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THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
A NEW TAX SYSTEM (BONUSES FOR OLDER AUSTRALIANS) BILL 1998
EXPLANATORY MEMORANDUM
(Circulated by authority of the Treasurer, the Hon Peter
Costello, MP,
Senator the Hon Jocelyn Newman, Minister for Family and
Community Services and
the Hon Bruce Scott, MP, Minister for
Veterans’ Affairs)
ISBN: 0642 378657
A NEW TAX
SYSTEM (BONUSES FOR OLDER AUSTRALIANS) BILL 1998
OUTLINE AND FINANCIAL IMPACT STATEMENT
This Bill forms part of the Government’s tax reform package, and
gives effect to the Government’s commitment to protect the interests of
older Australians under the new taxation system. The Bill provides for a
special one-off payment (“bonus”) - to be made to pensioners and
self-funded retirees to protect the value of their savings and retirement income
after the tax reform package is implemented.
The components of the bonus
provided in the Bill are as follows:
• A one-off untaxed lump sum
Aged Persons Savings component of up to $1000 per person (available to
Australian residents aged 60 years or more and subject to an income test);
and
• An additional one-off untaxed lump sum Self-Funded Retirees
Supplementary component of up to $2000 (making a total of $3000) for retirees of
age pension age and not in receipt of government benefits and subject to an
income test.
Both components of the bonus are targeted to lower income
groups with income of less than $20,000 in the 1998-1999 or 1999-2000 income
years. The amount of the bonus will be phased out where the person's income is
between $20,000 and $30,000 a year.
Financial Impact
The
financial impact of this Act is $1.3 billion in the 2000-2001 financial
year.
A NEW TAX SYSTEM (BONUSES FOR OLDER
AUSTRALIANS) BILL 1998
NOTES ON
CLAUSES
Part 1 – Preliminary
This Part
contains machinery provisions on the Act, its commencement date and provides for
an overview of its provisions.
Section 1 – Short
Title
Section 1 of the A New Tax System (Bonuses for Older
Australians) Bill 1998 sets out how the amending Act is to be
cited.
Section 2 – Commencement
Section 2 provides
for the Act to commence on the day after the last day on which all of the
following Acts in the Government’s tax package receive the Royal
Assent:
• the A New Tax System (Goods and Services Tax) Act
1998
• the A New Tax System (Goods and Services Tax
Administration) Act 1998
• the A New Tax System (Goods and
Services Tax Imposition - Excise) Act 1998
• the A New Tax
System (Goods and Services Tax Imposition - Customs) Act 1998
• the
A New Tax System (Goods and Services Tax Imposition - General) Act
1998
Section 3 - Overview of Act
Section 3 provides an
overview of the Act for ease of reference.
The Act provides for payment
of the bonuses to be authorised by 3 Commonwealth agencies - the Department of
Family and Community Services (DFACS); the Repatriation Commission (RC), the
Australian Taxation Office (ATO), according to whose “customer” is
the recipient of the bonus (for example, a person who is liable to lodge an
income tax return for the 1999-2000 year is an “ATO client”). It is
intended that the bonuses will be paid by Centrelink as paying agent for those 3
agencies.
The Act is structured to reflect the above role of those 3
Commonwealth agencies. Part 2 of the Act deals with Family and Community
Services customers, Part 3 deals with Veterans’ Affairs customers and Part
4 deals with ATO clients. Major purposes served by this division of
responsibility are to minimise intrusiveness upon the aged section of the
community to which these measures relate by avoiding a full data collection from
them, and to allow those aged Australians to deal with the Commonwealth agency
with which they are most familiar and accustomed to dealing with.
• Thus, for example, ATO clients will have their entitlement to
bonus assessed and authorised by the ATO. Should a review of any decision arise
in that regard it will be dealt with under the procedures contained in the
taxation
law.
Part
2 – Family and Community Services customers who qualify for a bonus
payment
Division 1 –
Interpretation
Section 4 - Definitions
Section 4
defines various phrases and terms for the purposes of this Part, which relates
to Family and Community Services customers. Generally speaking,
most of the phrases and terms are defined as bearing the same meaning as in the
3 major Commonwealth Acts administered by the 3 Commonwealth agencies who have
functions under the Act. These Acts are: the Income Tax Assessment Act
1997, the Veterans’ Entitlements Act 1986 and the Social
Security Act 1991.
In particular, the following terms are
defined:
“deprived asset” is given the same
meaning as defined in subsection 9(4) of the Social Security Act 1991,
namely an asset which the person has disposed of, and the value of which is
taken into account in relation to the person’s ordinary
income.
• Ordinarily, such an asset would be subject to the
“deeming” rules (Part 3.10, Division 1B of the Social Security
Act 1991) which provide for income to be imputed to a person in respect of
any deprived asset.
• For the purposes of paying the
bonus under this Act, the “deeming rules” are altered
beneficially in relation to the customer in an important respect: any
additional ordinary income which might be imputed to the person in
relation to a deprived asset is disregarded; – thus, that
person will not suffer any “tapering” on that account (ie, no
reduction in bonus, on that account, for ordinary income of the
person between $20,000 and $30,000).
“disqualifying
payment” is defined as
a) a social security pension (other
than a bereavement allowance);
b) a social security benefit;
c) a service
pension;
d) a carer service pension; and
e) an income support
supplement.
• A person who receives a disqualifying payment
between 1 April 2000 and 1 July 2000 (inclusive) will in most cases be
precluded from receiving the second component of the bonus ie the
self-funded retirees supplementary bonus.
Section 5
- Annual retirement income and annual savings and investment income –
customers with previous calculation of ordinary income on a yearly
basis
This section applies where the Secretary DFaCS has had to work
out the ordinary income of a Family and Community Services
customer during the qualifying period for the bonus, ie during the
1998-1999 or the 1999-2000 income years.
Where the Secretary worked out
the person’s ordinary income on one occasion during
that period, then that amount may be used in accordance with this section for
the purposes of working out the person’s annual retirement
income and annual savings and investment income for the
purposes of calculating the person’s bonus entitlement subsection
5(1):
• A person with an annual retirement income
of $20,000 or under may become entitled to a maximum bonus. Between $20,000 and
$30,000 the person’s potential entitlement “tapers” down to
zero;
• The person’s annual savings and investment
income determines the person’s actual bonus entitlement, at the
rate of “dollar-for-dollar” for each of the components of the
bonus;
• Ordinary income is comprehensively defined
in the Social Security Act 1991.
