Key points
- The Bill implements measures announced in the Albanese Government’s employment white paper, Working Future: The Australian Government’s White Paper on Jobs and Opportunities:
- providing new pensioners over Age Pension age with a starting Work Bonus balance of $4,000 and setting the concession balance limit at $11,800 and
- increasing the employment income nil rate period from 12 weeks to 24 weeks and extending access to JobSeeker Payment and Youth Allowance (Other) recipients who take up full-time work.
- The pension Work Bonus allows eligible payment recipients to exempt the first $300 per fortnight in employment earnings from the income test. Unused amounts in one fortnight can be accrued as credit against earnings in another fortnight—referred to as the unused concession balance. Up to $11,800 can be accrued in the unused concession balance.
- The employment income nil rate period allows income support recipients whose earnings reduce their payment rate to $0 to keep being treated as a payment recipient for the purposes of concession cards, supplements, and Additional Child Care Subsidy eligibility. The nil rate period also allows payment recipients to recommence receiving their payment if their earnings drop during the period—they do not have to make a new claim for the payment.
- The Work Bonus changes will benefit pensioners with employment earnings but are unlikely to increase the number of older pensioners undertaking paid work.
- The employment income nil rate period will assist those moving from income support to paid work, ensuring they can retain some supplementary payments and concession cards for longer. This will ease the transition to work and reduce disincentives for income support recipients to take up paid work.
Introductory Info
Date introduced: 18 October 2023
House: House of Representatives
Portfolio: Social Services
Commencement: Schedule 1 on 1 January 2024; Schedule 2 on 1 July 2024
Purpose of
the Bill
The purpose of the Social
Security and Other Legislation Amendment (Supporting the Transition to Work)
Bill 2023 (the Bill) is to amend the Social Security Act
1991 (the SS Act), the Veterans’
Entitlements Act 1986 (the VE Act), the A New Tax System
(Family Assistance) Act 1999 (the FA Act) and the A New Tax System
(Family Assistance) (Administration) Act 1999 (the FA Admin
Act) to make changes to the pension Work Bonus and the employment income
nil rate period.
The pension Work Bonus allows eligible payment recipients
to exempt the first $300 per fortnight in employment earnings from the income
test. Unused amounts in one fortnight can be accrued as credit against earnings
in another fortnight—referred to as the unused concession balance. Currently,
as a temporary measure, up to $11,800 can be accrued in the unused concession
balance. The Bill proposes to:
- provide
new social security pensioners and certain veterans’ payment recipients over
Age Pension age with a $4,000 Work Bonus unused concession balance and
- as
an ongoing measure, set the concession balance limit at $11,800—the limit had
been temporarily increased to this amount for the period 1 December 2022 to 31
December 2023.
The employment income nil rate period allows income
support recipients whose earnings reduce their payment rate to $0 to keep being
treated as a payment recipient for the purposes of concession cards,
supplements, and Child Care Subsidy eligibility. The nil rate period also
allows payment recipients to recommence receiving their payment if their
earnings drop during the period—they do not have to make a new claim for the
payment. The Bill proposes to increase the employment income nil rate period
from 12 weeks to 24 weeks and extend access to JobSeeker Payment and Youth
Allowance (Other) recipients who take up full-time work.
The measures were
announced in September 2023 in Working
Future: The Australian Government’s White Paper on Jobs and Opportunities
(p. 183).
Structure
of the Bill and the Bills Digest
The Bill contains 2 schedules. Schedule 1 proposes the
Work Bonus changes. Schedule 2 proposes the employment income nil rate changes.
The Bills Digest will provide separate background and analysis to the 2
schedules.
Committee
consideration
At the time of writing, the Bill had not been referred to
any committees.
Senate
Selection of Bills Committee
On 18 October 2023, the Senate
Selection of Bills Committee deferred consideration of the Bill to its next
meeting.
Senate
Standing Committee for the Scrutiny of Bills
At the time of writing, the Senate Standing Committee for
the Scrutiny of Bills had not considered the Bill.
