House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Agriculture, the Hon. Barnaby Joyce MP)

Notes on clauses

Section 1

This section provides for the Bill to be called the Farm Household Support (Consequential and Transitional Provisions) Act 2014.

Section 2

This section provides that the Farm Household Support (Consequential and Transitional Provisions) Bill 2014 (FHSCT Bill) commences on different dates for different purposes.

Sections 1 to 3, as well as any provisions not covered in the table, commence on the day the Bill receives the Royal Assent.

Schedule 1 commences at the same time that section 3 of the Farm Household Support Act 2014 (FHSA 2014) commences. The FHS Bill is currently before the Parliament. Section 2 of the FHS Bill provides for the substantive provisions of the FHA (i.e. sections 3 to 89 of the FHS Bill) to commence on a date fixed by Proclamation.

Schedule 2, Part 1 commences at the same time that section 3 of the FHSA 2014 commences.

Schedule 2, items 139 and 140, and Schedule 2, Part 2, Divisions 2 and 3 include contingent amendments to a number of Bills which are currently before Parliament, including the FHS Bill. Commencement of these contingent amendments is subject to passage and commencement of the relevant Bills.

The amendments in Schedule 2, Part 2, Division 4 relate to the operation of the exempt income provisions in the Income Tax Assessment Act 1997 (ITAA 1997) and the qualification for income support bonus provisions in the Social Security Act regarding the payment of non-legislated income support programs: the Transitional Farm Family Payment (TFFP); and the Interim Farm Household Allowance (IFHA). These amendments commence on 26 February 2014 because before this time it will not be possible to make payments of IFHA. As payments of IFHA and TFFP will be made before the FHA provisions commence, this means that commencement of the amendments in Schedule 2, Part 2, Division 4, which are beneficial to taxpayers, are retrospective.

The amendments in Schedule 2, Part 2, Division 5 relate to the repeal of references to TFFP and IFHA in the exempt income provisions in the ITAA 1997 and qualification for income support bonus provisions in the Social Security Act. These amendments commence on a day fixed by Proclamation; and on the day after the end of 12 months beginning on the day the FHSCT Bill receives the Royal Assent if the provision(s) do not commence within those 12 months. The period of 12 months accommodates the possible payment of TFFP and/or IFHA within this time.

Schedule 3, item 1 commences at the same time that section 3 of the FHSA 2014 commences.

Schedule 3, item 2 commences at the same time that section 1 of the FHSA 2014 commences.

Section 3

This section explains the operation of Schedules 1 to 3 of the Bill.

Schedule 1

Item 1

This item repeals the FHSA 1992. This Act contains provisions relating to payments and schemes that have ceased or will cease on the same date the substantive provisions of the FHA under the FHS Bill commence. These payments and schemes include 'exceptional circumstances relief payment', 'farm household support', 'farm help income support', 'farm help re-establishment grant scheme', 'farm help advice and training scheme'; and 'dairy exit payments' made under the 'DEP scheme'.

Schedule 2, Part 1

Schedule 2, Part 1 amends the following Acts and provides for the continuing application of provisions under these Acts despite the amendments:

•

Aged Care Act 1997 (item 1)

•

Age Discrimination Act 2004 (item 3)

•

A New Tax System (Family Assistance) (Administration) Act 1999 (items 4, 5)

•

Dairy Produce Act 1986 (items 7, 8, 10-23, 25, 27-30)

•

Income Tax Assessment Act 1936 (items 31-32)

•

Income Tax Assessment Act 1997 (items 33-55)

•

Small Superannuation Accounts Act 1995 (item 57)

•

Social Security Act 1991 (items 59-92)

•

Social Security (Administration) Act 1999 (items 94-133)

•

Veterans' Entitlements Act 1986 (items 135-138)

•

Application provisions (items 2, 6, 9, 24, 26, 56, 58, 93, 134).

As many of the amendments to these Acts achieve the same effect, the amendments are grouped as follows:

•

removal of redundant references

•

substitution of references to FHSA 1992 with FHSA 2014

•

modified operation of the social security Acts under the FHS Bill 2014

•

amendments to taxation law to support the FHA

•

amendments to social security law to support the FHA

•

miscellaneous amendments

•

application provisions.

