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AUSTUDY REGULATIONS (AMENDMENT) 1997 NO. 373

Statutory Rules 1997 No. 373

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.

OUTLINE OF REGULATIONS

The amendments to the AUSTUDY Regulations (the Regulations) made by these regulations:

*       provide the new rates of living allowance, rent assistance and fares allowance, the income and assets tests thresholds and the fringe benefit loan interest rates to apply for 1998 (regulations 18 and 19, 21 to 26 and 29);

*       make minor amendments to Division I B of Chapter 2 relating to the Actual Means Test (regulations 4 to 17 and subregulation 28.2); and

*       repeal provisions in the Regulations that are no longer required (regulations 3, 20 and 27 and subregulations 28.1 and 28.3).

Rates and thresholds

Living allowances and income and assets test thresholds are indexed annually in accordance with the method set out in section 12ZZA of the Act. Additionally, rent assistance amounts are increased to align with indexed amounts paid by the Department of Social Security on 1 January in each year, fares allowance rates for travel by motor vehicle are changed in accordance with rates determined from time to time by the Department of Workplace Relations and Small Business and fringe benefits loan interest rates are changed in accordance with fluctuations in market interest rates.

Actual Means Test

The Actual Means Test was introduced into the AUSTUDY means testing arrangements on 1 January 1996. The Actual Means Test is designed to complement the income tests for families with complex financial structures and arrangements. For these families the income tests are an inadequate tool to measure their need for AUSTUDY. Rather than test income, the Actual Means Test tests expenditure and savings. These regulations amend Division I B of Chapter 2 of the Regulations relating to the Actual Means Test to:

*       Clarify the policy intention with regard to several provisions;

*       move several provisions to their correct position following a restructure of Division 1B made by the AUSTUDY Regulations (Amendment) gazetted on 29 October 1997;

*       amend the definition of the tax component ("T") in various formulae to correct an oversight in the AUSTUDY Regulations (Amendment) gazetted on 29 October 1997; and

*       make other minor changes to correct typographical errors in the AUSTUDY Regulations (Amendment) gazetted on 29 October 1997.

Repeal of provisions

The Government announced in the 1996-97 Budget a two year (104 week) waiting period before newly arrived migrants can access AUSTUDY. Amendments to the Act to give effect to the Government´ s decision omitted the definition of "permanent resident of Australia". Regulation 4, which describes the persons who were to be treated as permanent residents of Australia, is therefore no longer required.

Regulation 63 of the Regulations provides a special rate of living allowance for people aged 21 and over transferring to AUSTUDY from "long term" Department of Social Security payments. Subparagraph 63(1)(a)(iii) of the Regulations provides that the special rate is available to students who, prior to commencing study, were receiving payments under the Commonwealth work experience program known as JobSkills. The JobSkills program was replaced by a new program, Special Employer Support, from 7 October 1996. Therefore subparagraph 63(1)(a)(iii) is no longer required and is omitted.

COMMENCEMENT OF THESE REGULATIONS

Regulation 1 provides that regulations 4 to 19, 21 to 26 and 29 and subregulation 28.2 of these regulations commence on 1 January 1998. The note to regulation 1 advises that the remaining provisions of these regulations commence on gazettal in accordance with subsection 48(1) of the Acts Interpretation Act 1901.

The Attachment contains more details about the amendments.

ATTACHMENT

DETAILS OF THE AUSTUDY REGULATIONS (AMENDMENT)

Regulation 1 Commencement

Regulation 1 provides that regulations 4 to 19, 21 to 26 and 29 and subregulation 28.2 of the regulations commence on 1 January 1998.

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

Regulation 2 Amendment

Regulation 2 provides that the AUSTUDY Regulations (the Regulations) are amended as set out in these regulations.

REPEAL OF PROVISIONS

Regulation 3       Regulation 4 (Citizenship)

Regulation 20       Regulation 63 (Who gets special rate living allowance?)

Regulation 27       Regulation 109 (What changes in circumstance must the Department be told about?)

Regulation 28        Regulation 113 (Definitions)

Background

The Government announced in the 1996-97 Budget a two year (104 week) waiting period before newly arrived migrants can access AUSTUDY. Amendments to the Student and Youth Assistance Act 1973 (the Act) to give effect to the Government's decision were made by the Student and Youth Assistance Amendment (Waiting Period) Act 199 7 which commenced on 4 March 1997.

These amendments omitted the definition of "permanent resident of Australia" which was defined in subsection 3(1) of the Act as "a person who, under the regulations, is to be treated, for the purposes of this Act, as a permanent resident in Australia". Regulation 4 described the persons who were to be treated as permanent residents of Australia. The regulation is no longer required. As a consequence, references to the definition in regulation 113 are no longer required either.

