Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)

Outline

This Bill re-introduces, with certain modifications, two measures that were originally announced by the previous government in the 2013-14 Budget.

Schedule 1 - Student start-up loans

Schedule 1 to the Bill replaces, from the first 1 January after Royal Assent, the current student start-up scholarship with an income-contingent loan, the student start-up loan (SSL). The amendments introduce a limit of two loans per year of equivalent value to the student start-up scholarship (currently $1,025 each and to be indexed from 1 January 2017). The loans are available on a voluntary basis, and are repayable under similar arrangements to Higher Education Loan Programme debts. Students are only required to begin repaying their student start-up loan after their Higher Education Loan Programme debt has been repaid.

Schedule 1 to the Bill also provides grandfathering arrangements so that recipients who received a student start-up scholarship or Commonwealth Education Costs Scholarship prior to this Schedule taking effect, and have remained continuously on student payments, will continue to be eligible to receive the student start-up scholarship, whilst they continue to be in receipt of student payments.

Schedules 3 and 4 - Removal of the upfront payment discount and voluntary repayment bonus

Schedule 3 to the Bill amends HESA to remove the HECS-HELP up-front payment discount. Currently, a 10 per cent discount is applied to up-front student contribution payments of $500 or more. The amount of the discount is paid by the Government to the student's higher education provider. As a result of these amendments, a person will not receive the HECS-HELP up-front payment discount for a payment made in relation to a unit of study with a census date on or after 1 January 2017.

Schedule 4 to the Bill amends HESA to remove the HELP voluntary repayment bonus. The voluntary repayment bonus currently reduces a person's HELP debt by an additional 5 per cent of the payment amount when the person makes a voluntary repayment of $500 or more. As a result of these amendments, a person will not receive the HELP voluntary repayment bonus for voluntary payments made on or after 1 January 2017.

Similar amendments were previously introduced to Parliament in the Higher Education Support Amendment (Savings and Other Measures) Bill 2013, which has not passed the Senate.

Statement of compatibility with human rights

The statement of compatibility with human rights appears at the end of this explanatory memorandum.

Notes on clauses

Abbreviations used in this explanatory memorandum

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Commissioner means the Commissioner of Taxation

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HELP means the Higher Education Loan Programme

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HESA means the Higher Education Support Act 2003

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Social Security Act means the Social Security Act 1991

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Social Security Administration Act means the Social Security (Administration) Act 1999

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SSL means student start-up loan

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Student Assistance Act means the Student Assistance Act 1973

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Taxation Administration Act means the Taxation Administration Act 1953

Clause 1 sets out how the new Act is to be cited - that is, as the Labour 2013-14 Budget Savings (Measures No. 2) Act 2015.

Clause 2 provides a table that sets out the commencement dates of the various sections in, and Schedules to, the new Act.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

Schedule 1 - Student start-up loans

Summary

This Schedule establishes a student start-up loan scheme from the first 1 January after Royal Assent. Student start-up loans aim to assist students with the costs of study, including the purchase of text books, computers and internet access. Student start-up loans will be income-contingent, and there will be a limit of two loans a year of $1,025 each (indexed from 1 January 2017). The loans will be repayable under similar arrangements to HELP debts. Students will only be required to begin repaying their start-up loan after their HELP debt has been repaid.

This Schedule also provides grandfathering arrangements so that a person who received a student start-up scholarship or Commonwealth Education Costs Scholarship prior to this Schedule taking effect, and have remained continuously on student payments, will continue to be eligible to receive the student start-up scholarship, whilst they continue to be in receipt of student payments.

Background

This Schedule amends both the Social Security Act and the Student Assistance Act to provide for the student start-up loan and ABSTUDY student start-up loan. These loans will be income-contingent, and repayable under similar arrangements to HELP debts, as provided for under the HESA.

The qualification provisions for the student start-up loan and ABSTUDY student start-up loan are similar to the existing qualification provisions for the student start-up scholarship payment currently contained in Division 1 of Part 2.11B of the Social Security Act and proposed for repeal by this Bill.

To the extent possible, the provisions in this Schedule that amend the Social Security Act mirror the amendments made to the Student Assistance Act for the purpose of ensuring consistency between the administration of the student start-up loan and the ABSTUDY student start-up loan. To ensure consistency with HELP, to the extent possible, the provisions in Schedule 1 relating to the recovery of the student start-up loans and ABSTUDY student start-up loans refer to relevant provisions in the HESA, including for the purpose of aligning the rate of interest on outstanding loans.

Schedule 1 also contains amendments to the Social Security Administration Act, the Bankruptcy Act 1966, the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997, the Taxation Administration Act, and the Taxation (Interest on Overpayment and Early Payments) Act 1983, and the Trade Support Loans Act 2014, including for the purpose of ensuring consistent administration between the student start-up loan and HELP.

Explanation of the changes

Amendment to the Bankruptcy Act 1966

Item 1 makes an amendment to section 82 of the Bankruptcy Act 1966 to ensure that student start-up loan debts are not provable in bankruptcy.

Amendments to the Income Tax Assessment Act 1936

Item 2 amends subsection 82A(2) of the Income Tax Assessment Act 1936 to ensure that payments made in respect of, or in the reduction or discharge of, any indebtedness under Chapter 2AA of the Social Security Act or under Part 2 of the Student Assistance Act are not included within the definition of expenses of self-education as contained in the Income Tax Assessment Act 1936.

Items 3 and 4 amend section 202 of the Income Tax Assessment Act 1936, which is the first provision of the Part of that Act that establishes the system of tax file numbers. Section 202 outlines the object of the system. In that context, the amendments refer to facilitating the administration of Chapter 2AA of the Social Security Act and Part 2 of the Student Assistance Act with regard to the provision of student start-up loans and ABSTUDY student start-up loans and the recovery of associated debts.

Item 5 amends paragraph 202F(1)(fb) of the Income Tax Assessment Act 1936 to provide that a decision of the Commissioner to give a notice under subsections 1061ZVJD(1) and 1061ZVJF(1) of the Social Security Act (as inserted by this Schedule) and sections 11D(1) and 11F(1) of the Student Assistance Act (as inserted by this Schedule) can be reviewed by the Administrative Appeals Tribunal. This aligns the reviewability of such decisions with the reviewability of similar decisions to give certain notices dealt with under section 202F.

Amendments to the Income Tax Assessment Act 1997

Items 6 and 7 amend section 12-5 to include student start-up loans in the list of provisions about tax deductions. These amendments, like other items in the list, are merely signposts to indicate where to find substantive provisions that actually deal with the relevant deductions.

Item 8 amends section 26-20 to ensure that any payment made in reduction or discharge of any indebtedness under Chapter 2AA of the Social Security Act or Part 2 of the Student Assistance Act is not a payment that can be deducted under the Income Tax Assessment Act 1997. This amendment will ensure that there is a consistent treatment between HELP and the student start-up loan under section 26-20.

Items 9 and 10 insert definitions of accumulated ABSTUDY SSL debt and accumulated SSL debt into the Income Tax Assessment Act 1997 (to refer to where these terms are defined in the Student Assistance Act and the Social Security Act).

