TAX LAWS AMENDMENT (EDUCATION REFUND) BILL 2008

i Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

Contents

Short title ............................................................................................ 1

Commencement .................................................................................. 1

Schedule(s) ......................................................................................... 1

Schedule 1--Education expenses tax offset

A New Tax System (Family Assistance) (Administration) Act 1999

Income Tax Assessment Act 1997

Social Security (Administration) Act 1999

Student Assistance Act 1973

Taxation Administration Act 1953

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 1

A Bill for an Act to amend the law relating to

taxation, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Tax Laws Amendment (Education

Refund) Act 2008.

2 Commence ment

This Act commences on the day on which it receives the Royal

Assent.

3 Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

Education expenses tax offset Schedule 1

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 3

Schedule 1

Education expenses tax offset

A New Tax System (Family Assistance) (Administration) Act

1999

1 After section 169A

Insert:

169B Disclosure of information--education expenses tax offset

(1) The Secretary may, for the purposes of the administration of the

education expenses tax offset provided by Subdivision 61-M of the

Income Tax Assessment Act 1997, give the Commissioner of

Taxation relevant information about people, including their tax file

numbers, acquired by an officer in the exercise of the officer's

powers, or the performance of the officer's duties or functions,

under the family assistance law.

(2) Information (including tax file numbers) given to the

Commissioner of Taxation under subsection (1) may be used only

for purposes relating to the education expenses tax offset provided

by Subdivision 61-M of the Income Tax Assessment Act 1997.

(3) This section does not limit the powers of the Secretary under

section 168.

Income Tax Assessment Act 1997

2 Section 13-

1 (after table item headed "dividends")

Insert:

education expenses

payment of ...................................................................................

Subdivision 61-M

3 After Subdivision 61-L

Insert:

Schedule 1 Education expenses tax offset

4 Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

Subdivision 61-M--Education expenses tax offset

Guide to Subdivision 61-M

61-600 What this Subdivision is about

You may get a refundable tax offset for education expenses

incurred for a school student in your care, or for yourself if you are

an independent student.

There is a limit on the amount of the tax offset.

Education expenses over the limit can be taken into account in the

next year of income.

Table of sections

Entitlement to education expenses tax offset

61-610

Entitlement to education expenses tax offset

61-620

Eligibility in respect of another individual

61-630

Schooling requirement

61-640

Education expenses

Amount of education expenses tax offset

61-650

Amount of education expenses tax offset

61-660

Education expenses tax offset limit

61-670

Shared care

61-680

Excess education expenses

Entitlement to education expenses tax offset

61-610 Entitle ment to education expenses tax offset

Entitlement in respect of another individual

(1) You are entitled to a

tax offset for an income year if:

(a) you satisfy subsection 61-620(1), (2), (3) or (4) on a day in

the income year for an individual; and

Education expenses tax offset Schedule 1

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 5

(b) the individual satisfies the schooling requirement in

section 61-630 on that day; and

education is incurred on that day.

Entitlement for independent students

(2) You are also entitled to a

tax offset for an income year if:

(a) on a day in the income year you are receiving:

(i) payments under a prescribed educational scheme

(within the meaning of the Social Security Act 1991); or

(ii) a social security pension (within the meaning of that

Act); or

(iii) a social security benefit (within the meaning of that

Act); or

(iv) payments under a program included in the programs

known as Labour Market Programs; and

(b) an independence requirement (however described) that you

satisfy is relevant to the amount of the payment; and

(i) an Australian resident (within the meaning of the Social

Security Act 1991) or a special category visa holder

(within the meaning of the Migration Act 1958); and

(ii) residing in Australia; and

(d) you are aged under 25 on that day; and

(e) you satisfy the schooling requirement in section 61-630 on

that day; and

(f) another individual or entity is not entitled to a tax offset for

the income year for that day in respect of you under

subsection (1); and

(g) an expense covered by section 61-640 for your education is

incurred on that day.

