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AUSTUDY REGULATIONS (AMENDMENT) 1997 NO. 302
EXPLANATORY STATEMENTStatutory Rules 1997 No. 302
Issued by the Authority of the Minister for Employment, Education, Training and Youth Affairs
Subject: Student and Youth Assistance Act 1973
AUSTUDY Regulations (Amendment)
Part 2 of the Student and Youth Assistance Act 1973 (the Act) provides the legislative authority for the AUSTUDY scheme. Section 56 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
The purpose of the regulations is to implement recommendations arising from the Government's review of the Actual Means Test (AMT).
CHANGES TO THE INCOME TESTS
The value of net rental property losses (i.e. the amount by which tax deductible expenses for a rental property exceed the gross income from it) is currently added to parent and spouse income. These regulations extend this to include net losses relating to all passive businesses. A passive business is a business in relation to which a person is usually engaged for less than 17 1/2 hours per week. (regulations 28, 30, 31 and 34 and subregulation 3.2)
CHANGES TO THE ACTUAL MEANS TEST
CHANGES TO DESIGNATED CATEGORIES
A person who is in a designated category is subject to the AMT. The Government has changed several of the existing categories such that a person is a designated person if..
* he or she first entered Australia under a permanent visa or entry permit relating to business skills in the 10 years before 1 January in the year of study; or
* on the day on which the student's application for AUSTUDY is completed, the person has an interest in assets outside Australia and its external territories that are valued at $2,500 or more. or
* in the financial year ending before the year of study, the person derived $2,500 or more of income from a source outside Australia and its external territories other than Norfolk Island, except if that income consisted only of a pension or similar payment that was income for the parental, spouse or student income test. (regulations 7, 13 and 19)
WHAT IS ACTUAL MEANS?
Actual means is taken to be the amount that equates to total expenditure and savings in the year of study except for certain specified items of expenditure and savings. The Government has decided that actual means is to be measured in the financial year ending before the year of study (the last financial year) and that a concession to allow actual means to be measured in the financial year ending in the year of study will apply in certain cases. (regulations 8, 14, 20 and 25)
The Government has also made the following changes to the composition of actual means:
exclude expenditure and savings sourced from income assistance (i.e. AUSTUDY, ABSTUDY, Financial Supplement and Assistance for Isolated Children payments, scholarships, tax exempt payments made under the Social Security Act 1991 (except Family Tax Payments) and the Veterans' Entitlements Act 1986, State or Territory education payments and scholarships (subregulation 3.4));
* exclude expenditure and savings sourced from arm's length loans in the last financial year and exclude repayments of non arm's length loans in that year. (An arm's length loan means a loan to a designated person or a family member by a person or body whose usual business is to make loans to the public (subregulation 3.4));
* exclude expenditure and savings sourced from a net reduction of liquid assets, or from the proceeds of a liquidation of assets, held at the beginning of the last financial year and reduced or liquidated in that year;
* exclude expenditure and savings sourced from windfall gains (except gifts);
* exclude expenditure and savings that equate to tax deductible necessarily incurred business expenses (except losses and superannuation contributions above certain levels); and
* include as savings profits retained by a company, partnership or trust over which a designated person or family member has substantial control in relation to whether the profits are distributed. (subregulations 3.4, 9.1, 15.1, 21.1 and 26.1)
THE BENCHMARK
The AMT compares family actual means with the after tax income of a notional family (i.e. the benchmark). The Government has abolished this comparison. (regulations 8, 14, 20 and 25)
USING ACTUAL MEANS TO CALCULATE ENTITLEMENT
Family actual means is converted to Equivalent Family Income (EFI) which may be used to determine how much AUSTUDY a student can get. The regulations make the following changes to this process:
* all AMT families and single independent students are assumed to have two income earners who earn income in equal proportions. This "income splitting" allows all people subject to the AMT the benefit of two tax free thresholds in the conversion of actual means to EFI. A Family Tax Initiative (FTI) allowance of $100 per eligible child applies in 1998 to families with eligible children;
* net passive business losses are added after tax in the conversion of designated parent, spouse and student with spouse actual means to EFI. This ensures that AMT clients are treated in the same way as PAYE (income test) clients; and
* AUSTUDY entitlement is based on the higher of EFI and Adjusted Family Income (AFI) derived from the income tests. (regulations 27, 29,32 and 33)
MISCELLANEOUS CHANGES
The regulations also make a number of minor changes, and re-order and renumber some of the provisions as a result of the changes outlined above. (regulations 4 - 8, 10 - 14, 16 - 20, 22 - 25, 35 and 36 and subregulations 3.1, 3.3, 9.2, 15.2, 21.2, and 26.2)
The Attachment contains more details about the amendments.
