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Social Security Legislation Amendment (2007 Budget Measures for Students) Bill 2007

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2004-2005-2006-2007

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

SENATE

 

 

 

 

 

 

SOCIAL SECURITY LEGISLATION AMENDMENT (2007 BUDGET MEASURES FOR STUDENTS) BILL 2007

 

 

 

 

 

 

REVISED EXPLANATORY MEMORANDUM

 

 

 

 

 

 

THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED

 

 

 

 

 

 

 

 

 

 (Circulated by authority of the Minister for Education, Science and Training the Hon Julie Bishop MP)

 



SOCIAL SECURITY LEGISLATION AMENDMENT (2007 BUDGET MEASURES FOR STUDENTS) BILL 2007

 

 

 

OUTLINE

 

The Social Security Legislation Amendment (2007 Budget Measures for Students) Bill 2007 amends the Student Assistance Act 1973 and the Social Security Act 1991 to give effect to measures announced in the 2007-08 Budget that concern the income support for students programmes and updates aspects of the administration of ABSTUDY and the Assistance for Isolated Children (AIC) schemes, in line with similar provisions under the Social Security Act 1991 .

 

Amendments to the Student Assistance Act 1973 provide legislative support for the provision of services to ABSTUDY and AIC.

 

The first amendment aims to simplify the processes currently used by the Australian Government (as represented by Centrelink) to recover payment(s) made under the ABSTUDY and AIC schemes that have been deposited into an incorrect financial institution account.  This is consistent with the provisions of the Social Security Act 1991.

 

The second amendment will allow notices issued under section(s) 343, 344 or 345 to be issued electronically.  This amendment is required to incorporate current technologies and data transfer processes used by Centrelink for other student income support payments into the administration of the ABSTUDY and AIC schemes.

 

Amendments to the Social Security Act 1991 insert a new category of Level of Course to the levels of eligible study, which specifies Masters degrees as eligible courses.  From 1 January 2008, students enrolled in an approved Masters by course-work programme, which is required for entry to a profession or is the fastest pathway to professional entry, will be eligible for Youth Allowance and Austudy payments.  This provision will also extend support to students enrolled in a Masters course-work programme where a university has diversified by restructuring its course delivery.

 

To maintain consistency with student income support policy, as defined by the Act, and the new amendments which extend income support to Masters courses, an additional amendment is required to remove the current restriction on the provision of income support to students who have already attained a Masters degree.  This amendment has no effect on the existing allowable time and progress rules, which are maintained.  It also does not apply to students who have attained a doctorate.

 

The amendments also attach Rent Assistance payments to the Austudy payment to increase the support for mature age people to participate in education.  From 1 January 2008, students aged 25 years and over who receive Austudy will be able, if eligible, to receive assistance with their rental accommodation expenses.

 

 

From 1 January 2008, Indigenous students in receipt of the ABSTUDY Living Allowance will be able to access Crisis payment and Bereavement payments under the ABSTUDY Scheme.  Amendments to the Social Security Act 1991 will clarify that a social security Crisis payment is not payable if the person is qualified for an ABSTUDY Crisis Payment in respect of the same circumstance.

 

The Bill will also amend the Income Tax Assessment Act 1997 to ensure that the new Crisis and Bereavement payments under the ABSTUDY scheme are treated in the same way as Crisis and Bereavement payments under the Social Security Act 1991 .  This will make those payments wholly or partly exempt from income tax and provide methods for calculating the tax exemption in various circumstances.

 

 

FINANCIAL IMPACT

 

 

Extending Rent Assistance to Austudy

 

Year                              Expense             

2007 - 2008                            $13.2 m                        

2008 - 2009                            $24.0 m                        

2009 - 2010                            $24.5 m                        

2010 - 2011                            $25.1 m                        

Total                                       $86.9 m                        

 

Youth Allowance and Austudy for Masters Courses

 

Year                              Expense             

2007 - 2008                            $5.5 m                          

2008 - 2009                            $11.2 m                        

2009 - 2010                            $12.5 m                        

2010 - 2011                            $14.1 m                        

Total                                       $43.3 m                        

 

 



SOCIAL SECURITY AMENDMENT (2007 BUDGET MEASURES FOR STUDENTS) BILL 2007

 

 

NOTES ON CLAUSES

 

 

Clause 1 - Short title

 

Provides for the Act to be cited as the Social Security Legislation Amendment (2007 Budget Measures for Students) Act 2007 .