Removal of redundant references - items 7-8, 10-23, 25, 27-33, 35, 38-40, 43-52, 55, 57, 59-78, 80-91, 94-96, 98 99, 102-105, 135-138

These items amend various Acts that refer to:

•

the FHSA 1992

•

a declaration of exceptional circumstances and the issue of a an exceptional circumstances certificate

•

payments made under the FHSA 1992

•

provisions of the FHSA 1992

•

provisions regarding a historical payment of 'farmers hardship bonus'.

The amendments to the Aged Care Act 1997, A New Tax System (Family Assistance) (Administration) Act 1999, Dairy Produce Act 1986, Income Tax Assessment Act 1936, Income Tax Assessment Act 1997, Small Superannuation Accounts Act 1995, Social Security Act 1991, Social Security (Administration) Act 1999 and Veterans' Entitlements Act 1986 under these items remove redundant references outlined in the aforementioned dot points, including definitions and headings.

Substitution of references to FHSA 1992 with FHSA 2014 - items 4-5, 34, 36-37, 53-54, 79, 92, 108, 111, 132

These items substitute references in various Acts to FHSA 1992 with FHSA 2014; and substitute references to payments under the FHSA 1992 with the FHA. These items maintain consistency where possible between the treatment of payments under the FHSA 1992 and the FHSA 2014 (or between those Acts) in relation to the following:

•

the family tax benefit provisions relating to debt in the A New Tax System (Family Assistance) (Administration) Act 1999 (items 4-5)

•

the non-assessable income provisions in the Income Tax Assessment Act 1997 (item 34)

•

the tax offset provisions in the Income Tax Assessment Act 1997 (items 36-37)

•

the definitions of 'Agriculture Department' and 'Agriculture Minister' in the Income Tax Assessment Act 1997 (items 53-54)

•

the provisions in the Social Security Act dealing with access to financial hardship rules and deductions by consent from a social security payment (items 79, 92)

•

the internal review provisions and definition of 'Agriculture Minister' in the Social Security Administration Act (items 108, 111, 132).

Modified operation of the social security Acts under the FHS Bill 2014 - items 1, 31, 40-42, 60, 106, 109, 112, 114-130

The FHS Bill includes provisions in Part 5 that modify how the Social Security Act and the Social Security Administration Act (together, the social security Acts) operate so that those Acts, as well as other legislation, can apply in relation to a payment of FHA, which is generally treated under the FHS Bill 2014 in the same way as newstart and youth allowance. This means that where there is a reference in the social security Acts to newstart or youth allowance, it is as if there were also a reference to FHA. Similarly, where there is a reference to a concept that is defined to include those allowances, such as 'social security benefit' or 'social security payment', it is as if that concept were also defined to include FHA. The modification provisions in the FHS Bill 2014 also provide that references in other Acts to the 'social security law' are to be read as including the FHSA 2014.

Arising from the modification provisions in Part 5 of the FHS Bill 2014, the amendments under these items mean that:

•

the substituted definition of 'income support payment' in the Aged Care Act 1997 includes a payment of FHA (item 1; see also FHS Bill subsection 93(1), table item 3)

•

the reference to 'payment under the Social Security Act 1991' in the Income Tax Assessment Act 1936 includes a payment under the FHSA 2014 (item 31; see also FHS Bill subsection 93(1), table item 12)

•

the reference to 'social security law' in the definition of 'officer' in the Social Security Act includes the FHSA 2014 (item 60; see also FHS Bill subsection 93(1), table item 11)

•

certain references to 'FHSA 1992' in the Social Security Administration Act do not need to be substituted with 'FHSA 2014' and are therefore redundant as the FHSA 2014 is part of the 'social security law' (items 106, 109, 112, 114-130; see also FHS Bill subsection 93(1), table item 11).