Amendments to the Social Security Act

Item 11 inserts new section 19AA, which provides a series of definitions for the purpose of Chapter 2AA of the Social Security Act to deal with new concepts introduced under the student start-up loan provisions.

Items 12 to 19 insert provisions into section 23, pointing to where to find definitions for a number of terms, including accumulated SSL debt, approved scholarship course, Commonwealth Education Costs Scholarship, enrolment test day, qualification period, scholarship-entitled person and student start-up loan.

item 14, broadly defines Commonwealth Education Costs Scholarship to include any scholarship provided for the purpose of assisting with education costs under the Commonwealth Scholarships Guidelines made under Part 2-4 of the HESA. This approach provides flexibility around possible future scholarships that may be established under those Guidelines.

Item 18 ensures that a student start-up loan will be a social security payment for the purposes of the Act. Bringing student start-up loans within this definition has a number of consequences, including ensuring that existing section 1223 of the Social Security Act (debts arising from lack of qualification, overpayment etc.) can apply to student start-up loans.

Items 20 and 21 insert paragraph 592F(1)(aa) and (ab) and 592F(2)(aa) and (ab) to amend the qualification provisions of the student start-up scholarship to allow a person who currently receives a student start-up scholarship to continue to receive this payment.

In order to continue to qualify for and receive a student start-up scholarship on the basis of youth allowance, a person must have received either a student start-up scholarship payment, an ABSTUDY student start-up scholarship payment or a Commonwealth Education Costs Scholarship with respect to a period before these amendments take effect.

A person must also be receiving youth allowance in respect of the person undertaking full-time study or Living Allowance under the ABSTUDY Scheme for a continuous period since the time in which they received at least one of the above mentioned scholarships.

The qualification to receive a student start-up scholarship on the basis of austudy is the same as the qualification for a student start-up scholarship on the basis of youth allowance in respect of the person undertaking full-time study, except that a person can still be qualified if the person continuously received a youth allowance, a Living Allowance under the ABSTUDY Scheme or austudy.

A person will be treated as continuously receiving either youth allowance in respect of a person undertaking full-time study, a Living Allowance or austudy even though the person did not actually receive such payments if they comply with section 38B of the Act (about notional continuous period of receipt of income support payments). In addition, a person will be continuously regarded as receiving such payments even if these payments are temporarily reduced to nil.

Items 22 and 23 make minor amendments to ensure that the definition of an approved scholarship course will apply to all references to that term in the Act, rather than just within Part 2.11B. This amendment has no substantive effect other than clarifying that the reference to this term in section 1067A (about a person being independent) is to be interpreted according to the existing definition.

Item 24 inserts new Chapter 2AA - Student start-up loans.

Part 2AA.1 - Introduction

Section 1061ZVAA - Simplified outline of this Chapter

Section 1061ZVAA provides a descriptive overview of new Chapter 2AA and an outline of what student start-up loans involve.

Part 2AA.2 - Qualification for and amount of student start-up loan

Section 1061ZVBA - Simplified outline of this Part

Section 1061ZVBA provides a brief overview of the qualification criteria and operation of the student start-up loan. Full-time students who receive youth allowance or austudy payment may qualify for a student start-up loan if they meet the qualification criteria in section 1061ZVBB. A person can qualify for up to two loans per calendar year.

Section 1061ZVBB - Qualification for student start-up loan

Section 1061ZVBB provides the qualification requirement for a student start-up loan. These qualification requirements are similar to the qualification requirements for the student start-up scholarship payment that, up until these amendments, had been contained in section 592F of the Social Security Act.

To qualify for a student start-up loan, each of the following must occur on the person's qualification test day:

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the person is qualified for youth allowance or austudy payment;

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youth allowance or austudy payment is payable to the person (which means they are receiving one of these payments rather than undergoing a period of suspension or some other period where they are in receipt of not more than an nil rate of payment);

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the person is receiving an amount of payment of youth allowance or austudy payment that is more than just the pharmaceutical allowance and rent assistance components of these payments as worked out under the relevant rate calculator;

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the person is receiving youth allowance or austudy payment because the person is enrolled in an approved scholarship course (as defined in section 592M);

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the Secretary is satisfied that the person has not received and is not likely to receive the amount or value of any scholarship provided to assist with education costs under the Commonwealth Scholarships Guidelines made for the purposes of Part 2-4 of the HESA in the period of six months starting immediately after the relevant qualification test day; and

•

the person has provided their tax file number.

Subsection 1061ZVBB(3) sets out when a person's qualification test day is for a qualification period. The qualification test day is the earliest of the day the person's claim is determined, the last day of the approved scholarship course and the last day of the qualification period. This formulation ensures that loans are only paid to people who are continuing their qualifying study or have studied for the duration of their course or qualification period. Generally, a qualification test day is worked out under paragraph (a).

Example of a student's qualification test day

Odetta is so busy studying all year that she only claims a student start-up loan towards the end of 2018 in respect of the qualification period spanning 1 July to 31 December 2018 for her approved scholarship course, a Bachelor of Arts, in which she is a first year student. The Secretary determines her claim after the qualification period. Odetta's qualification test day is taken to be the last day of the qualification period in respect of which the claim was made (rather than the day the Secretary determined Odetta's claim or the final day of her course, which she will continue studying in 2019).

Section 1061ZVBC - Circumstances in which person is not qualified for student start-up loan

Section 1061ZVBC provides the circumstances in which a person is not qualified for a student start-up loan despite otherwise being qualified under section 1061ZVBB.

A person is not qualified for a student start-up loan for a qualification period if:

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it has already been determined (immediately before the person's qualification test day for the relevant period) that the person is qualified for a student start-up loan or ABSTUDY student start-up loan for that qualification period (this is to ensure a person cannot receive more than one loan in a six-month period); or

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the person is a scholarship-entitled person; or

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in the period of six months ending immediately before the relevant qualification test day, one of the following circumstances applies:

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the person has received a payment known as a student start-up scholarship payment under the Veterans' Children Education Scheme;

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the person has received a payment known as a student start-up scholarship payment under the Military Rehabilitation and Compensation Act Education and Training Scheme;

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the person has received the amount or value of any scholarship provided to assist with education costs under the Commonwealth Scholarships Guidelines made for the purposes of Part 2-4 of the HESA;

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the person was entitled to the amount or value of any scholarship provided to assist with education costs under the Commonwealth Scholarships Guidelines made for the purposes of Part 2-4 of the HESA but has not received the full entitlement only because the scholarship was suspended.

Subsection 1061ZVBC(2) defines a scholarship-entitled person as someone who has received any of the following:

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a student start-up scholarship payment under section 592F;

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an ABSTUDY student start up scholarship payment;

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the amount or value of a Commonwealth Education Costs Scholarship;

and for a continuous period since receiving the scholarship the person has been receiving:

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youth allowance (in respect of full time study);

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an austudy payment; or

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Living Allowance payments under the ABSTUDY scheme.

