2008-2009 The Parliament of the Commonwealth of Australia HOUSE OF REPRESENTATIVES Presented and read a first time Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 (Treasury) A Bill for an Act to provide for fairer private health insurance incentives, and for related purposes [Page Break] 1 Short title ........................................................................................... 1 2 Commencement ................................................................................. 1 3 Schedule(s) ........................................................................................ 2 Schedule 1--Amendments 3 Income Tax Assessment Act 1936 3 Income Tax Assessment Act 1997 3 Private Health Insurance Act 2007 10 Taxation Administration Act 1953 15 Taxation (Interest on Overpayments and Early Payments) Act 1983 16 i Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] 2 insurance incentives, and for related purposes 3 The Parliament of Australia enacts: 4 1 Short title 5 This Act may be cited as the Fairer Private Health Insurance 6 Incentives Act 2009. 7 2 Commencement 8 (1) Each provision of this Act specified in column 1 of the table 9 commences, or is taken to have commenced, in accordance with 10 column 2 of the table. Any other statement in column 2 has effect 11 according to its terms. 12 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 1 [Page Break] Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 The day on which this Act receives the and anything in Royal Assent. this Act not elsewhere covered by this table 2. Schedule 1 The latest of: (a) the day on which the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Act 2009 receives the Royal Assent; and (b) the day on which the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge--Fringe Benefits) Act 2009 receives the Royal Assent; and (c) 1 July 2010. However, the provision(s) do not commence at all unless both of the events mentioned in paragraphs (a) and (b) occur. 1 Note: This table relates only to the provisions of this Act as originally 2 passed by both Houses of the Parliament and assented to. It will not be 3 expanded to deal with provisions inserted in this Act after assent. 4 (2) Column 3 of the table contains additional information that is not 5 part of this Act. Information in this column may be added to or 6 edited in any published version of this Act. 7 3 Schedule(s) 8 Each Act that is specified in a Schedule to this Act is amended or 9 repealed as set out in the applicable items in the Schedule 10 concerned, and any other item in a Schedule to this Act has effect 11 according to its terms. 12 2 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] 1 Schedule 1--Amendments 2 3 Income Tax Assessment Act 1936 4 1 After paragraph 264BB(2)(g) 5 Insert: 6 (ga) whether the premium has been reduced under section 23-1 of 7 the Private Health Insurance Act 2007, and if so, the amount 8 of the reduction; 9 (gb) the name, address and date of birth of a participant (within 10 the meaning of the Private Health Insurance Act 2007) in the 11 premiums reduction scheme (within the meaning of that Act) 12 in respect of the policy; 13 Income Tax Assessment Act 1997 14 2 Subsection 61-205(3) 15 Omit "if", substitute "to the extent that". 16 3 Paragraph 61-205(3)(b) 17 Omit "was less than it would otherwise have been", substitute "was 18 reduced". 19 4 After subsection 61-210(1) 20 Insert: 21 (1A) Reduce the amount of each percentage mentioned in subsection (1) 22 by 10 percentage points if you are a *tier 1 earner for the income 23 year. 24 (1B) Reduce the amount of each percentage mentioned in subsection (1) 25 by 20 percentage points if you are a *tier 2 earner for the income 26 year. 27 (1C) If you are a *tier 3 earner for the income year: 28 (a) reduce the amount of each percentage mentioned in 29 subsection (1) to nil; and 30 (b) do not apply subsection (2). Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 3 [Page Break] 1 5 Subsection 61-210(2) 2 Omit "However,", substitute "Despite subsections (1), (1A) and (1B),". 3 6 Paragraph 61-210(2)(a) 4 Omit "under subsection (1)", substitute "under subsection (1) (taking 5 into account any reduction under subsection (1A) or (1B))". 6 7 Subsection 61-210(3) 7 Omit "the difference", substitute "the difference (but not below nil)". 8 8 Paragraph 61-215(1)(a) 9 After "35% or 40%", insert "(or either of those percentages as altered 10 under subsection 61-210(1A) or (1B))". 11 9 Subsection 61-215(4) 12 After "35% or 40%", insert "(or either of those percentages as altered 13 under subsection 61-210(1A) or (1B))". 