House of Representatives

Student Assistance Legislation Amendment Bill 2005

Replacement Explanatory Memorandum

This Memorandum replaces the Explanatory Memorandum Presented to the House of Representatives on 7 September 2005

(Circulated by authority of the Minister for Education, Science and Training, the Hon Dr Brendan Nelson MP)

Student Assistance Legislation Amendment Bill 2005

OUTLINE

The Bill amends Part 4A of the Student Assistance Act 1973 and Chapter 2B of the Social Security Act 1991 to make it clear that a student cannot apply for assistance under the Student Financial Supplement Scheme under either Act after the commencement of the Bill.

The Bill also amends both Acts to provide for the alignment of the Student Financial Supplement Scheme repayment thresholds and indexation with the Higher Education Loan Programme (HELP) under the Higher Education Support Act 2003 and applies the definition of taxable income used under the HELP arrangements to the Student Financial Supplement Scheme.

The Student Financial Supplement Scheme was a voluntary loan scheme whereby eligible tertiary students could trade-in income support in return for a loan, on the basis of a $1 trade for a $2 loan. The money traded-in became part of the loan, all of which is repayable.

The Student Financial Supplement Scheme was closed administratively on 31 December 2003. No new loans have been issued since that date. The Government closed the Scheme in response to increasing levels of bad and doubtful debt and reduced take-up of loans.

The Bill makes a minor technical amendment to the Student Assistance Act 1973 to expressly permit the incorporation of an instrument "as in force or existing from time to time" in regulations prescribing events for the purposes of the section 48 of the Act and in accordance with section 14 of the Legislative Instruments Act 2003. This will eliminate the need to make new regulations whenever the Guide to Commonwealth Government Payments (which is referred to in notes to the Regulations) is altered.

The Bill also makes minor consequential amendments to the Taxation Administration Act 1953.

FINANCIAL IMPACT

Estimated financial impact of the discontinuation of the SFSS as identified in the 2003-04 Budget

Year Expense ($m) Revenue ($m)
2003-04 26.1 -0.3
2004-05 71.2 -2.1
2005-06 59.3 -6.4
2006-07 47.8 -10.6
Total 204.4 -19.4

Estimated financial impact of the simplification of administrative arrangements of the SFSS as identified in the 2005-06 Budget

Year Expense ($m) Savings ($m) Net Savings ($m)
2003-04 2.7 15.4 12.7
2004-05 0.5 15.6 15.1
2005-06 0.4 6.4 6.0
2006-07 0.3 0.0 -0.3
Total 3.9 37.4 33.5

STUDENT ASSISTANCE LEGISLATION AMENDMENT BILL 2005

NOTES ON CLAUSES

Clause 1 - Short title

Provides for the Act to be cited as the Student Assistance Legislation Amendment Act 2005.

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 provides for sections 1-3; Part 1 of Schedule 1 and Parts 1 and 2 of Schedule 2 to commence on Royal Assent. Part 2 of Schedule 1 and Part 3 of Schedule 2 commence on 1 July 2006.

Subclause 2(2) provides that column 3 of the table contains 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 - Amendments relating to the Social Security Act 1991

Part 1-Amendments concerning closure of Student Financial Supplement Scheme

Social Security Act 1991

Item 1 - Subsection 5(1) (at the end of paragraph (ca) of the definition of prescribed educational scheme)

Paragraph 5(1)(ca) includes the Student Financial Supplement Scheme as a prescribed educational scheme . Item 1 adds a note at the end of this paragraph to make it clear that as a consequence of the amendment made by item 4, an application for assistance under the Scheme cannot be made in respect of a year, or a part of a year, that begins on or after the day on which the Student Assistance Legislation Amendment Act 2005 receives the Royal Assent.

Items 2, 3 and 4 - Section 1061ZY

Section 1061ZY sets out who is eligible to obtain financial supplement under the Student Financial Supplement Scheme. Item 2 amends section 1061ZY so that the current section becomes subsection 1061ZY(1). Item 3 makes subsection 1061ZY(1) subject to proposed subsection 1061ZY(2). Item 4 adds a new subsection 1061ZY(2) which provides that a person is not eligible to obtain financial supplement for an eligibility period that begins on or after the day on which the Student Assistance Legislation Amendment Act 2005 receives the Royal Assent.

