Act (where there is an instalment or past period determination) or under section 29 (where there is a past period determination). The amount applicable to an individual for an eligible child in respect of whom there is such a percentage determination would be that percentage of $950. For example, if the individual is eligible for three FTB children aged four or more and less than 19 on 3 February 2009 and the specified percentage for each child under section 28 of the Family Assistance Act is 50 per cent, the individual is eligible for $1,425 (that is, $950 x 50 per cent x 3).

Where an individual has a shared care percentage under section 59 of the Family Assistance Act in relation to a particular FTB child and a section 28 or 29 specified percentage, both percentages would be taken into account in determining the amount of an individual's back to school bonus. For example, if an individual has 100 per cent care of two FTB children, 50 per cent care of one FTB child (due to section 59 of the Family Assistance Act), plus a specified percentage under section 28 of 50 per cent for the three children, the individual is eligible for $1,187.50 (that is, [2 x $950 x 50 per cent] plus [1 x $950 x 50 per cent x 50 per cent]).

The relevant rules are set out in new subsections 97(4) and (5).

Subdivision B - Other entitlements

When is an individual entitled to a back to school bonus ?

An individual is entitled to a back to school bonus under new section 98 if the individual was receiving carer payment or disability support pension in relation to 3 February 2009 and the individual was aged less than 19 on 3 February.

The concept of receiving is defined in subsection 3(1) of the Family Assistance Act by reference to provisions in the Social Security Act.

What is the amount of the bonus ?

The amount of the back to school bonus to the individual entitled under section 99 is $950.

Subdivision C - General rules

The rules in new section 100 prevent duplicate payments of back to school bonus under new Subdivisions A and B of Division 1 of new Part 7.

New subsection 100(1) provides that, if an individual is paid a back to school bonus under Subdivision A for a particular eligible child, that eligible child cannot get the back to school bonus under Subdivision B.

New subsection 100(2) provides that, if an individual (recipient) is paid a back to school bonus under Subdivision B, then another individual cannot be paid a back to school bonus for the recipient under Subdivision A.

Division 2 - Single income family bonus

Entitlement to single income family bonus

New section 101 sets out the circumstances in which an individual is entitled to a single income family bonus.

Section 16 of the Family Assistance Administration Act enables the Secretary to make an entitlement determination on a claim for FTB by instalment where the claimant satisfies the relevant eligibility rules.

An individual who is entitled to payment of FTB under a section 16 determination that includes 3 February 2009 is also entitled to a single income family bonus if the individual's rate of FTB for 3 February consisted of, or included, a Part B rate greater than nil (new subsection 101(2) refers).

Section 17 of the Family Assistance Administration Act enables the Secretary to make an entitlement determination on a claim for FTB for a past period where the claimant satisfies the relevant eligibility rules.

An individual who is entitled to FTB for a past period that includes 3 February 2009 under a section 17 determination is also entitled to a single income family bonus if the individual's past period entitlement is based on a claim made in 2008-09 and the individual's rate of FTB for 3 February consisted of, or included, a Part B rate greater than nil. If the individual's past period entitlement is based on a claim made in 2009-10 or 2010-11, then there is the additional requirement that the individual satisfy the relevant FTB reconciliation conditions for 2008-09. Subsection 101(3) is the relevant new provision. Section 32B of the Family Assistance Administration Act sets out when an individual satisfies the relevant reconciliation conditions. This generally occurs when the Tax Office has assessed the taxable income of the individual or their partner, if they are required to lodge a tax return.

This means that, where an individual makes claims in the 2008-09 income year for both FTB by instalment (prospectively) and for a past period that falls in that income year and covers 3 February 2009, the individual would be entitled to a single income family bonus if their estimated income results in payment of FTB Part B for 3 February 2009. Recipients who choose to receive their FTB as a lump sum after the end of the relevant income year would be entitled to a single income family bonus if their actual income results in payment of FTB Part B for 3 February 2009.

Section 18 deals with entitlement determinations on bereavement claims. A bereavement claim can be made where an eligible individual dies and another individual claims the unpaid FTB (including for 3 February 2009) or where an individual wants to be paid a single payment that includes 3 February 2009 because of the death of an FTB child.

An individual who is entitled to payment of FTB under a section 18 determination that includes 3 February 2009 is also entitled to a single income family bonus if the rate of FTB payable under the determination for 3 February consisted of, or included, a Part B rate greater than nil (new subsection 101(4) refers).

In the case of bereavement claims, an individual will be able to access the single income family bonus based on an estimate of income for FTB Part B purposes if the actual income is not yet known.

What is the amount of the payment ?

As a general rule, the amount of the single income family bonus is $900 (new subsection 102(1) refers).

However, if the individual's rate of FTB Part B in relation to 3 February 2009 was worked out taking into account only one FTB child and there was a shared care percentage in relation to that child (under section 59 of the Family Assistance Act), then the amount of the single income family bonus for the entitled individual is that percentage of $900. The relevant rule is in new subsection 102(2).

Where the individual's rate of FTB Part B in relation to 3 February 2009 was worked out taking into account more than one FTB child and there was a shared care percentage in relation to each child (under section 59 of the Family Assistance Act), then the amount of the single income family bonus to the individual is the highest of those percentages of $900. The relevant rule is in new subsection 102(3).