14 10 At the end of Subdivision 61-G 15 Add: 16 61-225 Private health insurance tiers 17 Families 18 (1) The following table applies to you for an income year if: 19 (a) on the last day of the year, you are married (within the 20 meaning of the A New Tax System (Medicare Levy 21 Surcharge--Fringe Benefits) Act 1999); or 22 (b) on any day in the year, you contribute in a substantial way to 23 the maintenance of a dependent child (within the meaning of 24 the Private Health Insurance Act 2007) who is: 25 (i) your *child; or 26 (ii) your sibling (including your half-brother, half-sister, 27 adoptive brother, adoptive sister, step-brother, 28 step-sister, foster-brother or foster-sister) who is 29 dependent on you for economic support: 30 4 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] Private health insurance tiers--families Item For the year, if your *income for but does not exceed you are a ... surcharge purposes for the following (if the year exceeds the applicable) for the following for the year ... year ... 1 tier 1 earner your *family tier 1 your *family tier 2 threshold threshold. 2 tier 2 earner your *family tier 2 your *family tier 3 threshold threshold. 3 tier 3 earner your *family tier 3 not applicable. threshold 1 (2) For the purposes of subsection (1), if paragraph (1)(a) applies, treat 2 the *income for surcharge purposes for the year of the person to 3 whom you are married (as mentioned in that paragraph) as 4 included in your income for surcharge purposes for the year. 5 Singles 6 (3) The following table applies to you for an income year if the table 7 in subsection (1) does not apply to you for the year: 8 Private health insurance tiers--singles Item For the year, if your *income for but does not exceed you are a ... surcharge purposes for the following (if the year exceeds the applicable) for the following for the year ... year ... 1 tier 1 earner your *singles tier 1 your *singles tier 2 threshold threshold. 2 tier 2 earner your *singles tier 2 your *singles tier 3 threshold threshold. 3 tier 3 earner your *singles tier 3 not applicable. threshold 9 61-230 Private health insurance singles thresholds 10 (1) Your singles tier 1 threshold for the 2008-09 income year is 11 $70,000. This amount is indexed annually. Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 5 [Page Break] 1 (2) Your singles tier 2 threshold for the 2010-11 income year is 2 $90,000. This amount is indexed annually. 3 (3) Your singles tier 3 threshold for the 2010-11 income year is 4 $120,000. This amount is indexed annually. 5 Note: Subdivision 960-M shows you how to index amounts. 6 61-235 Private health insurance family thresholds 7 (1) Your family tier 1 threshold for an income year is an amount equal 8 to double your *singles tier 1 threshold for the year. 9 (2) Your family tier 2 threshold for an income year is an amount equal 10 to double your *singles tier 2 threshold for the year. 11 (3) Your family tier 3 threshold for an income year is an amount equal 12 to double your *singles tier 3 threshold for the year. 13 (4) However, if you have 2 or more dependants (within the meaning of 14 the A New Tax System (Medicare Levy Surcharge--Fringe 15 Benefits) Act 1999) who are *children, increase your family tier 1 16 threshold, family tier 2 threshold and family tier 3 threshold for 17 the income year by the result of the following formula: 18 $1,500 × Number of those dependants who are children - 1 19 Example: If you have 3 such dependants who are children, your family tier 2 20 threshold for the 2010-11 income year is: 21 $180,000 + $1,500 × 2 = $183,000 22 11 Section 960-265 (at the end of the table) 23 Add: 14 Private health insurance offset--singles tier 1 subsection threshold 61-230(1) 15 Private health insurance offset--singles tier 2 subsections threshold and singles tier 3 threshold 61-230(2) and (3) 24 12 At the end of section 960-270 25 Add: 6 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] 1 (4) This section does not apply in relation to amounts mentioned in the 2 provisions listed at items 14 and 15 in section 960-265. 3 Note: For the indexation of those amounts, see section 960-290. 4 13 At the end of section 960-275 5 Add: 6 (7) This section does not apply in relation to amounts mentioned in the 7 provisions listed at items 14 and 15 in section 960-265. 8 Note: For the indexation of those amounts, see section 960-290. 9 14 At the end of section 960-280 10 Add: 11 Exception--private health insurance thresholds 12 (7) This section does not apply in relation to amounts mentioned in the 13 provisions listed at items 14 and 15 in section 960-265. 