Commonwealth Numbered Acts

STUDENT AND YOUTH ASSISTANCE AMENDMENT (YOUTH TRAINING ALLOWANCE) ACT (No. 3) 1995 No. 156, 1995 - SCHEDULE 1

                              SCHEDULE 1                  Section 3

AMENDMENTS OF THE STUDENT AND YOUTH ASSISTANCE ACT 1973
RELATING TO EXTENDED DEEMING
Part 1 - Amendments commencing on Royal Assent 1. Paragraph 179(1)(a): Omit,
substitute:

"(a) an accruing return investment that was made or acquired before 1 January
1988; or". 2. Sections 186, 187, 188 and 190: Repeal. 3. Transitional
provisions regarding the treatment of returns from the realisation of certain
investments

(1) If:

   (a)  before the commencement of this Part, a person realised an investment;
        and

   (b)  section 186 of the Student and Youth Assistance Act 1973, as in force
        immediately before the commencement of this Part, applied to the
        person as a result of the realisation of the investment; and

   (c)  the period of 12 months beginning on the day on which the investment
        was realised had not ended when this Part commenced; sections 186 and
        187 of that Act, as in force immediately before the commencement of
        this Part, are taken to continue to apply to the person in relation to
        the realisation of the investment until:

   (d)  the end of the period referred to in paragraph (c); or

   (e)  the end of 30 June 1996; whichever is the earlier.

(2) If:

   (a)  before the commencement of this Part, a person realised an investment;
        and

   (b)  section 188 of the Student and Youth Assistance Act 1973, as in force
        immediately before the commencement of this section, applied to the
        person as a result of the realisation of the investment; and

   (c)  the period of 12 months beginning on the day on which the investment
        was realised had not ended when this Part commenced; sections 188 and
        190 of that Act, as in force immediately before the commencement of
        this Part, are taken to continue to apply to the person in relation to
        the realisation of the investment until:

   (d)  the end of the period referred to in paragraph (c); or

   (e)  the end of 30 June 1996; whichever is the earlier.

Part 2 - Amendments commencing on 1 July 1996 1. Subdivisions A to E of
Division 11 of Part 8: Repeal, substitute:

"Subdivision A - Ordinary income concept General meaning of ordinary income

"174. A reference in this Part to a person's ordinary income for a period is a
reference to the person's gross ordinary income from all sources for the
period calculated without any reduction, other than a reduction under
Subdivision B. Note 1: For ordinary income see subsection 8(1) of the Social
Security Act. Note 2: For other provisions affecting the amount of a person's
ordinary income see sections 176 and 177 (business income), sections 178 to
185 (deemed income from financial assets) and sections 186 to 196 (income from
retirement funds and annuities). Certain amounts taken to be received over 12
months

"175. If a person has, whether before or after the commencement of this
section, received an amount that:

   (a)  is not income within the meaning of Subdivision C or D; and

   (b)  is not:

        (i)    income in the form of periodic payments; or

        (ii)   ordinary income from remunerative work undertaken by the
               person; the person is, for the purposes of this Part, taken to
               receive one fifty-second of that amount as ordinary income of
               the person during each week in the 12 months beginning on the
               day on which the person became entitled to receive that amount.

"Subdivision B - Business income Ordinary income from a business - treatment
of trading stock

"176.(1) If:

   (a)  a person carries on a business; and

   (b)  the value of all the trading stock on hand at the end of a tax year is
        greater than the value of all the trading stock on hand at the
        beginning of that tax year; the person's ordinary income for that tax
        year in the form of profits from the business is to include the amount
        of the difference in values.

"(2) If:

   (a)  a person carries on a business; and

   (b)  the value of all the trading stock on hand at the end of that tax year
        is less than the value of all the trading stock on hand at the
        beginning of that tax year; the person's ordinary income for that tax
        year in the form of profits from the business is to be reduced by the
        amount of the difference in values. Permissible reductions of business
        income

"177.(1) Subject to subsection (2), if a person carries on a business, the
person's ordinary income from the business is to be reduced by:

   (a)  losses and outgoings that relate to the business and are allowable
        deductions for the purposes of section 51 of the Income Tax Assessment
        Act; and

   (b)  depreciation that relates to the business and is an allowable
        deduction for the purposes of subsection 54(1) of that Act; and

   (c)  amounts that relate to the business and are allowable deductions under
        subsection 82AAC(1) of that Act.