Regulation 63 provides a special rate of living allowance for people aged 21 and over transferring to AUSTUDY from "long term" Department of Social Security payments. Subparagraph 63(1)(a)(iii) provides that the special rate is available to students who, prior to commencing study, were receiving payments under the Commonwealth work experience program known as JobSkills. The JobSkills program was replaced by a new program, Special Employer Support, from 7 October 1996. Therefore subparagraph 63(1)(a)(iii) is no longer required.

Amendments made by these regulations

Regulation 3 omits regulation 4.

Regulation 27 omits subparagraph 109(1)(a)(xix) and substitutes a new subparagraph which requires a student to notify the Department if he or she ceases to be an Australian citizen or an Australian resident within the meaning of section 6A of the Act. The new subparagraph brings the regulations into line with the Act. A note to regulation 27 provides that Note 3 to regulation 109 is omitted.

Subregulations 28.1 and 28.3 omit the reference to a permanent resident of Australia from the indexes in subregulations 113(1) and (2) respectively.

Regulation 20 omits subparagraph 63(1)(a)(iii) and renumbers paragraph 63(1)(a).

ACTUAL MEANS TEST (CHAPTER 2, DIVISION 1)

Background

Division 1B of Chapter 2 of the AUSTUDY Regulations contains the Actual Means Test provisions. These provisions were amended by Statutory Rules 1997 No. 302 (SR 97/302) which was gazetted on 29 October 1997. The amendments commence on 1 January 1998.

Regulation 4        Regulation 12F (Interpretation)

Regulation 5        New regulation 12FA

Definition of "business"

Subregulation 12F(2) contains the definition of "business". The definition applies to Division 1B. However, following the amendments made by SR 97/302, the definition is relevant to the Regulations. These regulations apply the definition to the Regulations.

Amendments made by these regulations

Subregulation 4.2 omits the definition of "business" from subregulation 12F(2) and subregulation 4.1 inserts the definition into subregulation 12F(1).

Definition of "savings"

Subregulation 12F(2) also contains the definition of "savings", which was inserted by SR 97/302. The definition attributes the total of any profits retained by certain companies, trusts or partnerships as "savings" (and, therefore, actual means) of a person. However', the policy intention is that only a person's, and each family member's, share of the profit retained by certain companies and partnerships are the person's "savings'. The intention is also that the person's, and each family member's, share of the profit retained by certain trusts are the person's "savings", where a share can be identified. If a share cannot be identified the total amount of the profit retained by the trust is the person's "savings". The Regulations are amended accordingly.

Amendments made by these regulations

Subregulation 4.3 omits the current definition of "savings" and substitutes a definition that provides that "savings" has the meanings given by regulation 12FA. Regulation 5 inserts new regulation I2FA to provide that "savings", in relation to a designated person or family member, include:

*       all of the shares of the person and each family member in profit retained by a company of which the person or family member is a director or shareholder who has a substantial influence over whether company profit is distributed to the person or family member or another company or a partnership or trust in which the person or family member has an interest;

*       all of the shares of the person and each family member in profit retained by a partnership of which the person or family member is a member who has a substantial influence over whether partnership profit is distributed to the person or fan-lily member or another partnership or a company or trust in which the person or family member has an interest; and

*       all of the shares of the person and each family member in undistributed trust profit or. if no share is attributable, the total amount of the undistributed trust profit, if the person or family member is a trustee or beneficiary who has a power of appointment under the trust, or a power to rescind or vary a provision of, or the effect of the exercise of a power under, the trust or substantial influence over whether trust profit is distributed to the person or family member or another trust or a partnership or company in which the person or family member has an interest.

The threshold test in deciding what proportion of profit retained by a company or partnership is attributed to a designated person or family member is whether the person or family member has a substantial influence in his or her capacity as a shareholder or director of the company, or a member of the partnership, over whether the profit is distributed. Once the threshold test is satisfied, "savings" includes the person's share, and the share of any family member as defined, in the profit retained.

Similarly, in relation to trusts, the threshold test in deciding what proportion of profit retained by a trust is attributed to a designated person or family member is whether the person or family member is a trustee or beneficiary who has a power of appointment under the trust, or has a power to rescind or vary a provision of, or the effect of the exercise of a power under; the trust, or substantial influence over whether trust profit is distributed. Once the threshold test is satisfied, "savings" includes the person's share, and the share of any family member as defined, in the profit retained.