Subsection 5(3) modifies
the meaning of ordinary income for the purposes of calculating and
paying the bonus. These modifications are for the most part beneficial
to the customer, as follows:
• A disability pension or disability
payment payable to the customer under the Veteran’s Entitlement Act 1986
is disregarded – ie by disregarding such payments, the customer
cannot suffer any “tapering” on this account paragraph
5(3)(a):
− “tapering” is the process by which the
customer’s potential entitlement reduces to zero as his or her
annual retirement income for a qualifying year increases from
$20,000 to $30,000;
• Periodic compensation payment which, for the
purposes of determining ordinary income are disregarded under some circumstances
(because they are direct deductions) are included as annual retirement income
paragraph 5(3)(b);
• Any social security or veteran's
payment which is not exempt from income tax is included in the customer’s
ordinary income for the purposes of calculating the bonus
paragraph 5(3)(c).
This approach treats the customer on the
same basis as ATO clients, who have their bonus entitlement assessed on the
basis of their taxable income;
Any amount of ordinary income that is
attributed to a deprived asset is disregarded, and once
again the customer cannot suffer any “tapering” on that account
paragraph 5(3)(d).
• Deprived asset is
given the same meaning as defined in subsection 9(4) of the Social Security
Act 1991, namely an asset which the person has disposed of, and the value of
which is taken into account in relation to the person’s ordinary
income;
• Ordinarily, such an asset would be subject to the
“deeming” rules (Part 3.10, Division 1B of the Social Security
Act 1991) which provide for income to be imputed to a person in respect of
any deprived asset;
• For the purposes of paying the
bonus under this Act, the “deeming rules” in relation to a
deprived asset are by force of this provision altered
beneficially so that the customer will not suffer any
“tapering” on that account.
The customer’s
entitlements will be worked out at the more beneficial “single
person” rates rather than “partnered rates”
paragraph 5(3)(e).
Subsections 5(4) and 5(5) set out a
method statement for working out a customer’s annual savings and
investment income and annual retirement
income.
Subsection 5(4) provides that the customer’s
annual savings and investment income is worked out having regard
to the same rules that apply to the calculation of the customer’s
annual retirement income (ie subsection 5(3) above) with
the exception that any increase in the customers annual savings and
investment income in respect of “deemed income” from
financial investments is deemed at the higher deeming rate
(currently 5%). This has the effect of increasing the customer’s bonus
“dollar-for-each-deemed-dollar” in relation to each bonus component
for which the customer is qualified.
Where the Secretary worked out the
person’s ordinary income on more than one occasion
during that period, then the amount which gives the best result for the customer
may be used in accordance with this section for the purposes of working out the
person’s annual retirement income and annual savings
and investment income for the purposes of calculating the person’s
bonus entitlement subsection 5(5):
• For this purpose, the
same rules apply as are set out in subsection 5(3).
Section
6 - Annual retirement income and annual savings and investment income –
customers with no previous calculation of ordinary income on a yearly
basis
This section applies where the Secretary DFaCS has not
had to work out the ordinary income of a Family and
Community Services customer during the qualifying period for the bonus,
ie during the 1998-1999 or the 1999-2000 income years subsection
6(1).
Where the Secretary has not had occasion to work out the
customer’s ordinary income during the qualifying period for
the bonus, this section provides that the Secretary may work out the
person’s ordinary income at the time the Secretary
determines the customer’s claim
subsection 6(2):
• Again, the ordinary
income rules set out in the previous section apply for this purpose, by
application of paragraphs 5(3)(a) to (e) inclusive - see subsections
6(2) and 6(3).
Division 2 – Claim for a bonus
payment
Division 2 provides for the making of a claim by
Family and Community Services customers for the payment of the
bonus.
Section 7 - Making a proper claim
This section
provides for the making of a claim for bonus by a Family and Community
Services customer subsection 7(1).
Subsection 7(2)
sets out those matters which determine whether or not a person is a Family
and Community Services customer, as follows:
A Family and
Community Services customer is a person who
• Is not
required to lodge a tax return for the 1999-2000 income year paragraph
7(2)(a); and
• At the time of making the claim has not lodged an
income tax return for that year paragraph 7(2)(b); and
• In
the claim, states that he or she does not intend to lodge an income tax return
for that year; paragraph 7(2)(c); and
• On 1 July 2000, he or
she is not receiving a service pension, a carer service pension or and income
support supplement paragraph 7(2)(d); and
• Makes the claim
after 30 June 2000 and before 1 July 2001 paragraph 7(2)(e);
and
• Gives the claim to the Secretary in a form and in a manner
approved by the Secretary paragraph 7(2)(f).
Subsection
7(3) provides that a person who makes a proper claim in accordance with
subsection 7(2) is a Family and Community Services
customer.
Section 8 – Proper claim can be
withdrawn
Section 8 allows a person to withdraw a claim for a bonus,
either orally or in writing. This will allow a person to withdraw a claim
before it is processed if the person discovers an error. A new claim can then
be made.
If a person discovers an error after a claim has been determined
by the Secretary, the error can be rectified under the rules for review of
determinations in Division 6 (see notes on that Division).
Section
9 – No further proper claim can be made
Section 9 provides that
a Family and Community Services customer cannot make more than one
proper claim for a bonus payment under this
Part.
Division 3 – Qualification for
bonus payment
Section 10 – Qualification for bonus
payment
Section 10 explains that a bonus payment can have 2
components. One component is the aged persons savings bonus
component (of up to $1,000). The other is the self-funded retirees
supplementary bonus component (up to an additional
$2,000).
• The different components reflect the Government’s
initial announcement in the tax reform document Tax Reform – not a new
tax, a new tax system. The first component will help maintain the value of
the savings of older Australians generally. The second represents an income
supplement to help maintain the value of retirement incomes for people who have
self-funded their retirement.
Section 11 - Qualification for
components of bonus payment
Aged persons savings bonus component
(up to $1,000)
Subsection 11(1) sets out the qualifying
criteria for payment of the first component of a bonus. A person can qualify
for this component if he or she has savings or investment income
for either the 1998-1999 or 1999-2000 income year and has a annual retirement
income of less than $30,000 in the relevant year.
As well as that, the
person must be 60 years or older on 1 July 2000 and be a resident of Australia
within the meaning of the Social Security Act 1991.
• Subsection 7(2) of the Social Security Act 1991
defines Australian resident:
7.(2) An
Australian resident is a person who:
(a) resides in Australia;
and
(b) is one of the following:
(i) an Australian
citizen;
(ii) the holder of a permanent visa;
(iii) the holder of a
special category visa who is likely to remain permanently in
Australia;
(iv) the holder of a special purpose visa who is likely to remain
permanently in Australia.
• These rules are different than the
rules used to determine whether someone is a resident of Australia for tax
purposes. These rules ensure a person receiving a bonus has a significant long
term attachment to Australia.
Self-funded retirees
supplementary bonus (up to an additional $2,000)
Subsection
11(2) sets out the qualifying criteria for the second component of a bonus.
This component is only available to self-funded retirees. These are people who
have attained age pension age (65 years for a man and 61½ years for a
woman) on 1 July 2000, but, as a general rule, have not received a social
security pension or benefit during the 3 months leading up to and including
1 July 2000 paragraph 11(2)(c).
The types of social security
pension and benefits that can disqualify a person from the second component of a
bonus are listed in the definition of disqualifying payment in
section 4.