Policy
position of non-government parties/independents
At the time of writing, non-government parties and
independents had not commented on the Bill. The Coalition’s separate Work Bonus
proposal is discussed in the ‘Coalition proposal to double the Work Bonus’
section below.
Position of
major interest groups
Major interest groups had not commented on the Bill at the
time of writing. The views of key stakeholder groups in relation to the Work
Bonus are discussed in the ‘Proposals to expand the Work Bonus’ section below.
Financial
implications
According to the Explanatory
Memorandum [p. i]:
- Schedule
1 (Work Bonus changes) has an indicative cost of $42.4 million over the
forward estimates from 2023–24.
- Schedule
2 (employment income nil rate period changes) will cost an estimated
$42.8 million over the forward estimates from 2023–24.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[1]
Parliamentary
Joint Committee on Human Rights
At the time of writing, the Parliamentary Joint Committee
on Human Rights had not considered the Bill.
Schedule 1–
Pensioner Work Bonus
The amendments in Schedule 1 will:
- provide
new social security pensioners and certain veterans’ payment recipients over
Age Pension age with a $4,000 Work Bonus unused concession balance and
- set
the unused concession balance limit at $11,800 as an ongoing measure.
Background
The Work Bonus
is designed as an incentive for pensioners over Age Pension age to earn
additional income from work. It does this by modifying the pension income test;
allowing a set amount of income from work to be excluded from the income test.
Pension recipients over Age Pension age are
eligible for the Work Bonus. This includes Age Pension, Disability Support
Pension and Carer Payment recipients, as well as Department of Veterans’
Affairs (DVA) Service Pension and Income Support Supplement recipients. From
1 July 2023, the Age Pension
qualifying age is 67 years.
Income test
Pension claimants are subject to an income and an assets
test which determine an eligible person’s payment rate. Both tests are applied
with the test that results in the lower rate the one that is used.
In general, the income test assesses gross income from all
sources including employment, income streams and deemed income from financial
investments.
Under the income
test for pensions, a single person’s income can be up to $204 per fortnight
and a couple’s combined income can be up to $360 per fortnight before their
pension rate is reduced. The amount of income a person can have before their
payment rate is affected is known as the ‘free area’. Each dollar of income
over the free area will reduce the single person’s and the couple’s combined
fortnightly pension rate by 50 cents. This reduction is known as the ‘taper
rate’.
At the time of writing, a single pensioner can have
fortnightly income up to $2,397.40 per fortnight before their pension rate is
reduced to zero. A couple can have fortnightly income of up to $3,666.80 before
their pension rate is reduced to zero. If they receive supplementary payments
such as Rent Assistance, this limit may be higher.
Financial investments are subject to the deemed income
rules: assets such as superannuation accounts, shares and real estate are
deemed to earn a set rate of income. This means that a set percentage of the
value of the asset is included under the income test, regardless of the actual
income earned on the asset.
The Work
Bonus
The Work
Bonus excludes the first $300 of employment income per fortnight from the
income test. Employment
income includes self-employment income from gainful work—work that involves
personal exertion such as operating a business (but not simply managing
investments). The Work Bonus applies to an individual, it cannot be shared by a
couple.
The Work Bonus is separate from the income free area. This
means, for example, a single person with no other income could have $504 in
employment income in a fortnight and still receive the maximum pension rate -
$300 would be excluded by the Work Bonus and the remaining $204 is equal to the
income test free area.
Unused amounts of the Work Bonus can be accrued as credits
to offset future employment income—this is known as the ‘unused concession
balance’. Normally, up to $7,800 in Work Bonus credits can be accrued. However,
all eligible pensioners were given a $4,000 one-off
increase in their Work Bonus balance on 1 December 2022, with the
credit limit temporarily increased from $7,800 to $11,800 for the period 1
December 2022 to 31 December 2023.