The provisions amended by items 106, 109, 112, 114-130 relate to:

•

review of decisions internally by the Secretary of the Department of Social Services (items 106 and 109)

•

review of decisions by the Social Security Appeals Tribunal (items 112, 114-116)

•

review of decisions by the Administrative Appeals Tribunal (item 117)

•

information gathering (items 118-119)

•

confidentiality (items 120-130).

Items 40, 41, 42 clarify that references in certain ITAA 1997 provisions (relating to exempt payments under the Social Security Act) to newstart allowance or youth allowance includes a reference to FHA under the FHSA 2014.

Amendments to taxation law to support the FHA - items 34, 36 and 37

The Bill amends the ITAA 1936 (items 31-32) and the ITAA 1997 (items 33 55) for the purposes described above.

The effect of items 34, 36 and 37 (together with the modifications provisions in Part 5 of the FHS Bill) is to support specifically the implementation of the FHA by providing for FHA (and the two supplements payable under the FHA - activity supplement and farm financial assessment supplement) to be assessable income.

In addition, the effect of Item 32 (together with the modifications provisions in Part 5 of the FHS Bill) is to define the FHA (but not the two supplements) as a 'rebatable benefit' so that it attracts a tax offset. This is consistent with the income tax treatment of equivalent social security allowances.

Recipients of FHA may be entitled to other amounts, some of which (for example, rent assistance, remote area allowance, pharmaceutical allowance) will be generally exempt from income tax.

Amendments to social security law to support the FHA - items 97, 100-101, 131, 133

The Bill amends the Social Security Act (items 59-92) and the Social Security Administration Act (items 94-133) for the purposes described above.

The following items support specifically the implementation of the FHA by amending the Social Security Administration Act to:

•

include the two supplements payable under the FHA (activity supplement and farm financial assessment supplement) in the definition of 'payment of lump sum benefit' (item 97)

•

provide for the payment of the two supplements payable under the FHA (item 100)

•

add the FHA to the 'notice to obtain foreign payment' provisions; to ensure that an individual who has reached pension age is not entitled to both the FHA and a comparable foreign payment (item 101)

•

provide that the meaning of the two supplements payable under the FHA have the same meaning as in the FHSA 2014 (items 131 and 133).

Miscellaneous

Item 3

This item replaces the current exemption from the unlawful age discrimination provisions in the Age Discrimination Act 2004 in relation to things done in direct compliance with the FHSA 1992 regarding redundant payments and schemes with an equivalent exemption in relation to things done in direct compliance with the relevant provisions of the FHSA 2014 regarding the FHA.

Item 94

This item removes a provision in the Social Security Administration Act that allows Secretaries of the Departments of Agriculture and Social Security to agree on administrative arrangements to further the objectives of section 26 and 27 of the Social Security Act. These provisions originally dealt with the giving of financial hardship certificates to farmers, but have since been repealed. Consequently, this provision is no longer necessary.

Items 107 and 110

These items amend the provisions in the Social Security Administration Act governing the internal review of decisions made under the FHSA 1992. (Items 108 and 111 substitute references to 'under the FHSA 1992' with 'under or in relation to the FHSA 2014'.) The amendments clarify that a decision made personally by the Agriculture Minister or the Secretary of the Agriculture Department under or in relation to the FHSA 2014 is not reviewable by the Secretary of the Department of Social Services. Otherwise, the usual review mechanisms apply. The Secretary of the Department of Social Services can still review decisions made by a delegate of the Secretary of the Agriculture Department under the FHSA 2014.

Item 113

This item removes provisions in the Social Security Administration Act that prevent the Social Security Appeals Tribunal (SSAT) from reviewing certain decisions under the FHSA 1992. The SSAT can generally review decisions made under the social security law and this amendment reflects that the FHA aligns with the social security law where possible.