Section 1061ZVBD - Amount of student start-up loan

Section 1061ZVBD provides that the amount of the student start-up loan payment is $1,025. The amount of the student start- up loan payment will be indexed on 1 January 2017 and each later 1 January in line with the Consumer Price Index.

Part 2AA.3 - Indebtedness

Division 1 - Introduction

Section 1061ZVCA - Simplified outline of this Part

Section 1061ZVCA provides an outline of how student start-up loan debts are incurred in Part 2AA.3, which is about the circumstances and rules relating to a person's indebtedness with regard to a student start-up loan.

Division 2 - Incurring SSL debts

Section 1061ZVDA - SSL debts

Section 1061ZVDA establishes the student start-up loan as an income-contingent loan that is recovered and administered in a similar way to a HELP loan. The student start-up loan is only treated as an income-contingent loan if the person remains in their course for 35 days after being qualified for the loan or after the commencement of their course. If this does not occur, section 1223ABF (as also inserted by this Schedule) will provide that the student start-up loan is a debt due to the Commonwealth and, under current section 1229, is due and payable 28 days after the person receives a debt notice.

Subsection 1061ZVDA(1) provides that a person incurs a debt to the Commonwealth if the person has received a student start-up loan for a qualification period. The amount of the loan is not a debt in respect of a student start-up loan under section 1223ABF, or as a result of the person obtaining benefit where they were not entitled for any reason to obtain that benefit (due to subsection (4)).

Subsection 1061ZVDA(2) provides that the SSL debt is incurred by the person either on the day the person received the loan or the day after the person's enrolment test day for the qualification period, whichever day is later. The term enrolment test day is defined by subsection 1061ZVDA(5), as indicated by a note at the end of this provision.

Subsection 1061ZVDA(3) clarifies that the amount of the SSL debt is the amount of the loan reduced by any amount repaid before the day on which the debt is incurred. This will mean that if a student initially enrols in a course or part of a course, receives a payment and withdraws from the course, the student can reduce their debt if they make an early repayment.

Subsection 1061ZVDA(4) provides that an SSL debt is not incurred if the loan has been fully repaid before the day on which the loan would have otherwise been incurred or if the Secretary has formed an opinion, under subsection 1223ABF(3) in relation to the loan, that the person ceased studying due to exceptional circumstances beyond the person's control.

In this case, if a person ceases to be enrolled in an approved scholarship course or is no longer enrolled full-time before the enrolment test day, neither a social security debt nor an SSL debt will be incurred. This provision will ensure that there is flexibility and fairness in respect to incurring a student start-up loan. SSL debts are also not incurred where the amount of the loan is a debt because of the terms of section 1223ABF (generally, where the person does not continue to study) or section 1223 (generally, where a person obtains the benefit of the loan and is not entitled).

Subsection 1061ZVDA(5) defines a person's enrolment test day for a qualification period, which is the earliest of the following days:

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the last day of the approved scholarship course, if the approved scholarship course ends during that qualification period;

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the last day of the relevant qualification period;

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the 35th day of the period starting on either the first day of the approved scholarship course (if the person's qualification time was before the first day of the relevant approved scholarship course, for example where a person is beginning their course) or the day on which the person qualifies for the loan.

Section 1061ZVDB - SSL debt discharged by death

Section 1061ZVDB ensures that an SSL debt is wholly discharged at death and that outstanding obligations to repay an SSL debt do not need to be met through a deceased person's estate.

Section 1061ZVDC - Notice to Commissioner

Section 1061ZVDC ensures that, if a person incurs an SSL debt, the Secretary must give the Commissioner a notice specifying the amount of the debt incurred. Subsection 1061ZVDC(2) ensures that the Secretary has power to include other details requested by the Commissioner to ensure proper administration of the debt. Passing this information to the Commissioner will allow for the Australian Taxation Office to administer SSL debt repayments.

Division 3 - Working out accumulated SSL debts

This Division provides for the calculation of a SSL debt and largely mirrors the calculation of HELP debts under Division 140 of the HESA.

Section 1061ZVEA - Simplified outline of this Division

Section 1061ZVEA is an information provision, which provides an outline as to how accumulated SSL debts are worked out for any given financial year. As explained in the provision, there are two stages to working out a person's accumulated SSL debt.

Section 1061ZVEB - Stage 1 - working out a former accumulated SSL debt.

Subsection 1061ZVEB(1) provides that a person's former accumulated SSL debt (in relation to the person's accumulated SSL debt for a financial year) is worked out by multiplying the amount worked out using a six-step method statement (set out in the table in the subsection) by the HELP debt indexation factor for 1 June in that financial year. The six steps generally work by adding outstanding SSL debts and subtracting repayments (and factoring in any amendments to assessments).

The term HELP debt indexation factor is defined in section 19AA as having the same meaning as in the HESA.

Subsection 1061ZVEB(2) provides that, for the purposes of section 1061ZVEB, an assessment (or an amendment of an assessment) is taken to have been made on the day specified in the notice of assessment (or notice of amended assessment) as the date of issue of that notice.

Section 1061ZVEC - Stage 2 - working out an accumulated SSL debt

Subsection 1061ZVEC(1) provides a formula, which sets out that a person's accumulated SSL debt, for a financial year, is equal to the person's former accumulated SSL debt plus the SSL debts incurred minus the person's SSL repayments, where:

•

a former accumulated SSL debt is the person's former accumulated SSL debt in relation to that accumulated SSL debt;

•

SSL debt repayments are the sum of all voluntary SSL repayments paid on or after 1 July in the financial year and before 1 June in that year, in reduction of the SSL debts incurred in that year; and

•

SSL debts incurred are the sum of all SSL debts (if any) that the person has incurred during the first six months of the financial year.

Subsection 1061ZVEC(2) provides that the person incurs the accumulated SSL debt on 1 June in the relevant financial year.

Section 1061ZVED - Rounding of amounts

Subsection 1061ZVED(1) provides that, if (apart from this section) a person's accumulated SSL debt is $1 or above, then that debt will be rounded down to the nearest whole dollar.

Subsection 1061ZVED(2) provides that, if (apart from this section) a person's accumulated SSL debt is below $1, then that debt is rounded down to zero.

Section 1061ZVEE - Accumulated SSL debt discharges earlier debts

Subsection 1061ZVEE(1) provides that the accumulated SSL debt a person incurs on 1 June in a financial year discharges (or discharges the unpaid part of) any SSL debt that the person incurred during the calendar year immediately preceding that day and any accumulated SSL debt that the person incurred on the preceding 1 June. This is because an accumulated SSL debt incurred on 1 June in a financial year is calculated to include any new SSL debt incurred during the calendar year as well as any outstanding accumulated SSL debt that was incurred immediately preceding 1 June. As such, this rule essentially carries over old debts, subject to the calculation of an accumulated SSL debt.

Subsection 1061ZVEE(2) clarifies that subsection 1061ZVEE(1) does not affect the calculation of accumulated SSL debts.

Section 1061ZVEF - Accumulated SSL debt discharged by death

Subsection 1061ZVEF(1) provides that, when a person who has an accumulated SSL debt dies, the accumulated SSL debt is taken to have been discharged.