Regulation 6 Regulation 12L (Students not entitled to living allowance) Regulation 7 Regulation 12M (Actual means: designated parents)

Following the restructure of Division 1B made by SR 97/302, subregulations 12N(2) to (4), 12U(2) to (4), 12ZA(5) to (7) and 12ZF(S) to (7) are misplaced. The regulations place these provisions in their correct positions within the Regulations.

The regulations also correct drafting errors in subregulations 12N(2) and (3), 12U(2) and (3), 12ZA(5) and (6) and 12ZF(5) and (6). These provisions require the Secretary to impute a value to:

*       expenditure in a transaction that the Secretary considers does not represent a fair market value for the expenditure; and

*       expenditure in a transaction that the Secretary considers to have been engaged in by a person, apart from a designated person or family member, for the benefit of the designated person or family member as if the expenditure had been incurred by the designated person or family member.

These provisions are deficient in several respects:

*       it is not clear that the amount of expenditure to be considered by the Secretary is an amount reported in an application for AUSTUDY.

*       they require the Secretary to consider each and every transaction involving expenditure to either determine whether the expenditure represents a fair market price. While this approach is taken in some cases, usually at a review or compliance stage, it is not generally applicable because expenditure in many transactions is grouped under general headings;

*       the concept of a "fair market price" does not accurately reflect the policy intention; and

*       they do not provide that the value imputed to expenditure by the Secretary is taken to be expenditure by the designated person or family member.

Amendments made by these regulations

Subregulation 8.5 omits subregulations 12N(2), (3) and (4) in relation to a designated parent. Subregulations 11.4, 14.5 and 17.4 omit similar provisions in relation to a designated spouse, designated student with spouse and designated student without spouse.

Current subregulations 12N(2) and 12N(3), amended as outlined below, are inserted into regulation 12L as subregulations 12L(2) and (3) by regulation 6. Current subregulation 12N(4) is inserted into regulation 12M as subregulation 12M(4) and current subregulation 12M(4) is renumbered 12M(5) by regulation 7. Similar amendments in relation to a designated spouse, designated student with spouse and designated student without spouse are made by regulations 9 and 10, 12 and 13, and 15 and 16 respectively.

Regulation 6 also makes the following amendments to current subregulations 12N(2) and (3) to overcome the problems noted above:

*       "reported to the Secretary in relation to the application for AUSTUDY" is inserted;

*       "in a particular transaction" is omitted;

*       "fair market price" is omitted and substituted by "fair market value"; and

*       new paragraphs 12L(2)(b) and 12L(3)(b) are inserted to attribute the imputed fair market value as expenditure of a designated parent or family member.

Regulations 9, 12 and 15 make similar amendments in relation to a designated spouse, designated student with spouse and designated student without spouse respectively.

Regulation 8 Regulation 12N (What is not the actual means of a designated parent?)

Regulations 12N(1)(c) and (d)

Paragraph 12N(1)(c) provides an exclusion from actual means where a designated parent or family member incurs expenditure in boarding away from home another family member who is a student qualifying for a boarding allowance under the Assistance to Isolated Children (AIC) scheme. The exclusion is the lesser of the amount of the expenditure incurred and $5,274 less the amount of the boarding allowance. Paragraph 12N(1)(d) provides similarly in respect of a student qualifying for the away-from-home living allowance. Paragraphs 12U(1)(c) and (d), 12ZA(1)(c) and (d), and 12ZF(1)(c) and (d) make similar provision in relation to a designated spouse, designated student with spouse and designated student without spouse respectively.

Paragraphs 12N(1)(c) and (d), 12U(1)(c) and (d), 12ZA(1)(c) and (d), and 12ZF(1)(c) and (d) do not, as they should, specify that the expenditure to board a family member away from home must be incurred in the relevant financial year (i.e. the financial year that ended before the year of study or the financial year ending in the year of study, as appropriate). The paragraphs are amended accordingly.

Amendments made by these regulations

Subregulations 8.1 and 8.2 omit all the words before subparagraph (i) in paragraphs 12N(1)(c) and (d) respectively and, aside from a slight rewording that does not change the effect of the provisions, insert "in the relevant financial yea?' to clarify that the expenditure must have been incurred in that year to be excluded from actual means.

Subregulations 11.1 and 11.2, 14.1 and 14.2, and 17.1 and 17.2 make similar amendments in relation to a designated spouse, designated student with spouse and designated student without spouse respectively

Paragraph 12N(1)(m)

Paragraph 12N(1)(m) provides an exclusion from actual means for expenditure or savings in the relevant financial year of not more than $6,000 from any income from independent employment (i.e. employment outside of the family and family businesses) earned by the student whose application is being considered (paragraph 12N(5)(b)), or a family member who is aged 16 or over, is a natural or adopted child of the designated parent and is a full-time dependent student (paragraph 12N(5)(d)). Given that students covered by paragraph 12N(5)(b) are also covered by paragraph 12N(5)(d), paragraph 12N(5)(b) is unnecessary.