14 Note: For the indexation of those amounts, see section 960-290. 15 15 At the end of Subdivision 960-M 16 Add: 17 960-290 Indexation--private health insurance thresholds 18 (1) This section applies in relation to an amount mentioned in a 19 provision listed at item 14 or 15 in section 960-265. 20 Indexing amounts 21 (2) You index the amount by: 22 (a) firstly: 23 (i) if the amount is mentioned in item 14 in 24 section 960-265 (singles tier 1 threshold)--multiplying 25 the amount for the 2008-2009 income year by its 26 *indexation factor mentioned in subsection (4); or 27 (ii) if the amount is mentioned in item 15 in 28 section 960-265 (singles tier 2 threshold or singles tier 3 29 threshold)--multiplying the amount for the 2010-2011 30 income year by its indexation factor mentioned in 31 subsection (5); and Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 7 [Page Break] 1 (b) next, rounding the result in paragraph (a) down to the nearest 2 multiple of $1,000. 3 Example 1: If the amount to be indexed is $90,000 and the indexation factor 4 increases this to an indexed amount of $90,500, the indexed amount is 5 rounded back down to $90,000. 6 Example 2: If the amount to be indexed is $120,000 and the indexation factor 7 increases this to an indexed amount of $121,500, the indexed amount 8 is rounded down to $121,000. 9 (3) You do not index the amount if its indexation factor mentioned in 10 subsection (4) or (5) is 1 or less. 11 Indexation factor 12 (4) For indexation of the amount on an annual basis in accordance 13 with subparagraph (2)(a)(i), the indexation factor is: *Index number mentioned in subsection (7) for the quarter ending on 31 December just before the start of the relevant income year 14 *Index number mentioned in subsection (7) for the quarter ending on 31 December 2007 15 (5) For indexation of the amount on an annual basis in accordance 16 with subparagraph (2)(a)(ii), the indexation factor is: *Index number mentioned in subsection (7) for the quarter ending on 31 December just before the start of the relevant income year 17 *Index number mentioned in subsection (7) for the quarter ending on 31 December 2009 18 (6) You work out the *indexation factor mentioned in subsection (4) or 19 (5) to 3 decimal places (rounding up if the fourth decimal place is 5 20 or more). 21 Index number 22 (7) For calculating the amounts, the index number for a quarter is the 23 estimate of full-time adult average weekly ordinary time earnings 24 for the middle month of the quarter first published by the 25 Australian Statistician in respect of that month. 8 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] 1 16 Subsection 995-1(1) 2 Insert: 3 family tier 1 threshold has the meaning given by section 61-235. 4 17 Subsection 995-1(1) 5 Insert: 6 family tier 2 threshold has the meaning given by section 61-235. 7 18 Subsection 995-1(1) 8 Insert: 9 family tier 3 threshold has the meaning given by section 61-235. 10 19 Subsection 995-1(1) (after paragraph (a) of the definition 11 of indexation factor) 12 Insert: 13 (aa) for an amount mentioned in a provision listed at item 14 or 14 15 in section 960-265--indexation factor has the meaning 15 given by section 960-290; or 16 20 Subsection 995-1(1) (after paragraph (a) of the definition 17 of index number) 18 Insert: 19 (aa) for an amount mentioned in a provision listed at item 14 or 20 15 in section 960-265--index number has the meaning given 21 by section 960-290; or 22 21 Subsection 995-1(1) 23 Insert: 24 singles tier 1 threshold has the meaning given by section 61-230. 25 22 Subsection 995-1(1) 26 Insert: 27 singles tier 2 threshold has the meaning given by section 61-230. 28 23 Subsection 995-1(1) Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 9 [Page Break] 1 Insert: 2 singles tier 3 threshold has the meaning given by section 61-230. 3 24 Subsection 995-1(1) 4 Insert: 5 tier 1 earner has the meaning given by section 61-225. 6 25 Subsection 995-1(1) 7 Insert: 8 tier 2 earner has the meaning given by section 61-225. 9 26 Subsection 995-1(1) 10 Insert: 11 tier 3 earner has the meaning given by section 61-225. 12 Private Health Insurance Act 2007 13 27 After subsection 23-1(2) 14 Insert: 15 (2A) Reduce the amount of each percentage mentioned in subsection (2) 16 by 10 percentage points if the person mentioned in subsection (1) 17 is a *tier 1 earner for the financial year. 18 (2B) Reduce the amount of each percentage mentioned in subsection (2) 19 by 20 percentage points if the person mentioned in subsection (1) 20 is a *tier 2 earner for the financial year. 21 (2C) If the person mentioned in subsection (1) is a *tier 3 earner for the 22 financial year: 23 (a) reduce the amount of each percentage mentioned in 24 subsection (2) to nil; and 25 (b) do not apply subsection (3). 