House of Representatives

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

Explanatory Memorandum

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

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.


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