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AUSTUDY REGULATIONS (AMENDMENT) 1997 NO. 341

Statutory Rules 1997 No. 341

Issued by the Authority of the Minister for Schools, Vocational Education and Training

Subject: Student and Youth Assistance Act 1973

AUSTUDY Regulations (Amendment)

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 these amendments is to implement the 1996-97 Budget decision to extend the range of fringe benefits for the AUSTUDY parental and spouse income tests.

A person's eligibility to receive AUSTUDY is determined after applying means tests, including income tests. From 1 January 1994, the value of employer provided motor vehicle, private health insurance, housing, low interest loan and school fees fringe benefits has been included as income in the parental and spouse income tests. The Government has decided that, from 1 January 1998, the value of expense benefits and financial investment benefits will also be included.

Regulations 3 and 4 and subregulation 5.13 provide for the inclusion of expense benefits and financial investment benefits in the parental and spouse income tests in subregulations 86(9) and 94(1)(c) and Schedule 6 (Fringe Benefits).

Other minor changes are required to correct a number of drafting errors and inconsistencies in Schedule 6. Subregulations 5.1 to 5.12 makes these amendments, which are not expected to alter the operation of the Schedule.

Subregulation 1.1 provides that the amendments made by regulations 3 and 4 and subregulation 5.13 will commence on 1 January 1998. The note to regulation 1 advises that the remaining provisions of these regulations commence on gazettal in accordance with section 48 of the Acts Interpretation Act 1901.

The Attachment contains more details about the amendments.

ATTACHMENT

DETAILS OF AUSTUDY REGULATIONS (AMENDMENT)

Regulation 1 Commencement

Subregulation 1.1 provides that the amendments made by regulations 3 and 4 and subregulation 5.13 will commence on 1 January 1998.

The Note to regulation 1 advises that the remaining provisions of these regulations commence on gazettal in accordance with section 48 of the Acts Interpretation Act 1901.

Regulation 2 Amendment

Subregulation 2.1 provides that the AUSTUDY Regulations are amended as set out in these Regulations.

Regulation 3	Regulation 86	What is parental income?
Regulation 4	Regulation 94	What is the spouse's income?
Regulation 5	Schedule 6	Fringe Benefits

Background

A person's eligibility to receive AUSTUDY is determined after applying means tests, including:

*       for students who are not independent under regulation 67, a parental income test (Part 5 of Chapter 4 of the AUSTUDY Regulations); and

*       for students who have a spouse, a spouse income test (Part 6 of Chapter 4 of the AUSTUDY Regulations).

Subregulations 86(1), 86(9) and 94(1)(c) and paragraph 94(1)(c) include as parental and spouse income the value of motor vehicle, private health insurance, housing, low interest loan and school fees fringe benefits as described in Schedule 6 of the regulations.

The Government has decided that, from 1 January 1998, the value of expense benefits and financial investment benefits will be included as parental and spouse income.

Amendments made by these regulations

Subregulations 3.1 and 4.1 insert new paragraphs 86(9)(f) and (g) and 94(1C)(f) and (g) to include in parental and spouse income:

*       an "expense benefit" within the meaning of Part 7 of Schedule 6 that is not an exempt expense payment benefit within the meaning of that Part; and

*       a "financial investment benefit" within the meaning of Part 8 of Schedule 6 that is not an exempt financial investment benefit within the meaning of that Part.

Subregulation 5.13 inserts new "Part 7 - Expense Benefits" and new "Part 8 - Financial Investment Benefits".

Division 1 of Part 7 deals with "What is an expense benefit?"

Clause 22 provides that an expense benefit does not include a health insurance, housing, loan or school fees benefit within the meaning of the relevant Part of Schedule 6. This is intended to ensure that benefits can not be dealt with by more than one Part.

Clause 23 provides that an employee gets an expense benefit in any situation in which the private expenses of the employee or a dependant of the employee are paid or reimbursed by an employer of the employee or a person associated with the employer. Clause 23 also provides that the employee gets an expense benefit if a third party (the arranger) pays or reimburses the private expenses of the employee or a dependant of the employee under any arrangement between the employer or associate and the arranger and any other person.

Clause 23 is intended to catch situations in which employers or their associates or other persons for employers or associates pay or reimburse a recipient or any other person amounts in connection with the private expenses that have been, or may be, incurred by the recipient.

Division 2 of Part 7 deals with "Exempt expense benefits".

Clause 24 provides that an expense benefit is an exempt expense benefit if.