Origins of
the Work Bonus
The Work Bonus commenced from 20
September 2009 (Schedule 7). It effectively replaced the Pension
Bonus Scheme, a program introduced by the Howard Government in 1998 which
was aimed at encouraging older people to remain in the workforce after they had
reached pension age. The 2009 Secure
and Sustainable Pensions Package closed-off the Pension Bonus Scheme to new
entrants. The Pension Bonus Scheme provided a tax-free lump sum to those who
deferred receiving an Age Pension and who remained in the workforce.
The Work Bonus arose from recommendations of the 2009
Harmer Review of Pensions (pp. xvii, xx). The Review made two findings in
relation to the Work Bonus:
Finding 18: The Review finds that the Pension Bonus Scheme is
not a particularly effective means of increasing workforce participation by
older Australians and that this goal would be better pursued through the design
of the pension means test to ensure that there are appropriate incentives for
employment.
…
Finding 27: The Review finds that there is a case to provide
more effective mechanisms to support age pensioners to maintain or take up paid
work if they wish to do so. A concessional treatment of low to moderate levels
of income from employment would better deal with the costs of work which are
only partially offset in the current means test and be more effective than the
current Pension Bonus Scheme. (p. 137)
Submissions to the Review raised concerns with the
treatment of employment income:
The treatment of earned income was a recurrent theme raised
in the consultations. A significant group of pensioners indicated that they
were discouraged from taking up employment by the extent to which this would
lead to a reduction in their pension payments. (p. 137)
The Review did not recommend a specific level for the
employment income concession. In discussing the issue of employment and the Age
Pension, the review found:
Taking these issues into account, and the importance of
employment, the Review considers that there is a case to consider mechanisms
that provide a stronger incentive for age pensioners to take up paid work, or
to have transitions into retirement that allow for a combination of work and
retirement.
-
The first part of such an approach could involve the concessional
treatment of at least some earned income (income from work) in the income test.
-
The second part relates to the mechanics of the operation of the income
test. The current approach is complex and involves ‘striking an annual rate’ of
earnings which is particularly unsuited for responding to the higher degree of
variability experienced in earnings-based income for some pensioners who
undertake casual or irregular employment.
Such a change would provide a
mechanism to replace the Pension Bonus Scheme. (p. 138)
Other than the Work Bonus, the Rudd Government’s 2009 Secure
and Sustainable Pensions Package, announced in the 2009–10 Budget, included
an increase in the rate of single pension payments (by $30 a week); a
tightening of the income test so that pension rates were reduced by 50 cents
for each dollar over the relevant threshold (rather than by 40 cents); and, a
gradual increase in the Age Pension eligibility age from 65 to 67 (p. 9).
Changes to
the Work Bonus
2009 scheme
The Work Bonus was introduced via the Social Security
and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures)
Act 2009. The initial Work Bonus operated
differently from the current arrangements. Under the initial Work Bonus, 50% of
a pensioner’s first $500 in employment income in a fortnight was exempt from
the income test. Employment income over $500 in that fortnight was added to the
reduced amount to be assessed. If employment income was under $500, then 50% of
the actual income was exempt—this meant that the initial Work Bonus was less
generous than current arrangements which allow up to $300 in employment income
per fortnight to be exempt. For example, under the initial scheme, a person
with $200 in employment income in a fortnight would have $100 exempted from the
income test. Under the current scheme, the full $200 amount would be exempt.
The initial scheme also did not allow for unused amounts of the Work Bonus to
be banked.
2011 scheme
In 2011, the Families, Housing,
Community Services and Indigenous Affairs and Other Legislation Amendment
(Election Commitments and Other Measures) Act 2011 made two
changes:
- it
disregarded up to $250 per fortnight from the income test (rather than 50% of
the first $500 in employment income)
- it
allowed for unused amounts to be saved as credits—up to $6,500 could be saved as
an ‘unused concession balance’.
2019
changes
In 2019, the Social Services
and Other Legislation Amendment (Supporting Retirement Incomes) Act 2019
made a number of changes to the Work Bonus. The legislation:
- increased
the pension Work Bonus income concession amount from $250 to $300 per fortnight
- increased
the amount of unused Work Bonus amounts that can be saved for later use from
$6,500 to $7,800 and
- allowed
for the Work Bonus to apply to any remunerative work involving personal
exertion, including self-employment and contract work.