Subsection 1061ZVEF(2) clarifies, to avoid any doubt that may be created by this provision, that subsection 1061ZVEF(1) does not affect any compulsory SSL repayment amounts required to be paid in respect of the accumulated SSL debt, whether or not those amounts were assessed before the person's death.

Part 2AA.4 - Discharge of indebtedness

Division 1 - Introduction

Division 1 of Part 2AA.4 provides for the voluntary and compulsory discharge of SSL repayments. These provisions largely mirror the discharge of indebtedness provisions of Divisions 148 to 154 of the HESA.

Section 1061ZVFA - Simplified outline of this Part

Subsection 1061ZVFA provides an outline of Part 2AA.4, relating to discharging SSL debts.

Section 1061ZVFB - Debts under this Chapter

Section 1061ZVFB(1) provides that debts dealt with under this Chapter are SSL debts and accumulated SSL debts. Debts that arise under sections 1223 (Debts arising from a lack of qualification, overpayment etc.) and 1223ABF (debts for failure to continue studying) are not debts under Chapter 2AA of the Act (they are dealt with separately under Chapter 5).

Division 2 - Voluntary discharge of indebtedness

Section 1061ZVGA - Voluntary SSL repayments in respect of debts

Section 1061ZVGA allows a person to make a voluntary payment, at any time, in respect of a debt that the person owes to the Commonwealth under Chapter 2AA. This payment must be made to the Commissioner for Taxation (through the Australian Taxation Office).

Section 1061ZVGB - Application of voluntary SSL repayments

Subsection 1061ZVGB(1) provides that a person who makes voluntary payments to the Commonwealth in respect of debts under Chapter 2AA may give a direction as to which debt they are paying off.

Subsection 1061ZVGB(2) provides that, if the person has not given an adequate direction, money paid will firstly discharge or reduce any accumulated SSL debt of the person and secondly be applied to the discharge or reduction of any SSL debts of the person.

Section 1061ZVGC - Refunding of payments

Section 1061ZVGC ensures that a person cannot pay more money than they owe to the Commonwealth by providing that, if a person pays an amount to the Commonwealth under Division 2 of Part 2AA.3 and the amount is greater than the amount required to discharge all debt under Chapter 2AA and the total amount of the person's primary tax debts (within the meaning of Part IIB of the Taxation Administration Act), then the Commonwealth must refund to the person an amount equal to that excess.

Division 3 - Compulsory discharge of indebtedness

Section 1061ZVHA - Liability to repay amounts

Subsection 1061ZVHA(1) provides that, if:

•

a person's HELP repayment income for an income year is greater than their minimum repayment HELP income for that income year; and

•

the person had an accumulated SSL debt on the 1 June immediately preceding an assessment of the person's income of that year;

then the person is liable to pay to the Commonwealth so much of the person's repayable SSL debt for the income year that does not exceed the amount worked out by subtracting the person's HELP liability from the applicable percentage of repayment income. For this purpose, applicable percentage of HELP repayment income is defined to mean the amount that is the percentage of the person's repayment income applicable under the table in section 154-20 of the HESA and HELP liability means any amount the person is liable to pay under section 154-1 of that Act for the income year in respect of an accumulated HELP debt.

The effect of this provision is that the repayment of any existing HELP debt is paid back before an SSL debt. It also ensures that, in a year where an amount payable is more than the amount remaining of the accumulated HELP debt, the remainder of the amount payable to the Commonwealth is paid to reduce a person's SSL debt.

To clarify this effect, subsection 1061ZVHA(2) ensures that a person is not liable under this section to pay an amount for an income year if the amount worked out through the formula in subsection (1) is zero or less than zero.

Subsection 1061ZVHA(3) provides that a person is not liable to pay an amount under this section for an income year if no Medicare levy is payable by the person on their taxable income for that year or if the amount of the Medicare levy required to be paid by the person on their taxable for the income year is reduced under law.

Section 1061ZVHB - Repayable SSL debt for an income year

Subsection 1061ZVHB(1) provides that a person's repayable SSL debt for an income year is their accumulated SSL debt immediately preceding 1 June in that income year or the amount (if any) remaining after deducting the total amount paid or assessed to be payable.

Subsection 1061ZVHB(2) clarifies that, in the calculation of a person's repayable debt, if the amount assessed to be payable has been increased, or reduced by an amendment of the relevant assessment, then the amended amount is the amount payable.

Section 1061ZVHC - Commissioner may make assessments

Section 1061ZVHC allows the Commissioner to make an assessment of the person's accumulated SSL debt on the 1 June immediately before making the assessment. The Commissioner may also make an assessment of the amount that is required to be paid in respect of that debt. In making this assessment, the Commissioner may use any information in his or her possession.

Section 1061ZVHD - Notification of notices of assessment of tax

Section 1061ZVHD allows the Commissioner to provide an additional notice of an assessment of a SSL debt if the Commissioner did not provide this with an assessment that she/he has served with respect to a person's income under section 174 of the Income Tax Assessment Act 1936. This additional notice of assessment must also contain the amounts that have been provided in the notice under section 174 of that Act.

Section 1061ZVHE - Commissioner may defer making assessments

Subsection 1061ZVHE(1) provides that a person may apply in an approved form to the Commissioner for deferral of the making of an assessment in respect of the person under section 1061ZVHC.

Subsection 1061ZVHE(2) provides that the application must specify the income year for which the deferral is being sought and the reasons for seeking the deferral.

Subsection 1061ZVHE(3) provides that the income year specified in the application must be the income year in which the person makes the application, the immediately preceding income year or the immediately succeeding income year.

Subsection 1061ZVHE(4) provides that, on application by a person under section 1061ZVHE(1), the Commissioner may defer making an assessment in respect of the person under section 1061ZVHC if the Commissioner is of the opinion that if the assessment were made, payment of the assessed amount would either cause serious hardship to the person, or there are other special reasons that make it fair and reasonable to defer making the assessment.

Subsection 1061ZVHE(5) provides that the Commissioner may defer making the assessment for any period that the Commissioner considers to be appropriate.

Subsection 1061ZVHE(6) provides that as soon as practicable after an application is made under section 1061ZVHE(1), the Commissioner must consider the matter to which the application relates and notify the applicant of the Commissioner's decision on the application.

Section 1061ZVHF - Commissioner may amend assessments

Subsection 1061ZVHF(1) provides that a person may apply in an approved form to the Commissioner for an amendment of an assessment made in respect of the person under section 1061ZVHC so that the amount payable under the assessment is reduced or no amount is payable under the assessment.

Subsection 1061ZVHF(2) provides that the application must be made no later than two years after the day the Commissioner gives notice to which the assessment relates or must specify the reasons justifying a later application.

Subsection 1061ZVHF(3) provides that, on application by a person under section 1061ZVHF(1), the Commissioner may amend an assessment made in respect of the person under section 1061ZVHC so that the amount payable under the assessment is reduced or no amount is payable under the assessment if the Commissioner is of the opinion that payment of the assessed amount has caused (or would cause) serious hardship to the person or there are other special reasons that make it fair and reasonable to make the amendment.