Item 5 - At the end of section 1061ZZAC

Section 1061ZZAC deals with the Secretary's decision about whether a student is eligible to obtain a financial supplement. Item 5 adds proposed new subsection 1061ZZAC(4) which makes it clear that section 1061ZZAC does not apply in relation to a period that begins on or after the day on which the Student Assistance Legislation Amendment Act 2005 receives the Royal Assent.

Part 2-Amendments concerning repayment of accumulated FS debt

Division 1 - Main amendments

Social Security Act 1991

Items 6-20 - Subsection 19AB(2)

Subsection 19AB(2) contains a number of definitions which have effect for the purposes of Chapter 2B of the Act which deals with the Student Financial Supplement Scheme. Items 6 to 20 insert, amend or repeal a number of definitions in subsection 19AB(2), as a consequence of the amendments made by item 23 of Schedule 1.

Item 6 inserts a new definition of compulsory repayment amount which means an amount that is required to be paid in respect of an accumulated FS debt under section 1061ZZEZ, and is included in a notice of an assessment made under section 1061ZZFH.

Item 7 inserts a new definition of exempt foreign income which has the meaning given by subsection 1061ZZFA(4).

Item 8 inserts a new definition of income tax , which has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997.

Item 9 inserts a new definition of income tax law , which has the meaning given by section 14ZAAA of the Taxation Administration Act 1953.

Item 10 inserts a new definition of income year , which has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997.

Item 11 repeals the definition of intermediate prescribed amount .

Item 12 repeals the definition of maximum prescribed amount .

Item 13 inserts a new definition of Medicare levy which means the Medicare levy imposed by the Medicare Levy Act 1986.

Item 14 repeals the definition of minimum prescribed amount .

Item 15 inserts a new definition of minimum repayment income which has the meaning given by section 1061ZZFB.

Item 16 repeals the definition of relevant debt .

Item 17 inserts a new definition of rental property loss , which has the meaning given by subsection 1061ZZFA(2).

Item 18 inserts a new definition of repayable debt , which has the meaning given by section 1061ZZFC.

Item 19 inserts a new definition of repayment income , which has the meaning given by section 1061ZZFA.

Item 20 inserts a new definition of taxable income in subsection 19AB(2) which has effect only for the purposes of the Student Financial Supplement Scheme. The definition states that taxable income has the meaning given by section 4-15 of the Income Tax Assessment Act 1997. This amendment ensures that the definition of taxable income for the purposes of the Student Financial Supplement Scheme is the same as the definition of taxable income for the purposes of the Higher Education Loan Program under the Higher Education Support Act 2003.

Item 21 - At the end of Division 4 of Part 2B.3

Adds a new section 1061ZZEYA dealing with refunding of payments. The proposed new section provides that if a person pays an amount to the Commonwealth under Division 4 of Part 2B.3, provided that the amount exceeds the sum of the amount required to discharge the total debt the person owed to the Commonwealth under Part 2B.3, and the total amount of the person's primary tax debts, the Commonwealth is required to refund the person an amount equal to the excess.

The note at the end of the section provides that interest is payable if the Commonwealth is late in paying requested refunds: see Part IIIA of the Taxation (Interest on Overpayments and Early Payments) Act 1983.

Item 22 - Division 5 of Part 2B.3

Division 5 of Part 2B.3 of the Social Security Act 1991 deals with compulsory repayments of accumulated financial supplement (FS) debts. Item 22 substitutes a new Division 5. These amendments are mirrored by the amendments to the Student Assistance Act 1973 made by item 24 of Schedule 2.

Proposed section 1061ZZEZ deals with compulsory payments in respect of accumulated FS debt. Proposed subsection 1061ZZEZ(1) provides that if a person's repayment income for the income year 2006-07, or a subsequent income year, exceeds the minimum repayment income for that income year, and, on 1 June immediately before the making of an assessment in respect of the person's income for that income year, the person had an accumulated FS debt, then the person is liable to pay to the Commonwealth, in accordance with Division 5, the amount worked out under section 1061ZZFD in reduction of the person's repayable debt.

Proposed subsection 1061ZZEZ(2) provides that a person is not liable under section 1061ZZEZ to pay an amount for an income year if, under section 8 of the Medicare Levy Act 1986, no Medicare levy is payable by the person on the person's taxable income for the income year, or the amount of the Medicare levy payable by the person on the person's taxable income for the income year is reduced.