COMMENCEMENT
Regulation 1 provides that the amendments commence on 1 January 1998.
ATTACHMENT
DETAILS OF THE AUSTUDY REGULATIONS (AMENDMENT)
Regulation 1 Commencement
Regulation 1 provides that the regulations commence on 1 January 1998.
Regulation 2 Amendment
Regulation 2 provides that the AUSTUDY Regulations are amended as set out in these regulations.
Details of the changes to the AUSTUDY Regulations made by these regulations are set out below.
CHANGES TO THE INCOME TESTS
Background
Subregulations 86(1) and 94(1) provide that the value of a net rental property loss (NRPL) is added back in the calculation of parental or spouse income. Net rental property loss is defined in subregulation 12F(1) as "the amount (if any) by which expenses in relation to a rental property exceed the gross income gained from the property". Rental property is defined in subregulations 12F(1), 86(1A) and 94(1AA) as "residential or commercial property (whether inside or outside Australia) from which an amount or premium is received by the student's parent, parents or spouse as rent".
The Government has decided that losses from other passive businesses are to be brought to account in the income testing arrangements.
Amendments made by these regulations
Subregulation 3.1 omits the definitions of rental property and net rental property loss (NRPL) in subregulation 12F(1). Subregulation 3.2 inserts definitions of net passive business loss and passive business for the purposes of the regulations. A net passive business loss is the amount by which tax deductible necessarily incurred expenses in relation to a net passive business exceed the gross income from the business. A passive business is "a business in relation to which a person is usually engaged for less than 17 1/2 hours per week".
The current definition of business includes the carrying on of primary production, the provision of professional services and the earning of income as a rentier. The ordinary (i.e. dictionary) meaning of rentier is a person who earns income from property, investments etc. The new provisions in combination with the existing provisions mean that net passive business losses relating to any business undertaking including investments, such as shares, are added back to parental and spouse income.
Regulation 30 and subregulation 28.1 omit NRPL from the formulae used to calculate parental income in subregulations 90(1) and 86(1) and substitute NPBL. Subregulation 28.2 omits the definition of NRPL from subregulation 86(1) and substitutes a definition of NPBL as the net passive business loss incurred by the student's parent or parents.
Subregulations 28.3 and 31.2 omit subregulations 86(1A) and 94(1AA) respectively. These provisions are no longer be required with the treatment of the definition of passive business. Subregulations 31.1 and 34.1 omit net rental property loss from regulations 94 and 96 (which are used to calculate spouse income) and substitute net passive business loss.
CHANGES TO THE ACTUAL MEANS TEST
CHANGES TO THE DESIGNATED CATEGORIES
The amendments exclude certain persons from the coverage of the AMT.
Background
Regulations 12L, 12S and 12Y provide who is a designated parent, spouse or student for the AMT.
Paragraph 12L(1)(a) provides that a parent who holds, or has held, a permanent visa or entry permit for the grant of which a criterion or requirement was that the person demonstrate skills in business, is a designated parent. Subparagraph 12L(1)(b)(i) and paragraph 12L(1)(c) provide, respectively, that a parent who has an interest in an asset outside Australia and a person who derives income from outside Australia is a designated parent. Similar provisions apply for a designated spouse (regulation 12S) and a designated student with or without a spouse (regulation 12Y).
These provisions mean that the AMT applies to all persons who:
* arrived in Australia at Any time as "business migrants";
* derive My income from a source outside of Australia and its external territories; or
* have an interest in M assets outside of Australia and its external territories.