26 28 Subsection 23-1(3) 27 Omit "However,", substitute "Despite subsections (2), (2A) and (2B),". 28 29 Paragraph 23-1(3)(a) 10 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] 1 Omit "under subsection (2)", substitute "under subsection (2) (taking 2 into account any reduction under subsection (2A) or (2B))". 3 30 Paragraph 23-10(1)(a) 4 After "35% or 40%", insert "(or either of those percentages as altered 5 under subsection 23-1(2A) or (2B))". 6 31 Subsection 23-10(4) 7 After "35% or 40%", insert "(or either of those percentages as altered 8 under subsection 23-1(2A) or (2B))". 9 32 After subsection 26-1(2) 10 Insert: 11 (2A) Reduce the amount of each percentage mentioned in subsection (2) 12 by 10 percentage points if the person mentioned in subsection (1) 13 is a *tier 1 earner for the financial year. 14 (2B) Reduce the amount of each percentage mentioned in subsection (2) 15 by 20 percentage points if the person mentioned in subsection (1) 16 is a *tier 2 earner for the financial year. 17 (2C) If the person mentioned in subsection (1) is a *tier 3 earner for the 18 financial year: 19 (a) reduce the amount of each percentage mentioned in 20 subsection (2) to nil; and 21 (b) do not apply subsection (3). 22 33 Subsection 26-1(3) 23 Omit "However,", substitute "Despite subsections (2), (2A) and (2B),". 24 34 Paragraph 26-1(3)(a) 25 Omit "under subsection (2)", substitute "under subsection (2) (taking 26 into account any reduction under subsection (2A) or (2B))". 27 35 Paragraph 26-5(1)(a) 28 After "35% or 40%", insert "(or either of those percentages as altered 29 under subsection 26-1(2A) or (2B))". 30 36 Subsection 26-5(4) Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 11 [Page Break] 1 After "35% or 40%", insert "(or either of those percentages as altered 2 under subsection 26-1(2A) or (2B))". 3 37 After subsection 282-1(1) 4 Insert: 5 (1A) However, an amount is not recoverable under paragraph (1)(d), (e), 6 (f) or (g) if the situation giving rise to the amount did not occur due 7 to the fault of the private health insurer. 8 38 After Subdivision 282-A 9 Insert: 10 Subdivision 282-AA--Recovery of certain amounts by 11 Commissioner of Taxation 12 282-16 Administration of this Subdivision by Commissioner of 13 Taxation 14 The Commissioner of Taxation has the general administration of: 15 (a) this Subdivision; and 16 (b) any other provision of this Act to the extent that it relates to 17 this Subdivision. 18 282-17 Subdivision operates in addition to Subdivision 282-A 19 (1) This Subdivision: 20 (a) operates in addition to Subdivision 282-A; and 21 (b) does not limit the operation of that Subdivision. 22 (2) Subdivision 282-A does not limit the operation of this Subdivision. 23 No double recovery 24 (3) Despite subsections (1) and (2): 25 (a) an amount is not recoverable under section 282-1 to the 26 extent that it has already been recovered in accordance with 27 section 282-18; and 28 (b) an amount is not recoverable under section 282-18 to the 29 extent that it has already been recovered in accordance with 30 section 282-1. 12 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] 1 Note: This section means that an amount that is recoverable under both 2 paragraph 282-1(1)(e) and section 282-18 is recoverable from the 3 private health insurer in accordance with section 282-1 or from the 4 participant in accordance with section 282-18. 5 282-18 Liability for excess private health insurance premium 6 reduction or refund 7 (1) This section applies if: 8 (a) the amount of premiums payable under a *complying health 9 insurance policy in respect of a financial year is reduced 10 because a person is a *participant in the *premiums reduction 11 scheme in respect of the policy; and 12 (b) the amount of the reduction of the premiums exceeds the 13 amount of the reduction allowable under section 23-1. 14 (2) This section also applies if: 15 (a) a payment is made to a person under Subdivision 26-B; and 16 (b) the amount of the payment exceeds the amount to which the 17 person was entitled under section 26-1. 18 (3) The person is liable to pay the excess to the Commonwealth. 19 (4) An amount that a person is liable to pay under subsection (3) is due 20 and payable 21 days after the day on which the Commissioner of 21 Taxation gives him or her a notice in writing of the liability. 