 

 

Clause 2 - Commencement

 

Subclause 2(1) inserts a three column table setting out commencement information for various provisions in the Act.  Each provision of the Act specified in column 1 of the table commences (or is taken to have commenced) in accordance with column 2 of the table and any other statement in column 2 has effect according to its terms.

 

The table has the effect of providing for items 1 to 11 of Schedule 2 and Schedule 3 to commence on 1 January 2008, for item 12 of Schedule 2 to commence immediately after the commencement of Schedule 3 to the Families, Community Services and Indigenous Affairs Legislation Amendment (Further 2007 Budget Measures) Act 2007 and for sections 1-3, Schedule 1 and items 13 to 18 of Schedule 2 of the Act to commence on Royal Assent.

 

Subclause 2(2) provides that column 3 of the table is for additional information which may be added to or edited in any published version of the Act but that information in this column is not part of the Act.

 

 

Clause 3 - Schedule(s)

 

Provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule and that any other item in a Schedule has effect according to its terms.

 

 



Schedule 1 - Amendment of the Student Assistance Act 1973

 

 

Student Assistance Act 1973

 

Item 1  Subsection 3(1)

 

Inserts a new definition of financial institution in subsection 3(1).

 

 

Item 2  After section 42

 

Inserts a new section 42A dealing with the recovery of amounts from financial institutions to recover payments made under the ABSTUDY and AIC schemes that have been deposited into an incorrect financial institution account.

 

Proposed subsection 42A(1) has the effect of providing that, if an amount (or amounts) of student assistance benefit are paid to a financial institution for the credit of an account kept with the institution and the Secretary is satisfied that the amount (or the amounts) were intended to be paid for the benefit of someone who was not the person (or one of the persons) in whose name (or names) the account was kept; then the Secretary may give a written notice to the institution setting out those matters and requiring the institution to pay to the Commonwealth, within a reasonable period stated in the notice, the lesser of the following amounts:

·          an amount specified in the notice, being the amount, or the sum of the amounts, of the student assistance benefit;

·          the amount standing to the credit of the account when the notice is received by the institution.

 

Proposed subsection 42A(2) has the effect of providing that, if an amount (or amounts) of student assistance benefit that are intended for the benefit of a person are paid to a financial institution for the credit of an account that was kept with the institution by the person (or by the person and one or more other persons) and the person died before the amount (or amounts) were paid; then the Secretary may give a written notice to the institution setting out those matters and requiring the institution to pay to the Commonwealth, within a reasonable period stated in the notice, the lesser of the following amounts:

·          an amount specified in the notice, being the amount, or the sum of the amounts, of the student assistance benefit;

·          the amount standing to the credit of the account when the notice is received by the institution.

 

Proposed subsection 42A(3) has the effect of providing that, as soon as possible after issuing a notice under subsection 42A(2), the Secretary must inform the deceased estate in writing of the amount sought to be recovered from the deceased person’s account and the reasons for the recovery action.

 

Proposed subsection 42A(4) provides that a financial institution must comply with a notice given to it under subsection 42A(1) or (2).  A penalty of 300 penalty units applies if a financial institution fails to comply.

 

Proposed subsection 42A(5) provides that it is a defence to a prosecution of a financial institution for failing to comply with a notice given to it under subsection 42A(1) or (2) if the financial institution proves that it was incapable of complying with the notice.  The defendant bears a legal burden in relation to the matter in subsection 42A(4) (see section 13.4 of the Criminal Code ).

 

Proposed subsection 42A(6) has the effect of providing that, if a notice is given to a financial institution under subsection 42A(1) (amount paid to wrong account) in respect of an amount or amounts of student assistance benefit or subsection 42A(2) (death of person in whose name the account was kept) in respect of an amount or amounts of student assistance benefit; then any amount recovered by the Commonwealth from the institution in respect of the debt reduces any debt owed to the Commonwealth by any other person in respect of the amount or amounts of student assistance benefit.

 

 

Item 3  Subsection 347(1) (note)

 

Subsection 347(1) provides that a requirement to produce information made to a person under section 343, 344 or 345 must be by written notice given to the person.  Item 3 repeals the note to subsection 347(1) and substitutes a new note to inform the reader that sections 28A and 29 of the Acts Interpretation Act 1901 and section 9 of the Electronic Transactions Act 1999 set out methods by which a notice for the purposes of section 343, 344 or 345 may be given to a person.  This will reflect that notices under section(s) 343, 344 or 345 may be issued electronically.