Subsection 1061ZVHF(4) provides that, as soon as practicable after an application is made under section 1061ZVHF, the Commissioner must consider the matter to which the application relates and notify the applicant of the Commissioner's decision on the application.

Part 2AA.5 - Tax administration matters

Section 1061ZVJA Simplified outline of this Part

Section 1061ZVJA outlines the purpose of Part 2AA.5 - Tax administration matters.

Section 1061ZVJB - Verification of tax file numbers

Section 1061ZVJB(1) provides power for the Secretary, when determining a claim for a student start-up loan for a person receiving youth allowance or austudy payment, to verify the person's tax file number with the Commissioner.

Section 1061ZVJB(2) allows the Commissioner, if they are satisfied with the person's tax file number, to notify the Secretary, through a written notice, accordingly.

Note that, under existing section 75 of the Social Security Administration Act, the Secretary has the power to request tax file numbers.

Section 1061ZVJC - When person with tax file number incorrectly notifies number

Section 1061ZVJC provides that, if the Commissioner is satisfied that the tax file number that was given to the Secretary for the purposes of qualification for a student start-up loan has been at any time cancelled or withdrawn, or is otherwise wrong, and the person does have a tax file number, then the Commissioner may give a notice of this to the Secretary. The Commissioner may also provide the Secretary with the person's tax file number. For the purposes of qualification, the new tax file number is the one that is taken to have been given to the Secretary.

This provision ensures that a person will not be disqualified from the student start-up loan because of providing an incorrect tax file number.

Section 1061ZVJD - When person without tax file number incorrectly notifies number

Subsection 1061ZVJD(1) provides that, if the Commissioner is satisfied that the tax file number that was given to the Secretary in order to become qualified for a student start-up loan has been cancelled or for any other reason is not the person's tax file number and the Commissioner is not satisfied that the person has such a number, then the Commissioner may give to the Secretary a written notice informing the Secretary accordingly. The decision to give the notice is reviewable under section 202F of the Income Tax Assessment Act 1936.

The Commissioner must also give a copy of any notice to the person concerned, containing a statement of reasons for the decision to give the notice.

Note that section 75 of the Social Security Administration Act allows the Secretary to request a tax file number from a person who is receiving a social security payment.

Section 1061ZVJE - When tax file numbers are altered

Section 1061ZVJE ensures that, when a new tax file number is issued in place of one that has been withdrawn, the Commissioner may inform the Secretary, and the new number is taken to be notified by the person to whom the tax file number relates.

Section 1061ZVJF - When tax file numbers are cancelled

Section 1061ZVJF provides that, if the Commissioner cancels a tax file number that a person has given to the Secretary for the purposes of qualification for a student start-up loan, then the Commissioner may give to the Secretary a written notice of the cancellation. The decision to give the notice is reviewable under section 202F of the Income Tax Assessment Act 1936.

The Commissioner must also give a copy of any notice to the person concerned containing a statement of reasons for the decision to give the notice.

Note that section 75 of the Social Security Administration Act allows the Secretary to request a tax file number from a person who is receiving a social security payment.

Section 1061ZVJG - Returns, assessments, collection and recovery

Section 1061ZVJG provides that, subject to Parts 2AA.4 and 2AA.5 of the Social Security Act (as inserted by this Schedule), Part IV of the Income Tax Assessment Act 1936, Division 5 of the Income Tax Assessment Act 1997 and Part 4-15 in Schedule 1 to the Taxation Administration Act apply (so far as they are capable of application) in relation to a compulsory SSL repayment amount of a person as if it were income tax assessed to be payable by a taxpayer by an assessment made under Part IV of the Income Tax Assessment Act 1936.

Section 1061ZVJH - Charges and civil penalties for failing to meet obligations

Section 1061ZVJH provides that Part 4-25 in Schedule 1 to the Taxation Administration Act has effect as if any compulsory SSL repayment amount of a person were income tax payable by the person in respect of the income year in respect of which the assessment of that debt was made, and Part 2AA.1 so far as it relates to persons providing tax file numbers, and Part 2AA.3, 2AA.4 and Part 2AA.5 were income tax laws.

This does not have the effect of making a person liable to a penalty for any act or omission that happened before the commencement of this section.

Section 1061ZVJJ - Pay as you go (PAYG) withholding

Section 1061ZVJJ provides that Part 2-5 (other than section 12-55 and Subdivisions 12-E, 12-F and 12-G) in Schedule 1 to the Taxation Administration Act applies (so far as it is capable of application) in relation to the collection of amounts of a person's compulsory SSL repayment amount of a person as if the compulsory SSL repayment amount were income tax.

Section 1061ZVJK - Pay as you go (PAYG) instalments

Section 1061ZVJK provides that Division 45 in Schedule 1 to the Taxation Administration Act applies (so far as it is capable of application) in relation to the collection of a person's compulsory SSL repayment amount as if the compulsory repayment amount were income tax.

Section 1061ZVJL - Administration of this Chapter

Section 1061ZVJL provides that the Commissioner has general administration of certain provisions in the social security law relevant to the repayment of student start-up loans. The purpose of this provision is to allow the Commissioner to administer the recovery of SSL debts (noting that the Secretary retains some powers, such as being responsible for forming an opinion as to whether a person ceased to be enrolled in an approved scholarship course because of exceptional circumstances beyond the person's control).

Items 25 and 26 insert items 69A and 41A into the tables contained in section 1190 and subsection 1191(1) respectively to provide for the indexation of the student start-up loan amount (to be paid to a person). This is not to be confused with the indexation of a person's accumulated SSL debt.

Item 26A inserts subsection 1192(8B) to ensure that the student start-up loan amount is not indexed on 1 January 2016, as the student start-up scholarship payment amount was not indexed on 1 January 2016 under subsection 1192(8A) of the Social Security Act 1991. The student start-up loan will be indexed on 1 January 2017 and each subsequent 1 January.

Item 27 inserts a new item in the table in subsection 1222(2) to list the recovery methods available for debts in respect of student start-up loans under section 1223ABF.

Item 28 inserts new section 1223ABF - Debts in respect of student start-up loans.

Subsection 1223ABF(1) raises a debt for a person who is paid a student start-up loan for a qualification period where the circumstances determined in a legislative instrument under subsection (2) apply to the person.

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Subsection 1223ABF(2) provides that the Minister may, by legislative instrument, determine circumstances in which subsection (1) applies to a person who has not met, or who has ceased to meet, the condition that they are undertaking full-time study for youth allowance, or qualifying study for austudy payment.

The purpose of these rules is to ensure that the loans are targeted to people who have a genuine commitment to continuing their study.

Subsection 1223ABF(3) states that a debt will not arise under this section if the Secretary determines that a person is no longer enrolled in qualifying study because of exceptional circumstances beyond the person's control.

Items 30 and 31 make amendments to ensure that deductions (to pay off other social security debts) are not able to be made from a student start-up loan. This ensures that student start-up loans are targeted towards meeting education costs.