2022
changes
The Social Services and
Other Legislation Amendment (Workforce Incentive) Act 2022 made some
temporary changes to the Work Bonus design:
The one-off increase to Work Bonus balances was announced
on 2 September 2022 as an outcome of the Jobs and Skills Summit. The summit
brought together unions, employers, civil society and governments to discuss
issues such as skills shortages.
Proposals
to expand the Work Bonus
In a December 2021 pre-budget submission, the Australian
Chamber of Commerce and Industry (ACCI) argued there ‘is an army of older
workers with the skills Australia needs who would still like to work, but don’t
participate in the workforce as it reduces their pension’ (p. 28). ACCI
recommended a number of changes including an increase in the Work Bonus:
To entice aged pensioners back into the workforce, the income
free threshold and work bonus should be raised to allow pensioners to keep more
of their pension when they earn income. In addition, to address the current
skill shortage, as a temporary measure until June 2023, consideration should be
given to allow Australians who are already in receipt of the aged pension as at
1 January 2022 to earn at a significantly higher rate before their age pension
begins to be reduced, with the aim of bringing pensioners back into the
workforce for 2 to 3 days per week. (pp. 28–29)
In a December
2021 media release, national, state and territory chambers of commerce
argued that getting older skilled workers back into the labour force would help
make up for the lack of skilled migrants caused by border closures during the
COVID-19 pandemic.
COTA, a group representing older Australians recommended
an increase in the Work Bonus in its January 2022 pre-budget
submission (p. 17). In its submission
to the Employment White Paper, COTA welcomed the 2022 temporary changes but
stated that this was ‘not a long-term approach’ (p. 8). COTA called for
‘research to be commissioned to ascertain both the degree to which the income
test is an impediment to continued part time work, and the probable threshold
levels that would be a “tipping point”, so that there is an evidence base for
policy decisions’ (p. 9).
National Seniors, an advocacy group for older Australians,
has been campaigning for income test changes to encourage Age Pension
recipients to work. National
Seniors has called for employment income to be made ‘exempt from the income
test for pensioners with limited savings or assets’. An alternative policy
proposed in National Seniors’ submission
to the Employment White Paper is for a 2-year trial of a 32.5% tax on
employment income for pensioners rather than an income test taper rate (pp.
20–23). Under this proposal, employment income would not be assessed under the
income test. National Seniors also suggested a 32.5% taper rate for income over
the free areas as an alternative—this taper rate would apply to all payments
(pp. 22–23).
Coalition
proposal to double the Work Bonus
In June 2022, Opposition
Leader Peter Dutton proposed boosting the Work Bonus by increasing the
fortnightly amount credited to each pensioner’s income bank from $300 to $600.
He said the proposal was ‘designed to increase labour supply, will ease
workplace shortages and put downward pressure on inflation and interest rates’.
The Coalition moved
amendments to the Social
Services and Other Legislation Amendment (Workforce Incentive) Bill 2022 to
give effect to this proposal. The amendments were
not agreed to by the Senate in committee.
Liberal Senator Dean Smith has a private
member’s Bill before the Senate which includes the proposed increase to the
Work Bonus.
Effectiveness
of the changes
The number and proportion of Age Pensioners with earnings has
declined since November 2016. While it is difficult to discern the impact of
the 2019 changes due to the economic downturn following the COVID-19 pandemic,
the December 2022 changes and tight labour market do not appear to have
significantly affected the proportion of Age Pension recipients with earnings
(Figure 1). According to Department
of Social Services data, in July 2019, around 4.0% of Age Pensioners (101,490)
had earnings from employment. In July 2023, 3.2% of Age Pensioners (80,895) had
earnings.
Figure 1 Age
Pensioners with earnings from employment (%)
Source: Parliamentary Library estimates using monthly data from
'DSS
Income Support Recipients – Monthly Time Series August 2023’, Department of
Social Services (DSS).