Application provisions - items 2, 6, 9, 24, 26, 56, 58, 93, 134

Items 2, 6, 9, 24, 26, 58, 93, 134 provide that, despite the amendment or repeal of the following provisions by Schedule 2 of the Bill, those provisions continue to apply (in relation to specific things) as if those amendments or repeals had not occurred:

•

definition of 'income support payment' in clause 1 of Schedule 1 to the Aged Care Act 1997 (item 2)

•

amendments of the A New Tax System (Family Assistance) (Administration) Act 1999 (item 6)

•

the secrecy provisions in section 119; and the protection of confidential information provisions in clause 43 of Schedule 2 to the Dairy Produce Act 1986 (items 9 and 24)

•

the cancellation of units provisions regarding a dairy exit payment in clause 53 of Schedule 2 to the Dairy Produce Act 1986 (item 26)

•

Definition of 'Commonwealth income support payment' in subsection 64(7) to the Small Superannuation Accounts Act 1995 (item 58)

•

sections 573A, 916D; and the overpayment and debt recovery provisions in Parts 5.2 and 5.3 of the Social Security Act (item 93)

•

the information gathering provisions in sections 193 and 194; and the confidentiality provisions in Part 5, Division 3 of the Social Security Administration Act (item 134).

These items provide for the necessary saving of these provisions to account for existing payments and debts due; decisions; and the recording or disclosure of information or the production of a document.

Item 56 provides for amendments made by items 31-55 to taxation legislation apply in relation to payments made after this item commences that do not relate to the period before commencement, unless provided for otherwise.

Schedule 2, Part 2 - Contingent amendments

Schedule 2, Part 2 includes contingent amendments to a number of Bills which are currently before Parliament, including the FHS Bill; as well as amendments to provisions in the ITAA 1997 and the Social Security Act regarding the operation of, and repeal of references to, a payment of TFFP and IFHA.

Items 139 and 140 remove references to 'farmers hardship bonus' in the Minerals Resource Rent Tax Repeal and Other Measures Act 2014 and the Social Security Act 1991 if the Farm Household Support (Consequential and Transitional Provisions) Act 2014 commences before the Minerals Resource Rent Tax Repeal and Other Measures Act 2014.

Items 141 and 142 remove references to 'farmers hardship bonus' in the Social Security Act 1991 if the Farm Household Support (Consequential and Transitional Provisions) Act 2014 commences after the Minerals Resource Rent Tax Repeal and Other Measures Act 2014.

Item 142 is contingent on passage of the Social Security Legislation Amendment (Increased Employment Participation) Act 2014 and inserts a new table item 1A in section 95 of the Farm Household Support Act 2014. Item 1A refers to paragraph 861(1)(a) of the Social Security Act. Section 95 of the FHS Bill modifies particular provisions of the Social Security Act for the purpose of the FHA. (The explanatory memorandum to the FHS Bill explains the operation of FHS Bill section 95.) The Social Security Legislation Amendment (Increased Employment Participation) Act 2014 amends the Social Security Act to provide for the 'job commitment bonus', including qualification requirements under section 861. This item provides that references to newstart allowance or youth allowance in paragraph 861(1)(a) do not include a reference to FHA. (The reference to 'income support payment' in subsections 861(2) and (4) include a reference to FHA.)

Items 143 to 146 insert references to a payment of TFFP and IFHA in the exempt income provisions in the ITAA 1997 and the qualification for income support bonus provisions in the Social Security Act.

Items 147 to 151 repeal references to a payment of TFFP and IFHA in the exempt income provisions in the ITAA 1997 and the qualification for income support bonus provisions in the Social Security Act.

Schedule 3 - Transitional provisions

Item 1 provides that recipients of existing farmer income support payments or former income support payments, including Interim Income Support and ECRP, who qualify for the FHA can have the ordinary waiting period of 13 weeks under section 40 of the FHS Bill waived. This provision facilitates a smooth transition for recipients and former recipients from these payments to the FHA following passage of the FHS Bill and the FHSCT Bill.

Item 2 provides for the Minister to make transitional rules regarding amendments or repeals made by the FHSCT Bill; or enactment of the FHS Bill or the FHSCT Bill. Transitional rules may be necessary to provide for saving or application provisions in relation to the FHSA 2014 or the social security Acts, as well as to facilitate a smooth transition for income support recipients and former recipients from TFFP and IFHS to the FHA.