These are:
“disqualifying
payment” is defined as
a) a social security pension (other
than a bereavement allowance);
b) a social security benefit;
c) a service
pension;
d) a carer service pension; and
e) an income support
supplement.
There are two exceptions to the general rule on
disqualifying payments. Subparagraph 11(2)(c)(ii)
provides an exception for someone who received a disqualifying
payment following the death of the person’s partner, so long as
the person is not receiving a pension or benefit on 1 July
2000.
Subparagraph 11(2) (c)(iii) provides for other exceptions to
be prescribed in Regulations. This will allow exceptions, if necessary, to
avoid hardship should such cases come to light.
Having qualified as a
self-funded retiree, a person will qualify for the second component of the bonus
if he or she is entitled to the first component of the bonus for either, or
both, the 1998/99 or 1999/00 tax years and has savings and investment income for
the relevant year, or years, of more than
$1,000.
Division 4 – Determination of proper
claim
This Division requires the Secretary to determine
whether or not a person is entitled to a bonus and to provide notice of his
determination to the Family and Community Services customer
.
A notice must contain certain information, including how a bonus was
worked out or, where a person’s claim is not granted, the reasons for not
granting the claim. This information will allow a claimant to seek a review of
the Secretary’s determination where the claimant disagrees with the
Secretary’s decision.
Section 12- Secretary to determine proper
claim
This section provides for the Secretary to determine a claim
received from an Family and Community Services
customer.
Section 13 - Grant of proper claim
This
section provides that the Secretary must grant the claim if he or she is
satisfied that the Family and Community Services customer is
qualified for a bonus payment subsection 13(1) and must provide a written
notice to the Family and Community Services customer of that
determination, including how the bonus payment was worked out subsection
13(2).
Section 14 - Refusal of proper claim
This
section provides that if the Secretary determines that a Family and
Community Services customer’s claim is not to be granted the
Secretary must give written notice of the determination to the Family and
Community Services customer, stating reasons and advise the Family
and Community Services customer of the right to apply for review of the
determination.
Division 5 – Amount of bonus
payment etc.
Section 15 - Amount of bonus
payment
This section provides for the amount of the bonus that is
payable to a Family and Community Services customer, which is
calculated by adding together the persons entitlement to the aged person
savings bonus and any entitlement to an amount of the self-funded
retirees supplementary bonus
subsection 15(1).
• Division 3 of this Part (see
section 11) provides that to qualify, a person must be aged 60 or more on
1 July 2000, be an Australian resident on that day, and have a annual
retirement income of less than $30000 in a qualifying year.
Aged
persons savings bonus component
Subsection 15(2) contains a
table setting out how to work out a person’s entitlement to the aged
persons savings bonus, and contains an example by way of
illustration.
A qualified person is entitled to a
“dollar-for-dollar” bonus in respect of that person’s
savings and investment income for 1 of the qualifying years, up to a maximum of
$1000. The amount of bonus reduces on a tapering scale as the person’s
income for that qualifying year exceeds $20000, reducing to a zero bonus at
$30000.
• the reduction is arrived at as follows: the amount by
which the person’s annual retirement income exceeds $20000 is taken as a
fraction of $10000. The resulting fraction is used to reduce the person’s
bonus entitlement subsection 15(5);
Self-funded retirees
supplementary bonus component
Subsection 15(3) contains a
table setting out how to work out a person’s entitlement to the
self-funded retirees supplementary bonus, and contains an example
by way of illustration.
Put briefly, a person who is qualified is
entitled to a “dollar-for-dollar” bonus in respect of the
amount by which that person’s savings and investment income for 1 of the
qualifying years exceeds $1000, up to a maximum of $2000. The amount of bonus
reduces on a tapering scale as the person’s income for that qualifying
year exceeds $20000, reducing to a zero bonus at $30000.
• the
reduction is arrived at as follows: the amount by which the person’s
annual retirement income exceeds $20000 is taken as a fraction of $10000. The
resulting fraction is used to reduce the person’s bonus entitlement
subsection 15(5);
If the amount of a person’s bonus is
worked out as being greater than zero but less than $1, then the person’s
entitlement is rounded to $1 subsection 15(4).
Section 16 -
Making of bonus payment
This section provides that the Secretary
must, on behalf of the Commonwealth, pay a Family and Community Services
customer’s bonus payment at such time, and in such manner, as the
Secretary determines.
Division 6 –
Miscellaneous
Section 17 - General administration of
Part
The Secretary, Department of Family and Community Services has
the general administration of this Part.
Section 18 - Application of
Social Security Act
This section provides that the provisions of the
Social Security Act 1991 apply to any determination made for the purposes
of this Part.
This means that the provisions of the Social Security
Act 1991 will apply to determinations made under this Part for the purposes
of (for example)
Review of determinations;
Recovery of
overpayments;
Delegation;
Offences relating to false
statements;
Evidentiary matters.
• This is an important feature
of the structure of the Act, in terms of delivering the bonus to older
Australians who are Family and Community Services customers
without undue intrusion into their lives and routine. It will enable those
Family and Community Services customers to be dealt with at the
same office, and under the same rules and conditions that normally apply when
they deal with that Commonwealth agency.
Subsection 18(2) enables
regulations to be made to modify the application of the Social Security Act
1991 in its application to this Part, should that become
necessary.
Part 3 – Veterans’ Affairs
customers who qualify for bonus
payment
Division 1 –
Interpretation
Section 19 - Definitions
Section
19 defines various phrases and terms for the purposes of this Part, which relate
to Veterans’ Affairs customers. Generally speaking, most of
the phrases and terms are defined as bearing the same meaning as in the 3 major
Commonwealth Acts administered by the 3 Commonwealth agencies who have functions
under the Act. These Acts are: the Income Tax Assessment Act 1997, the
Veterans’ Entitlements Act 1986 and the Social Security Act
1991.
The following terms are defined for the purposes of this
Act:
“annual retirement income” is defined as
having the same meaning as that given by sections 20 and 21.
“annual savings and investment income” is
defined as having the same meaning as that given by sections 20 and
21.
“proper claim” is defined as having the
same meaning as that given by section 22.
“qualifying
year” is either the year commencing on 1 July 1998 or the year
commencing on 1 July 1999. Section 29 will determine the aged persons savings
bonus of a Veterans’ Affairs customer from that
person’s ordinary income worked out during a qualifying
year.
“relevant income tax law” identifies
income tax legislation under which certain payments under the Veterans’
Entitlements Act 1986 are exempt from income tax. A pension that is exempt
from income tax is not included in a person’s “annual
retirement income”.