The Age Pension qualifying age was gradually
increased from 65 to 67 years from 1 July 2017 to 1 July 2023. This
eligibility change may have also affected the number of pensioners with
earnings as employment rates decline as age increases (Table LM9, Labour
force, Australia, Detailed, ABS).
In August 2022, the Department of Social Services (DSS)
briefed Minister Amanda Rishworth on the Coalition’s proposal to increase the
Work Bonus. According to
the briefing:
There is no evidence to suggest increasing the Work Bonus
would incentivise retirees back into the workforce:
- Pensioners
already have the opportunity to earn a significant amount of income from work
without affecting their Age Pension and currently 97 per cent of pensioners
choose not to work.
- The
number of pensioners reporting income from employment is in long-term decline
despite an increase in the value of the Work Bonus concession of $50 per
fortnight (to $300 per fortnight) in 2019.
- The low
number of pensioners undertaking work and the lack of take-up of the Work Bonus
indicates pensioners are likely not working due to other factors, such as a
desire to be retired, physical impairments, and the type of work available.
This is supported by the findings of the 2020 Retirement Incomes Review. (pp.
46–47)
The Albanese Government’s employment white paper, Working
Future: The Australian Government’s White Paper on Jobs and Opportunities,
did not set out any evidence that increasing the Work Bonus would increase the
participation of pensioners in the workforce. The white paper stated: ‘The
pension Work Bonus is designed to specifically reward pensioners who are
working’ (p. 230). This suggests the changes are most likely to benefit those
already working.
Working age
payment recipients have a tighter income test
The August 2022 DSS
briefing to the Minister suggested that rather than looking to the Work
Bonus to boost labour force participation, ‘attempts to address workforce
shortages would be better focused on activating people who are of working age
and have less barriers to work than age pensioners’ (p. 47).
Those on working age payments such as JobSeeker Payment
have a tighter
income test with singles having an income free area of $150 per fortnight compared
to $204 per fortnight for pensioners (p. 49). For a JobSeeker Payment
recipient, each dollar of income between $150 and $256 per fortnight reduces
their payment rate by 50 cents (the same taper rate as pensioners). However,
for JobSeeker Payment recipients, the taper rate increases to 60 cents for each
dollar of income over $256 per fortnight (p. 49).
There is no Work Bonus equivalent for JobSeeker Payment
and other working-age payment recipients. Working-age payment recipients can
access Working
Credit, an income test concession which allows for credits to be accrued
during periods without private income that can be used to reduce assessed
income at a later date. Working Credits accrue for any fortnights where a
person’s income is below $48 per fortnight. Up to $1,000 can be accrued ($3,500
for Youth Allowance (Other) recipients).
The higher
payment rate combined with a more generous income test and Work Bonus
arrangements mean that a single Age Pension recipient could earn over $1,200
more in employment income per fortnight before losing their payment than a single
person on JobSeeker Payment could before losing their payment (pp. 49, 53).
Numbers
affected
In her second
reading speech on the Bill, Minister for Social Services Amanada Rishworth
stated that ‘more than 195,000 senior Australians who commence on a
pension each year’ would benefit from the measure to provide new eligible
pensioners with a $4,000 Work Bonus unused concession starting balance.
Key
provisions
Social
Security Act 1991
Section 1073AB of the Social Security Act 1991 provides
for the Work Bonus unused concession balance. Item 1 of Schedule 1
repeals and substitutes subsection 1073AB(1) so that:
- on
1 January 2024, a person retains any unused concession balance that they had
immediately before that date and
- those
who first become eligible for the Work Bonus on or after 1 January 2024 will
have an unused concession balance of $4,000.
Under the proposed amendment, if a person ceases to
receive a social security pension but retains an unused concession balance,
then that person can have their unused concession balance increased to $4,000
if they commence receiving a pension again. However, this top-up only applies
if, since 1 July 2024, it has been more than 2 years since they received the
$4,000 commencement balance or they received a previous top-up to $4,000. This
top-up provision does not apply where a person recommences receiving a pension
after a suspension or employment income nil rate period.