 

Schedule 2 - Amendment of the Social Security Act 1991

 

Social Security Act 1991

 

Item 1  Subsection 23(1)

 

Inserts a definition of VET provider in subsection 23(1).  The term has the same meaning as in the Skilling Australia’s Workforce Act 2005 .

 

 

Item 2  Subparagraphs 569(2)(b)(i) and (ii)

 

Part 2.11A (ss.568-592E) provides for Austudy payment while Part 3.5A (ss.1067H-1067L) contains the Austudy Payment Rate Calculator provisions.  Subsection 569(2) lists classes of persons who do not satisfy the activity test for Austudy payment.  Paragraph 569(2)(b) currently has the effect of providing that a person cannot be taken to satisfy the activity test if the person has completed a course for a degree of Master or Doctor at an educational institution (subparagraph 569(2)(b)(i)) or a qualification at a foreign institution that is (in the Secretary’s opinion) of the same standing as a degree of Master or Doctor at an educational institution (subparagraph 569(2)(b)(ii)).

 

Item 2 amends subparagraphs 569(2)(b)(i) and (ii) to remove those persons who have completed a course for a degree of Master at an educational institution (or an equivalent qualification at a foreign institution) from the classes of persons who do not satisfy the activity test.  This removes the current restriction on Austudy recipients which prevents them from receiving payment if they have already gained a masters’ level degree.  Such persons will now be able to satisfy the activity test for Austudy payment.

 

 

Item 3  Paragraph 569H(7)(e)

 

Section 569H sets out the progress rules for tertiary students to remain eligible for Austudy payment.  Subsection 569H(7) sets out matters to be disregarded in determining whether someone has exceeded the allowable study time and paragraph 569H(7)(e) provides that time spent undertaking a TAFE course (if the normal length of the course for a full time student is one year or less) is a matter to be disregarded.  Item 3 amends paragraph 569H(7)(e) to have the effect of providing that a course provided by a VET provider is also a matter to be disregarded in determining whether someone has exceeded the allowable study time for the purposes of subsection 569H(7).

 

 

Item 4  Subsection 569H(8)

 

Repeals subsection 569H(8) (not including the heading), and substitutes a new subsection to provide for 5 levels of tertiary courses to reflect the addition of a degree of Master by item 5.

 



 

Item 5  After subsection 569H(8)

 

Inserts a new subsection 569H(8A) to provide that a course for a degree of Master (or equivalent) is a new level of tertiary course to be known as a “Level M course”.

 

 

Item 6  Subparagraph 569H(10)(c)(iii)

 

Subsection 569H(10) sets out what are Level B tertiary courses.  Paragraph 569H(10)(c) currently provides that a diploma course other than a graduate or postgraduate diploma course or a course for which an entry requirement is successful completion of year 10 of secondary studies or a TAFE course, is a Level B tertiary course.  Item 6 amends subparagraph 569H(10)(c)(iii) to have the effect of providing that a course provided by a VET provider is also not a Level B tertiary course.

 

 

Item 7  Paragraph 569H(11)(c)

 

Subsection 569H(11) sets out what are Level C tertiary courses.  Paragraph 569H(11)(c) currently provides that a diploma course at a TAFE institution for which an entry requirement is successful completion of year 12 of secondary studies is a Level C tertiary course.  Item 7 amends paragraph 569H(11)(c) to have the effect of providing that a diploma course provided by a VET provider for which an entry requirement is successful completion of year 12 of secondary studies is also a Level C tertiary course.

 

 

Items 8 and 9  Paragraph 569H(12)(b)

 

Subsection 569H(12) sets out what are Level D tertiary courses.  Paragraph 569H(12)(b) currently provides that a TAFE course (unless the course is in Level A, B or C) is a Level D tertiary course.  Items 8 and 9 amend paragraph 569H(12)(b) to have the effect of providing that a TAFE course or a course provided by a VET provider (unless the course is in Level M, A, B or C) is a Level D tertiary course.

 

 

Item 10  Application

 

An application provision that provides that the amendments made by items 1 to 9 of this Schedule apply in respect of a period commencing on or after 1 January 2008.

 



 

Item 11  At the end of Division 1 of Part 2.23A

 

Part 2.23A (ss. 1061JG-1061JU) provides for a crisis payment to a person if they are experiencing an “extreme circumstance”, while Division 1 of Part 2.23A (ss. 1061JG-1061JK) sets out the qualifications for a crisis payment.  Item 11 inserts a new section 1061JL which has the effect of providing that a person is not qualified for a crisis payment under section 1061JG, 1061JH or 1061JHA in respect of a circumstance if the Secretary is satisfied that the person is qualified under the ABSTUDY scheme for a crisis payment in respect of that same circumstance and the crisis payment is payable under that scheme in respect of that circumstance.

