Income Tax (Universalisation of In-work Tax Credit) Amendment Bill

  • defeated on 07 November 2012

Explanatory note

General policy statement

The purpose of this Bill is to provide greater fairness in the provision of Working for Families social assistance by removing the discriminatory elements of the in-work tax credit (IWTC).

The IWTC (formerly called the In-Work Payment) is part of the Working for Families package, which supports families with children on low and middle incomes. The IWTC is worth $60 per week for our poorest families with 1–3 children. However, those children whose parents cannot work the required number of hours or are in receipt of an income-tested benefit or a student allowance get at least $60 per week less in Working for Families tax credits than others, because they are not eligible for IWTC.

This is discrimination on the basis of parental work status, which is prohibited under the Human Rights Act 1993. The Human Rights Review Tribunal has issued a decision finding the IWTC amounts to real and substantive discrimination.

This Bill makes amendments to the Income Tax Act 2007 to extend the IWTC to the children of beneficiary and student families.

Clause by clause analysis

Clause 1 is the Title provision.

Clause 2 provides that the Bill will come into force on a date to be appointed by the Governor-General by Order in Council.

Clause 3 provides that the Income Tax Act 2007 is the principal Act.

Clause 4 states the Bill’s purpose.

Clause 5 repeals sections MA 7, MD 8 and MD 9 of the Income Tax Act 2007, which currently operate to discriminate with regard to the in-work tax credit against the children of parents who receive an income-tested benefit, a veteran’s pension, or a parent’s allowance.

Clause 6 amends section MC 6 of the Income Tax Act 2007 to remove the prohibition on payment of an in-work tax credit to a parent who is in receipt of an income-tested benefit, a veteran’s pension, or a parent’s allowance.

Clause 7 amends section MD 4 of the Income Tax Act 2007 consequential on clauses 5 and 6.