Item 2 amends subsection 1073AB(2) to
increase the unused concession balance limit from $7,800 to $11,800.
Item 4 repeals the temporary unused concession
balance arrangements at section 1073AC.
Veterans’
Entitlements Act 1986
Items 6–9 of Schedule 1 make similar amendments to
the Work Bonus unused concession balance provisions in the VE Act.
Schedule
2—Employment income nil rate period
The amendments in Schedule 2 will increase the maximum
duration of an employment income nil rate period from 12 weeks to 24 weeks and
extend access to JobSeeker Payment and Youth Allowance (Other) recipients who
take up full-time work.
Background
The employment
income nil rate period is intended to encourage income support payment
recipients to work by allowing them to keep certain benefits attached to their
payment, even though their payment rate has been reduced to zero under the
income test. It also makes it easier for these payment recipients to restart
their income support payment if their employment income is reduced—they will
not have to make a new claim for the payment.
Where a pension or benefit recipient has some employment
income and their payment is not payable due to the income test, they can still
be considered to be receiving the pension or benefit for the purposes of
qualifying for certain supplementary payments, concession cards and the Child
Care Subsidy. Currently, the maximum duration
of an employment income nil rate period is 6 fortnights from the end
of the payment fortnight in which their rate was reduced to nil under the
income test.
Introduction
The employment income nil rate period was introduced in 2003
as part of the Howard Government’s ‘Australians Working Together’ package, announced in the 2001
Budget (p. 131). The package included a broad suite of
measures aimed at providing incentives and assistance for people on income
support to take up paid work (pp. 120–132). The measures were part of the
Government’s initial response to the final
report of the welfare review led by Patrick McClure (the McClure Review),
released in 2000.
When introduced, the maximum duration was set at 6
fortnights (12 weeks) and this has not changed since.
How the employment
income nil rate period works
The employment income nil rate period applies to any
pensioner or benefit recipient whose payment is not payable due to their or
their partner’s income, if that income is made up partly or entirely of employment
income. Payment recipients still need to meet other qualification
requirements—their payment must only be not payable as a result of the income
test. For example, to be eligible for JobSeeker Payment a person needs to be
considered ‘unemployed’. A JobSeeker Payment recipient may have employment
income and still
be considered unemployed—for example, where the work is casual or
short-term.
During the employment income nil rate period, an
individual is still considered to be receiving their social security pension or
benefit for
the purposes of:
- Child
Care Subsidy—the higher rate Additional
Child Care Subsidy (Transition to Work) is only paid to those receiving
certain social security payments
- Rent
Assistance payments to their partner—both members of the couple are treated as
receiving a social security pension or benefit. The impact depends
on whether the couple are receiving a pension or a benefit payment, and whether
they have any dependent children.
- applying
the benefit
income test to their partner—their partner will be treated as if both
members of the couple are receiving a social security pension or benefit
- supplementary
benefits paid to recipients of certain payments (who meet the
supplement-specific criteria):
- retaining
their Health Care Card or Pensioner Concession Card.
If, during the employment income nil rate period, the
person reports a lower income that means at least a part-rate payment can be
made to them, then receipt of the social security payment resumes without the
need for a new claim. If the payment is not reinstated before the end of the
employment income nil rate period, then the person’s payment is cancelled at
the end of that period. This will affect their eligibility for the payments and
concession cards listed above.
An individual who has lost eligibility for an income
support payment due to their or their partner’s employment income can continue
to qualify for a Health Care
Card or Pensioner
Concession Cards for a certain periods. The extended eligibility period
depends on the concession card and the person’s circumstances. These provisions
are separate from the employment income nil rate period.
Employment white
paper
The Albanese Government’s employment white paper, Working
Future: The Australian Government’s White Paper on Jobs and Opportunities,
found:
It is often reported that the risk of losing access to
concession cards and child care subsidies, or needing to reapply for payment if
a job doesn’t work out, can discourage job seekers from taking on work. This is
particularly true in circumstances where available roles are short term.