“savings and
investments” are defined as including financial investments which
is a term used in the Veterans’ Entitlements Act 1986 to describe
part of a person’s financial assets to which a deemed rate of income is
applied for the purposes of working out a person’s ordinary income. For
the purposes of working out a person’s annual savings and investment
income, but not the person’s annual retirement income, the
deemed income from savings and investments will be worked out using only the
higher (above threshold) rate (see subsections 20(4) and 21(3)). The other part
of a person’s financial assets, as defined in the Veterans’
Entitlements Act 1986, is a deprived asset. Any amount attributed to a
deprived asset will be disregarded from the amount of the person’s
ordinary income for the purposes of the person’s annual savings and
investment income and annual retirement income (see paragraph
20(3)(b)).
“Veterans Affairs customer” is
defined as having the same meaning as that given by section
22.
Section 20 - Annual retirement income and annual savings and
investment income – customers with previous calculation of ordinary income
on a yearly basis
Section 20 sets out how a Veterans’ Affairs
customer’s annual retirement income and annual savings
and investment income will be worked out where the Repatriation
Commission (the Commission) has worked out the annual ordinary income of a
Veterans’ Affairs customer at least once during the qualifying years. A
person’s ordinary income is defined in the Veterans’ Entitlements
Act 1986 and is worked out and used by the Commission to calculate the rate
of service pension, carer service pension or income support supplement payable
under that Act.
Annual ordinary income worked out once during the
qualifying years
Where the Commission has worked out the
Veterans’ Affairs customer’s annual ordinary income on only one
occasion during the qualifying years, then that amount of ordinary income is
used, in accordance with this section, to work out the person’s annual
retirement income and annual savings and investment
income.
Subsection 20(3) sets out how to calculate the annual
retirement income of a Veterans’ Affairs customer. A person with an
annual retirement income of $20,000 or under may become entitled to a maximum
aged persons savings bonus. Between $20,000 and $30,000 the person’s
potential entitlement “tapers” down to zero. Annual retirement
income is based on a person’s ordinary income with the following
modifications:
Paragraph 20(3)(a) provides for the annual rate of any
pension paid under the Veterans’ Entitlements Act 1986 that was not
tax exempt to be added to the person’s ordinary income. As a result, the
annual rate of (taxable) pension calculated when the ordinary income was worked
out is added to that annual ordinary income. The only payments under the
Veterans’ Entitlements Act 1986 that are not tax exempt are the
basic income support pensions and supplement paid to those over age pension age.
Disability pensions, war widow pensions and associated allowances paid under the
Veterans’ Entitlements Act 1986 are tax exempt. This addition
reflects the annual income available to the person and mirrors the inclusion of
any pension that is not exempt from income tax in a person’s taxable
income.
If the Veterans’ Affairs customer’s ordinary income
includes an amount in respect of a deprived asset, then that amount is
disregarded from the person’s ordinary income (paragraph 20(3)(b)). A
deprived asset is given the same meaning as in the
Veterans’ Entitlements Act 1986, namely an asset that the person has
disposed of (subsection 5J(2B) of that Act). Ordinarily the value of a deprived
asset is included as a person’s financial asset from which an amount of
income is deemed (Division 3, Part IIIB of that Act) and included as the
person’s ordinary income.
The amendment of the “deeming
rules” in this regard is beneficial to the Veterans’ Affairs
customer in working out the annual retirement income under this
Act.
A Veterans’ Affairs customer’s aged persons savings
bonus will be worked out on the basis of his or her own annual retirement income
and annual savings and investment income. The
Veterans’ Entitlements Act 1986 provides that the ordinary income
of a person who is a member of a couple (as defined in that Act) is half of the
combined income of the couple. Paragraph 20(3)(c) provides for the effect of the
combination and splitting of the ordinary income to be removed and so allow the
person’s annual retirement income to be determined on his or her income
alone.
The Method Statement in subsection 20(4) sets out how to
calculate the annual savings and investment income of a Veterans’ Affairs
customer.
Where a Veterans’ Affairs customer’s annual
retirement income includes income that has been deemed from the person’s
financial investments, Step 1 provides that, for the purpose of calculating
annual savings and investment income, the deemed income will be worked out using
only the higher (above threshold) rate. This provision will operate only where
part or all of the person’s deemed income has been assessed at the lower,
below threshold, rate.
Step 2 provides that the Veterans’ Affairs
customer’s annual savings and investment income is to be
determined from the savings and investments (see section 19) within the
person’s annual retirement income as calculated in Step
1.
Annual ordinary income worked out more than once during the
qualifying years
The Method Statement in subsection 20(5)
explains how to work out a Veterans’ Affairs customer’s annual
retirement income and annual savings and investment income where
the customer’s annual ordinary income had been worked out by the
Commission on more than one occasion during the qualifying years.
In Step
1, the annual retirement income and annual savings and investment
income for each occasion are determined by the same rules as are set out in
subsections 20(3) and (4).
On the basis of the 2 amounts calculated in
Step 1, Step 2 provides for the calculation of the amount of aged persons
savings bonus to which the customer would be entitled on each
occasion.
Step 3 provides that if any occasion gives a better aged
persons savings bonus result for the customer, then the two amounts calculated
for that occasion are the customer’s annual retirement income and annual
savings and investment income.
Section 21 - Annual retirement income
and annual savings and investment income – customers with no previous
calculation of ordinary income on a yearly basis
Section 21 applies
where the Commission has not worked out the ordinary income of a
Veterans’ Affairs customer during the qualifying period for the aged
persons savings bonus, ie during the 1998-1999 or the 1999-2000 income
years.
In these cases the annual retirement income is based on the
person’s annual ordinary income that the Commission last
worked out before it determined the customer’s entitlement to an aged
persons savings bonus. This calculation of ordinary income is subject to
the same modifications as those that apply to the calculation of a
Veterans’ Affairs customer’s annual retirement income
in subsection 20(3). The Method Statement in subsection 21(3)
explains how to calculate the customer’s annual savings and
investment income. This calculation is identical to that used to work out a
person’s annual savings and investment income in
subsection 20(4).
Division 2 – Claim for
bonus payment
Section 22 - Making a proper
claim
Section 22 defines the terms proper claim and
Veterans’ Affairs customer.
Subsection 22(1)
provides for a claim for a bonus to be made.
Under subsection
22(2), a claim for an aged persons savings bonus made under Part 3 is a
proper claim if it is made after 30 June 2000 and before 1 July 2001, it is made
in a form and in a manner approved by the Commission and if the individual
making the claim:
• is not required to lodge an income tax return
for the 1999-2000 income year;
• has not, at the time of making the
claim, lodged an income tax return for 1999-2000;
• states in the
claim that he or she does not intend lodging such a return; and
• on 1 July 2000 is receiving a service pension, carer service
pension or income support supplement.
Subsection 22(3) then
provides that an individual who makes a proper claim is a
Veterans’ Affairs customer.
Section 23 - Proper claim can be
withdrawn
Section 23 provides that if a claim has not been determined
by the Commission, it may be withdrawn by the Veterans’ Affairs customer
either orally or in writing. In such a case the claim is taken not to have been
made.