22 Note: The liability is a tax-related liability: see Part 4-15 in Schedule 1 to the 23 Taxation Administration Act 1953 for collection and recovery 24 provisions. 25 (5) A notice under subsection (4) may be included in a notice of any 26 assessment under the Income Tax Assessment Act 1936 or the 27 Income Tax Assessment Act 1997. 28 (6) If the person is dissatisfied with the notice under subsection (4), he 29 or she may object against it in the manner set out in Part IVC of the 30 Taxation Administration Act 1953. 31 282-19 When general interest charge payable 32 (1) If: 33 (a) a person is liable under subsection 282-18(3) to pay an 34 amount; and Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 13 [Page Break] 1 (b) the whole or a part of the amount remains unpaid after the 2 time by which the amount is due to be paid; 3 the person is liable to pay *general interest charge on the unpaid 4 amount. 5 (2) A person who is liable under this section to pay *general interest 6 charge on an unpaid amount is liable to pay the charge for each day 7 in the period that: 8 (a) started at the beginning of the day by which the unpaid 9 amount was due to be paid; and 10 (b) finishes at the end of the last day at the end of which any of 11 the following remains unpaid: 12 (i) the unpaid amount; 13 (ii) general interest charge on any of the unpaid amount. 14 39 Section 282-25 15 Omit "or this Part" (wherever occurring), substitute ", this Part or 16 paragraph 323-5(c)". 17 40 Paragraph 323-5(b) 18 Omit "Medicare Australia Act 1973.", substitute "Medicare Australia 19 Act 1973; or". 20 41 At the end of section 323-5 21 Add: 22 (c) for the purpose of enabling a person to perform functions 23 under: 24 (i) a provision of the A New Tax System (Medicare Levy 25 Surcharge--Fringe Benefits) Act 1999; or 26 (ii) a provision of the Medicare Levy Act 1986; or 27 (iii) a provision of Subdivision 61-G of the Income Tax 28 Assessment Act 1997; or 29 (iv) any other provision of the Income Tax Assessment Act 30 1997, or of any other Act, to the extent that the 31 provision relates to a provision mentioned in 32 subparagraph (i), (ii) or (iii). 33 42 Clause 1 of Schedule 1 34 Insert: 14 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 [Page Break] 1 general interest charge means the charge worked out under 2 Part IIA of the Taxation Administration Act 1953. 3 43 Clause 1 of Schedule 1 4 Insert: 5 tier 1 earner, for a financial year, means a person who is a tier 1 6 earner (within the meaning of the Income Tax Assessment Act 7 1997) for the income year corresponding to the financial year. 8 44 Clause 1 of Schedule 1 9 Insert: 10 tier 2 earner, for a financial year, means a person who is a tier 2 11 earner (within the meaning of the Income Tax Assessment Act 12 1997) for the income year corresponding to the financial year. 13 45 Clause 1 of Schedule 1 14 Insert: 15 tier 3 earner, for a financial year, means a person who is a tier 3 16 earner (within the meaning of the Income Tax Assessment Act 17 1997) for the income year corresponding to the financial year. 18 Taxation Administration Act 1953 19 46 Subsection 8AAB(5) (after table item 4) 20 Insert: 4AA 282-19 Private Health Insurance Act 2007 21 47 Subsection 250-10(2) in Schedule 1 (after table item 45A) 22 Insert: 45B liability for excess 282-18 Private Health Insurance Act private health 2007 insurance premium reduction or refund Fairer Private Health Insurance Incentives Bill 2009 No. , 2009 15 [Page Break] 1 Taxation (Interest on Overpayments and Early Payments) 2 Act 1983 3 48 Subsection 3(1) (after paragraph (ca) of the definition of 4 decision to which this Act applies) 5 Insert: 6 (caaa) in a case where the expression is used in relation to relevant 7 tax of a kind referred to in item 60 of the table in 8 section 3C--a decision of the Commissioner to give a notice 9 under subsection 282-18(4) of the Private Health Insurance 10 Act 2007; or 11 49 Section 3C (after item 55 of the table) 12 Insert: 60 Liabilities under subsection 282-18(3) of the Private Health Insurance Act 2007 13 50 After subparagraph 8E(1)(d)(iv) 14 Insert: 15 (iva) a liability under subsection 282-18(3) of the Private 16 Health Insurance Act 2007 that is notified in the notice 17 of assessment; 18 51 After subparagraph 8E(2)(d)(iv) 19 Insert: 20 (iva) a liability under subsection 282-18(3) of the Private 21 Health Insurance Act 2007, payable by the person 22 immediately before the post-notice crediting; 23 52 Application 24 The amendments made by this Schedule apply on and after 1 July 2010. 16 Fairer Private Health Insurance Incentives Bill 2009 No. , 2009