61-620 Eligibility in respect of another individual

You are entitled to Family Tax Benefit (Part A)

(1) You satisfy this section on a day in an income year for an

individual if:

Schedule 1 Education expenses tax offset

6 Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

(a) you are entitled to be paid family tax benefit for the

individual in relation to that day under the A New Tax System

(Family Assistance) (Administration) Act 1999; and

(b) your daily rate of family tax benefit for that day consists of,

or includes, a Part A rate worked out under Part 2 or 3 of

Schedule 1 to the A New Tax System (Family Assistance) Act

1999 that is greater than nil.

You care for an individual entitled to certain payments

(2) You satisfy this section on a day in an income year for an

individual if:

(a) one or more of the following:

(i) payments under a prescribed educational scheme

(within the meaning of the Social Security Act 1991); or

(ii) a social security pension (within the meaning of that

Act); or

(iii) a social security benefit (within the meaning of that

Act); or

(iv) payments under a program included in the programs

known as Labour Market Programs;

is received on that day by the individual, or by you or another

person on the individual's behalf; and

(b) the individual would be your FTB child (within the meaning

of Subdivision A of Division 1 of Part 3 of the A New Tax

System (Family Assistance) Act 1999) on that day if that

payment were disregarded.

Approved care organisation

(3) An approved care organisation (within the meaning of the A New

Tax System (Family Assistance) Act 1999) satisfies this section on

a day in an income year for an individual if the approved care

organisation is entitled, under the A New Tax System (Family

Assistance) (Administration) Act 1999, to be paid family tax

benefit for that individual on that day.

Individual finishing full-time schooling--cut-out amount

disregarded

(4) You satisfy this section on a day in an income year for an

individual if:

Education expenses tax offset Schedule 1

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 7

(a) the individual satisfies the schooling requirement in

section 61-630 on that day; and

(b) during the income year, the individual ceased to be covered

by either subsection 61-630(2) or (4); and

at the end of the year of income; and

(d) the Commissioner is of the opinion that you would satisfy

one or more of subsections (1), (2) and (3) for the individual

on that day if:

(i) paragraph (a) of item 2 of the table in subsection 22A(1)

of the A New Tax System (Family Assistance) Act 1999

(which deals with the cut-out amount) were disregarded;

(ii) for approved care organisations (within the meaning of

the A New Tax System (Family Assistance) Act 1999)--

paragraph (a) of item 2 of the table in subsection 35(1)

of that Act (which also deals with the cut-out amount)

were disregarded.

61-630 Schooling requirement

(1) An individual satisfies the schooling requirement in this section on

every day in a 6 month period beginning on 1 July or 1 January if

there is at least one day in that 6 month period on which the

individual:

(a) is covered by subsection (2) or (4); and

(b) attended the course of study or instruction, or received the

home schooling, referred to in that subsection.

Primary school student

(2) An individual is covered by this section if the individual is a

student enrolled or registered:

(a) in a course of study or instruction that is a primary course

within the meaning of the

GST Act; or

(b) with the education authority of the State or Territory in which

the individual resides as a home schooled student (however

described) allocated to the primary level of education; or

applies.

Schedule 1 Education expenses tax offset

8 Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

(3) The Minister administering the Student Assistance Act 1973 (the

Education Minister) may, by legislative instrument, determine that

a course of study or instruction is a course to which this subsection

applies.

Secondary school student

(4) An individual is covered by this section if the individual is a

student enrolled or registered:

(a) in a course of study or instruction that is a secondary course

within the meaning of the

GST Act; or

(b) with the education authority of the State or Territory in which

the individual resides as a home schooled student (however

described) allocated to the secondary level of education; or

applies.

(5) The Education Minister may, by legislative instrument, determine

that a course of study or instruction is a course to which this

subsection applies.

