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Labor 2013-14 Budget Savings (Measures No. 2) Bill 2015

Schedule 5 Interest charge

Part 1 Amendments

Social Security Act 1991

1  Subsection 1222(2) (after table item 17)

Insert:

17A

1229G

(interest charge)

deductions

legal proceedings

garnishee notice

repayment by instalments

1231, 1234A

1232

1233

1234

2  After subsection 1228B(2)

Insert:

          (2A)  To avoid doubt, the amount added by way of penalty is part of the debt.

3  Subsection 1228B(5)

Omit “or 1229AB”, substitute “, 1229AB or 1229G”.

4  After paragraph 1229(1)(e)

Insert:

                    (ea)  if, because of section 1229D, sections 1229E and 1229F apply in relation to the person and the debt—the effect of sections 1229E and 1229F; and

5  At the end of section 1229

Add:

             (5)  Subsections (3) and (4) do not apply in relation to a person and a debt if, because of section 1229D, sections 1229E and 1229F apply in relation to the person and the debt.

6  After section 1229C

Insert:

1229D   Interest charge payable under section 1229E or 1229F on certain social security debts

             (1)  Sections 1229E and 1229F apply in relation to a person and a debt if:

                     (a)  the debt is a debt owed by the person to the Commonwealth under the social security law and the debt has not been wholly paid; and

                     (b)  the debt relates to a payment of any of the following social security payments:

                              (i)  youth allowance;

                             (ii)  austudy payment;

                            (iii)  fares allowance;

                            (iv)  a social security payment prescribed in an instrument under subsection (2); and

                     (c)  for a payment of a youth allowance:

                              (i)  qualification for the youth allowance was under section 540 in circumstances where paragraph 541(1)(a) (about full-time study) applied; or

                             (ii)  qualification for the youth allowance was under section 540AA (about new apprentices); or

                            (iii)  qualification for the youth allowance was in circumstances prescribed in an instrument under subsection (3).

Legislative instruments

             (2)  The Minister may, by legislative instrument, prescribe a social security payment for the purposes of subparagraph (1)(b)(iv).

             (3)  The Minister may, by legislative instrument, prescribe circumstances for the purposes of subparagraph (1)(c)(iii).

1229E   No repayment arrangement in effect

             (1)  If:

                     (a)  because of section 1229D, this section applies in relation to a person and a debt; and

                     (b)  a notice is given to the person under subsection 1229(1) in relation to the debt; and

                     (c)  an amount (the unpaid amount ) of the debt remains unpaid at the end of the day (the due day ) on which the debt is due to be paid; and

                     (d)  at the end of the due day, there is no arrangement in effect under section 1234 in relation to the debt;

then the person is liable to pay, by way of penalty, interest charge, worked out under subsection (7), for each day in the period described in subsection (6).

             (2)  However, subsection (1) does not apply in relation to the person in the circumstances prescribed in an instrument under subsection (3).

             (3)  The Minister may, by legislative instrument, prescribe circumstances for the purposes of subsection (2).

             (4)  If, because of subsection (2), subsection (1) does not apply in relation to the person, then:

                     (a)  at a later time, the Secretary may give the person a notice specifying:

                              (i)  the day on which it was issued; and

                             (ii)  the outstanding amount of the debt at that day; and

                            (iii)  the day on which the outstanding amount is due and payable; and

                            (iv)  the contact details for inquiries concerning the debt; and

                     (b)  the outstanding amount of the debt is due and payable on the 28th day after the day on which the notice was issued.

             (5)  If:

                     (a)  a notice is given to the person under paragraph (4)(a) in relation to the debt; and

                     (b)  an amount (the unpaid amount ) of the debt remains unpaid at the end of the day (the due day ) on which the debt is due to be paid; and

                     (c)  at the end of the due day, there is no arrangement in effect under section 1234 in relation to the debt;

then the person is liable to pay, by way of penalty, interest charge, worked out under subsection (7), for each day in the period described in subsection (6).