Section 24 - No further proper claim can be
made
Section 24 prevents a Veterans’ Affairs customer from
making more than one proper claim for an aged persons savings bonus under this
Part.
Division 3 – Qualification for bonus
payment
Section 25 - Qualification for aged persons savings
bonus payment
Section 25 sets out the qualifying criteria for payment
of the aged persons savings bonus. A Veterans’ Affairs customer can
qualify for this bonus if he or she has savings or investment income for either
qualifying year and has an annual retirement income of less than
$30,000.
The person must also be 60 years or older on 1 July 2000, be an
Australian resident within the meaning of the Social Security Act 1991
and the amount of the person’s bonus as worked out under section 29 must
be greater than nil.
Subsection 7(2) of the Social Security Act 1991
defines Australian resident:
An Australian resident is
a person who:
(a) resides in Australia; and
(b) is one of the
following:
(i) an Australian citizen;
(ii) the holder of a permanent
visa;
(iii) the holder of a special category visa who is likely to remain
permanently in Australia;
(iv) the holder of a special purpose visa who is
likely to remain permanently in Australia.
These rules are different from
the rules used to determine whether someone is a resident of Australia for tax
purposes.
The note to paragraph 25(c) refers the reader to the
definitions of annual retirement income and annual savings and investment income
in sections 20 and 21.
Division 4 –
Determination of proper claim
Section 26 - Commission to
determine proper claim
Under section 26 the Commission must determine
whether or not a proper claim is to be granted. This determination is to be
made in accordance with this Part.
Section 27 - Grant of proper
claim
Subsection 27(1) provides that if the Commission is
satisfied that a Veterans’ Affairs customer is qualified for an aged
persons savings bonus (see section 25), it must determine that a proper claim by
that person is to be granted.
Subsection 27(2) provides that the
Commission must provide written notice of that determination to the
Veterans’ Affairs customer. This notice needs to state that the
Veterans’ Affairs customer is qualified for an aged persons savings bonus,
to specify the amount of the bonus and how it was worked out, and include a
statement of his or her review rights.
Section 28 - Refusal of proper
claim
Section 28 provides that, where the Commission determines that
a proper claim is not to be granted, the Commission must provide written notice
of that determination to the Veterans’ Affairs customer. This notice
needs to state the reasons for the Commission’s determination that the
person is not qualified for a bonus, and include a statement of his or her
review rights.
The notes to sections 27 and 28 refer to section 32 which,
unless alternative provision is made in the Bill, extends the provisions of the
Veterans Entitlements’ Act 1986 to matters relating to the aged
persons savings bonus as if that bonus were a pension bonus under that
Act.
Division 5 – Amount of bonus payment
etc
Section 29 - Amount of bonus payment
Subsection 29(1) contains a table setting out how to calculate the
amount of aged persons savings bonus for a Veterans’ Affairs customer, and
an example to illustrate how the provisions will work.
Annual
retirement income of $20,000
A Veterans’ Affairs
customer with an annual retirement income of $20,000 or less
is
entitled to a ‘dollar-for-dollar’ bonus that matches the
person’s savings and investment income, up to a maximum of $1000.
Annual retirement income more than $20,000, but less than
$30,000
If the Veterans’ Affairs customer has an annual retirement
income between $20,000 and $30,000 a lower amount of bonus is payable. To
calculate the bonus, first work out the annual savings and investment income (up
to a maximum of $1000). From this, subtract the phasing out fraction (as
defined in subsection 29(3)) of this amount. This will result in any
bonus cutting out when a person’s annual retirement income reaches
$30,000.
Subsection (2) provides that if the amount of a
person’s aged persons savings bonus is worked out as being greater than
nil but less than $1, then the person’s entitlement is rounded up to $1.
Subsection (3) gives the formula applied to determining the
phasing out fraction when calculating the amount of the aged
persons savings bonus.
Section 30 – Making of bonus payment
Section 30 provides that if the Commission determines that a
Veterans’ Affairs customer’s claim for an aged persons savings bonus
is to be granted, the Commission must, on behalf of the Commonwealth, pay the
bonus to the customer at such time, and in such manner, as the Commission
determines.
It is intended that Centrelink will pay all bonuses granted
under this Act, as paying agent.
Division 6 –
Miscellaneous
Section 31 - General administration of
Part
Section 31 provides the Commission has the general
administration of this Part.
Section 32 - Application of the
Veterans’ Entitlements Act
Subsection 32(1) provides
that the provisions of the Veterans’ Entitlements Act 1986 apply to
any determination or payment of an aged person’s savings bonus, or to any
other related matter, as if the bonus were a pension bonus under that Act,
unless there are alternative provisions in this Bill. This is not intended to
suggest the pension bonus under the Veterans’ Entitlements Act 1986
is similar in nature or purpose to a bonus under this Act, it is not. The
provisions of review and general administration associated with the pension
bonus can operate, and have been extended to apply, in respect of the aged
person’s savings bonus.
This means that, if specific provision is
not otherwise made in this Bill, the provisions of the Veterans’
Entitlements Act 1986 will apply to determinations made under this Part for
the purposes of (for example)
review of determinations;
recovery of
overpayments;
delegation;
offences relating to false
statements;
evidentiary matters.
Subsection (2) enables
regulations to be made to modify the application of the Veterans’
Entitlements Act 1986 in its application to this Part, should that become
necessary.
Part 4 – ATO clients who
qualify for bonus payment
Division 1 –
Interpretation
Section 33 - Definitions
Section
33 defines various phrases and terms for the purposes of this Part, which
relates to ATO clients. Generally speaking, most of the phrases and
terms are defined as bearing the same meaning as in the 3 major Commonwealth
Acts administered by the 3 Commonwealth agencies who have functions under the
Act. These Acts are: the Income Tax Assessment Act 1997, the
Veterans’ Entitlements Act 1986 and the Social Security Act
1991.
Section 34 - Adjusted savings and investment
income
Section 34 sets out the basis for working out a person’s
adjusted savings and investment income, which is the basis for determining
whether an ATO client can qualify for a savings bonus. One of the eligibility
criteria for a bonus is that a person has adjusted savings and investment income
in either the 1998-1999 or 1999-2000 income tax year. The rules for determining
whether someone has adjusted savings and investment income are the same as those
used in determining whether someone will qualify for the savings tax offset for
the 1998-1999 year.
The first step in working out the amount of adjusted
savings and investment income is to work out the amount of savings and
investment income. Savings and investment income is, broadly, all assessable
income other than salary or wages as defined in subsection 221A(1) of the
Income Tax Assessment Act 1936 (ITAA36).
There are two main
exceptions.
First, some amounts of salary or wages are counted for the
purpose of the bonus. These are :
• certain amounts paid as
superannuation pensions or annuities; and
• eligible termination
payments.
