Bills Digest No. 38 2003-04
Family Assistance Legislation Amendment (Extension of
Time Limits) Bill
2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Family Assistance Legislation Amendment
(Extension of Time Limits) Bill
2003
Date Introduced:
10 September 2003
House: House of Representatives
Portfolio: Family and Community
Services
Commencement:
Royal
Assent
To amend the A New Tax System Family
Assistance (Administration) Act 1999 (FAAA) to allow a further
twelve months for claimants of Family Tax Benefit (FTB) or Child
Care Benefit (CCB) to lodge a tax return and still be eligible to
receive FTB or CCB entitlements.
Background
The FTB and CCB payment arrangements were
introduced from 1 July 2000 as a part of the A New Tax System
(ANTS) family assistance changes. Bills Digest No 175 1998-99
refers.(1)
Under the ANTS family assistance arrangements
a claim for FTB or CCB can be lodged in either of two ways:
1.
before the end of the financial
year - to be paid fortnightly based on an income estimate;
and/or
2.
at the end of the financial
year with the lodgement of a tax return.
For payment method 1, up to 26 fortnightly
instalments can be made based on an estimate of income for the
financial year.
For payment method 2, a single lump sum
arrears payment is made for any FTB or CCB entitlement for the
whole financial year.
Whatever method of payment is selected by the
claimant, the same amount of FTB or CCB is paid for the whole year
against their assessed level of taxable income. Note: The FTB/CCB
income test uses adjusted taxable income, being net taxable income
but with foreign income, employer provided fringe benefits and
negatively geared rental property loses added back in.
Once the tax return is lodged and the tax
assessment made, the level of adjusted taxable income for the
financial year can then be determined and an assessment of FTB
and/or CCB entitlement for the year can then be made.
Where payment method 1 was used, ie.
fortnightly instalments during the year against an income estimate,
a reconciliation is then conducted for the year. Any underpayment
is paid as arrears or any overpayment recovered as a debt.
Subsection 10(2) of the FAAA requires that a
claim for FTB must be lodged within 12 months of the end of the
year in respect of the year the FTB is claimed.(2) For
example, for a claim for FTB for the 2002-03 financial year a tax
return must be lodged by 30 June 2004. A like provision for claims
for CCB applies - sub-section 49J(2) of the FAAA
refers.(3)
In an answer to a question on notice to the
Senate Community Affairs Legislation Committee provided in August
2002, the Department of Family and Community Services reported some
77 688 customers had been paid FTB as a lump sum payment
through the tax system for the 2000-01 year.(4)
In an answer to a question on notice to the
Senate Community Affairs Legislation Committee provided in February
2003, the Department of Family and Community Services reported some
25 072 FTB customers were not paid $37.03 million of FTB for
the 2000-01 year, as the tax return was lodged more than 12 months
after the end of 30 June 2001.(5)
Contact was made with the Australian Tax
Office and a random sample of tax agents to ascertain if there was
a common group, type or reason as to why individuals delay more
than 12 months after the end of the tax years to lodge a tax
return. No one contacted provided singular or typical reason.
Anecdotal evidence provided suggests that it is more likely to be
individual tax payers preparing their own tax returns, rather than
persons involved in business or company arrangements and/or using a
tax agent, who are more likely to lodge a late tax return.
Item 1 proposes to amend the
FAAA to extend the time period in which a claim for FTB may be
lodged for a past period from 12 to 24 months.
Item 3 proposes to amend sub-paragraph 49(J)(2)(b)
of the FAAA to extend the time period in which a claim for CCB may
be lodged for a past period from 12 to 24 months.
Items 6(1) proposes to amend the FAAA to ensure
the extension of the current 12 month time limit to a 24 month time
limit only refers to the 2001-02 year and subsequent years for FTB
claims.
Items 6(3) proposes to amend the FAAA to ensure
the extension of the current 12 month time limit to a 24 month time
limit only refers to the 2001-02 year and subsequent years for CCB
claims.
Part 2 of Schedule 1 is a change arising from the
extension of time to lodge a FTB or CCB claim from 12 to 24 months.
Part 2 proposes to amend the Income Tax
Assessment Act 199, 7 to allow a person who uses the services
of a tax agent to make a claim for FTB or CCB for a past period, to
claim the tax agent s fee as a tax deduction.