Calculation of interest charge

             (6)  For the purposes of subsection (1) or (5), the period starts at the beginning of the day after the due day and ends at the end of the earlier of the following days:

                     (a)  the last day at the end of which any of the following remains unpaid:

                              (i)  the unpaid amount;

                             (ii)  interest charge on any of the unpaid amount;

                     (b)  the day before the first day, after the due day, on which the person makes a payment under an arrangement under section 1234 in relation to the debt.

             (7)  The interest charge for a day in the period described in subsection (6) is worked out by multiplying the interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

                     (a)  the unpaid amount;

                     (b)  the interest charge from previous days.

Note 1:       For interest charge rate see section 1229H.

Note 2:       The interest charge for a day is due and payable to the Commonwealth at the end of that day and is a debt due to the Commonwealth: see section 1229G.

1229F   Failure to comply with or termination of repayment arrangement

             (1)  If:

                     (a)  because of section 1229D, this section applies in relation to a person and a debt; and

                     (b)  an arrangement is in effect under section 1234 in relation to the debt; and

                     (c)  the person fails to make a payment under the arrangement;

then the person is liable to pay, by way of penalty, interest charge, worked out under subsection (3), for each day in the period described in subsection (2).

             (2)  The period starts at the beginning of the day after the day (the due day ) on which the payment was required to be made under the arrangement and ends at the end of the earliest of the following days:

                     (a)  the last day at the end of which any of the following remains unpaid:

                              (i)  the outstanding amount of the debt;

                             (ii)  interest charge on any of the outstanding amount of the debt;

                     (b)  the day before the first day, after the due day, on which the person has paid all the payments that have so far become due and payable under the arrangement;

                     (c)  the day before the day the arrangement is terminated under section 1234.

             (3)  The interest charge for a day in the period described in subsection (2) is worked out by multiplying the interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

                     (a)  the outstanding amount of the debt;

                     (b)  the interest charge from previous days.

Note 1:       For interest charge rate see section 1229H.

Note 2:       The interest charge for a day is due and payable to the Commonwealth at the end of that day and is a debt due to the Commonwealth: see section 1229G.

Repayment arrangement is terminated

             (4)  If:

                     (a)  because of section 1229D, this section applies in relation to a person and a debt; and

                     (b)  an arrangement is in effect under section 1234 in relation to the debt; and

                     (c)  the arrangement is then terminated under section 1234 on a day (the termination day );

then:

                     (d)  the following amounts (if any) are due and payable on the 14th day after the termination day:

                              (i)  the outstanding amount of the debt;

                             (ii)  interest charge on any of the outstanding amount of the debt; and

                     (e)  if, at the end of that 14th day, any of those amounts remains unpaid, the person is liable to pay, by way of penalty, interest charge, worked out under subsection (6), for each day in the period described in subsection (5).

             (5)  The period starts at the beginning of the day after that 14th day and ends at the end of the earlier of the following days:

                     (a)  the last day at the end of which any of the following remains unpaid:

                              (i)  the outstanding amount of the debt;

                             (ii)  interest charge on any of the outstanding amount of the debt;

                     (b)  the day before the first day, after that 14th day, on which the person makes a payment under another arrangement under section 1234 in relation to the debt.

             (6)  The interest charge for a day in the period described in subsection (5) is worked out by multiplying the interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

                     (a)  the outstanding amount of the debt;

                     (b)  the interest charge from previous days.

Note 1:       For interest charge rate see section 1229H.

Note 2:       The interest charge for a day is due and payable to the Commonwealth at the end of that day and is a debt due to the Commonwealth: see section 1229G.

1229G   Other rules for interest charge

When interest charge is due and payable

             (1)  The interest charge under section 1229E or 1229F for a day is due and payable to the Commonwealth at the end of that day.

Interest charge is a debt

             (2)  The interest charge under section 1229E or 1229F for a day is a debt due to the Commonwealth by the person.

Provisions that do not apply to interest charge debt

             (3)  Subsection 1229(1) and paragraph 1229D(1)(b) do not apply in relation to the debt referred to in subsection (2) of this section.

1229H   What is the interest charge rate ?

             (1)  For the purposes of sections 1229E and 1229F, the interest charge rate for a day is the rate worked out by adding 7 percentage points to the base interest rate for that day, and dividing that total by the number of days in the calendar year.

