Explanatory Memorandum
(Circulated by the authority of the Minister for Family and Community Services, Senator the Hon Kay Patterson)Outline and financial impact statement
Outline
This Bill gives effect to a measure announced in the 2005 Budget to provide extra assistance to carers.
The Bill will provide three one-off payments that will generally be paid in June 2005:
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- A one-off payment of $1000 to recipients of carer payment on Budget night 2005 (10 May 2005).
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- A one-off payment of $1000 to recipients of carer service pension on Budget night 2005, 10 May 2005 (these are people whose entitlement to carer service pension was preserved under savings and transitional provisions under subclause 8(2) or (4) of Schedule 5 of the Veterans' Entitlements Act 1986).
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- A one-off payment to recipients of carer allowance on Budget night (10 May 2005), generally payable as an amount of $600 for each person being cared for who attracts carer allowance.
The Bill also contains provisions to enable an administrative scheme to be established. In broad terms, the purpose of the administrative scheme will be to provide payments in circumstances where the statutory one-off payments regime does not produce an appropriate result. The Minister for Family and Community Services will determine the details of the scheme by legislative disallowable instrument.
The Bill commences on Royal Assent.
Financial impact statement
The financial cost of the one-off payments to carers is $313.700m for in 2004-05 and $3.2m10m in 2005-06.
Notes on clauses
Clause 1 sets out how the Act is to be cited, that is, as the Social Security Legislation Amendment (One-off Payments for Carers) Act 2005.
Clause 2 provides that the Act commences on Royal Assent.
Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule (see notes on following pages).
This Explanatory Memorandum uses the following abbreviations:
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- 'Social Security Act' means the Social Security Act 1991;
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- 'Social Security Administration Act' means the Social Security (Administration) Act 1999;
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- 'Veterans' Entitlements Act' means the Veterans' Entitlements Act 1986.
Schedule 1 - 2005 one-off payments to carers
Summary
This Schedule provides for a one-off payment of $1000 to recipients of carer payment on Budget night 2005. It also provides for a one-off payment to recipients of carer service pension on Budget night 2005 whose entitlement to carer service pension was preserved under savings and transitional provisions under subclause 8(2) or (4) of Schedule 5 of to the Veterans' Entitlements Act). Finally, it also provides for a one-off payment to recipients of carer allowance on Budget night 2005. Where the carer is the only person who is being paid carer allowance in respect of the care receiver (or care receivers), the one-off payment will be $600 in respect of each care receiver (or in respect of the care receivers in relevant cases). Where carer allowance is shared in relation to a care receiver (or care receivers), the $600 will be shared on the same basis as the payment(s) of carer allowance is shared.
Background
In broad terms, this Schedule introduces a new one-off payment to carers, which would be paid as a lump sum payment, generally before 30 June 2005. There would not be a claim process attached to the one-off payment.
The trigger for eligibility for the one-off payment will be whether the primary payments (carer payment, carer service pension or carer allowance) was payable to the person for a period that includes 10 May 2005. A person who receives an instalment of carer payment for a period that includes Therefore, if an instalment of carer payment is payable to the person for a period that includes 10 May 2005 will , the person will b be entitled to a one-off payment of $1000. Similarly, if a person who receives an in instalment of carer service pension is payable to the person for a period that includes 10 May 2005, the person will be entitled to a one-off payment of $1000.
Finally (Ssubject to certain qualifications), a person will be entitled to $600 in respect of each care receiver in relation to whom the person receives an instalmentif an instalment of carer allowance is payable to the person in respect offor a period that includes 10 May 2005. Where the care of the care receiver is shared, the $600 will also be shared. Where qualification for carer allowance depends on the person providing care for two disabled children, the payment will also be $600.
Explanation of changes
Amendments of the Social Security Act
Item 1 inserts new Parts 2.5B and 2.5C into Chapter 2 of the Social Security Act.
New Part 2.5B applies to the 2005 one-off payment to people eligible for carer payment.
New section 249 provides that a person is qualified for a one-off payment if the person has been paid an instalment of carer payment and the instalment period includes an instalment of carer payment is payable to the person in respect of a period that includes 10 May 2005. The Note to this provision makes it clear that a person can qualify for this one-off payment as well as the one-off payment that is available in respect of carer allowance.
New section 250 provides that the amount of the 2005 one-off payment is $1000. The Note to the provision makes it clear that the maximum available to a person is $1000 regardless of the number of people in relation to whom the qualified person provides care.
New Part 2.5C applies to the 2005 one-off payment to people eligible for carer service pension.
The only people who are now currently receivingeligible for carer service pension are people whose entitlement to carer service pension was preserved under savings and transitional provisions under subclause 8(2) or (4) of Schedule 5 of to the Veterans' Entitlements Act 1986. This is because the Veterans' Affairs Legislation Amendment (Budget and Compensation Measures) Act 1997 made changes that removed all carer provisions from the Veterans' Entitlements Act, allowing the recipients to transfer to carer payments that were available at that time under the Social Security Act 1991. Because, at the time of these changes, it was recognised that a number of people would be adversely affected by those changes, they could elect to remain on the carer service pension rather than transferring to carer payment.
New section 251 provides that a person is qualified for a one-off payment if the person has been paid an instalment of carer service pension as a result of the operation of subclause 8(2) or (4) of Schedule 5 to the Veterans' Entitlements Act and is payable to the person in respect of a period that includes 10 May 2005.
New section 252 provides that the amount of the 2005 one-off payment is $1000. The Note to the provision makes it clear that the maximum available to a person is $1000 regardless of the number of people in relation to whom the person provides care.
Item 2 inserts a new Part 2.19B into Chapter 2 of the Social Security Act.