Amendments made by these regulations

Subregulation 8.3 omits "(b) of' from paragraph 12N(1)(m).

Subregulation 12N(1B)

For the purposes of subparagraph 12N(1)(d)(ii), the after tax income compensation for a secondary student of a designated parent is calculated according to the formula in subregulation 12N(1B). The latter provision was amended by SR 971302 to take account of the repeal of regulation 12M (which contained the "benchmark" until repealed by SR 97/302). The amendments included a definition for the amount of income tax ("T") which is not the same as the definition for "T" inserted elsewhere by SR 971302. These regulations amend the definition of "T" so that it is consistent in the Regulations.

Amendments made by these regulations

Subregulation 8.4 amends subregulation 12N(1B) by inserting "without regard to any increase in the tax free threshold because of section 20C or 20D of the Income Tax Rates Act 1980 after "rebates". Subregulations 11.3, 14.4 and 17.3 make similar amendments in relation to a designated spouse, designated student with spouse and designated student without spouse respectively.

Additionally, subregulation 14.3 corrects a drafting error in subregulation 12ZA(3) by omitting " 'DC the" and substituting " 'DC' is the".

RATES AND THRESHOLDS

Regulation 18 Regulation 13 (Do assets affect AUSTUDY?)

Regulation 19 Regulation 61 (What is the maximum living allowance?)

Regulation 21 Regulation 64 (Is there additional allowance for a spouse?)

Regulation 22 Regulation 88 (How parental income affects living allowance)

Regulation 23 Regulation 95 (How spouse's income affects living allowance)

Regulation 24 Regulation 101 (How much is the fares allowance?)

Regulation 25 Regulation 102E (How much rent does a student have to pay?)

Regulation 26 Regulation 102F (What is the amount of rent assistance?)

Regulation 29 Schedule 6 (Fringe Benefits)

Background

The maximum living allowance rates and the income and assets tests thresholds are indexed annually in accordance with the method set out in section 12ZZA of the Student and Youth Assistance Act 1973. Additionally, rent assistance amounts, fares allowance rates for travel by motor vehicle and fringe benefits loan interest rates are also changed each year:

*       rent assistance amounts are increased to align with indexed amounts paid by the Department of Social Security on 1 January in each year;

*       fares allowance rates for travel by motor vehicle are changed in accordance with rates determined by the Department of Workplace Relations and Small Business; and

*       fringe benefits interest rates for housing and other loans are changed in accordance with fluctuations in market interest rates.

Amendments made by these regulations

Subregulations 18.1, 18.2 and 18.3 omit $120,580, $171,820 and $405,960 from paragraphs

(a), (b) and (c) respectively in the table in subregulation 13(1) and substitute $121,000, $172,250 and $407,250 respectively.

Subregulations 19.1, 19.2 and 19.3 omit $8,910, $7,580, and $5,841 from paragraphs 61(1)(a), 61(1)(b) and 61(1)(ba) respectively and substitute $8,937, $7,603 and $5,859 respectively.

Subregulation 19.4 omits the table in paragraph 61 (1)(c) and substitutes the following table:

Category	Under 18 years $	18 years and over $	Special Rate $
Standard	3,791	4,560	5,594
Independent	6,259	6,919	8,406
Away-from-home	6,259	6,919	8,406

Regulation 21 omits $7,580 from regulation 64 and substitutes $7,603.

Subregulations 22.1 and 22.2 on-fit $23,350 from subregulations 88(1) and 88(2) respectively and substitute $23,400.

Subregulations 23.1 and 23.2 omit $14,690 from subregulations 95(1) and 95(2) respectively and substitute $14,750.

Regulation 24 omits the table in paragraph 101(4)(b) and substitutes the following table:

Engine capacity of motor vehicle (without rotary engine) (cubic centimetres)	Engine capacity of motor vehicle (rotary engine) (cubic centimetres)	Rate per Kilometre (cents)
1,600 or less	800 or less	45.4
1,601 - 2,600	801-1,300	51
more than 2,600	more than 1,300	53

Regulation 25 omits $33.20 from regulation 102E and substitutes $35.80.

Subregulations 26.1 and 26.2 omit $33.20 and $37.30 from subregulation 102F(1) and paragraph 102F(2)(b) respectively and substitute $35.80 and $37.40 respectively.

Regulation 29 adds at the end of the table in subclause 16(2) of Schedule 6 the following rates:

Fringe benefits year	Notional rate of interest
	Housing loan	Other loan
starting 1/4/97	6.95%	11.75%