The Government has decided to restrict the coverage of the AMT by:
* specifying a time Emit for business migrants beyond which a person will not be subject to the AMT;
* setting a threshold level for assets held outside Australia and its external territories, and income sourced from outside Australia and its external territories except Norfolk Island, below which a person will not be subject to the AMT; and
* excluding people whose only source of income from outside Australia and its external territories is a taxable pension or similar payment.
Consistent with other changes to the AMT (see comments under the heading "What is actual means?"), a person's status as a designated parent will, with the exception of the business migrant and overseas assets categories, be determined in respect of the financial year ending before the year of study (this later year is hereafter referred to as the "relevant year"). A person's status as a "business migrant" will be determined in respect of the 10 years before 1 January in the year of study and the value of a person's overseas assets will be at the time the relevant AUSTUDY application is completed.
Amendments made by these regulations
Regulation 7 omits regulation 12L (Who is a designated parent?) and substitutes new regulation 12K which changes the effect of the current provisions so that a person is a designated parent if:
* the person first entered Australia under a permanent visa or entry permit relating to business skills in the 10 years before 1 January in the year of study; or
* on the day on which the student's application for AUSTUDY is completed, the person has an interest in assets outside of Australia and its external territories that are valued at $2,500 or more; or
* in the relevant year the person derived $A2,500 or more of income from a source outside of Australia and its external territories other than Norfolk Island, except if that income consisted only of a taxable pension or similar payment.
Regulation 7 also provides that a person is a designated parent if in the relevant year the person was a salary and wage earner with a carry forward business loss that did not consist only of a net passive business loss. (See comments under the heading of "Changes to the Income Tests" above.)
Regulations 13 and 19 substitute new regulations 12R (Who is a designated spouse?) and 12X (Who is a designated student?) to make similar provisions in the actual means test for a designated spouse, a designated student with spouse and a designated student without a spouse.
WHAT IS ACTUAL MEANS?
Background
Subregulations 12K(1), 12R(1), 12X(1) and 12ZD(1) provide that a student is not entitled to receive living allowance for a period of eligibility in a year of study unless the Secretary is satisfied that, for that period, the actual means of the designated parent (in the 12K(1) case), spouse (in the 12R(1) case), student with a spouse (in the 12X(1) case) or student without a spouse (in the 12ZD(1) case) are less than the after tax income of the notional parent, spouse or student as the case may be.
Regulations 12N(1), 12U(1), 12ZA(1) and 12ZF(1) provide that actual means is taken to be the amount that equates to total expenditure and savings in a period by a designated parent (for example) and each member of his or her family. Subregulations 12N(1A), 12U(1A), 12ZA(2) and 12ZF(2) provide that, despite subregulation (1), particular amounts are not included in actual means.
Due to inherent difficulties with the current requirement to estimate actual means in the year of study, the Government has decided that actual means is to be measured for the financial year ending ~ the year of study. A concession will apply to enable applicants who have significantly reduced actual means in the financial year ending in the year of study because of an event beyond their control to have their actual means calculated on expenditure and savings in that year.
In order to bring specific areas of the actual means tests closer into line with the income testing arrangements, and to improve parity with the treatment of non actual means test clients under the income tests, the Government has also made several changes to the composition of actual means. These are discussed below.
Amendments made by these regulations
Use of financial year actual means
Actual means is ordinarily to be calculated from expenditure and savings in the financial year ending before the year of study. Actual means in the financial year ending in the year of study can be used in limited circumstances.
Regulation 8 inserts new regulations 12L and 12M. Regulation 12L provides that a student who has a designated parent cannot get living allowance in a year of study unless the details of the actual means of the parent are materially correct.
Subregulation 12M(1) provides that the actual means of a designated parent for the year of study is taken to be the amount that equates to total expenditure and savings of the parent and each member of his or her family in the last financial year ending before the year of study. Subregulation 12M(2) provides that actual means can be calculated from expenditure and savings in the financial year ending in the year of study if:
* actual means in that year is substantially less than the amount in the financial year ending before the year of study; and
* the difference is due to an event that is beyond the control of the parent or family member (see below); and
* the amount in the financial year ending in the year of study is likely to last for two years from the later of the day the event happened and 1 January in the year of study.