Proposed section 1061ZZFA deals with repayment income. Proposed subsection 1061ZZFA(1) provides that a person's repayment income for an income year is an amount equal to the sum of:

·
the person's taxable income for the income year; and, if a person has a rental property loss for the income year-the amount of that rental property loss; and
·
if the person is an employee (within the meaning of the Fringe Benefits Tax Assessment Act 1986); and has a reportable fringe benefits total (within the meaning of that Act) for the income year -the reportable fringe benefits total for the income year; and
·
if the person has exempt foreign income for the income year-the amount of that exempt foreign income.

Proposed subsection 1061ZZFA(2) defines a person's rental property loss as the amount (if any) by which the amount of the person's allowable deductions under the Income Tax Assessment Act 1997 in respect of rental property in Australia exceeds the person's gross rental property income.

Proposed subsection 1061ZZFA(3) provides that for the purposes of subsection 1061ZZFA(2), any rental property income that the person derives as a member of a partnership is to be disregarded.

Proposed subsection 1061ZZFA(4) provides that a person's exempt foreign income is the total amount (if any) by which the person's income that is exempt from tax under section 23AF or 23AG of the Income Tax Assessment Act 1936 exceeds the total amount of losses and outgoings that the person incurs in deriving that exempt income.

Proposed subsection 1061ZZFA(5) provides that for the purposes of subsection 1061ZZFA(4), any capital losses and outgoings are to be disregarded.

Proposed section 1061ZZFB provides that the minimum repayment income for the 2006-07 income year, or for a later income year, is the amount worked out under paragraph 154-10(b) of the Higher Education Support Act 2003 in respect of that income year. This amendment ensures that the repayment thresholds for the Student Financial Supplement Scheme are aligned with the thresholds for the Higher Education Loan Program.

Proposed section 1061ZZFC deals with repayable debt for an income year. Proposed subsection 1061ZZFC(1) provides that a person's repayable debt for an income year is:

·
the person's accumulated FS debt referred to in paragraph 1061ZZEZ(1)(b) in relation to that income year; or
·
if one or more amounts have been paid in reduction of that debt or have been assessed under section 1061ZZFH to be payable in respect of that debt, the amount (if any) remaining after deducting from that debt the amount, or sum of the amounts, so paid or assessed to be payable.

Proposed subsection 1061ZZFC(2) provides that a reference in paragraph 1061ZZFC(1)(b) to an amount assessed to be payable is, if the amount has been increased or reduced by an amendment of the relevant assessment, a reference to the increased amount or the reduced amount.

Proposed section 1061ZZFD deals with amounts payable to the Commonwealth, and includes a table setting out the applicable percentages as against a person's repayment income. The amount that a person is liable to pay under section 1061ZZEZ, in respect of an income year, is an amount equal to so much of the person's repayable debt for the income year as does not exceed the percentage of the person's repayment income that is applicable under the table.

This table has the effect of linking the repayment thresholds for the Student Financial Supplement Scheme to the repayment thresholds for the Higher Education Loan Program under the Higher Education Support Act 2003.

Item 1 of the table provides that if a person's repayment income for the 2006-07 income year, or a later income year, is more than the minimum repayment income, but less than the amount determined as set out in column 2 of item 2 of the table in section 154-20 of the Higher Education Support Act 2003 for that income year, then the applicable percentage is 2%.

Item 2 of the table provides that if a person's repayment income for the 2006-07 income year, or a later income year, is more the amount under item 1 of the table, but less than the amount determined as set out in column 2 of item 7 of the table in section 154-20 of the Higher Education Support Act 2003, for that income year, then the applicable percentage is 3%.

Item 3 of the table provides that if a person's repayment income for the 2006-07 income year, or a later income year, is more than the amount under item 2, the applicable percentage is 4%.

Proposed section 1061ZZFE deals with publication of indexed amounts. Proposed subsection 1061ZZFE(1) provides that the Minister must cause to be published in the Gazette, before the start of the 2007-08 income year, or a later income year, a notice setting out the minimum repayment income, and the amounts determined as referred to the second column of items 1 and 2 of the table in section 1061ZZFD for that income year.

Proposed subsection 1061ZZFE(2) provides that a notice under subsection 1061ZZFE(1) is not a legislative instrument. This provision is included to assist readers, as such a notice is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003.

