House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

OUTLINE AND FINANCIAL IMPACT STATEMENT

Outline

As part of the Government's plan for a new tax system, the structure and administration of family assistance is being simplified from 1 July 2000.

The package of Bills that will give effect to the new family assistance regime are:

A New Tax System (Family Assistance) Bill 1999;

A New Tax System (Family Assistance) (Consequential and Related Measures) Bill (No. 1) 1999;

A New Tax System (Family Assistance) (Administration) Bill 1999; and

A New Tax System (Family Assistance) (Consequential and Related Measures) Bill (No. 2) 1999.

The first two Bills are currently before the Parliament. In broad terms, these Bills repeal the 12 existing forms of assistance for families and outline the eligibility conditions for, and rates of payment of, three new payment types, family tax benefit (Part A), family tax benefit (Part B) and child care benefit (CCB). In addition, maternity allowance (MAT) and maternity immunisation allowance (MIA), being family related payments, are incorporated into the new family assistance regime.

The A New Tax System (Family Assistance) (Administration) Bill 1999 contains administrative, procedural and technical rules that will apply in relation to the administration of family tax benefit (FTB) and CCB. The Bill provides for new and simpler administrative arrangements for the delivery of FTB and CCB. As MAT and MIA will also form part of the new family assistance regime, this Bill covers similar issues as they relate to those payments.

The matters covered in this Bill include claims processes, payment options, internal and external review of decisions, debt recovery, information management including information gathering powers, confidentiality of information, offences and other matters of an administrative nature.

The A New Tax System (Family Assistance) (Consequential and Related Measures) Bill (No. 2) 1999 makes consequential amendments to the following Acts:

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Social Security Act 1991;

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A New Tax System (Family Assistance) Act 1999 (when enacted);

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Child Care Act 1972;

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Child Support (Assessment) Act 1989;

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Data-matching Program (Assistance and Tax) Act 1990 ;

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Farm Household Support Act 1992;

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Health Insurance Commission Act 1973;

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Health Insurance Act 1973;

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Veterans Entitlement Act 1986;

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Fringe Benefits Tax Assessment Act 1986;

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Income Tax Assessment Act 1936;

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Income Tax Assessment Act 1997;

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Income Tax Rates Act 1986;

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Income Tax Rates Amendment Act (No. 1) 1997;

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Income Tax (Transitional Provisions) Act 1997;

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Medicare Levy Act 1986;

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Taxation Administration Act 1953;

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Bankruptcy Act 1966;

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Safety, Rehabilitation and Compensation Act 1988; and

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Seafarers Rehabilitation and Compensation Act 1992.

These Acts refer to concepts and terms that are relevant under the existing family assistance structure. These references will be repealed or amended to reflect the new family assistance regime. In addition, amendments are made to allow a tax deduction for fees related to family tax benefit claimed through the tax system.

Other related amendments are made to the A New Tax System (Family Assistance) Act 1999 (when enacted) and the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999 (when enacted) as follows:

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an amendment is made to ensure that FTB (Part A) recipients in receipt of income support (or whose partners receive income support) have their FTB (Part A) calculated under Method 1 (Schedule 1, Part 2, Division 4);

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an amendment is made to ensure that a CCB amount for an instalment period is calculated not only with reference to a CCB rate that applies in normal circumstances (under the CCB Rate Calculator in Schedule 2) but also with reference to a CCB rate that applies in special circumstances (under section 71);

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an amendment is made to allow the use or disclosure of information by or between the three agencies (Centrelink, the Australian Taxation Office and the Health Insurance Commission) involved in the transition to the new family assistance regime, for the purpose of identifying shared customers (so that customers receive only one letter instead of, potentially, three);

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provide for other minor technical amendments.

Financial impact

The total cost to revenue of the family package is $2.4 billion in 2000-01, $2.5 billion in 2001-02, and $2.6 billion in 2002-03.