*       it is paid to reimburse the employee's employment related expenses; or

*       the employee requires the amount to be applied to the payment of his or her employment related expenses.

Division 3 of Part 7 deals with the "Value of an expense benefit?".

Clause 25 provides that the value of an expense benefit is to be the, actual amount of a payment that constitutes the expense benefit. So, for example, if an employer pays the private component of an employee's telephone bill, the value of the expense benefit will be the amount of the payment.

Division 1 of Part 8 deals with "What is a financial investment benefit?".

Clause 26 defines the following terms for the purposes of Part 8 - "available money", "deposit money", "financial investment", "listed security", "managed investment" and "unlisted public security".

"Financial investment" means "available money, a managed investment, a listed security, an unlisted public security or gold, silver or platinum bullion".

"Available money" means money that is held by or for the person; and is not deposit money of the person; and is not subject of a loan made by the person". "Deposit money" is money that is deposited in an account with a bank, building society, credit union or other institution that takes money on deposit".

"Managed investment" has the same meaning as in subsections 9(1A), (1B) and (1C) of the Social Security Act 1991.

"Listed security" means a share in a company; or another security that is listed on a stock exchange. "Unlisted public security" means a public security that is not a listed security.

Clause 27 provides that an employee gets a financial investment benefit in any situation in which the cost of acquisition of a financial investment for a recipient is paid or reimbursed by an employer of the employee or a person associated with the employer. Clause 27 also provides that an employee gets a financial investment benefit if a third party (the arranger) pays or reimburses the cost of acquisition Of EL financial investment for a recipient under any arrangement between the employer or associate and the arranger and any other person.

Clause 27 is intended to catch situations in which employers or their associates or other persons for employers or associates pay or reimburse a recipient or any other person amounts in connection with the acquisition of a financial investment for the recipient.

Division 2 deals with "Exempt financial investment benefits".

Subclause 28(2) provides that the making of contributions to a "superannuation fund" or an "ATO small superannuation account" by an employer for the benefit of a recipient does not constitute a financial investment benefit.

Subclause 28(1) also provides that, for Clause 28:

*       "ATO small superannuation account" means an account kept in the name of an individual under the Small Superannuation Accounts Act 1995; and

*       "superannuation fund" means a superannuation fund as defined for the purposes of Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act 1936 that is not a fund covered by subparagraph (ia) of the definition of "superannuation fund" in subsection 27A(1) of that Act.

Clause 29 provides that the value of a financial investment benefit is the value of the benefit at the time the recipient receives it.

Commencement

The amendments will commence on 1 January 1998.

OTHER CHANGES

Background

Minor changes are required to correct a number of drafting errors and inconsistencies in Schedule 6. They are not intended to change the operation of the Schedule.

Amendments made by these regulations

"Recipient" is defined in Part 1 of Schedule 6 to mean a student's parent or a student's spouse. Subregulation 5.1 omits the definition and substitutes a new definition to provide that "recipient" means an employee or a dependent of the employee. ("Employee" is defined as a student's parent or spouse who is or was in employment.)

Definitions of "arrangement" and "associate" are currently in Part 2 for the purposes of that Part. However, they apply to all of Schedule 6 and subregulation 5.3 omits them from Part 2 and subregulation 5.2 inserts them into Part 11.

The current provisions are inconsistent in their description of.

* the person who can provide a benefit for it to be a fringe benefit for Schedule 6; and

* the person to whom the benefit can be provided for it to be a fringe benefit for Schedule 6.

The amendments made by subregulations 5.4, 5.5, 5.7, 5.9 and 5.10 omit various expressions used to describe the person who provides the benefit and substitute "employer, or an associate of an employer or another person acting for the employer or associate" as the standard in the Schedule.

The amendments made by subregulations 5.6 and 5.7 omit various expressions used to describe the person to whom the benefit can be provided and substitute the proposed form of "recipient" (see above). The current use of "recipient" (see above) becomes incorrect throughout Schedule 6 when the new definition is inserted.

Subregulation 5.8 omits ", or to the recipient and a partner or dependant of the recipient" from Clause 11. This phrase is not required when the new definition of "recipient" (see above) comes into effect.

Subregulation 5.11 omits "a dependant of a recipient, or of the recipient's partner" from paragraph 20(1)(c) and substitutes "a child of an employee". This ensures that clause 20 remains consistent with the changes outlined above.

Subregulation 5.12 omits "the recipient" from subclause 20(1) and substitutes "the employee" to retain consistency with the new definition of "recipient" (see above).