Amendments to the Social Security Administration Act

Item 32 inserts section 26C, which provides a time limit for claiming the student start-up loan.

Subsection 26C(1) provides that a person's claim for a student start-up loan for a qualification period must be made before the end of the qualification period.

Subsection 26C(2) provides that a person's claim for a student start-up loan for a qualification period must be made at least 35 days before the course end date if the student is expected to complete the approved scholarship during that qualification period.

Item 33 inserts subsections 36(4) and (5), which provide obligations on the Secretary in determining claims and intend to give the Secretary flexibility in when to determine claims.

Subsection 36(4) states that, if a person claims a student start-up loan for a qualification period, the Secretary may determine the person's claim at a time the Secretary considers appropriate. For claims made before the start of the period of study, the Secretary should have regard to the principle that the time should be close to the start of the period of study concerned for the relevant approved scholarship course.

Subsection 36(5) provides that nothing in subsection 36(4) affects the operation of section 39. Section 39 states that if the Secretary does not make a determination regarding a claim within the period of 13 weeks after the day on which the claim was made, the Secretary is taken to have made a determination rejecting the claim.

Item 34 is a minor amendment for the purposes of item 35.

Item 35 inserts subsection 39(9) to provide an exception to the requirement in subsection 39(1). Subsection 39(1) deems that a claim that has not been decided upon by the Secretary within a 13-week period of making the claim is refused.

Subsection 39(9) ensures that the 13-week period will start on the day when the person becomes qualified (that is, on the first day of the qualification period) - thus, allowing a person to make valid claims for student start-up loans (for upcoming qualification periods) in advance of actually being qualified. This will enable the Secretary to determine claims once the relevant qualification periods actually commence.

Item 36 inserts section 47DB, which provides for the time when the payment of the amount of a student start-up loan must be made. There is also a rule to deal with how student start-up loans are to be paid where a person's youth allowance is paid to their parent. In this case, the Secretary can pay the student start-up loan to the parent (or another person in the exercise of discretion).

Item 37 makes a mechanical amendment to ensure that a student start-up loan can be paid into a bank account, and is otherwise subject to the payment rules in existing section 55.

Item 38 amends the heading to section 58.

Item 39 amends section 58 to include reference to the student start-up loan to ensure it is exempted from the rule that allows a social security payment to be paid to another person after the death of the person who was otherwise entitled to the payment. This exemption is not needed because a person's death discharges SSL debt liabilities.

Item 40 is an amendment to ensure that student start-up loans are subject to the nominee provisions in the Social Security Administration Act (to align them with the former treatment of student start-up scholarship payments).

Item 41 inserts subsection 127(4) to provide that the Secretary must not review a decision that is a reviewable decision under section 138A. As discussed with respect to section 138A below, the purpose of this amendment is to ensure that reviewable decisions under the student start-up loan provisions are reviewed in the same way that the equivalent decisions in the HESA, relating to HELP, are reviewed. For the recovery of HELP debts, the decision-maker for reviewable decisions is the Commissioner. This amendment appropriately ensures that the Commissioner, who administers the recovery of HELP, is the relevant decision-maker.

For the same reason, item 35 will ensure the Secretary will not be able to review other decisions relating to the student start-up loan that are reviewable by the Commissioner or decisions inserted by this Schedule that are reviewable in accordance with section 202F of the Income Tax Assessment Act 1936.

Item 42 inserts paragraphs 129(4)(da), (db) and (dc) to provide that a person may not apply to the Secretary in relation to a decision that is reviewable under section 138A or certain other decisions that are reviewable by the Commissioner or reviewable under taxation legislation.

Item 43 inserts into Part 4 new Division 2A, containing sections 138A to 138J. These provisions are intended to ensure that the system of review for the student start-up loan is consistent with the system of review for HELP under the HESA.

Division 2A - Internal review of Commissioner decisions relating to student start-up loans

Section 138A - Decisions reviewable under this Division

Section 138A provides that the decisions by the Commissioner to defer making an assessment or to amend an assessment are reviewable decisions.

Section 138B - Commissioner must give reasons for reviewable decisions

Section 138B provides that, if the Commissioner is required to notify a person of the making of a reviewable decision, then the notice must include the reasons for the decision. This means that, if the Commissioner makes a reviewable decision under section 138A, the Commissioner must include the reasons for the decision. This section does not affect any other legal obligation to give reasons for a decision.

Section 138C - Reviewer of decisions

Subsection 138C(1) provides that the Commissioner is the reviewer of reviewable decisions under Division 2A unless subsection 138C(2) applies.

Subsection 138C(2) provides that, where a delegate of the Commissioner makes a reviewable decision, any delegate of the Commissioner who reconsiders the decision must not have been involved in the making of the decision and must be more senior to the decision-maker.

Section 138D - Reviewer may reconsider reviewable decisions

Section 138D provides a mechanism by which a reviewer can reconsider a reviewable decision. Unlike section 138F, a reviewer can review a decision under this section whether or not a person requests such reconsideration.

Subsections 138D(1) and (2) provide that the reviewer of a reviewable decision may reconsider the decision if they are satisfied that there is a sufficient reason to do so. The reviewer will be able to do so even if the application for reconsideration was made on request or the decision had been confirmed, varied or set aside and an application had otherwise been made to the Administrative Appeals Tribunal.

Subsection 138D(3) provides that, after reconsidering the decision, the reviewer must either confirm, vary or set aside the decision. If the decision is set aside a new decision must be substituted.

Subsection 138D(4) provides that a decision of the reviewer to confirm, vary or set aside the original decision takes effect either on the day that is specified in the decision on review or, if it is not specified, the day on which the decision on review was made.

Subsection 138D(5) provides that the reviewer must give written notice of the decision on review to the person to whom the decision relates.

Subsection 138D(6) provides that the notice must be given within a reasonable period of time after the decision has been made and must contain a statement of the reason for the reviewer's decision on review. In addition to this requirement, section 27A of the Administrative Appeals Tribunal Act 1975 will also require the person to be notified of the person's review rights (as mentioned in a note).

Section 138E - Notice to AAT Registrar

Section 138E ensures that, if a person has applied to the Administrative Appeals Tribunal for review of a decision under subsection 138D(3), the reviewer is under an obligation to give notice of the decision to the Tribunal.

Section 138F - Reconsideration of reviewable decisions on request

Section 138F provides a mechanism by which a person can require a reviewer to confirm, vary or set aside a decision that is to be reconsidered.

Subsection 138F(1) provides a right of a person whose interests are affected by a reviewable decision to request the reviewer to reconsider the decision.

Subsection 138F(2) provides that such a request must be in a written notice given to the reviewer within 28 days (or longer, if the reviewer allows it) from when the person first received the notice of decision.

Subsection 138F(3) provides that the notice must set out the reasons for making the request.

Subsections 138F(4) to 138F(7) operate in the same way as subsections 138D(3) to 138D(6) but with respect to a decision reconsidered on request. In addition to these rules, section 27A of the Administrative Appeals Tribunal Act 1975 requires that the person is notified of their review rights.