Regulation 8 also inserts subregulation 12M(3) to provide that an expected downturn in business profitability is not ordinarily be an event that is beyond the control of the parent or family member
Regulation 8 also inserts subregulation 12M(4) to provide that family or regulation 12M has the same meaning as in subregulation 12N(5). This is necessary because of the restructuring of the AMT provisions.
Subregulation 9.2 defines relevant financial year as whichever financial year applies to the designated parent under regulation 12M.
Regulations 14, 20 and 25 and subregulations 15.2, 21.2 and 26.2 make similar provision in the actual means of a designated spouse, designated student with a spouse and designated student without a spouse.
Income assistance
Income assistance to the designated person or a family member in the relevant financial year will be excluded from actual means.
Subregulation 3.4, for the purposes of Division 1B (Actual Means Test), defines income assistance as:
* a payment under Part 2 (AUSTUDY) or Part 4A (Financial Supplement) of the Student and Youth Assistance Act 19 73, an amount under the scheme known as the ABSTUDY scheme or the Assistance for Isolated Children scheme;
* a payment under a scholarship;
* so much of an amount under the Social Security Act 1991 (except Family Tax Payment under Part 2.17AA) or the Veterans' Entitlements Act 1986 that is exempt from income tax under Division 1AA of Part 3 of the Income Tax Assessment Act 1936 or Subdivision 52-A, 52-B or 52-C of the Income Tax Assessment Act 1997, and
* State or Territory payments to assist the primary, secondary or tertiary education of a student.
Subregulation 9.1 inserts new paragraph 12N(1)(a) to provide the exclusion from the actual means of a designated parent. Subregulations 15.1, 21.1 and 26.1 make similar provision in the actual means of a designated spouse, designated student with a spouse and designated student without a spouse.
Loans
Expenditure and savings in the relevant financial year that are sourced from an arms length loan in that year are excluded from actual means. Expenditure in the relevant financial year to repay a non arm's length loan is also excluded from actual means.
Subregulation 3.2 provides that, for the purposes of the regulations, loan means an advance of money, the provision of credit or the payment of an amount to or for another person who is obliged to repay it. Subregulation 3.4 provides that, for the purposes of Division 1B (Actual Means Test), arm's length loan means a loan to a designated person or a family member by a person or body whose usual business is to make loans to the. public. This ensures that expenditure of a loan made to a designated parent or a family member by an associated entity, such as a family company or trust, or an associated person, such as a partner or family member, is not excluded from actual means.
Subregulation 9.1 inserts new paragraphs 12N(1)(f) and (g) to provide the exclusions from the actual means of a designated parent. Subregulations 15.1, 21.1 and 26.1 make similar provision in the actual means of a designated spouse, designated student with a spouse and designated student without a spouse.
Assets
The general rule following the amendments made by these regulations is that actual means only includes expenditure and savings that are sourced from income in the relevant financial year (i.e. whichever financial year is applicable under regulation 12M). This means that the following items are excluded from actual means:
* expenditure in the relevant financial year that equates to a reduction in liquid assets held at the beginning of the relevant financial year, and
* expenditure, and any increase in savings, in the relevant financial year that was sourced from the proceeds of a liquidation of assets held at the beginning o~ and liquidated during, that year.
Subregulation 9.1 inserts new paragraphs 12N(1)(h) and (i) to provide the exclusions from the actual means of a designated parent. Subregulations 15.1, 21.1 and 26.1 make similar provision in the actual means of a designated spouse, designated student with a spouse and designated student without a spouse.
The approach is illustrated in the case of person A who has an asset (i.e. a painting) valued at $20,000 on 1 July 19XX (the beginning of the relevant financial year). She sells the painting on 1 September 19XX for $30,000, puts $10,000 in the bank and spends the other $20,000. Person A saves another $15,000 from her salary during the financial year. On 30 June 19XY the person has no painting, but has $35,000 in the bank. For the purposes of the AMT:
* the $20,000 spent is excluded from actual means as it is expenditure in the relevant financial year sourced from the liquidation of an asset held at the beginning of that year;
* the $10, 000 banked is also excluded from actual means as it is savings in the relevant financial year sourced from the liquidation of an asset held at the beginning of that year; and
* the remaining $15,000 is not excluded from actual means as it is savings sourced from income in the period.