Evidence indicates that people who have some work are twice as likely to
ultimately exit income support than those who don’t. It is critical that people
are not deterred from taking on job opportunities. (p. 229).
The white paper announced 2 changes to the employment
income nil rate period:
To help smooth the transition between income support and
work, and encourage more people to take up work, the Government will extend the
nil rate period from 6 to 12 fortnights (subject to the passage of legislation)
... This extension will give income support recipients more confidence to take
up work opportunities, with less need to worry about reapplying for payment and
associated benefits.
Access to the nil rate period is also being expanded to
recipients who take up full-time work and therefore no longer meet the
definition of being unemployed under the Social Security Act 1991. This
will encourage people to take up full-time opportunities where they may
previously have been concerned that, if the job didn’t work out, they would
need to reapply for payment. As a result of these changes, people will be
better supported to get back into work and have greater certainty they can
access income support should they need it again. (pp. 229–230)
The white paper did not present any evidence as to the
impact of the employment income nil rate period and its effectiveness as a work
incentive.
Numbers
affected
According to
government estimates, around 138,000 recipients each year will benefit from
the employment income nil rate period measure, particularly those on the
JobSeeker Payment and Youth Allowance (other).
Key
provisions
Social
Security Act 1991
Item 1 of Schedule 2 amends paragraph 23(4A)(h)
to increase the maximum duration of the employment income nil rate period from
12 to 24 weeks from the end of the instalment period in which the person’s
pension or benefit ceases to be payable.
Item 3 inserts new subsection 23(4AB) so
that certain provisions will not apply in determining whether an individual continues
to be otherwise qualified for their social security payment in order for them
to be eligible for the employment income nil rate period. As discussed above, the
employment income nil rate period only applies where a person still meets the
non-income test related qualification and payability requirements for their
payment. The provisions that would not apply under the proposed amendment are the
Youth Allowance (Other) qualification requirements that a person not be
undertaking full-time paid work of 35-hours a week or more (subparagraph
540(2)(a)(iii) and subparagraph 540(2)(b)(iii)), and the JobSeeker Payment
qualification requirement that a person be unemployed (subparagraph
593(1)(a)(i)). The effect of this proposed amendment is that Youth Allowance
(Other) and JobSeeker Payment recipients who take up full-time work will now be
eligible for an employment income nil rate period. Previously, only those recipients
of these payments who took up part-time or short-term work were eligible.
Item 4 repeals and substitutes paragraph 1061ZEA(2)(h)
to amend the extended qualification requirements for the Pensioner Concession
Card where a person ceases to receive their income support payment due to
employment income. The amendments increase the extended qualification period
from 12 weeks to 24 weeks. The amendments will also allow some single parents
on JobSeeker Payment or Youth Allowance (Other) who enter into full-time work
to retain their Pensioner Concession Card for 26 weeks. This changes the current
arrangement for this cohort where they can retain their Pensioner
Concession Card for 12 weeks and are then provided with a Health Care Card for
a further 14 weeks (the Health Care Card offers fewer concessions than the
Pensioner Concession Card).
Items 6 and 7 amend paragraph
1061ZMA(2)(h) and subsection 1061ZMA(3), respectively, to change the
extended qualification duration for the Health Care Card where a person ceases
to receive their income support payment due to employment income. The duration
is extended from 12 weeks to 24 weeks.
A New
Tax System (Family Assistance) Act 1999
Section 85CK of the FA Act sets out eligibility for
the Additional Child Care Subsidy (Transition to Work). Subsection 85CK(2)
provides that an individual is eligible for the Additional Child Care Subsidy
(Transition to Work) if the individual ceased receiving an eligible income
support payment fewer than 12 weeks before the start of the relevant Child Care
Subsidy fortnight. Eligible
Additional Child Care Subsidy (Transition to Work) income support payments
are Parenting Payment, JobSeeker Payment, Disability Support Pension, Youth
Allowance, Carer Payment, Special Benefit, Austudy, Farm Household Allowance
and means tested ABSTUDY payments.
Item 10 amends subsection 85CK(2) to
increase the 12 week period to 24 weeks.