Supplementary Explanatory Memorandum
Outline
The Family Assistance Legislation Amendment (Child Care Budget Measures) Bill 2010 (the Bill) amends the A New Tax System (Family Assistance) Act 1991 to set the annual child care rebate limit at $7,500 for four income years, starting from the year 2010-2011, with the first indexation to occur on 1 July 2014.
Amendments 1 to 4 have the effect of setting that annual limit ($7,500) for 3 income years, starting from the year 2011-2012 (with the first indexation to occur on 1 July 2014).
Financial Impact
The measure in the Bill had the effect of net savings of $86.3m over 4 years (2010-11, 2011-12, 2012-13 and 2013-14).
The measure as amended has the effect of net savings of $81.0m over 3 years (2011-12, 2012-13 and 2013-14).
Notes on amendments
Amendment 1
Item 2 of Schedule 1 to the Family Assistance Legislation Amendment (Child Care Budget Measures) Bill 2010 (the Bill) inserts in the A New Tax System (Family Assistance) Act 1991 new paragraph 84F(1)(e), which specifies the amount of $7,500 as an annual child care rebate limit for four income years: the income years ending on 30 June 2011, 30 June 2012, 30 June 2013 and 30 June 2014.
Amendment 1 omits this paragraph and replaces paragraph (e) with paragraphs (e) and (ea). Paragraph (e) changes the annual child care rebate limit for the income year ending on 30 June 2011 from $7,500 to $7,941 (the limit amount as indexed on 1 July 2010). Paragraph (ea) specifies the amount of $7,500 as an annual child care rebate limit for the income year ending 30 June 2012, 30 June 2013 and 30 June 2014.
As a result of Amendment 1, the $7,500 limit will apply for three income years, starting from the current income year (2011-2012). This amendment ensures that the $7,500 limit does not operate retrospectively.
Amendments 2, 3 and 4
Amendments 2, 3 and 4 are consequential to Amendment 1.
Item 4 of Schedule 1 to the Bill inserts new subclauses 3(6A) and 3(6B) in Schedule 4 of the A New Tax System (Family Assistance) Act 1991. These new clauses makes ineffective the indexation of the child care rebate annual limit that occurred on 1 July 2010 and provide that the limit is not to be indexed on 1 July 2011, 1 July 2012 and 1 July 2013.
Amendments 2, 3 and 4 amend these clauses to make ineffective the indexation that occurred on 1 July 2011 and to provide that the limit is not to be indexed on 1 July 2012 and 1 July 2013.