Subsection 138F(8) provides that, if a reviewer does not give a notice of a decision to the person within 45 days after receiving the person's request, then the original decision is taken to be confirmed. This will allow an application to be made to the Administrative Appeals Tribunal under section 138H.

Section 138G - Withdrawal of request

Section 138G ensures that a person is able to withdraw a request to a reviewer to reconsider a reviewable decision.

Section 138H - AAT review of the reviewable decisions

Section 138H provides that, if a reviewable decision has been confirmed, varied or set aside by a reviewer who has reconsidered the decision, then a person may apply to the AAT for review of the decision.

Section 138J - Decision changed before AAT review completed

Section 138J puts beyond doubt that, if a decision is varied or set aside by a reviewer and an application has been made to the AAT for review of the decision, the decision on review is taken to be the decision as varied or set aside by the reviewer.

Item 44 adds student start-up loans to the list of social security payments in section 238 from which deductions cannot be made for the purposes of making payments to the Commissioner or the Child Support Registrar. This helps ensure that student start-up loans are put towards student expenses.

Amendments to the Student Assistance Act

Items 45 to 66 amend subsection 3(1) to include definitions of terms relating to the ABSTUDY student start-up loan.

Item 67 inserts new Part 2 about ABSTUDY student start-up loans.

Part 2 - ABSTUDY student start-up loans

Division 1 Introduction

Section 6A - Simplified outline of this Part

The new Part is prefaced with a simplified outline.

Division 2 - Qualification for and amount of ABSTUDY student start-up loan

Section 7A - Simplified outline of this Division

Section 7A gives a simplified outline of the Division that relates to qualification for and amount of the ABSTUDY student start-up loan.

Section 7B - ABSTUDY Scheme

Section 7B provides clarity that ABSTUDY student start-up loans are made under the ABSTUDY Scheme (which is otherwise mainly set out in a policy manual).

Section 7C - Qualification for ABSTUDY student start-up loan

Section 7C operates in a similar way to section 1061ZVBB of the Social Security Act (as inserted by item 24) but with respect to the ABSTUDY student start-up loan.

The difference between these provisions is that, to be qualified for a student start-up loan under section 7C, rather than being qualified on the basis of youth allowance or austudy payment, a person at the qualification time has to be qualified for a payment known as Living Allowance under the ABSTUDY Scheme and Living Allowance must be payable to the person.

Section 7D - Circumstances in which person is not qualified for ABSTUDY student start-up loan

Section 7D mirrors the operation of section 1061ZVBC of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 7E - Amount of ABSTUDY student start-up loan

Subsection 7E(1) provides that the amount of the ABSTUDY student start-up loan is $1,025 and for the indexation rules for this amount, which mirror the treatment of student start-up loans under the social security law.

Subsection 7E(2) provides that the ABSTUDY student start-up loan is indexed under Division 2 of Part 3.16 of the Social Security Act on 1 January 2017 and each subsequent 1 January, as if it were a student start-up loan amount referred to in the table in subsection 1191(1) of that Act.

Division 3 - Indebtedness: incurring ABSTUDY SSL debts

Section 8A - Simplified outline of this Division

Section 8A briefly outlines the process for incurring ABSTUDY SSL debts.

Section 8B - ABSTUDY SSL debts

Section 8B mirrors the operation of section 1061ZVDA of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 8C - ABSTUDY SSL debt discharged by death

Section 8C mirrors the operation of section 1061ZVDB of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 8D - Notice to Commissioner

Section 8D mirrors the operation of section 1061ZVDC of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Division 4 - Indebtedness: working out accumulated ABSTUDY SSL debts

Section 9A - Simplified outline of this Division

Section 9A mirrors the simplified outline provided by section 1061ZVEA of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 9B - Stage 1 - working out a former accumulated ABSTUDY SSL debt

Section 9B mirrors the operation of section 1061ZVEB of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 9C - Stage 2 - working out an accumulated ABSTUDY SSL debt

Section 9C mirrors the operation of section 1061ZVEC of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 9D - Rounding of amounts

Section 9D mirrors the operation of section 1061ZVED of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 9E - Accumulated ABSTUDY SSL debt discharges earlier debts

Section 9E mirrors the operation of section 1061ZVEE of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 9F - Accumulated ABSTUDY SSL debt discharged by death

Section 9F mirrors the operation of section 1061ZVEF of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Division 5 - Discharge of indebtedness

Section 10A - Simplified outline of this Division

Section 10A mirrors the simplified outline provided by section 1061ZVFA of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10B - Debts under this Part

Section 10B provides that a debt within the meaning of section 39 of the Act is not a debt that arises under Part 2. This is because these debts relate to the ABSTUDY student start-up loans, which are income-contingent loans and are therefore administered differently to other debts arising under the Student Assistance Act.

Section 10C - Voluntary ABSTUDY SSL repayments in respect of debts

Section 10C mirrors the operation of section 1061ZVGA of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10D - Application of voluntary ABSTUDY SSL repayments

Section 10D mirrors the operation of section 1061ZVGB of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10E - Refunding of payments

Section 10E mirrors the operation of section 1061ZVGC of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10F - Liability to repay amounts

Section 10F is similar in operation to section 1061ZVHA of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan. However, this provision differs in that it applies a priority rule to ensure that ABSTUDY student start-up loan repayments only need to be made after SSL debts are repaid.

Section 10G - Repayable ABSTUDY SSL debt for an income year

Section 10G mirrors the operation of section 1061ZVHB of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10H - Commissioner may make assessments

Section 10H mirrors the operation of section 1061ZVHC of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10J - Notification of notices of assessment of tax

Section 10J mirrors the operation of section 1061ZVHD of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10K - Commissioner may defer making assessments

Section 10K mirrors the operation of section 1061ZVHE of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 10L - Commissioner may amend assessments

Section 10L mirrors the operation of section 1061ZVHF of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Division 6 - Tax administration matters

Section 11A - Simplified outline of this Division

Section 11A briefly outlines tax administration matters with regard to the ABSTUDY student start-up loan.

Section 11B - Verification of tax file numbers

Section 11B mirrors the operation of section 1061ZVJB of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11C - When person with tax file number incorrectly notifies number

Section 11C mirrors the operation of section 1061ZVJC of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11D - When person without tax file number incorrectly notifies number

Section 11D mirrors the operation of section 1061ZVJD of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11E - When tax file numbers are altered

Section 11E mirrors the operation of section 1061ZVJE of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11F - When tax file numbers are cancelled

Section 11F mirrors the operation of section 1061ZVJF of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11G - Returns, assessments, collection and recovery

Section 11G mirrors the operation of section 1061ZVJG of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11H - Charges and civil penalties for failing to meet obligations

Section 11H mirrors the operation of section 1061ZVJH of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11J - Pay as you go (PAYG) withholding

Section 11J mirrors the operation of section 1061ZVJJ of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11K - Pay as you go (PAYG) instalments

Section 11K mirrors the operation of section 1061ZVJK of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Section 11L - Administration of this Part

Section 11L mirrors the operation of section 1061ZVJL of the Social Security Act (as inserted by item 24) but with respect to an ABSTUDY student start-up loan.