For pensions and annuities a distinction is drawn between those
from an Australian source and those from foreign sources:
• all
Australian sourced pensions and annuities, other than social security pensions,
are counted as savings and investment income. Social security pensions are
principally those which may qualify the recipient for a pensioner or beneficiary
rebate under section 160AAA of the ITAA36.
• in the case of foreign
pensions, only those for which the recipient is, or has been, entitled to a
deduction for the undeducted purchase price of the pension are counted as
savings and investment income. This is a relatively simple way of
distinguishing between pensions which the recipient has at least partly funded,
as opposed to solely government provided pensions.
All assessable amounts
of eligible termination payments (ETPs) qualify as savings and investment
income. This is because ETPs generally arise from the same kind of savings
behaviour as give rise to pensions and annuities, which also count as savings
and investment income.
The second main exception to the broad rule
mentioned above, is that some amounts of non-salary or wage income are not
counted for the purposes of the bonus. These are:
• remuneration
and allowances paid to members of local governing bodies;
and
• assessable reimbursements of deductible amounts paid in
respect of:
- tax related expenses; and
- election
expenses.
Payments to members of local governing bodies are in the nature
of salary or wages, even though they are normally excluded from the definition
of salary or wages. The assessable reimbursements referred to above do not
relate to savings and investment income.
After working out the savings
and investment income some adjustments are made to determine the adjusted
savings and investment income.
Deductions relating to savings and
investment income
Certain tax deductions are offset against gross
savings and investment income. Only deductions which relate to savings and
investment income are deducted in determining the amount of adjusted savings and
investment income. Deductions that are not related to any particular amount of
adjusted savings and investment income are not deducted. This would mean, for
example, that the following deductions would not be subtracted from savings and
investment income:
• gifts;
• tax-related
expenses;
• carried forward losses;
and
• superannuation contributions.
Superannuation
contributions
All personal contributions made by a taxpayer to a
complying superannuation fund or retirement savings account (RSA) are also taken
into account in calculating the amount of adjusted savings and investment
income. However, contributions made on behalf of a spouse are not taken into
account in calculating the savings bonus.
The amount of personal
contributions taken into account is reduced by the amount of the contributions
that are deductible under section 82AAT of the ITAA36.
Netting of
savings and investment income and superannuation contributions
Net
savings and investment income after deductions and undeducted superannuation
contributions are effectively added together to determine the amount of adjusted
savings and investment income.
Example
Hoa’s taxable
income is as follows:
Rental
income $10,000
Salary $35,000
less
Rental
deductions $11,000
Total income $34,000
In addition, Hoa makes
personal superannuation contributions of $1,500.
Hoa’s adjusted
savings and investment income is $500 (ie. 10,000 + 1,500 – 11,000).
Division 2 – Claim for bonus
payment
Division 2 provides for claims to be lodged with the
ATO. People who have to lodge a tax return for the 1999-2000 income year may
only lodge a claim for a bonus with the ATO. People who don’t have to
lodge a tax return for 1999-2000 may still lodge a claim for a bonus with the
ATO if they choose to voluntarily lodge a tax return for that year. However,
they cannot lodge a claim with the ATO if they have already made a claim with
the Department of Family and Community Services or the Repatriation Commission.
People who make claims for a bonus with the ATO will be known as ATO clients.
To simplify this procedure for making claims, it is intended that claim
procedures for ATO clients will be referred to in Taxpack for the year
1999-2000.
Section 35 - Making a proper claim
Section 35
provides that a claim for a bonus by an ATO client must be made after 30 June
2000 but prior to 1 July 2001, it must be given to the Commissioner in a form
and manner approved by the Commissioner, and must specify which tax year, or
years, (1998-1999 or 1999-2000, or both) the ATO client wishes to have used for
the purposes of determining his or her claim.
A person may qualify for a
bonus in either or both of the 1998-1999 or 1999-2000 tax years. The general
rule will be that a person is entitled to the bigger bonus if he or she
qualifies in both years (see notes explaining Division 5, which deals with the
determination of the amount of bonus payment). This means that a bonus would
not be available until after a person’s 1999-2000 tax return is assessed
by the ATO.
However, the law has been designed to allow a person to make
a claim for one year only. This means that someone who qualifies for a bonus on
the basis of their taxable income and adjusted savings and investment income for
the 1998-1999 tax year could make a claim for the bonus on 1 July 2000, rather
than wait until their 1999-2000 tax return is lodged and processed by the ATO.
This option will be available to people who know they qualify for the maximum
bonus based on the 1998-1999 data, or who prefer to get an earlier bonus
payment. Where a person chooses this early payment option, they cannot make
another claim for a bonus on the basis of data for the other tax year, even if
the bonus in the other year would be bigger subsection 35(4).
The
possibility to claim a bonus before lodging a 1999-2000 tax return is also
possible because a bonus is delivered outside of the ATO client’s tax
assessment. This is also the reason for having specific review and debt
recovery provisions in this Bill (see explanation of Divisions 6 and 7). The
review and recovery provisions for income tax assessments and debts could not
easily be adopted for decisions related to bonus entitlements.
Section
36 - Proper claim can be withdrawn
Section 36 allows a person to
withdraw a claim for a bonus, either in writing or any other manner approved by
the Commissioner. This will allow a person to withdraw a claim before it is
processed if the person discovers an error. A new claim can then be
made.
If a person discovers an error after a claim has been determined by
the Commissioner, the error can be rectified under the rules for review of
determinations in new Division 6 (see notes on that Division).
Section
37 - No further proper claim can be made
An ATO client can only
receive one bonus. Once a proper claim has been determined another claim cannot
be made.
Division 3 – Qualification for bonus
payment
Section 38 - Qualification for bonus
payment
Section 38 explains that a bonus payment can have 2
components. One component is the aged persons savings bonus component (of up to
$1,000). The other is the self-funded retirees supplementary bonus component
(up to an additional $2,000).
The different components reflect the
Government’s initial announcement in the tax reform document Tax Reform
– not a new tax, a new tax system. The first component will help
maintain the value of the savings of older Australians generally. The second
represents an income supplement to help maintain the value of retirement incomes
for people who have self-funded their retirement.
Section 39 -
Qualification for components of bonus payment
Aged persons savings
bonus component (up to $1,000)
Subsection 39(1) sets out the
qualifying criteria for payment of the first component of a bonus. A person can
qualify for this component if he or she has adjusted savings or investment
income for either the 1998-1999 or 1999-2000 tax year and has a taxable income
of less than $30,000 in the relevant year.
As well as that, the person
must be 60 years or older on 1 July 2000 and be a resident of Australia within
the meaning of the Social Security Act 1991.
• Subsection
7(2) of the Social Security Act 1991 defines Australian
resident :
7.(2) An Australian resident is a
person who:
(a) resides in Australia; and
(b) is one of the
following:
(i) an Australian citizen;
(ii) the holder of a permanent
visa;
(iii) the holder of a special category visa who is likely to remain
permanently in Australia;
(iv) the holder of a special purpose visa who is
likely to remain permanently in Australia.