Part 2.19B applies to the 2005 one-off payment to people eligible for carer allowance.
New section 992Q sets out the criteria to be satisfied in order for a person to qualifyied for a 2005 one-off payment to carers (carer allowance related). In effect, there are two requirements that need to be met in relation to one or more instalments of carer allowance that have been paid to the personare payable to the person. The first requirement is that the instalment of carer allowance was in respect is in respect of a period that includes 10 May 2005. The second requirement is that the operation of clause 16 or 17 of Schedule 2 to the Social Security Administration Act (which deal with 'backdating') must not be the reason that the instalment covered 10 May 2005.
The effect of subsection 992Q(2) is that each instalment that meets both the requirements of subsection (1) is a 'qualifying instalment'.
The Note to the provision makes it clear that a person can qualify for this 2005 one-off payment as well as the 2005 one-off payment that is available in respect of carer payment.
The broad operation of the scheme is that a qualified person will receive payment in respect of each 'eligible care receiver' in relation to the person. The concept of who is an 'eligible care receiver' is dealt with in new section 992R. Subsection (1) essentially provides for the general rule that, where providing care to a person gives rise to a qualifying instalment of carer allowance, that person is an 'eligible care receiver' in relation to the qualified person. However, there are situations where a person's qualification for an instalment of carer allowance arises on account of the care the person provides for two disabled children (subsection 953(2) of the Social Security Act). Accordingly, subsection (2) qualifies the general rule by providing that, where subsection 953(2) applies in relation to the qualifying instalment, the two disabled children are treated as a single 'eligible care receiver'.
New section 992S is concerned with working out the amount of the one-off payment. Subsection (1) provides that the amount is worked out by adding together the amounts applicable for each eligible care receiver. Subsection (2) provides that the applicable amount for an eligible receiver is $600 unless subsection (3) applies. Subsection (3) is concerned with situations where 2 people are qualified for carer allowance because they share the care of a care receiver (or care receivers). In those circumstances, subsection 981(1) of the Social Security Act provides for the Secretary to make a written determination specifying the share of carer allowance that each of the two people is to receive. The effect of subsection (3) is that, where the qualifying instalment was paid on the basis of a determination as to a particular share of carer allowance, the amount applicable for an eligible care receiver in relation to a qualified person is that same share of $600.
Items 3 to 6 deal with overpayment arising in respect of the three 2005 one-off payments. These amendments ensure that section 1223ABA of the Social Security Act (which applies in relation to the payments made under the Family Assistance Legislation Amendment (More Help for Families - One-off Payments) Act 2004) will also apply to the 2005 one-off payments. Section 1223ABA, in very broad terms, provides that a one--off payment (or part of a one-off payment) will be a overpayment where it is established that the recipient knowingly made a false or misleading statement (or provided false information) and, if the true circumstances had been known, the determination in relation to the relevant instalment (which gave rise to the qualification for the one-off payment) would not have been made.
Amendments of the Social Security Administration Act
Item 7 inserts new section 12AB into the Social Security Administration Act. It provides that a claim is not required in order to be paid any of the three 2005 one-off payments.
Item 8 inserts a reference to the three new one-off payments into the existing definition of 'lump sum benefit' contained in subsection 47(1) of the Social Security Administration Act.
Item 9 inserts new section 47C. In broad terms, it provides that the Secretary must pay the payments provided for by this Schedule on the date that the Secretary determines is the earliest reasonably practicable date on which to do so.
Amendments of the Income Tax Assessment Act 1936
A taxpayer's dependants' Separate Net Income (SNI) is used to determine the taxpayer's eligibility to certain dependant offsets. SNI is income and other specified amounts earned, derived or received, less certain expenses incurred in earning that income. A payment of carer allowance is not included as part of SNI. As it is not intended that any of the 2005 one-off payments to carers form part of SNI, items 10 and 11 make the necessary amendments to the Income Tax Assessment Act 1936.
Amendments to of the Income Tax Assessment Act 1997
The 2005 one-off payments to carers, and a payment made under the scheme determined under Schedule 2 to this Bill, will be exempt from income tax. Amendments are made to section 52-10 of the Income Tax Assessment Act 1997 to achieve this effect (items 13 to 15).
A consequential amendment is also made to the table in section 11-15 to add in references to the 2005 one-off payments to carers and a payment made under the scheme determined under Schedule 2 to this Bill (item 12).
Amendments of the Social Security Act 1991
Item 16 inserts a new paragraph 8(8)(jacb) into the Social Security Act. This ensures that any payment made under the arrangements determined under Schedule 2 to this Bill, do not count as income for the purposes of the social security law.
Schedule 2 - Administrative scheme for 2005 one-off payments to carers
Summary
This Schedule contains provisions to enable an administrative scheme to be established. In broad terms, the purpose of the administrative scheme will be to provide payments in circumstances where the statutory one-off payments regime provided for in Schedule 1 does not produce an appropriate result in relation to circumstances that occur in the 2004-05 income year. The Minister for Family and Community Services will determine the details of the scheme by legislative instrumentdisallowable instrument.
Background
This Schedule enables an administrative scheme to be established alongside the statutory one-off payment scheme.
Explanation of changes
Item 1 provides for the establishment of an administrative scheme by the Minister for Family and Community Services by legislative instrument, under which one-off lump sum payments can be made to carers in specified circumstances. The purpose of the scheme is to provide payments in circumstances where the statutory one-off payments regime does not produce an appropriate result in relation to circumstances that occur in the 2004 - 05 income year.
The details of the administrative scheme (including such matters as eligibility, amount of the payment and administrative matters) would be set out in a disallowable instrument.
Payments under the administrative scheme would be made out of the Consolidated Revenue Fund (in accordance with subitem 1(4) ).