             (2)  The base interest rate for a day depends on which quarter of the year the day is in. For each day in a quarter in column 1 of the table, it is the monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank of Australia for the month in column 2 of the table.

 

Base interest rate

Item

Column 1

For days in this quarter:

Column 2

the monthly average yield of 90-day Bank Accepted Bills for this month applies:

1

1 January to 31 March

the preceding November

2

1 April to 30 June

the preceding February

3

1 July to 30 September

the preceding May

4

1 October to 31 December

the preceding August

             (3)  If the monthly average yield of 90-day Bank Accepted Bills for a particular month in column 2 of the table in subsection (2) is not published by the Reserve Bank of Australia before the beginning of the relevant quarter, assume that it is the same as the last monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank of Australia before that month.

             (4)  The base interest rate must be rounded to the second decimal place (rounding .005 upwards).

7  After subsection 1234(1)

Insert:

          (1A)  If a person is required to make a payment under an arrangement entered into under subsection (1) before the end of a particular day, the person must make that payment before the end of that day.

Student Assistance Act 1973

8  Section 38 (heading)

Repeal the heading, substitute:

38   Definitions

9  Section 38

Insert:

ABSTUDY debt means an amount paid under the ABSTUDY Scheme (also known as the Aboriginal Study Assistance Scheme) that should not have been paid.

Note:          The amount is a debt under paragraph (a) of the definition of debt in this section.

10  Section 38 (paragraph (c) of the definition of debt )

After “section 40”, insert “or 41F”.

11  After section 41

Insert:

41A   Sections 40 and 41 do not apply to ABSTUDY debts

                   Sections 40 and 41 do not apply in relation to a person and an ABSTUDY debt owed by the person to the Commonwealth.

41B   Notice in respect of ABSTUDY debt

             (1)  If an ABSTUDY debt owed by a person to the Commonwealth has not been wholly paid, the Secretary must give the person a notice specifying:

                     (a)  the date on which it was issued (the date of the notice ); and

                     (b)  the reason the debt was incurred, including a brief explanation of the circumstances that led to the debt being incurred; and

                     (c)  the period to which the debt relates; and

                     (d)  the outstanding amount of the debt at the date of the notice; and

                     (e)  the day on which the outstanding amount is due and payable; and

                      (f)  the effect of sections 41D and 41E; and

                     (g)  that a range of options is available for repayment of the debt; and

                     (h)  the contact details for inquiries concerning the debt.

             (2)  The outstanding amount of the debt is due and payable on the 28th day after the date of the notice.

41C   Interest charge payable on ABSTUDY debts

                   Sections 41D and 41E apply in relation to a person and a debt if the debt is an ABSTUDY debt owed by the person to the Commonwealth and the debt has not been wholly paid.

41D   No repayment arrangement in effect

             (1)  If:

                     (a)  because of section 41C, this section applies in relation to a person and a debt; and

                     (b)  a notice is given to the person under subsection 41B(1) in relation to the debt; and

                     (c)  an amount (the unpaid amount ) of the debt remains unpaid at the end of the day (the due day ) on which the debt is due to be paid; and

                     (d)  at the end of the due day, there is no arrangement in effect under section 41H in relation to the debt;

then the person is liable to pay, by way of penalty, interest charge, worked out under subsection (7), for each day in the period described in subsection (6).

             (2)  However, subsection (1) does not apply in relation to the person in the circumstances prescribed in an instrument under subsection (3).

             (3)  The Minister may, by legislative instrument, prescribe circumstances for the purposes of subsection (2).

             (4)  If, because of subsection (2), subsection (1) does not apply in relation to the person, then:

                     (a)  at a later time, the Secretary may give the person a notice specifying:

                              (i)  the day on which it was issued; and

                             (ii)  the outstanding amount of the debt at that day; and

                            (iii)  the day on which the outstanding amount is due and payable; and

                            (iv)  the contact details for inquiries concerning the debt; and

                     (b)  the outstanding amount of the debt is due and payable on the 28th day after the day on which the notice was issued.