Item 23 - After section 1061ZZFG

This item inserts new provisions dealing with taxation issues, consistent with similar provisions applicable to Higher Education Loan Program debts under the Higher Education Support Act 2003.

Proposed section 1061ZZFGA deals with charges and administrative penalties for failing to meet certain obligations. Proposed subsection 1061ZZFGA(1) provides that Part 4-25 in Schedule 1 to the Taxation Administration Act 1953 has effect as if any compulsory repayment amount of a person were income tax payable by the person in respect of the income year for which the assessment of that debt was made, and Part 2B.3 were an income tax law. Part 4-25 in Schedule 1 to the Taxation Administration Act 1953 deals with charges and administrative penalties imposed on taxpayers for failing to meet obligations.

Proposed subsection 1061ZZFGA(2) states that subsection 1061ZZFGA(1) does not have the effect of making a person liable to a penalty for any act or omission that happened before the commencement of subsection 1061ZZFGA(2).

Proposed section 1061ZZFGB deals with Pay as you go (PAYG) withholding and provides that Part 2-5 (other than section 12-55 and Subdivisions 12-E, 12-F and 12-G) in Schedule 1 to the Taxation Administration Act 1953 applies (so far as it is capable of application) in relation to the collection of amounts of a compulsory repayment amount of a person as if the compulsory repayment amount were income tax.

Proposed section 1061ZZFGC deals with provisional tax and provides that Division 3 of Part VI of the Income Tax Assessment Act 1936 applies (so far as it is capable of application) in relation to the collection of a compulsory repayment amount of a person as if the compulsory repayment amount were income tax.

Proposed section 1061ZZFGD deals with Pay as you go (PAYG) instalments, and provides that Division 45 in Schedule 1 to the Taxation Administration Act 1953 applies (so far as it is capable of application) in relation to the collection of a compulsory repayment amount of a person as if the compulsory repayment amount were income tax.

Taxation Administration Act 1953

Item 24 - Paragraph 15-30(da) in Schedule 1

Section 15-30 in Schedule 1 of the Taxation Administration Act 1953 provides for matters that must be considered by the Commissioner of Taxation when making withholding schedules. As a consequence of the amendments made by item 22 of Schedule 1, item 24 repeals the current paragraph and substitutes a new paragraph which requires the Commissioner to have regard to the percentages specified in section 1061ZZFD (about repayments of accumulated FS debts) of the Social Security Act 1991 for any financial year starting on or after 1 July 2006.

Division 2 - Saving provision

Item 25 - Preservation of existing repayment rules

Item 25 provides that if, at any time before the commencement of the amendments to the Social Security Act 1991 made by items 6 to 24 of Schedule 1, a person had an accumulated FS debt and the person was, by virtue of the application of the provisions of that Act as in force at that time, under an obligation to make a payment in reduction of that debt in respect of an income year before the 2006-07 income year, then the provisions of that Act as so in force continue to apply in respect of the payments required to be made in reduction of that debt for that income year as if those items had never been enacted.

Schedule 2-Amendments relating to the Student Assistance Act 1973

Part 1-Amendments concerning closure of Student Financial Supplement Scheme

Student Assistance Act 1973

Items 1 - Subsection 3(1) (at the end of definition of eligible student)

Insert a note after the definition of eligible student as a consequence of the amendment made by item 4 to point out that a person cannot be a eligible student (and therefore cannot apply for assistance under the Student Financial Supplement Scheme) from the day on which the Student Assistance Legislation Amendment Act 2005 receives the Royal Assent.

Item 2 - Subsection 3(1) (at the end of the definition of Student Financial Supplement Scheme)

Inserts a note after the definition of Student Financial Supplement Scheme as a consequence of the amendment made by item 4 to point out that an application cannot be made under the Student Financial Supplement Scheme from the day on which the Student Assistance Legislation Amendment Act 2005 receives the Royal Assent.

Items 3 and 4 - Subsection 12C(1)

Section 12C sets out which students are eligible for financial supplement under the Student Financial Supplement Scheme. Item 3 makes subsection 12C(1) subject to proposed subsection 12C(1A). Item 4 adds a new subsection 12C(1A) which provides that a person is not an eligible student in relation to a year, or part of a year, that begins on or after the day on which the Student Assistance Legislation Amendment Act 2005 receives the Royal Assent.

