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A NEW TAX SYSTEM (FAMILY ASSISTANCE) (IMPROVED ACCESS TO BABY BONUS) AMENDMENT BILL 2008 Explanatory Memorandum

A NEW TAX SYSTEM (FAMILY ASSISTANCE) (IMPROVED ACCESS TO BABY BONUS) AMENDMENT BILL 2008


    A New Tax System (Family Assistance) (Improved Access to Baby Bonus)
                             Amendment Bill 2008

Explanatory Memorandum

Circulated by authority of Senator Natasha Stott Despoja

GENERAL OUTLINE: Policy Rationale

The Australian Democrats believe adoptive parents should be treated with
the same respect and recognition provided to biological parents.
Currently, only families who adopt children up to the age of two are
eligible for the baby bonus.

The current baby bonus largely discriminates against families adopting from
overseas. In the 2005-2006 financial year, 118 children aged more than two
years were adopted from overseas, effectively making the parents ineligible
to receive financial assistance.

This Bill amends the A New Tax System (Family Assistance) Act 1999, and
builds upon existing provisions for adoptive parents to ensure that the
baby bonus is available to all adoptive families.

FINANCIAL IMPACT:

On 1 July 2008, the baby bonus will be increased to $5000 and will be
indexed in line with the Consumer Price Index (CPI) in March and September.


Assuming CPI will change at a similar rate to which it has in the last six
months (1.65% from June to December 2007) the baby bonus will increase to
about $5083 in September 2008 and $5166 in March 2009.

We know that in 2005-06 there were a total of 125 'unknown child'[1]
adoptions where the child was aged two or older.

Assuming that there will be a similar number of 'unknown child' adoptions
of children aged two and over in 2008-09, then the extra cost to government
of extending the baby bonus to the adopting parents of these children will
be approximately $636,000.

This represents less than 0.05% of the estimated cost of the baby bonus in
2008-09 (of between $1.4 and $1.5 billion).[2]
To arrive at the final costing over 2008-09, the number of adoptions has
been evenly spread over the year and costed as follows.
 . 1 July to 19 Sept 2008 - 26 adoptions at $5000 each = $130,000

 . 20 Sept 2008 to 19 March 2009 - 63 adoptions at $5083 each = $320,200

 . 20 March to 30 June 2009 - 36 adoptions at $5166 each = $185,992

 . TOTAL for 2008-09 - 125 adoptions at $5000-$5166 = $636,000 (rounded)


NOTES ON CLAUSES:

Clause 1 - Short title

This clause provides for the Act, when it is enacted, to be cited as A New
Tax System (Family Assistance) (Improved Access to Baby Bonus) Amendment
Bill 2008.

Clause 2 - Commencement

This clause provides for the commencement of the Act on the day on which it
receives the Royal Assent.

Clause 3 - Schedule(s)

This clause states that each Act that is specified within Schedule 1 is
amended or repealed according to the terms set out within the Schedule.

Clause 4 - Object

This clause states that the purpose of this Bill is to ensure all adoptive
parents are eligible for the baby bonus.

Clause 5 - Appropriation of funds

This clause ensures that any money payable under Paragraph 36 (5) (b) is to
be paid only be moneys appropriated by the Parliament.

Schedule 1 - Amendment of A New Tax System (Family Assistance) Act 1999

1 Paragraph 36(5) (b) removes the age restriction currently in place for
claiming the baby bonus.

2 Paragraph 36 (5) (ba) repeals the paragraph that stipulates that if a
child arrives in Australia from overseas as part of the process for the
adoption of the child - the child must be aged under 2 in order to claim
the baby bonus thus, removing all age references.
-----------------------

[1].  Unknown child adoptions  are  comprised  of  local  and  inter-country
   adoptions where the child was unknown to the adoptive parents  prior  to
   the adoption process. Source:  AIHW  Adoptions  Australia  2005-06  data
   collection (unpublished data).


[2].  Parliamentary Library estimate derived from the latest published  data
   on the Maternity Payment/Baby Bonus  in  FaHCSIA,  Portfolio  Additional
   Estimates Statements 2007-08 and FaHCSIA, Annual Report 2006-07.