             (5)  If:

                     (a)  a notice is given to the person under paragraph (4)(a) in relation to the debt; and

                     (b)  an amount (the unpaid amount ) of the debt remains unpaid at the end of the day (the due day ) on which the debt is due to be paid; and

                     (c)  at the end of the due day, there is no arrangement in effect under section 41H in relation to the debt;

then the person is liable to pay, by way of penalty, interest charge, worked out under subsection (7), for each day in the period described in subsection (6).

Calculation of interest charge

             (6)  For the purposes of subsection (1) or (5), the period starts at the beginning of the day after the due day and ends at the end of the earlier of the following days:

                     (a)  the last day at the end of which any of the following remains unpaid:

                              (i)  the unpaid amount;

                             (ii)  interest charge on any of the unpaid amount;

                     (b)  the day before the first day, after the due day, on which the person makes a payment in accordance with an arrangement under section 41H in relation to the debt.

             (7)  The interest charge for a day in the period described in subsection (6) is worked out by multiplying the interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

                     (a)  the unpaid amount;

                     (b)  the interest charge from previous days.

Note 1:       For interest charge rate see section 41G.

Note 2:       The interest charge for a day is due and payable to the Commonwealth at the end of that day: see section 41F.

41E   Failure to comply with or termination of repayment arrangement

             (1)  If:

                     (a)  because of section 41C, this section applies in relation to a person and a debt; and

                     (b)  an arrangement is in effect under section 41H in relation to the debt; and

                     (c)  the person fails to make a payment under the arrangement;

then the person is liable to pay, by way of penalty, interest charge, worked out under subsection (3), for each day in the period described in subsection (2).

             (2)  The period starts at the beginning of the day after the day (the due day ) on which the payment was required to be made under the arrangement and ends at the end of the earliest of the following days:

                     (a)  the last day at the end of which any of the following remains unpaid:

                              (i)  the outstanding amount of the debt;

                             (ii)  interest charge on any of the outstanding amount of the debt;

                     (b)  the day before the first day, after the due day, on which the person has paid all the payments that have so far become due and payable under the arrangement;

                     (c)  the day before the day the arrangement is terminated under section 41H.

             (3)  The interest charge for a day in the period described in subsection (2) is worked out by multiplying the interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

                     (a)  the outstanding amount of the debt;

                     (b)  the interest charge from previous days.

Note 1:       For interest charge rate see section 41G.

Note 2:       The interest charge for a day is due and payable to the Commonwealth at the end of that day: see section 41F.

Repayment arrangement is terminated

             (4)  If:

                     (a)  because of section 41C, this section applies in relation to a person and a debt; and

                     (b)  an arrangement is in effect under section 41H in relation to the debt; and

                     (c)  the arrangement is then terminated under section 41H on a day (the termination day );

then:

                     (d)  the following amounts (if any) are due and payable on the 14th day after the termination day:

                              (i)  the outstanding amount of the debt;

                             (ii)  interest charge on any of the outstanding amount of the debt; and

                     (e)  if, at the end of that 14th day, any of those amounts remains unpaid, the person is liable to pay, by way of penalty, interest charge, worked out under subsection (6), for each day in the period described in subsection (5).

             (5)  The period starts at the beginning of the day after that 14th day and ends at the end of the earlier of the following days:

                     (a)  the last day at the end of which any of the following remains unpaid:

                              (i)  the outstanding amount of the debt;

                             (ii)  interest charge on any of the outstanding amount of the debt;

                     (b)  the day before the first day, after that 14th day, on which the person makes a payment under another arrangement under section 41H in relation to the debt.

             (6)  The interest charge for a day in the period described in subsection (5) is worked out by multiplying the interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

                     (a)  the outstanding amount of the debt;

                     (b)  the interest charge from previous days.

Note 1:       For interest charge rate see section 41G.

Note 2:       The interest charge for a day is due and payable to the Commonwealth at the end of that day: see section 41F.

41F   When interest charge becomes due and payable

                   The interest charge under section 41D or 41E for a day is due and payable to the Commonwealth at the end of that day.

Note:          The interest charge for a day is a debt owed to the Commonwealth: see section 39.

41G   What is the interest charge rate ?