• These rules are
different than the rules used to determine whether someone is a resident of
Australia for tax purposes.
Self-funded retirees supplementary bonus
component (up to an additional $2,000)
Subsection 39(2) sets
out the qualifying criteria for the second component of a bonus. This component
is only available to self-funded retirees. These are people who have attained
age pension age (65 years for a man and 61½ years for a woman) on 1 July
2000, but, as a general rule, have not received a social security pension or
benefit during the 3 months leading up to and including 1 July 2000
paragraph 39(2)(c).
The types of social security pensions and
benefits that can disqualify a person from the second component of a bonus are
listed in the definition of ‘disqualifying payment’ in section 33.
These are:
• a social security pension (but not a bereavement
allowance);
• a social security benefit;
• a service pension;
• a carer service pension;
or
• an income support supplement.
There are two exceptions
to the general rule on disqualifying payments. Subparagraph 39(2)(c)(ii)
provides an exception for someone who received a disqualifying payment following
the death of the person’s partner, so long as the person is not receiving
a pension or benefit on 1 July 2000.
Subparagraph 39(2)(c)(iii)
provides for other exceptions to be prescribed in the Regulations. This will
allow exceptions, if necessary, to avoid hardship should such cases come to
light.
Having qualified as a self-funded retiree, a person will qualify
for the second component of the bonus if he or she is entitled to the first
component of the bonus for either, or both, the 1998-1999 or 1999-2000 tax years
and has adjusted savings and investment income for the relevant year, or years,
of more than $1,000.
Division 4 –
Determination of proper claim
Division 4 requires the
Commissioner to determine whether or not a person is entitled to a bonus and to
provide notice of his determination to the claimant.
A notice must
contain certain information, including how a bonus was worked out or, where a
person’s claim is not granted, the reasons for not granting the claim.
This information will allow a claimant to seek a review of the
Commissioner’s determination where the claimant disagrees with the
Commissioner’s decision.
Section 40 - Commissioner to determine
proper claim
Section 40 provides for the Commissioner to determine a
claim received from an ATO client.
Section 41 - Grant of proper
claim
Section 41 provides that the Commissioner must grant the claim
if he or she is satisfied that the ATO client qualifies for a bonus payment
subsection 41(1) and must provide a written notice to the ATO client of
that determination, including how the bonus payment was worked out subsection
41(2).
Section 42 - Refusal of proper claim
Section 42
provides that if the Commissioner determines that an ATO client’s claim is
not to be granted the Commissioner must give written notice of the determination
to the ATO client, stating the reasons and advising the ATO client of the right
to object to the determination.
Division 5 –
Amount of bonus payment etc
Section 43 - Amount of bonus
payment
As explained in the notes on Division 3 there are two
possible components of a bonus, ie., the aged persons savings bonus component
and the self-funded retirees supplementary bonus component. To be eligible for
the second component you have to be eligible for the first component.
A
person may qualify for a bonus in either the 1998-1999 or 1999-2000 tax years or
both. Where someone qualifies in both years subsection 43(2) provides
for the higher bonus to be paid.
The amount of the aged persons savings bonus component is worked out using a table in subsection 43(4). For a person whose taxable income is $20,000 or less in the relevant year the amount of this component is the amount of the person’s adjusted savings and investment income to a maximum of $1,000. If a person’s income is more than $20,000 but less than $30,000 the component is the amount of the person’s adjusted savings and investment income (up to $1,000), reduced for every dollar of taxable income over $20,000. The reduction is worked out by multiplying the adjusted savings and investment income by the fraction:
ATO client’s taxable income - $20,000
$10,000
For instance, if a person had adjusted savings and investment income of $500
and a taxable income of $23,000 the reduction would be:
|
$23,000-$20,000
|
= 3 of $500
|
= $150 reduction. The bonus payable would be $350.
|
|
$10,000
|
10
|
|
The amount of the self-funded retirees supplementary bonus component is
worked out using a table in subsection 43(5). For someone whose taxable
income is $20,000 or less this component is the amount of the person’s
adjusted savings and investment income exceeding $1,000, up to a maximum of
$2,000. This means the maximum bonus from adding together both components is
$3,000.
As with the aged persons savings bonus component, the amount of
the potential self-funded retirees supplementary bonus component is reduced for
people whose taxable income exceeds $20,000. The reduction is worked out in a
similar way as for reductions under the table in subsection
43(4).
Where a bonus payment is less than $1 it will be rounded up to
$1.
Section 44 - Making of bonus payment
Section 44
provides for payment of a person’s
bonus.
Division 6 – Review of
determinations
Division 6 deals with the circumstances in
which a determination of a claim for a bonus can be reviewed. A determination
could be one that decides the amount of the bonus payable (section 41 –
see notes on that section) or that decides that no bonus is payable (section
42).
Section 45 - Review after an amendment of
assessment
One of the circumstances where a determination for a
particular year could be reviewed is where the Commissioner amends the
person’s income tax assessment for the year after having made a
determination about a bonus. This is because a person’s bonus entitlement
for a year depends in part on the amount of taxable income for the year. For
instance, no bonus is payable to someone whose taxable income is $30,000 or
more. If an amendment of taxable income increased taxable income over this
threshold, or reduced taxable income below the threshold, it would have an
effect on the correct amount of bonus as well. Subsection 45(1) requires
the Commissioner, in such a case, to redetermine the correct amount of
bonus.
Subsection 45(2) then establishes when a redetermination
will actually lead to a variation to the original bonus decision, either upwards
or downwards. The rules governing when a variation of bonus will be made are
linked to the general review period for decisions on entitlement to a bonus.
The period in which someone will be able to seek a review of the
Commissioner’s decision to grant or not grant a bonus will be 13 weeks
(see notes on section 47). Consistent with this, a variation to a bonus will
generally only be made where something happens in that 13 week period to bring
to notice that the Commissioner’s decision was incorrect. The 13 week
review period to a bonus for ATO clients is consistent with the rules for
variations of bonuses for Veterans’ Affairs customers and DFaCS customers.
An exception to the general 13 week restriction on variations will be where the
amendment of the income tax assessment would result in a smaller bonus. In that
case the Commissioner will be required to redetermine the amount of bonus and
raise a debt for the amount of the overpayment. Variations will be made
where:
• the Commissioner amended the relevant income tax
assessment within 13 weeks after giving notice of the bonus determination;
or
• the Commissioner amended the assessment after the 13 week
period, but because the person applied for an amendment of the assessment within
that period; or
• the Commissioner amended the assessment after the
13 week period and, as a result of the amendment, the person would be entitled
to a smaller bonus or no bonus at all.