"(2) If, under Subdivision C, a person is taken to receive ordinary income on
a financial investment, that ordinary income is not to be reduced by the
amount of any expenses incurred by the person because of that investment.

"Note: For financial investment see subsection 9(1) of the Social Security
Act.

"Subdivision C - Deemed income from financial assets Deemed income from
financial assets - people other than members of couples

"178.(1) This section applies to a person who is not a member of a couple.

"(2) A person who has financial assets is taken, for the purposes of this
Part, to receive ordinary income on those assets in accordance with this
section.

"(3) This is how to work out the ordinary income the person is taken to
receive: Method statement Step 1. If any part of the person's deposit
concession money attracts interest, multiply the amount of each such part by
the rate of interest and add together the amounts so worked out. Note: For
deposit concession money see section 180. Step 2. Subtract the total amount of
the person's deposit concession money from the person's deeming threshold or,
if the total value of the person's financial assets is less than that
threshold, from that total value. Note: For deeming threshold see subsection
182(1). Step 3. Multiply the remainder (if any) worked out at Step 2 by the
below threshold rate. Note: For below threshold rate see subsection 183(1).
Step 4. If the total value of the person's financial assets exceeds the
person's deeming threshold, subtract the person's deeming threshold from the
total value of those assets. Step 5. Multiply the remainder (if any) worked
out at Step 4 by the above threshold rate. Note: For above threshold rate see
subsection 183(2). Step 6. The total of the amounts worked out at Steps 1, 3
and 5 represents the ordinary income the person is taken to receive per year
on the financial assets.
EXAMPLE OF HOW DEEMED INCOME OF A PERSON WHO IS NOT A MEMBER OF A
COUPLE IS WORKED OUT (using rates in force on 1 July 1996) Facts: Elaine, a
single person has $36,500 worth of financial assets. $1,500 is in a cheque
account not earning any interest. $25,000 is earning 6% in interest and
$10,000 is earning 8% in interest. The below threshold rate is 5%. The above
threshold rate is 7%. Application: Step 1. Elaine's deposit concession money
amounts to $1,500 (see section 180), which earns no interest. Under this step,
$1,500 is multiplied by 0%, giving a nil amount. Step 2. Elaine's deeming
threshold is $30,000 (see subsection 182(1)). Her deposit concession money
totals $1,500. The difference is $28,500. Step 3. The amount of $28,500 is
multiplied by the below threshold rate (5%):
5
          $28,500  X           = $1,425

100 Step 4. Elaine's deeming threshold of $30,000 is subtracted from the total
value of her financial assets ($36,500). The remainder is $6,500. Step 5. The
amount of $6,500 is multiplied by the above threshold rate (7%):
7
          $6,500  X            = $455

100 Step 6. The amounts worked out at Steps 1, 3 and 5 are added together:
$
                  Step 1          0

                  Step 3      1,425

                  Step 5        455

1,880
The ordinary income Elaine is deemed to receive per year from her financial
assets is $1,880.

"(4) The person is taken, for the purposes of this Part, to receive one
fifty-second of the amount worked out under subsection (3) as ordinary income
of the person during each week. Deemed income from financial assets - members
of couples

"179.(1) This section applies to a person who is a member of a couple.

"(2) A person who has financial assets is taken, for the purposes of this
Part, to receive ordinary income on those assets in accordance with this
section.

"(3) This is how to work out the ordinary income the person is taken to
receive: Method statement Step 1. If any part of the person's deposit
concession money attracts interest, multiply the amount of each such part by
the rate of interest and add together the amounts so worked out. Note: For
deposit concession money see section 180. Step 2. Subtract the total amount of
the person's deposit concession money from the person's deeming threshold or,
if the total value of the person's financial assets is less than that
threshold, from that total value. Note: For deeming threshold see subsection
182(2). Step 3. Multiply the remainder (if any) worked out at Step 2 by the
below threshold rate. Note: For below threshold rate see subsection 183(1).
Step 4. If the total value of the person's financial assets exceeds the
person's deeming threshold, subtract the person's deeming threshold from the
total value of those assets. Step 5. Multiply the remainder (if any) worked
out at Step 4 by the above threshold rate. Note: For above threshold rate see
subsection 183(2). Step 6. The total of the amounts worked out at Steps 1, 3
and 5 represents the ordinary income the person is taken to receive per year
on the financial assets.
EXAMPLE OF HOW DEEMED INCOME OF A MEMBER OF A COUPLE IS
WORKED OUT
(using rates in force on 1 July 1996) Facts: Kerry, who is married and
receiving youth training allowance, has $1,200 worth of financial assets. Her
spouse, Robert, is not receiving a social security pension or a youth training
allowance. Kerry has a cheque account containing $200 on which no interest is
paid. The remaining $1,000 is held in a savings account on which interest is
paid at 3%. The below threshold rate is 5%. Application: Step 1: Kerry's
deposit concession money amounts to $1,200 (section 180). Of that amount, $200
earns no interest. The remaining $1,000 earns interest at less than the below
threshold rate. Amounts are worked out as follows: . $200 X 0% = $0 . $1,000 X
3% = $30. Step 2. As Kerry has no financial assets other than deposit
concession money, the result of this step is a zero remainder. Kerry's deeming
threshold is $25,000. Step 3. Because of the outcome of Step 2, Steps 3 to 5
have no application, and no income is assessed under those steps. Step 4. The
only amount of income worked out is the amount of $30 under Step 1. Therefore,
the ordinary income Kerry is deemed to receive per year from her financial
assets is $30.