             (1)  For the purposes of sections 41D and 41E, the interest charge rate for a day is the rate worked out by adding 7 percentage points to the base interest rate for that day, and dividing that total by the number of days in the calendar year.

             (2)  The base interest rate for a day depends on which quarter of the year the day is in. For each day in a quarter in column 1 of the table, it is the monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank of Australia for the month in column 2 of the table.

 

Base interest rate

Item

Column 1

For days in this quarter:

Column 2

the monthly average yield of 90-day Bank Accepted Bills for this month applies:

1

1 January to 31 March

the preceding November

2

1 April to 30 June

the preceding February

3

1 July to 30 September

the preceding May

4

1 October to 31 December

the preceding August

             (3)  If the monthly average yield of 90-day Bank Accepted Bills for a particular month in column 2 of the table in subsection (2) is not published by the Reserve Bank of Australia before the beginning of the relevant quarter, assume that it is the same as the last monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank of Australia before that month.

             (4)  The base interest rate must be rounded to the second decimal place (rounding .005 upwards).

41H   Arrangement for payment of ABSTUDY debt

             (1)  The Secretary may, on behalf of the Commonwealth, enter into an arrangement with a person under which the person is to pay an ABSTUDY debt, owed by the person to the Commonwealth, or the outstanding amount of such a debt, in a way set out in the arrangement.

             (2)  If a person is required to make a payment under an arrangement entered into under subsection (1) before the end of a particular day, the person must make that payment before the end of that day.

             (3)  An arrangement entered into under subsection (1) has effect, or is taken to have had effect, on and after the day specified in the arrangement as the day on which the arrangement commences (whether that day is the day on which the arrangement is entered into or an earlier or later day).

             (4)  If an arrangement entered into under subsection (1) does not specify a day as mentioned in subsection (3), it has effect on and after the day on which it is entered into.

             (5)  The Secretary may terminate or alter an arrangement entered into under subsection (1):

                     (a)  at the debtor’s request; or

                     (b)  after giving 28 days notice to the debtor of the proposed termination or alteration; or

                     (c)  without notice, if the Secretary is satisfied that the person has failed to disclose material information about his or her true capacity to repay the debt.

12  Paragraph 51(1)(b)

After “subsection 40(1A)”, insert “or 41B(1) or paragraph 41D(4)(a)”.

Part 2 Application and transitional provisions

13  Application and transitional provisions—social security law

(1)       Section 1229D of the Social Security Act 1991 , as inserted by this Act, applies in relation to:

                     (a)  a debt that arises on or after the commencement of this item; and

                     (b)  a debt that arose before the commencement of this item, to the extent that the debt was outstanding immediately before that commencement.

(2)       Paragraph 1229E(1)(b) of the Social Security Act 1991 , as inserted by this Act, applies in relation to a notice given on or after the commencement of this item.

(3)       If:

                     (a)  section 1229D of the Social Security Act 1991 , as inserted by this Act, applies in relation to a debt that arose before the commencement of this item; and

                     (b)  before the commencement of this item, the Secretary gave a person a notice under subsection 1229(1) of that Act in relation to the debt;

then, on or after the commencement of this item, the Secretary must give the person another notice under subsection 1229(1) of that Act, as amended by this Act, in relation to the debt.

(4)       Paragraph 1229F(1)(c) of the Social Security Act 1991 , as inserted by this Act, applies in relation to a failure that occurs on or after the commencement of this item (whether the arrangement was entered into before, on or after that commencement).

(5)       Paragraph 1229F(4)(c) of the Social Security Act 1991 , as inserted by this Act, applies in relation to a termination that occurs on or after the commencement of this item (whether the arrangement was entered into before, on or after that commencement).

(6)       The amendment made by item 7 applies in relation to a requirement to make a payment on or after the commencement of that item (whether the arrangement was entered into before, on or after that commencement).

14  Application provision—student assistance law

Sections 41A to 41H of the Student Assistance Act 1973 , as inserted by this Act, apply in relation to:

                     (a)  an ABSTUDY debt that arises on or after the commencement of this item; and

                     (b)  an ABSTUDY debt that arose before the commencement of this item, to the extent that the debt was outstanding immediately before that commencement.