61-640 Education expenses

(1) An expense incurred on a day is covered for you by this section if:

(a) the expense is incurred by:

(i) you; or

(ii) your partner (within the meaning of the Social Security

Act 1991); and

(b) the expense directly relates to the education of:

(i) one or more individuals in relation to whom paragraphs

61-610(1)(a) and (b) are satisfied on the day; or

(ii) if you are covered by paragraphs 61-610(2)(a), (b), (c),

(d), (e) and (f) on the day--yourself; and

(2) However, an expense is not covered by this section to the extent

that the expense:

(a) is deductible under this Act; or

(b) is subject to a

tax offset under this Act (other than this

Subdivision); or

Education expenses tax offset Schedule 1

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 9

entitled to receive, as reimbursement or payment of your

expenses under a benefit, grant or subsidy:

(i) the provision of which was authorised under a

Commonwealth law or an instrument of a legislative

character made under a Commonwealth law; or

(ii) to which paragraph (3)(a) applies.

(3) The regulations may provide the following:

(a) that a benefit, grant or subsidy is a benefit, grant or subsidy

to which this paragraph applies;

(b) that an expense of a particular kind is not an expense covered

by this section.

(4) The expenses are those mentioned in column 3 of an item in the

following table relating to a thing mentioned in column 2 of that

item.

Item

Thing to which expense relates

Kind of expense

Co mputer for:

(a) ho me use (including, in the case

of an indiv idual who has no

home, use in a setting that

equates to a residential setting

for the person); or

(b) use in an educational institution

in place of paper based

educational material

(a) cost of acquiring (whether by

way of purchase, lease, hire o r

hire-purchase); and

(b) cost of repairing; and

Co mputer-related equipment for a

use referred to in item 1, includ ing:

(a) printers; and

(b) disability aids

(a) cost of acquiring (whether by

way of purchase, lease, hire o r

hire-purchase); and

(b) cost of repairing; and

Ho me internet connection

(a) cost of establishing; and

(b) cost of maintain ing.

Item of co mputer software

cost of acquiring (whether by way of

purchase, lease, hire o r

hire-purchase).

School textbooks, other paper based

school learn ing material and

cost of acquiring (whether by way of

purchase, lease, hire o r

Schedule 1 Education expenses tax offset

10 Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

Item

Thing to which expense relates

Kind of expense

stationery

hire-purchase).

A tool of trade

cost of acquiring (whether by way of

purchase, lease, hire o r

hire-purchase).

Amount of education expenses tax offset

61-650 Amount of education expenses tax offset

(1) The amount of your

tax offset for an income year (the current

year) is the amount (rounded up to the nearest whole dollar) that is

the lesser of:

(a) one half of the sum of:

(i) all of the expenses covered for you by section 61-640

for the current year; and

(ii) your expenses covered by section 61-680 (about excess

education expenses) for the income year ending

immediately before the current year; and

(b) your offset limit under section 61-660 for the current year.

Effect of shared care arrangements

(2) If:

(a) on a particular day, you and your partner (within the meaning

of the Social Security Act 1991) (your partner) satisfy

subsection 61-620(1) for an individual; and

(b) a determination has been made under section 28 or 29 of the

A New Tax System (Family Assistance) Act 1999 of your

percentage, and of your partner's percentage, of the family

tax benefit for the individual for a period that includes that

day; and

on that day;

for the purposes of subparagraph (1)(a)(i) you and your partner

may each count only a portion of the expense corresponding to

your percentage.

(3) If:

Education expenses tax offset Schedule 1

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 11

(a) on a particular day, you are a member of a couple (within the

meaning of the Social Security Act 1991); and

(b) both you and your partner (within the meaning of that Act)

(your partner) satisfy subsection 61-620(2) or (4) for one or

more individuals on that day; and

on that day;

for the purposes of subparagraph (1)(a)(i) the expense only counts

as follows:

(d) if you and your partner have made a written agreement

nominating one of you as the member who can claim the

offset under this Subdivision in respect of the individual or

individuals for a period including that day:

(i) the nominated member may count the whole of each

expense covered for you by section 61-640 incurred on

that day; and

(ii) the other member must not count any of the expense; or

(e) if paragraph (d) does not apply--you and your partner may

each count only half of the expense.