This is beneficial legislation. There
are a significant number of individual tax lodgers who do delay
more than 12 months after the end of the tax year to lodge a tax
return and who also would otherwise qualify for arrears of FTB
and/or CCB.
1.
Bills Digest No. 175 1998-99 - A New Tax System (Family Assistance)
Bill 1999.
http://www.aph.gov.au/library/pubs/bd/1998-99/99bd175.htm
- Claim must
relate to one income year and not be made after the end of the next
income year.
10.(2) A claim for payment of family tax benefit for a
past period is not effective if:
(a)
the period does not fall wholly
within one income year; or
(b)
the period does fall wholly within one income year but the claim is
made after the end of
the next income
year
- 49J.(2) A past period claim is ineffective if:
(a)
the period does not fall wholly
within one income year; or
(b)
the period does fall wholly within one income year but the claim is
made before the end of that
income year or after the end
of the following income year.
4.
Senate Community Affairs
Legislation Committee
ANSWERS TO
ESTIMATES QUESTIONS ON NOTICE
FAMILY AND
COMMUNITY SERVICES PORTFOLIO
2002-2003
Budget Estimates, 3 June
2002
Output Group:
1.1 Family Assistance Question No: 42
Topic: Family
Tax Benefit
Hansard Page:
Written question on notice
Senator
Mark Bishop asked:
How many
families in total claimed Family Tax Benefit in respect
to
2000 -
2001;
b)
How many families claimed their
payments fortnightly;
c)
How many families chose to claim
their payments through the tax system as (a) a lump sum; and (b)
tax
instalment reductions;
d)
What was the total dollar value of
the Family Tax Benefit payments claimed through the respective
payment
methods?
Answer:
a)
Centrelink records show that
1,937,047 customers successfully claimed Part A and 1,358,413
customers
successfully claimed Family Tax Benefit Part B as fortnightly
payments. It is estimated that a further 80,688
customers have successfully claimed Family Tax
Benefit through the tax system in respect of 2000-01.
b)
As noted above, Centrelink records
show that 1,937,047 customers received Family Tax Benefit Part A
and 1,358,413
customers received Family Tax Benefit Part B as fortnightly
payments.
c)
Australian Taxation Office records
show that 77,688 customers have so far been paid lump sum claims
for Family Tax
Benefit through the tax system and it is estimated that around
3,000 customers received Family Tax
Benefit as reduced tax withholdings.
d) During
2000-01, $10.1 billion in fortnightly FTB payments was paid by
Centrelink. During 2001-02, a further
$0.2 billion has been paid out by Centrelink in respect of 2000-01
entitlements. The Australian Taxation
Office has paid out a further $0.3 billion in respect of
2000-2001.
5.
Senate Community Affairs
Legislation Committee
ANSWERS TO
ESTIMATES QUESTIONS ON NOTICE
FAMILY AND
COMMUNITY SERVICES PORTFOLIO
2002-2003
Supplementary Budget Estimates, 21 November 2002
Output Group:
1.1 Family Assistance Question No: 40
Topic: FTB-CCB
entitlement where 2001 tax return lodged after 30 June 2002
Hansard Page:
CA17
Senator
Bishop asked:
What is the
amount of FTB-CCB that families would have been entitled to either
as a:
a) top-up
payment; or
b) complete
payment)
had they lodged
before the June 30 deadline?
Answer:
a)
As at 29 November 2002, 25,072 Family Tax Benefit (FTB) customers
who lodged 2001 tax returns after 30 June 2002, and/or whose
partners lodged 2001 tax returns after 30 June 2002, would have
received $37,033,027 (an average of $1477) in top-ups of their
2000-01 FTB entitlements had those returns been lodged before 1
July 2002. All of these customers were sent letters by the Family
Assistance Office in April 2002 and reminder letters in June 2002
telling them that they would not receive top-ups if they lodged
their 2001 tax returns after 30 June 2002. b) With regard to FTB
and Child Care Benefit claims for 2000-01 that were lodged too late
to be effective claims, the amount that would have been paid had
those claims been lodged on time is not known as those claims have
not been assessed for payment. The deadline for lodgement of FTB
and CCB claims for 2000-01 was stated in the 2001 FTB Tax Claim and
the CCB lump sum claim form, respectively. The lodgement deadline
was also advised to childcare centres in May 2002 and to tax
practitioners at various times in 2001 and 2002.
Peter Yeend
10 October 2003
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2003
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