Windfall gains
Expenditure and savings from windfall gains (except gifts) are excluded from actual means.
Subregulation 9.1 inserts new paragraph 12N(1)(j) to provide the exclusion from the actual means of a designated parent. Subregulations 15.1, 21.1 and 26.1 make similar provision in the actual means of a designated spouse, designated student with a spouse and designated student without a spouse.
Business expenditure
In relation to the changed treatment of business expenditure, expenditure (with the exceptions noted below) that equates to the amount that was, or will be, deductible for taxation purposes under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 because the expenditure was or will be necessarily incurred in carrying on the business is excluded from actual means. The definition of business activity is on-fitted from subregulation 12F(2) by subregulation 3.3.
There are two exceptions to the approach outline above:
* carry forward losses (which are the excess of the tax deductible expenses over the income of a business) are not excluded; and
* superannuation contributions in the relevant financial year are not excluded to the extent that they exceed:
- for an employee, those required under the Superannuation Guarantee (Administration) Act 1992; or
- for a self-employed person within the meaning of subregulation 12L(2) - the lesser of:
* $3,000; and
* the total amount of the contributions for the self employed person and any other self employed family members in the relevant financial year.
Subregulation 9.1 inserts:
* new paragraph 12N(1)(k) to provide the exclusion from the actual means of a designated parent; and
* new subregulation 12N(1A) to provide the exceptions to paragraph 12N(1)(k).
Subregulations 15.1, 21.1 and 26.1 make similar provision in the actual means of a designated spouse, designated student with a spouse and designated student without a spouse.
Clarification of savings
Subregulation 3.4 inserts a definition of savings to clarify that retained profits are, in some circumstances, included in actual means. The definition provides that for the purposes of Division 1B (Actual Means Test) of Chapter 2, savings includes profits retained by a company, partnership, or trust over which a designated parent, spouse or student or a family member (within the meaning of the provision in which the expression is used) has a substantial influence in relation to whether the profits of the company, partnership, or trust are distributed to the parent, spouse, student, family member, company or trust in which the parent, spouse, student or family member has an interest.
THE BENCHMARK
The AMT requires the comparison of family actual means with the after tax income of a notional family (i.e. the benchmark).
Background
The Government has abolished the benchmark which, because of the decision to use the higher of AFI and EFI to determine entitlement, is no longer required (see comments under the heading of "Using actual means to calculate entitlement" below).
Amendments made by these regulations
Regulations 8, 14, 20 and 25 omit regulations 12M, 12T, 12Z and 12ZE which contain the benchmark for comparison of actual means of a designated parent, spouse, student with a spouse and designated student without a spouse.
USING ACTUAL MEANS TO CALCULATE ENTITLEMENT
Background
Parts 4, 5 and 6 of Chapter 4 of the AUSTUDY Regulations provide for the calculation of the income of a student, and the adjusted family income (AFI) of a parent or spouse. The amount of student, parental or spouse income impacts on the amount of AUSTUDY a student can get. However, for students who are in a designated category, or who have a parent or spouse who is in a designated category, income is taken to be the amount worked out under subregulation 82(1B) or regulation 87A, 94A or 94B as appropriate. These amounts are known as Equivalent Family Income (EFI) and are calculated by converting actual means to a taxable income (AFI) equivalent.
Calculation of notional tax on actual means
The formulae used to convert actual means to EFI for a student with a designated parent, a student with a designated spouse, a designated student with a spouse and a designated student without a spouse are set out in subregulations 82(1B), 87A(1), 94A(1) and 94B(1) respectively.
For subregulations 87A(1), 94A(1) and 94B(1), the formula for converting actual means to EFI is "[(AM - FP) + T] - DC", where "T" means the amount of income tax (including Medicare levy, but before rebates, if any) that would notionally be payable by the parent (or spouse) to achieve an after tax income of (AM - FP). For subregulation 82(1B) the formula is "[(AM - FP) + T] x EP/no. of days in year" where "T" has the same meaning as in the other formulae.