61-660 Education expenses tax offset limit

(1) Your offset limit is:

(a) if you satisfy paragraphs 61-610(1)(a), (b) and (c) for one or

more individuals in the current year--the sum of the amounts

worked out under the method statement for each such

individual; and

(b) if you are an independent student covered by subsection

61-610(2)--the amount worked out for yourself under the

method statement.

Method statement

Step 1. Start with this amount:

(a) for an individual who satisfies the schooling

requirement in subsection 61-630(4) (for

secondary school students) on a day in the current

year--$750; or

Schedule 1 Education expenses tax offset

12 Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

(b) if paragraph (a) does not apply and the individual

satisfies the schooling requirement in subsection

61-630(2) (for primary school students) on a day in

the current year--$375.

Note:

The effect of step 1 is that the secondary school student

starting amount applies for the whole year where an

individual completes primary school in the first half of

the financial year and starts secondary school in the

second half of the financial year.

Step 2. Add up the number of days in the current year on which:

(a) paragraphs 61-610(1)(a) and (b) are satisfied for

you and the individual; or

Note:

There are modifications to step 2(a) in section 61-670.

(b) if you are an independent student covered by

subsection 61-610(2)--paragraphs 61-610(2)(a),

(b), (c), (d), (e) and (f) apply to you.

Step 3. Divide the result of step 2 by the number of days in the

current year. Round the result to 2 decimal places

(rounding up if the third decimal place is 5 or more).

Step 4. Multiply the result from step 1 by the result from step 3.

(2) The amounts specified in step 1 of the method statement in

subsection (1) are indexed annually.

Note:

Subdivision 960-M shows you how to index amounts.

61-670 Shared care

(1) This section modifies the operation of step 2 of the method

statement in subsection 61-660(1).

Modification for shared care determinations

(2) If:

(a) on a particular day, you satisfy subsection 61-620(1) for an

individual; and

(b) a determination has been made under section 28 or 29 of the

A New Tax System (Family Assistance) Act 1999 of your

Education expenses tax offset Schedule 1

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 13

percentage of the family tax benefit for the individual for a

period that includes that day; and

only a portion of that day corresponding to that percentage may be

counted for the purposes of step 2.

(3) If:

(a) on a particular day, you satisfy subsection 61-620(1) for an

individual; and

(b) you have a shared care percentage under section 59 of the A

New Tax System (Family Assistance) Act 1999 for the

individual for a period that includes that day; and

applies to that day;

only a portion of that day (or only a portion of the portion referred

to in subsection (2)) corresponding to the shared care percentage

may be counted for the purposes of step 2 (or that step as affected

by subsection (2)).

Modification for members of a couple

(4) If:

(a) on a particular day, you are a member of a couple (within the

meaning of the Social Security Act 1991); and

(b) both you and your partner (within the meaning of that Act)

(your partner) satisfy subsection 61-620(2) or (4) for one or

more individuals on that day; and

for the purposes of step 2 the day only counts as follows:

(d) if you and your partner have made a written agreement

nominating one of you as the member who can claim the

offset under this Subdivision in respect of the individual or

individuals for that period:

(i) the nominated member may, subject to subsection (5),

count the whole of each day in the period for each such

individual; and

(ii) the other member must not count any days in the period

for each such individual; or

(e) if paragraph (d) does not apply--only half of each day in the

period may, subject to subsection (5), be counted.

Schedule 1 Education expenses tax offset

14 Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

Modification for individuals not members of a couple

(5) If you and one or more other entities (other than your partner

(within the meaning of the Social Security Act 1991)) each satisfy

subsection 61-620(2) or (4) for an individual on a day, you may

only count for the purposes of step 2 (or that step as affected by

subsection (4)) a portion of that day that is reasonable having

regard to:

(a) the objects of this subsection; and

(b) the living arrangements of the individual.