Item 5 - After subsection 12F(1)

Section 12F deals with when the Secretary is required to make a decision about whether a student is eligible to receive financial supplement. Item 5 inserts proposed subsection 12F(1A) which makes it clear that section subsection 12F(1) does not apply in relation in relation to a year, or part of a year, that begins on or after the day on which the Student Assistance Legislation Amendment Act 2005 receives the Royal Assent.

Item 6 - Subsection 12F(2)

Amends subsection 12F(2) to make it clear that reference to a notice in that subsection is to a notice issued under subsection 12F(1).

Part 2- Amendments concerning extension of regulation-making power relating to notifications

Student Assistance Act 1973

Item 7 - Subsection 12QB(1)

Technical amendment to the wording of subsection 12QB(1) substituting reference to "section 48" with a reference to "subsection 48(1)" as a result of the amendment made by item 10.

Item 8 - Subsection 12S(1)

Technical amendment to the wording of subsection 12S(1) substituting reference to "section 48" with a reference to "subsection 48(1)" as a result of the amendment made by item 10.

Item 9 - Section 48

Technical amendment to change the current section 48 into subsection 48(1), as a result of the amendment made by item 10.

Item 10 - At the end of section 48

Section 14 of the Legislative Instruments Act 2003 deals with prescribing matters in legislative instruments by reference to other instruments (extrinsic materials). Subsection 14(2) provides that unless the contrary intention appears, a legislative instrument may not make provision in relation to a matter by applying, adopting or incorporating any matter contained in an instrument or other writing as in force or existing from time to time.

Section 48 of the Student Assistance Act 1973 obliges a person who is receiving (or entitled to receive) an amount under a financial supplement contract or a current special educational assistance scheme to notify the Department, within 14 days if a "prescribed event" occurs. These events are prescribed under the regulations to the Act (currently in the Student Assistance Regulations 2003 as amended). The Guide to Commonwealth Government Payments is a Centrelink publication updated quarterly which is currently referred to in notes to the regulations.

Item 10 adds proposed subsection 48(2) to expressly permit the incorporation of an instrument "as in force or existing from time to time" in regulations prescribing events for the purposes of the section 48 of the Act and in accordance with section 14 of the Legislative Instruments Act 2003. This will eliminate the need to make new regulations whenever the Guide to Commonwealth Government Payments is altered.

To remove any doubt, the power in proposed subsection 48(2) is not intended to permit the creation, determination or variation of prescribed events by extrinsic materials. Prescribed events may only be determined expressly in the regulations.

Item 11 - Subsection 49(1)

Technical amendment to the wording of subsection 49(1) substituting reference to "section 48" with a reference to "subsection 48(1)" as a result of the amendment made by item 10.

Part 3- Amendments concerning repayment of accumulated FS debt

Division 1 - Main amendments

Student Assistance Act 1973

Items 12-22 - Subsection 3(1)

Subsection 3(1) contains a number of definitions. Items 12 to 22 insert a number of new definitions, or amend existing definitions.

Item 12 inserts a definition of compulsory repayment amount which means an amount that is required to be paid in respect of an accumulated FS debt under section 12ZK and is included in a notice of assessment made under section 12ZK.

Item 13 inserts a new definition of exempt foreign income , which has the meaning given by subsection 12ZL(4).

Item 14 inserts a new definition of income tax , which has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997

Item 15 inserts a new definition of income tax law , which has the meaning give by section 14ZAAA of the Taxation Administration Act 1953.

Item 16 inserts a new definition of income year which has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997.

Item 17 inserts a new definition of Medicare levy , which means the Medicare levy imposed by the Medicare Levy Act 1986.

Item 18 inserts a new definition of minimum repayment income , which has the meaning given by section 12ZLA.

Item 19 inserts a new definition of rental property loss , which has the meaning given by subsection 12ZL(2).

Item 20 inserts a new definition of repayable debt , which, for an income year, has the meaning given by section 12ZLB.

Item 21 inserts a new definition of repayment income , which has the meaning given by section 12ZL.

Item 22 inserts a new definition of taxable income , which has the meaning given by section 4-15 of the Income Tax Assessment Act 1997.