"(4) The person is taken, for the purposes of this Part, to receive one
fifty-second of the amount worked out under subsection (3) as ordinary income
of the person during each week. Deposit concession money

"180.(1) This is how to work out which money constitutes, at a particular
time, the deposit concession money of a person who is not a member of a
couple: Method statement Step 1. Start with the amount of $2,000. Step 2. Set
off against this amount any available money of the person. Step 3. Set off
against the remainder any deposit money of the person that does not attract
interest. Step 4. Set off against the remainder any deposit money of the
person that attracts interest at a rate lower than the below threshold rate:
this money is to be set off in ascending order of interest rate. Note: For
below threshold rate see subsection 183(1). Step 5. The total of the available
money or deposit money that can be set off under Steps 2 to 4 is the deposit
concession money of the person at that time. Note: Because of subsection (3),
the total worked out under this Step cannot exceed $2,000.

"(2) This is how to work out which money constitutes, at a particular time,
the deposit concession money of a person who is a member of a couple: Method
statement Step 1. Start with the amount of $2,000. Step 2. Set off against
this amount any available money of the person. Step 3. Set off against the
remainder any deposit money of the person that does not attract interest. Step
4. Set off against the remainder any deposit money of the person that attracts
interest at a rate lower than the below threshold rate: this money is to be
set off in ascending order of interest rate. Note: For below threshold rate
see subsection 183(1). Step 5. The total of the available money or deposit
money that can be set off under Steps 2 to 4 is the deposit concession money
of the person at that time. Note: Because of subsection (3), the total worked
out under this Step cannot exceed $2,000.

"(3) For the purposes of subsections (1) and (2), if available money or
deposit money is to be set off against an amount, only so much of the money as
does not exceed the amount can be set off against the amount.

"(4) In this section: available money does not include money referred to in a
determination under subsection 185(1). Note: For available money see
subsection 8(1) of the Social Security Act. deposit money does not include
money referred to in a determination under subsection 185(1). Note: For
deposit money see subsection 8(1) of the Social Security Act. Meaning of money
that attracts interest

"181. A reference in any of sections 178 to 180 to money that attracts
interest is a reference to money on which interest accrues, whenever the
interest is paid. Deeming threshold

"182.(1) The deeming threshold for a person who is not a member of a couple is
$30,000.

"(2) The deeming threshold for a member of a couple is $25,000. Note: The
amounts fixed by subsections (1) and (2) are indexed every 1 July. See section
252. Below threshold rate, above threshold rate

"183.(1) For the purposes of this Subdivision, the below threshold rate is the
rate determined by the Minister to be the below threshold rate for the
purposes of this Subdivision.

"(2) For the purposes of this Subdivision, the above threshold rate is the
rate determined by the Minister to be the above threshold rate for the
purposes of this Subdivision.

"(3) A rate determined under this section must be in the form of a stated
percentage.

"(4) A determination under this section:

   (a)  must be in writing; and

   (b)  is a disallowable instrument. Actual return on financial assets not
        treated as ordinary income

"184.(1) Subject to subsection (2), any return on a financial asset that a
person actually receives is taken, for the purposes of this Part, not to be
ordinary income of the person.

"(2) If, because of a determination under subsection 185(1), a financial
investment is not to be regarded as a financial asset for the purposes of
section 178 or 179, subsection (1) does not apply to any return on the
investment that the person actually receives. Certain money and financial
investments not taken into account

"185.(1) The Minister may determine that:

   (a)  particular financial investments; or

   (b)  financial investments of a particular class; are not to be regarded as
        financial assets for the purposes of section 178 or 179.

