Senate

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

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)
This memorandum takes account of amendments made by the House of Representatives to the bill as introduced

Schedule 4 - Removal of the voluntary repayment bonus

Summary

People may make a voluntary repayment towards their HELP debt to the Australian Taxation Office at any time. Voluntary repayments of $500 or more currently attract a 5 per cent bonus on the payment amount. This means a person's account is credited with an additional 5 per cent of their payment amount.

Schedule 4 implements a savings measure included in the 2013-14 Budget by amending the HESA to remove the voluntary repayment bonus.

The removal of the voluntary repayment bonus for HELP debtors would take effect from 1 January 2017.

Detailed explanation

Items 2, 3, 4 and 5 will update the example set out in subsection 140-5(1) of HESA to ensure it is relevant and current.

Item 7 will repeal section 151-5 of HESA. The effect of this provision is to remove the voluntary repayment bonus of 5 per cent for HELP debtors who make a voluntary payment towards their accumulated HELP debt.

Item 8 is an application provision which makes clear the circumstances in which the amendments made by Schedule 4 will apply. The amendments in respect of a voluntary repayment will only apply to a repayment made on or after 1 January 2017, regardless of whether the repayment relates to a debt incurred before or after this date.

As a result, if a person wants to make a voluntary repayment any time up to and including 31 December 2016, he or she would still be eligible for the voluntary repayment bonus (e.g. for a degree completed three years ago). However, a payment made on the following day (1 January 2017) would not attract the bonus.

Items 1 and 6 make technical amendments for the purpose of Item 7.


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