 

 

Item 12  Section 1061JL

 

Amends new section 1061JL (inserted by item 11) to reflect the addition of new section 1061JI by the Families, Community Services and Indigenous Affairs Legislation Amendment (Further 2007 Budget Measures) Act 2007 , once that Act commences.

 

 

Item 13  Point 1067L-A1 (method statement)

 

Part 3.5A (ss.1067H-1067L) contains the Austudy Payment Rate Calculator provisions.  Module A of the Austudy Payment Rate Calculator sets out the overall rate calculation process while the method of calculating the rate of Austudy payment is set out in the method statement at point 1067L A1.  Item 13 inserts a new Step 2A in the method statement in point 1067L-A1 to have the effect of adding fortnightly rent assistance payments to a person’s Austudy payment to increase the attraction for mature age people to participate in education.  Currently Austudy recipients are not eligible for rent assistance.

 

 

Item 14  Point 1067L-A1 (method statement, step 3)

 

Amends step 3 of the method statement in point 1067L-A1 to reflect the addition of step 2A by item 13.

 

 

Item 15  After paragraph 1070(d)

 

Part 3.7 (ss.1070-1070X) makes provision for rent assistance.  Section 1070 specifies when Part 3.7 applies.  Item 15 inserts a new paragraph 1070(da) which has the effect of providing that Part 3.7 (i.e. rent assistance) applies if the rate of a person’s social security payment is to be calculated in accordance with the Austudy Payment Rate Calculator in Part 3.5A.  In other words the amendment extends rent assistance to Austudy recipients.

 



 

Item 16  Subsection 1070H(1)

 

Amends subsection 1070H(1) to have the effect of providing that, if the rate of a person’s social security payment is to be calculated in accordance with the Austudy Payment Rate Calculator or Benefit Rate Calculator B, the specific requirement applicable to the social security payment is that set out in subsection 1070H(2).  This amendment reflects the extension of rent assistance to Austudy recipients.

 

 

Item 17  Subsection 1070Q(1)

 

Amends subsection 1070Q(1) to have the effect of providing that, if the rate of the person’s social security payment is to be calculated in accordance with the Youth Allowance Rate Calculator , the Austudy Payment Rate Calculator or Benefit Rate Calculator B, a person’s rate of rent assistance is worked out under section 1070Q.  This amendment reflects the extension of rent assistance to Austudy recipients.

 

 

Item 18  Application and transitional

 

Sub-item 18(1) is an application provision that provides that the amendments made by items 13 to 17 of this Schedule apply in respect of a fortnight that includes 1 January 2008 and later fortnights.

 

Sub-item 18(2) is an application provision that provides that the applicable amount per fortnight of rent assistance for the purposes of step 2A of the method statement in point 1067L-A1 of the Social Security Act 1991 in respect of the fortnight that includes 1 January 2008 is to be calculated pro rata in accordance with a formula reflecting the proportion of days in the fortnight that occur on or after 1 January 2008 (i.e. the number of eligible days ).

 



Schedule 3—Amendment of the Income Tax Assessment Act 1997

 

Item 1  Section 11-15 (table)

 

Amends the table in section 11-15 (which lists ordinary or statutory income which is exempt from tax if it is derived by certain entities) by adding payments under the ABSTUDY scheme as set out in new Subdivision 52-E (inserted by item 4).

 

 

Items 2 and 3  Sections 51-35 (note) and 51-40 (note)

 

Amend the notes to sections 51-35 and 51-40 to reflect the insertion of new Subdivision 52-E by item 4.

 

 

Item 4  After Subdivision 52-D

 

Inserts a new Subdivision 52-E specifying those payments under the ABSTUDY scheme that are wholly or partly exempt from income tax, the circumstances, conditions or exceptions that apply for tax exemption and how to calculate how much of a payment is exempt.

 

Subdivision 52-E—Exempt payments under the ABSTUDY scheme

 

Guide to Subdivision 52-E

 

52-130  What this Subdivision is about

 

Proposed section 52-130 provides a guide to explain what Subdivision 52-E is about.

 

 

Operative provisions

 

 

52-131  Payments under ABSTUDY scheme

 

Proposed subsection 52-131(1) explains that section 52-131 deals with the income tax treatment of a payment under the ABSTUDY scheme made in respect of a period commencing at a time when the recipient was at least 16 years old.  A note to the subsection explains that the whole of a payment under the ABSTUDY scheme in respect of a period commencing at a time when the recipient was under 16 years of age may be exempt under section 51-10.