Item 23 - At the end of Subdivision B of Division 6 of Part 4A

Adds a new section 12ZJA dealing with refunding of payments. The proposed new section provides that if a person pays an amount to the Commonwealth under Subdivision B of Division 6 of Part 4A, provided that the amount exceeds the sum of the amount required to discharge the total debt the person owed to the Commonwealth under Part4A and the total amount of the person's primary tax debts, the Commonwealth is required to refund the person an amount equal to the excess.

The note at the end of the section provides that interest is payable if the Commonwealth is late in paying requested refunds: see Part IIIA of the Taxation (Interest on Overpayments and Early Payments) Act 1983.

Item 24 - Subdivision C of Division 6 of Part 4A

Subdivision C of Division 6 of Part 4A of the Student Assistance Act 1973 deals with compulsory payments in respect of accumulated financial supplement (FS) debts. Item 24 substitutes a new Subdivision C. These amendments mirror the changes made to the Social Security Act 1991 by item 23 of Schedule 1.


Proposed section 12ZK deals with compulsory payments in respect of an accumulated FS debt. Proposed subsection 12ZK(1) provides that if a person's repayment income for the income year 2006-07 or a subsequent income year exceeds the minimum repayment income for that income year, and, on 1 June immediately preceding the making of an assessment in respect of the person's income for that income year, the person had an accumulated FS debt, then the person is liable to pay to the Commonwealth, in accordance with Division 6, the amount worked out under section 12ZLC in reduction of the person's repayable debt.

Proposed subsection 12ZK(2) provides that a person is not liable under section 12ZK to pay an amount for an income year if, under section 8 of the Medicare Levy Act 1986, no Medicare levy is payable by the person on the person's taxable income for the income year, or the amount of the Medicare levy payable by the person on the person's taxable income for the income year is reduced.

Proposed section 12ZL deals with repayment income. Proposed subsection 12ZL(1) provides that a person's repayment income for an income year is an amount equal to the sum of:

·
the person's taxable income for the income year; and, if a person has a rental property loss for the income year-the amount of that rental property loss; and
·
if the person is an employee (within the meaning of the Fringe Benefits Tax Assessment Act 1986); and has a reportable fringe benefits total (within the meaning of that Act) for the income year -the reportable fringe benefits total for the income year; and
·
if the person has exempt foreign income for the income year-the amount of that exempt foreign income.


Proposed subsection 12ZL(2) defines a person's rental property loss as the amount (if any) by which the amount of the person's allowable deductions under the Income Tax Assessment Act 1997 in respect of rental property in Australia exceeds the person's gross rental property income.

Proposed subsection 12ZL(3) provides that for the purposes of subsection 12ZL(2), any rental property income that the person derives as a member of a partnership is to be disregarded.

Proposed subsection 12ZL(4) provides that a person's exempt foreign income is the total amount (if any) by which the person's income that is exempt from tax under section 23AF or 23AG of the Income Tax Assessment Act 1936 exceeds the total amount of losses and outgoings that the person incurs in deriving that exempt income.

Proposed subsection 12ZL(5) provides that for the purposes of subsection 12ZL(4), any capital losses and outgoings are to be disregarded.

Proposed section 12ZLA provides that a person's minimum repayment income for the 2006-07 income year is or for a later income year is the amount worked out under paragraph 154-10(b) of the Higher Education Support Act 2003 for that income year.

Proposed section 12ZLB deals with repayable debt for an income year. Proposed subsection 12ZLB(1) provides that a person's repayable debt for an income year is:

·
the person's accumulated FS debt referred to in paragraph 12ZK(1)(b) in relation to that income year; or
·
if one or more amounts have been paid in reduction of that debt or have been assessed under section 12ZM to be payable in respect of that debt, the amount (if any) remaining after deducting from that debt the amount, or sum of the amounts, so paid or assessed to be payable.


Proposed 12ZLB(2) provides that a reference in paragraph 12ZLB(1)(b) to an amount assessed to be payable is, if the amount has been increased or reduced by an amendment of the relevant assessment, a reference to the increased amount or the reduced amount.

Proposed section 12ZLC deals with amounts payable to the Commonwealth, and includes a table setting out the applicable percentages as against a person's repayment income. The amount that a person is liable to pay under section 12ZK, in respect of an income year, is an amount equal to so much of the person's repayable debt for the income year as does not exceed the percentage of the person's repayment income that is applicable under the table.