The amount of income tax added is based on the assumption that the actual means is derived from the income of one person within a family. Therefore, the tax added back in the conversion of actual means to EFI is a single amount. This treats AMT families in which there is more than one income earner harshly because, for a given amount of income, two earners generally pay less tax than one as they both will benefit from a tax free threshold. Assuming all AMT families have one income earner, therefore, overstates the family's pre-tax income and treats those families more harshly than non AMT families with comparable after tax means.
To alleviate the disadvantage to AMT families, the Government has changed the way "T" is calculated to more closely reflect the amount of tax paid by many AMT families by assuming that there are two income earners who earn income in equal proportions (i.e. a 50/50 income split) and, therefore, pay tax in equal proportions. The formulae take account of the Family Tax Initiative (FTI).
Treatment of net passive business losses
Currently, net rental property losses are added back to parental and spouse income. They are not taken account of in the AMT. The Government has extended the range of losses to be added back in both the AMT and the income tests (see comments under the heading of "Changes to the Income Tests" above) and aligned the treatment of net passive business losses in the AMT with their treatment under the income tests.
The effect of aligning the AMT treatment of net passive business losses with the income tests treatment is that the amount of the loss is added after tax ("T") in the conversion of actual means to EFI.
Calculation of AUSTUDY entitlement
Amendments made by Statutory Rules 1996 No. 245 provided that, for a student with a designated parent, parental income used to determine the student's entitlement was the greater of the AFI and EFI. Similar amendments were made for designated students and students with a designated spouse.
The comparison between AFI and EFI was not applied in practice, and subregulations 82(1B), 87A(1), 94A(1) and 94B(1) were amended by Statutory Rules 1997 No. 159 to provide that the entitlement of a student who is subject to the AMT is based on EFI. The Government has reverted to the pre-Statutory Rules 1997 No. 159 position.
Additionally, EFI in the financial year ending before the year of study (or the financial year ending in the year of study, if relevant) is compared to the relevant income of a student, or the AFI of the parent or spouse in the same financial year, as appropriate.
Amendments made by these regulations
Subregulation 27.1 omits the formula for converting student actual means to relevant income from subregulation 82(1B) and substitutes a new formula as follows:
2(AM/2 + T + M) - FTI
where:
* 'AM' is the actual means of the student for the financial year mentioned in whichever of subregulations 12ZE(1) and (2) applies to the student;
* 'T' is the amount of income tax in the financial year to whichever of subregulations 12ZE(1) or (2) applies, before any rebates, without regard to section 20C or 20D of the Income Tar Rates Act 1986, that would be notionally payable by the student to achieve an after tax income of AM/2;
* 'M' is the amount of Medicare levy that would be notionally payable by the student for the relevant financial year to achieve an after tax income of AM/2 if:
- each person described in paragraph (a) of 'family' in subregulation 12ZF(8) (i.e. a person who is aged less than 16 and is a natural or adopted child of the student, or is wholly or substantially dependent on the student) has no separate net income (within the meaning of subsection 159J(6) of the Income Tax Rates Act 1986); and
- each person described in paragraph (b) of 'family' in subregulation 12ZF(8) (i.e. a person who is aged 16 or more, who is a natural or adopted child of the student or is wholly or substantially dependent on the student, who is undertaking full-time study, is not independent and is not in a State approved guardianship arrangement) who is under 25 years of age has no separate net income; and
* TTI' is:
- for a 1998 application to which subregulation 12ZE(1) applies - 20% of the amount calculated under subsection 20C(1) of the Income Tax Rates Act 1986; and
- for any other application - 20% of the amount calculated under subsection 20C(2) of that Act.
Subregulation 27.2 inserts new subregulation 82(2A) to provide that the maximum amount of living allowance a student whose income is determined under subregulation 82(1B) can get is reduced by $1 for every $2 that the student's relevant income exceeds $6,000. This provides a taper in cases in which a student who is subject to the AMT has relevant income that exceeds the free area of $6,000.
Regulations 29, 32 and 33 omit the current formulae for converting designated parent, designated spouse and designated student with a spouse actual means to EFI and substitute the following formula:
2(AM/2 + T + M) - FTI + NPBL - DC
where:
* 'AM', 'T', 'M' and 'FTI' have the meanings given above consistent with their positioning within parent, spouse and student with spouse actual means tests,"
* 'NPBL' is the net passive business loss of the student's parent, parents or spouse as appropriate; and
* 'DC' is the deductions for other dependent children available under regulation 87 or 94(2A) as appropriate.