 

Proposed subsection 52-131(2) has the effect of providing that a crisis payment made to a person under the ABSTUDY scheme is exempt from income tax.

 

Proposed subsection 52-131(3) has the effect of providing that, if an ordinary payment becomes due to a person and that payment is not covered by subsections 52-131(4) or (6), then the supplementary amount of the ordinary payment is exempt from income tax.  A note to the subsection explains that the reader should refer to section 52-132 to work out the supplementary amount of the ordinary payment.

 

Proposed subsection 52-131(4) has the effect of providing that, if an ABSTUDY recipient’s partner dies, the recipient does not qualify for a payment under the ABSTUDY scheme in respect of that death and an ordinary payment becomes due to the recipient during the bereavement period, then the  supplementary amount and the  tax-free amount of the ordinary payment are exempt from income tax.  Notes to the subsection explain that the supplementary amount of the ordinary payment is worked out under section 52-132 and the tax-free amount of the ordinary payment is worked out under section 52-133.

 

Proposed subsection 52-131(5) has the effect of providing that, if a payment becomes due to a person under the ABSTUDY scheme because of someone’s death (except a lump sum payment because of their partner’s death), the payment is exempt from income tax.

 

Proposed subsection 52-131(6) has the effect of providing that, if a person’s partner dies and a lump sum payment under the ABSTUDY scheme becomes due to that person because of their partner’s death, then the total of the lump sum payment and all other payments that become due to the person under the ABSTUDY scheme during the bereavement lump sum period are exempt from income tax up to the tax free amount.  A note to the subsection explains that the tax-free amount is worked out under section 52-134.

 

Proposed subsections 52-131(7) and (8) provide definitions of the expressions ABSTUDY scheme and Ordinary payment respectively.

 

Proposed subsection 52-131(9) provides a list of expressions used in Subdivision 52-D that have the same meaning as in the ABSTUDY Policy Manual.  A note to the subsection explains to the reader that, in 2007, the ABSTUDY Policy Manual was accessible through the website of the Department of Education, Science and Training.

 

 

52-132  Supplementary amount of payment

 

Proposed section 52-132 has the effect of providing that the supplementary amount of a payment is the total of:

(a)        so much of the payment as is included to assist a person with (or to reimburse them for) the costs of any one or more of the following:

·          rent;

·          living in a remote area;

·          commencing employment;

·          travel to (or participation in) courses, interviews, education or training;

·          a child or children wholly or substantially dependent on them;

·          telephone bills;

·          living away from their usual residence;

·          maintaining their usual residence while living away from that residence;

·          accommodation, books or equipment;

·            discharging a HEC assessment debt (within the meaning of Chapter 4 of the Higher Education Funding Act 1988 ) ;

·            discharging a compulsory repayment amount (within the meaning of the Higher Education Support Act 2003 ) ;

·            transport in travelling to undertake education or training, or to visit their usual residence when undertaking education or training away from that residence;

·            if the person is disabled - acquiring any special equipment, services or transport as a result of the disability;

·            anything that would otherwise prevent them from beginning, continuing or completing any education or training; and

(b)                so much of the payment as is included by way of pharmaceutical allowance.

 

 

52-133  Tax-free amount of ordinary payment on death of partner if no bereavement payment payable

 

Proposed section 52-133 provides a method statement for calculating the tax-free amount of an ordinary payment for the purposes of subsection 52-131(4).

 

 

52-134  Tax-free amount if you receive a bereavement lump sum payment

 

Proposed section 52-134 provides a method statement for calculating the tax-free amount of an ordinary payment for the purposes of subsection 52-131(6).

 

 

Items 5 and 6  At the end of subsection 52-140(1)

 

Section 52-140 provides that the supplementary amount of a Commonwealth education or training payment is tax exempt.  Item 5 amends subsection 52-140(1) to have the effect of excluding a payment to or on behalf of a student under the scheme known as ABSTUDY from the ambit of the section and item 6 inserts a note to the subsection to reflect the insertion of new Subdivision 52-E by item 4.

 

 

Items 7 to 9  Subsection 995-1(1)

 

Replace ( item 7 ) and amend ( items 8 and 9 ) the definitions of ordinary payment , supplementary amount and tax-free amount in the dictionary at subsection 995-1(1).

 

 

Item 10  Application

 

An application provision which provides that the amendments made by Schedule 3 apply in relation to a payment made on or after 1 January 2008.