This table has the effect of linking the repayment thresholds for the Student Financial Supplement Scheme to the repayment thresholds for the Higher Education Loan Program under the Higher Education Support Act 2003.

Item 1 of the table provides that if a person's repayment income for the 2006-07 income year, or a later income year, is more than the minimum repayment income, but less than the amount determined as set out in column 2 of item 2 of the table in section 154-20 of the Higher Education Support Act 2003 for that income year, then the applicable percentage is 2%.

Item 2 of the table provides that if a person's repayment income for the 2006-07 income year, or a later income year, is more the amount under Item 1 of the table, but less than the amount determined as set out in column 2 of item 7 of the table in section 154-20 of the Higher Education Support Act 2003 for that income year, then the applicable percentage is 3%.

Item 3 of the table provides that if a person's repayment income for the 2006-07 income year, or a later income year, is more than the amount under item 2, the applicable percentage is 4%.

Proposed section 12ZLD deals with publishing indexed amounts. Proposed subsection 12ZLD(1) provides that the Minister must cause to be published in the Gazette, before the start of the 2007-08 income year, or a later income year, the minimum repayment income, and the amounts determined as referred to in the second column of items 1 and 2 of the table in section 12ZLC for that income year.

Proposed subsection 12ZLD(2) provides that a notice under subsection 12ZLD(1) is not a legislative instrument. This provision is included to assist readers, as such a notice is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003.

Item 25 - After section 12ZN

This item inserts new provisions dealing with taxation issues, consistent with similar provisions applicable to Higher Education Loan Program debts under the Higher Education Support Act 2003.


Proposed section 12ZNA deals with charges and administrative penalties for failing to meet certain obligations. Proposed subsection 12ZNA(1) provides that Part 4-25 in Schedule 1 to the Taxation Administration Act 1953 has effect as if any compulsory repayment amount of a person were income tax payable by the person in respect of the income year for which the assessment of that debt was made, and Part 2B.3 were an income tax law. Part 4-25 in Schedule 1 to the Taxation Administration Act 1953 deals with charges and administrative penalties imposed on taxpayers for failing to meet obligations.

Proposed subsection 12ZNA(2) states that subsection 12ZNA(1) does not have the effect of making a person liable to a penalty for any act or omission that happened before the commencement of subsection 12ZNA(2).

Proposed section 12ZNB deals with Pay as you go (PAYG) withholding and provides that Part 2-5 (other than section 12-55 and Subdivisions 12-E, 12-F and 12-G) in Schedule 1 to the Taxation Administration Act 1953 applies (so far as it is capable of application) in relation to the collection of amounts of a compulsory repayment amount of a person as if the compulsory repayment amount were income tax.

Proposed section 12ZNC deals with provisional tax and provides that Division 3 of Part VI of the Income Tax Assessment Act 1936 applies (so far as it is capable of application) in relation to the collection of a compulsory repayment amount of a person as if the compulsory repayment amount were income tax.

Proposed section 12ZND deals with Pay as you go (PAYG) instalments, and provides that Division 45 in Schedule 1 to the Taxation Administration Act 1953 applies (so far as it is capable of application) in relation to the collection of a compulsory repayment amount of a person as if the compulsory repayment amount were income tax.

Taxation Administration Act 1953

Item 26 - Paragraph 15-30(db) in Schedule 1

Section 15-30 in Schedule 1 of the Taxation Administration Act 1953 provides for matters that must be considered by the Commissioner of Taxation when making withholding schedules. As a consequence of the amendments made by item 24 of Schedule 2, item 26 repeals the current paragraph and substitutes a new paragraph which requires the Commissioner to have regard to the percentages specified in section 12ZLC (about repayments of accumulated FS debts) of the Student Assistance Act 1973 for any financial year starting on or after 1 July 2006.

Division 2 - Saving provision

Item 26 - Preservation of existing repayment rules

Item 26 mirrors the amendment made to the Social Security Act 1991 by item 25 of Schedule 1. It provides that if, at any time before the commencement the amendments to the Student Assistance Act 1973 made by items 12 to 24 of Schedule 2, a person had an accumulated FS debt and the person was, by virtue of the application of the provisions of that Act as in force at that time, under an obligation to make a payment in reduction of that debt in respect of an income year before the 2006-07 income year, then the provisions of that Act as so in force continue to apply in respect of the payments required to be made in reduction of that debt for that income year as if those items had never been enacted.