Note: The formulae no longer subtracts 'FP', being family payment at the basic rate under Part 2.17 of the Social Security Act 1991. This is because family payment is included in income assistance and is therefore specifically excluded from actual means by proposed paragraphs 12N(1)(a), 12U(1)(a), 12ZA(1)(a) and 12ZF(1)(a).
MISCELLANEOUS CHANGES
A number of minor amendments to the regulations are made as a result of the changes to the AMT. Unless otherwise indicated, these amendments do not change the operation of the existing AMT.
Paragraphs 12N(1A)(d), 12U(1A)(d), 12ZA(2)(d) and 12ZF(2)(d) provide an exclusion from actual means for people who incur expenditure to board family members away from home to undertake secondary study. The exclusion is the lesser of the amount of the expenditure and $5,274 less the secondary student's after tax income compensation. Subregulations 12N(1C), 12U(1C), 12ZA(4) and 12ZF(4) provide a formulae to calculate the after tax income compensation. The formulae refer to regulation 12M, which is repealed. Consequently, the formula in regulation 12M is inserted into subregulations 12N(1B), 12U(1B), 12ZA(3) and 12ZF(3) to provide the same result. Aside from the addition of 'M' (Medicare) and 'FTI' (Family Tax Initiative) to be consistent with changes made in the calculations of designated student relevant income and designated parent and spouse income (see comments under the heading "Using actual means to calculate entitlement" above), these changes do not alter the current operation of the provisions.
As the comparison of actual means with the after tax income of a notional person has been abolished, the regulations which refer to notional parent, spouse or student are repealed as follows:
* subregulation 4.1 omits regulation 12H;
* subregulation 10.1 omits regulation 12P;
* subregulation 16.1 omits regulation 12V; and
* subregulation 22.1 omits regulation 12ZB;
As a result of the changes, a re-ordering of some of the regulations is necessary:
* subregulation 5.1 omits "regulation 12L" and substitutes "regulation 12K";
* subregulation 6.1 omits regulation 12K, subregulation 7.1 omits regulation 12L and substitutes a new regulation 12K and subregulation 8.1 omits regulation 12M and substitutes new regulations 12L and 12M;
* subregulation 11.1 omits "regulation US" and substitutes "regulation 12R";
* subregulation 12.1 omits regulation 12P, subregulation 13.1 omits regulation 12S and substitutes a new regulation 12R and subregulation 14.1 omits regulation 12T and substitutes new regulations 12S and 12T;
* subregulation 17.1 omits "regulation 12Y" and substitutes "regulation 12X";
* subregulation 17.2 omits "regulation 12S" and substitutes "regulation 12R";
* subregulation 18.1 omits regulation 12X, subregulation 19.1 omits regulation 12Y and substitutes a new regulation 12X and subregulation 20.1 omits regulation 12Z and substitutes new regulations 12Y and 12Z;
* subregulation 23.1 omits "regulation 12Y" and substitutes "regulation 12X"; and
* subregulation 24.1 omits regulation 12ZD and subregulation 25.1 omits regulation 12E and substitutes new regulations 12ZD and 12ZE,
Other miscellaneous changes:
* subregulation 5.2 amends paragraph 12J(b) to omit the qualification of "apart from this Subdivision would qualify for" and substitutes "qualifies for". This is necessary since clients are no longer ineligible for AUSTUDY because of Subdivisions B to E. Similar amendments are made by subregulation 11.2 to paragraph 12Q(b) for a designated spouse, by subregulation 17.3 to paragraph 12W(c) for a designated student with a spouse and by subregulation 23.2 to paragraph 12ZC(c) for a designated student;
* regulation 35 amends regulation 113 (Definitions) to omit references to net rental property loss and rental prop and insert a reference to loam net passive business loss and passive business; and
* regulation 36 amends Schedule 6 (Fringe Benefits) to omit from Clause 13 (Loan Benefits Definitions) the definition of loan.