It follows that if the individual's rate of FTB Part B in relation to 3 February 2009 was worked out taking into account more than one FTB child and there was no shared care percentage in relation to at least one of those children, then the amount of the single income family bonus to the entitled individual would be the full $900.

These rules are consistent with the way in which the amount of an individual's FTB Part B supplement is determined.

The amount of the single income family bonus could also be affected by a specified percentage determination due to a blended family determination under section 28 of the Family Assistance Act (where there is an instalment or past period determination) or under section 29 (where there is a past period determination). The effect is similar to that described above in relation to the back to school bonus. The relevant rules are provided for in new subsections 102(4) and (5).

For example, if the individual has three FTB children (with no shared care percentage for at least one of those children) on 3 February 2009 and the specified percentage for each child under section 28 of the Family Assistance Act is 50 per cent, the individual is eligible for a single income family bonus of $450 (that is $900 x 50 per cent). If an individual has a shared care percentage of 50 per cent for the individual's only FTB child (due to section 59 of the Family Assistance Act), plus a specified percentage under section 28 of 50 per cent for the child, the individual is eligible for $225 (that is, $900 x 50 per cent x 50 per cent).

Amendments to the Family Assistance Administration Act

Payment

Part 3 of the Family Assistance Administration Act provides the rules for payment of the various family assistance payments available under the family assistance law.

Item 4 inserts a new Division 4C and section 65H into Part 3 of the Family Assistance Administration Act. New section 65H outlines the payment arrangements for the new back to school bonus and the single income family bonus. Each bonus will be paid as a single lump sum on a date that is determined by the Secretary to be the earliest date on which it is reasonably practicable to make the payment and in an appropriate manner.

A note at the end of new section 65H indicates to the reader that a claim would not be required for the new payment.

Inalienability

Section 66 of the Family Assistance Administration Act lists the family assistance payments that are absolutely inalienable. Both the new back to school bonus and the single income family bonus are included in the list as new paragraph 66(1)(i) by item 5 .

Debts

An amount paid by way of a back to school bonus or a single income family bonus will only be a debt to the extent that a provision in the Family Assistance Administration Act expressly provides for it. Item 6 makes an amendment to section 70 of the Family Assistance Administration Act to this effect.

Item 7 inserts new section 71K into the Family Assistance Administration Act. This new provision sets out when a back to school bonus and a single income family bonus is a debt. In broad terms, a debt would only arise where some or all of the payment was incorrectly paid because a relevant individual knowingly made a false or misleading statement or knowingly provided false information.

Where an individual is paid a back to school bonus or a single income family bonus because of entitlement to FTB or receipt of disability support pension or carer payment in relation to 3 February 2009 and the determination relating to that entitlement or payment (the relevant determination) is later changed with the effect that the individual was not entitled to the bonus, and a reason for the determination needing to be changed was that the recipient of the bonus knowingly made a false or misleading statement or knowingly provided false information, then the bonus paid would be a debt due to the Commonwealth by the recipient. The relevant rules are in new subsection 71K(3).

Similar rules, set out in new subsection 71K(4), would apply where an individual is paid in excess of the amount of their entitlement to a back to school bonus or a single income family bonus because of a subsequent change to the relevant determination, except that the amount of the debt would be the difference between the amount of bonus paid and the amount that should have been paid.

The relevant determinations are listed in new subsection 71K(2).

Section 74 of the Family Assistance Administration Act applies where an amount of family assistance is paid by cheque, a person who is not the payee obtains the cheque, the cheque is not endorsed by the payee to the person and the person obtains the benefit of the cheque. In these circumstances, the amount of the cheque is a debt owed by the person. This provision is amended by item 8 so that it also applies where a back to school bonus or a single income family bonus is paid by cheque.

Section 82 of the Family Assistance Administration Act lists the methods by which a debt can be recovered. Item 9 amends the definition of debt in subsection 82(3) so that it also refers to new section 71K (where payment of a back to school bonus or a single income family bonus is a debt).

Item 10 inserts a reference to a payment of back to school bonus or single income family bonus at the end of the definition of family assistance payment in subsection 93A(6) of the Family Assistance Administration Act. This would enable the bonuses paid to a financial institution to the credit of an account with that institution to be recovered from the institution in certain circumstances (for example, where the back to school bonus or a single income family bonus is paid into an incorrect account).

Review and appeals

Where the Secretary reviews certain decisions, there is a requirement for the Secretary to give notice of the review decision to the person or people whose entitlement or possible entitlement to family assistance, the 2004 one-off payment to families or the economic security strategy payment to families is affected by the review decision (subsection 106(3) of the Family Assistance Administration Act refers).

Item 11 amends subsection 106(3) so that the same rule also applies in relation to review decisions relating to the back to school bonus and the single income family bonus.

As a general rule, an application for review of a decision must be made no later than 52 weeks after the applicant has been notified of the decision. There are exceptions to this general rule (for example, where the Commissioner of Taxation reviews and changes a person's taxable income). Items 12 and 13 amend subsection 109D(4) and paragraph 109D(5)(a) of the Family Assistance Administration Act respectively to ensure that the exceptions should apply also to applications for review of decisions relating to the payment of the back to school bonus and the single income family bonus as relevant.

Nominees

Item 14 inserts a reference to the back to school bonus and the single income family bonus at the end of the definition of relevant benefit in section 219TA of the Family Assistance Administration Act. This would enable the Secretary to appoint a payment nominee who would be paid the bonus on behalf of the entitled individual.


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