(6) The objects of subsection (5) are:

(a) to determine the extent to which the individual was in your

care on a day; and

(b) to prevent double counting in distributing the tax offset under

this Subdivision between you and others who share the care

of the individual.

61-680 Excess education expenses

(1) You have an amount covered by this section from an income year

if the amount worked out under paragraph 61-650(1)(a) for the

year exceeds your offset limit for the year under section 61-660.

(2) The amount that is covered by this section is the lesser of:

(a) all of the expenses covered for you by section 61-640 for the

year that can be counted for the purposes of subparagraph

61-650(1)(a)(i); and

(b) twice the amount of the excess.

Note:

The excess is worked out by comparing half of the education expenses

to the offset limit (see section 61-650). Paragraph (b) doubles any

excess so that the excess expenses have their original value and can be

counted in full the next year.

Example: A family with one child in full-time secondary schooling has incurred

education expenses of $2,000 in an income year. Under

section 61-650, these expenses are halved ($1,000) and then compared

to the offset limit ($750). The excess of $250 is doubled under

subsection (2) to restore it to the original expense amount. In the next

year, the family can count this $500 of expenses towards the offset.

4 At the end of section 67-25

Add:

Education expenses tax offset Schedule 1

Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008 15

Education expenses tax offset

(7) The

tax offset available under Subdivision 61-M is subject to the

refundable tax offset rules.

5 Section 960-265 (after table item 4)

Insert:

Education expenses tax offset limit

section 61-660

Social Security (Administration) Act 1999

6 After section 208

Insert:

208A Disclosure of information by Secretary--education expenses

tax offset

(1) The Secretary may, for the purposes of the administration of the

education expenses tax offset provided by Subdivision 61-M of the

Income Tax Assessment Act 1997, give the Commissioner of

Taxation relevant information about people, including their tax file

numbers, acquired by an officer in the exercise of the officer's

powers, or the performance of the officer's duties or functions,

under the social security law.

(2) Information (including tax file numbers) given to the

Commissioner of Taxation under subsection (1) may be used only

for purposes relating to the education expenses tax offset provided

by Subdivision 61-M of the Income Tax Assessment Act 1997.

(3) This section does not limit the powers of the Secretary under

section 208.

Student Assistance Act 1973

7 After section 356

Insert:

Schedule 1 Education expenses tax offset

16 Tax Laws Amendment (Education Refund) Bill 2008 No. , 2008

356A Disclosure of information--education expenses tax offset

(1) The Secretary may, for the purposes of the administration of the

education expenses tax offset provided by Subdivision 61-M of the

Income Tax Assessment Act 1997, give the Commissioner of

Taxation relevant information about people, including their tax file

numbers, acquired by an officer in the exercise of the officer's

powers, or the performance of the officer's duties or functions,

under this Act.

(2) Information (including tax file numbers) given to the

Commissioner of Taxation under subsection (1) may be used only

for purposes relating to the education expenses tax offset provided

by Subdivision 61-M of the Income Tax Assessment Act 1997.

(3) This section does not limit the powers of the Secretary under

section 355.

Taxation Administration Act 1953

8 Section 45-340 (method statement, step 1, after

paragraph (da))

Insert:

(db) Subdivision 61-M of the Income Tax Assessment

Act 1997 (the education expenses tax offset); or

9 Section 45-375 (method statement, step 1, after

paragraph (ca))

Insert:

(cb) Subdivision 61-M of the Income Tax Assessment

Act 1997 (the education expenses tax offset); or

10 Application

The amendments made by this Schedule apply to the 2008-2009 income

year and later years.

Commonwealth of Australia Bills

TAX LAWS AMENDMENT (EDUCATION REFUND) BILL 2008