Where these circumstances apply
and the Commissioner had previously determined that the ATO client was entitled
to a bonus, the Commissioner must vary the original determination to reflect the
correct entitlement. Where a claim was made for a bonus for both the 1998-1999
and 1999-2000 years this means the Commissioner must re-examine both claims.
This is because the Commissioner would previously have paid the ATO client the
higher of the 2 bonuses claimed. A change to the person’s taxable income
for either year may have an effect on which bonus is higher.
After
redetermining the correct bonus, the Commissioner must either make an extra
payment to the ATO client, where the bonus previously paid was smaller, or raise
a debt, where there was an overpayment.
If the Commissioner originally
determined that a bonus was payable but the redetermination shows that none is
payable, the Commissioner must revoke the original decision. He must then issue
a notice that no bonus is payable, with an explanation of the reasons
paragraph 45(2)(e).
If the Commissioner originally determined that
no bonus was payable but the redetermination shows that the ATO client is
entitled to a bonus, the Commissioner must revoke the original determination.
The Commissioner must then make a determination under section 41 of the amount
of the bonus paragraph 45(2)(f).
Where the amount of a bonus is
varied the Commissioner must give the ATO client affected a notice explaining
the reasons for the variation.
Section 46 - Commissioner may initiate
review in other circumstances
Another circumstance that may lead to a
review of a determination is where the Commissioner discovers that a bonus was
overpaid for some reason. This could occur, for instance, if an ATO client
advises the Commissioner that an error was made in a claim. In such a case the
Commissioner must redetermine the correct amount of the bonus and notify the ATO
client, stating the reasons for varying the determination (section
46).
Section 47 - ATO client may initiate review under the
Taxation Administration Act
The third circumstance where a review of
a bonus determination may be initiated is where an ATO client disagrees with the
Commissioner’s determination (under sections 41 or 42), or with the
Commissioner’s decision (under sections 45 or 46) to vary an earlier
decision.
In such a case an ATO client may object against the decision in
the same way an objection can be lodged against other decisions of the
Commissioner, under the provisions of Part IVC of the Taxation Administration
Act 1953 subsection 47(1).
One difference to the normal
objection rules is that the period for lodging an objection will be 13 weeks,
rather than the periods usually used for taxation objections subsection
47(2). This is consistent with the review period for Veterans’
Affairs customers and DFaCS customers. It also reflects the fact that a
determination about a bonus is not linked directly to the income tax assessment
process.
Finally, the Commissioner must notify a person of any
determination variation affecting an entitlement to a bonus.
Section
48 - Determinations not to be varied or revoked other than in accordance with
this Division
The Commissioner may only vary a determination
following a review as allowed for under sections 45 or 46, or to give effect to
an objection decision in respect of an objection lodged under section
47.
Division 7 – When and how payments can be
recovered
Division 7 sets out how overpayments of bonuses can
be recovered by the Commissioner, where necessary.
Section 49 -
Recovery of payments
Under the bonus payment arrangement the
following amounts may be recoverable as debts owing to the
Commonwealth:
• a payment made to an ATO client to which the client was
not entitled. This includes an amount owing due to any variation or revocation
made by the Commissioner; and
• interest imposed on outstanding amounts
under section 50. subsection 49(1)
Where an amount is recoverable
in relation to a bonus payment, including interest, the amount is recoverable
from an individual or the individual’s estate. subsection
49(2)
The above amounts are recoverable debts even though a person
has been convicted of an offence relating to the payment. subsection
49(3)
Section 50 - Interests on amounts
recoverable
Section 50 allows for interest to be imposed for late
payment of debts raised under section 49.
Effectively, an ATO client will
have a period of 3 months to either repay an overpayment or enter into an
arrangement with the Commissioner to repay a debt. The Commissioner will have
the power to extend the 3 month period, where appropriate.
Where no
arrangement is made with the Commissioner and a debt remains unpaid at the end
of 3 months, interest will accrue from then. If an arrangement has been made
with the Commissioner for repayment of a debt, but a person defaults on payment
required under the arrangement, interest will become payable on the unpaid debt
from the date of default.
The rate of interest payable will be 8%, unless
a different rate is prescribed in the regulations made for the purposes of this
legislation.
Even though the Commissioner is authorised to impose
interest, a court may order that interest is taken to be payable from a date
later than the date specified under subsection 50(1) as the date from
which interest will accrue. subsection 50(4)
Section 51 - Write
off, waiver and payment by instalments
The Commissioner may, on
behalf of the Commonwealth, make a written determination:
• writing off
an amount that a client owes to the Commonwealth under the
scheme;
• waiving the right of the Commonwealth to recover from an
individual the whole or part of an amount that the person owes to the
Commonwealth under the scheme; or
• allowing an individual to pay an
amount owed to the Commonwealth under the scheme by instalments. subsection
51(1)
The determination is to take effect:
• on the day
specified in the determination, being the day on which it is made or on any
earlier or later day; or
• if no day is specified – on the day
the determination is made. subsection 51(2)
If a determination
referred to above is made in relation to the individual, the Commissioner must
cause notice of the determination to be served on the person. subsection
51(3)
A decision by the Commissioner not to make a determination is
reviewable by the Administrative Appeals Tribunal. subsection
51(4)
Division 8 -
Miscellaneous
Section 52 - General administration of
Part
Section 52 provides that the Commissioner of Taxation is
responsible for the administration of Part 4.
Section 53 - Use etc.
of information relating to another person
Section 53 protects ATO
clients from misuse of information they provide in a claim for a bonus. Under
section 53 a person is guilty of an offence if:
• the person uses,
makes a record of or discloses or communicates to any person any information
that relates to the affairs of another person and that was acquired by the
performance of a function or obligation, or in the exercise of a power under
this Part; and
• the use, making of the record, disclosure or
communication was not carried out in the performance of a function or
obligation, or the exercise of a power under this Part.
The maximum
penalty is 2 years imprisonment.
Chapter 2 of the Criminal Code applies
to the offence under subsection 53(1).
Section 54 - False or
misleading information etc
No special rules are used for dealing with
false or misleading statements in relation to a claim for a bonus. Instead
section 54 will ensure that the ordinary rules dealing with false or misleading
statements made to ATO officers will apply. These are contained in the
Taxation Administration Act 1953.
Part 5 –
Other Matters
Section 55 - Bonus payment not income under
Social Security Act or Veterans’ Entitlements Act
Section 55
provides that a bonus payment to a Family and Community Services
customer or a Veterans’ Affairs customer is not
taken to be income for the purposes of the Social Security Act 1991 or
the Veteran’s Entitlements Act 1986.
Section 56 -
Appropriation
Section 56 provides that the Consolidated Revenue Fund
is appropriated for the purpose of making payments under the new scheme
.
Section 57 - Regulations
Section 57 provides that the
Governor-General may make regulations prescribing matters which are required or
permitted by this Bill to be prescribed or are necessary or convenient to be
prescribed for carrying out or giving effect to this Bill.