"(2) Money that constitutes a financial investment to which a determination
under subsection (1) applies is not to be taken into account under section
180.

"(3) A determination under subsection (1) must be in writing.

"(4) A determination under subsection (1) takes effect on the day on which it
is made or on any other day (whether earlier or later) that is stated in the
determination.

"Subdivision D - Investments taken into account on realisation Treatment of
superannuation fund investments

"186. If:

   (a)  a person has an investment in:

        (i)    a superannuation fund; or

        (ii)   an approved deposit fund; or

        (iii)  a deferred annuity; and

   (b)  the person has not begun to receive a pension or annuity from the
        investment; the investment is treated as follows:

   (c)  the return on the investment is not treated as ordinary income (see
        paragraph 8(8)(b) of the Social Security Act);

   (d)  if the investment is realised, the return is spread across the
        following 12 months (see section 187). Early withdrawal from
        superannuation fund

"187. If:

   (a)  a person realises an investment in a superannuation fund, approved
        deposit fund or deferred annuity; and

   (b)  the amount is not rolled over into:

        (i)    a superannuation fund; or

        (ii)   an approved deposit fund; or

        (iii)  a deferred annuity; or

        (iv)   an immediate annuity; the person is taken to receive one
               fifty-second of the assessable growth component of that amount
               as ordinary income of the person during each week in the period
               of 12 months beginning on the day on which the person realises
               the investment. Note: For assessable growth component see
               subsection 9(1) of the Social Security Act. Adjustment of
               ordinary income for investment losses

"188.(1) If:

   (a)  a person realises an investment to which section 187 applies; and

   (b)  the investment is realised at a loss; the person's ordinary income is
        taken to be reduced during each week in the 12 months beginning on the
        day on which the person realises the investment by the amount worked
        out using the formula:
assessable loss
52 where: assessable loss is so much (if any) of the amount of the loss as is
attributable to the person's assessable period. Note: For assessable period
see subsection 9(1) of the Social Security Act.

"(2) The reduction under subsection (1) in a person's rate as at a particular
day is not to exceed the increase to be made under section 187 in working out
the person's rate as at that day.". 2. Subdivisions G, H and I of Division 11
of Part 8: Repeal. 3. Section 251 (Table): Add at the end:
  "10.   Deeming threshold for a person who is not a member of a

couple (abbreviated as 'Deeming threshold individual')
Subsection 182(1)
  "11.   Deeming threshold for a member of a couple (abbreviated as

'Deeming threshold member of a couple')
Subsection 182(2)

". 4. Subsection 252(1) (CPI Indexation Table): Add at the end:
  "6.   Deeming threshold individual   1 July   March

highest March quarter before reference quarter
(but not earlier than March 1994 quarter)
$200.00
  "7.   Deeming threshold member of a couple   1 July   March

highest March quarter before reference quarter
(but not earlier than March 1994 quarter)
$200.00

". 5. Section 253: Add at the end:

"(4) The first indexation of amounts under items 6 and 7 of the CPI Indexation
Table in subsection 252(1) is to take place on 1 July 1997.". 6. Schedule 1
(Module G - point G1 - Note 2): Omit "D investment income (sections 177 to
196);", substitute:
  "D   the general concept of ordinary income (sections 174 and 175);

  "D   business income (sections 176 and 177);

  "D   deemed income from financial assets (sections 178 to 185);

  "D   income from retirement funds and annuities (sections 186 to
196);". 7. Saving: Determinations under repealed sections 202 and 210 A
determination in force under section 202 or 210 of the Student and Youth
Assistance Act 1973 immediately before the commencement of this Part continues
to have effect after that commencement as if:

   (a)  section 185 of that Act, as in force immediately after the
        commencement of this Part, had been in force when the determination
        was made; and

   (b)  the determination had been made under that section as so in force; and

   (c)  any reference in the determination to section 198, 207 or 208 of that
        Act were a reference to sections 178 and 179 of that Act as in force
        immediately after the commencement of this Part. 8. Saving: Allowance
        rates If a youth training allowance is payable to a person for a
        fortnightly period that starts before 1 July 1996 and ends after that
        day, the rate of the person's payment for that period is to be worked
        out in accordance with the Student and Youth Assistance Act 1973 as in
        force immediately before 1 July 1996.