Item 69 amends the definition of debt to include an ABSTUDY student start-up loan overpayment.

Item 70 makes technical amendments for the purposes of the amendment contained in item 71.

Item 71 inserts new section 38A - ABSTUDY student start-up loans overpayments.

Section 38A operates in a similar way to section 1223ABF of the Social Security Act (as inserted by this Schedule) as it sets out circumstances in which the ABSTUDY student start-up loan will not be treated as an income-contingent loan but as a debt owed by the person to the Commonwealth.

Items 72 and 73 make minor amendments for the purposes of item 74.

Item 74 amends section 39 to provide that, where an ABSTUDY student start-up loan payment becomes a debt recoverable by the Commonwealth, the ABSTUDY student start-up loan overpayment is taken to have arisen when the person received the loan to which the overpayment relates.

Item 75 amends section 39AA to ensure that deductions, for the purposes of repaying debts, cannot be made from ABSTUDY student start-up loans.

Item 76 makes a minor amendment for the purposes of item 77.

Item 77 amends subsection 44A(7) to provide that subsection 44A(5) does not apply in relation to recovery of an amount relating to an ABSTUDY student start-up loan. This will mean that a student will have to provide their actual tax file number, rather than lodging an application for a tax file number with the Department, in order to meet the qualification requirements for the ABSTUDY student start-up loan.

Item 78 amends subsection 55A(1) to clarify that payments made in relation to ABSTUDY student start-up loans are be to made out of the Consolidated Revenue Fund, which is appropriated by law.

Item 79 makes a minor amendment for the purposes of item 80.

Item 80 amends section 302 to provide that Division 1 of Part 9 does not apply to a decision that is reviewable under section 308A.

Item 81 inserts into Part 9 new Division 1A, relating to internal review of Commissioner decisions relating to ABSTUDY student start-up loans.

Division 1A - Internal review of Commissioner decisions relating to ABSTUDY student start-up loans

Section 308A - Decisions reviewable under this Division

Section 308A mirrors the operation of section 138A of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308B - Commissioner must give reasons for reviewable decisions

Section 308B mirrors the operation of section 138B of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308C - Reviewer of decisions

Section 308C mirrors the operation of section 138C of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308D - Reviewer may reconsider reviewable decisions

Section 308D mirrors the operation of section 138D of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308E - Notice to AAT Registrar

Section 308E is a mirror provision to section 138E of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308F - Reconsideration of reviewable decisions on request

Section 308F mirrors the operation of section 138F of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308G - Withdrawal of request

Section 308G mirrors the operation of section 138G of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308H - AAT review of reviewable decisions

Section 308H mirrors the operation of section 138H of the Social Security Administration Act (as inserted by item 43) but with respect to reviewable decisions in relation to ABSTUDY student start-up loans.

Section 308J - Decision changed before AAT review completed

Section 308J is a mirror provision to section 138J of the Social Security Administration Act as proposed to be inserted by this Bill.

Amendments to the Taxation Administration Act

Item 82 inserts a definition of compulsory ABSTUDY SSL repayment amount into the Act.

Item 83 inserts a definition of compulsory SSL repayment amount into the Act.

Item 84 amends section 8AAZLD to provide that any compulsory SSL repayment amount of the entity and then any compulsory ABSTUDY SSL repayment amount will be prioritised in that order after any compulsory repayment amount but before any FS assessment debt when the Commissioner applies a credit that arises under the Pay As You Go system.

Items 85 to 88 are amendments consequential to other amendments made to the Income Tax Assessment Act 1936 by this Bill, and deal with exceptions to rules limiting quoting and recording tax file numbers.

Item 89 amends section 6-1 in Schedule 1 to allow for the Pay As You Go system to collect amounts that go towards meeting liability to repay debts in relation to student start-up loans and ABSTUDY student start-up loans.

Item 90 amends the objects in section 11-1 of Schedule 1 to ensure that the object Part 2-11 is to ensure the efficient collection of amounts of liabilities to the Commonwealth under Chapter 2AA of the Social Security Act or under Part 2 of the Student Assistance Act.

Item 91 inserts references to the new paragraphs inserted by item 90 into subsection 15-25(1) in Schedule 1, about the Commissioner's power to make withholding schedules.

Item 92 amends section 15-30 of Schedule 1 to ensure that the Commissioner must have regard to the applicable percentages in section 1061ZVHA of the Social Security Act and the equivalent provision in the ABSTUDY SSL scheme when making a withholding schedule.

Item 93 inserts references to the new paragraphs inserted by item 92 into the provision in Schedule 1 about declarations.

Item 94 amends the object in section 45-5 of Schedule 1 (about PAYG instalments) to cover the efficient collection of amounts of liabilities to the Commonwealth under Chapter 2AA of the Social Security Act or under Part 2 of the Student Assistance Act.

Item 95 amends section 45-340 in Schedule 1 to insert steps 3AA and 3AB to the method statement on adjusted tax on adjusted taxable income or adjusted withholding income.

Item 96 makes technical amendments to step 4 of the method statement in section 45-340 in Schedule 1 to take account of new steps 3AA and 3AB as inserted by item 95.

Item 97 amends the method statement in section 45-375 in Schedule 1 to insert steps 3AA and 3AB for adjusted assessed tax on adjusted assessed taxable income.

Item 98 makes a technical amendment to step 4 of the method statement in section 45-375 in Schedule 1 to take account of new steps 3AA and 3AB as inserted by item 97.

Item 99 amends the table in subsection 250-10(2) to include any compulsory SSL and ABSTUDY SSL repayment amount in the adjusted taxable income calculation.

Amendments to the Taxation (Interest on Overpayment and Early Payments) Act 1983

Items 100 and 101 insert into the Act definitions of compulsory ABSTUDY SSL repayment amount and compulsory SSL repayment amount.

Items 102 amends the table in section 3C to ensure that compulsory SSL repayment amounts and ABSTUDY SSL repayment amounts are identified as a 'relevant tax' for the purposes of the Act.

Items 103 and 104 amend section 8A to ensure compulsory SSL repayment amounts and ABSTUDY SSL repayment amounts are payments for which interest is payable by the Commissioner to the person on the payment, calculated in respect of the period applicable under section 8B at the rate specified in section 8C.

Items 105 and 106 amend paragraphs 8E(1)(d) and 8E(2)(d) to ensure that interest can be paid when crediting amounts in excess of any compulsory SSL repayment amounts and compulsory ABSTUDY SSL repayment amounts.

Item 107 amends paragraph 12A(1A)(b) to include references to compulsory SSL repayment amounts and compulsory ABSTUDY SSL repayment amounts under existing subparagraph 12A(1)(a)(iv) (dealing with when interest is payable by the Commissioner to the person on the amount remitted, refunded or credited, calculated in respect of a certain period).

Amendments to the Trade Support Loans Act 2014

Items 108 and 109 insert references to certain other income-contingent loan schemes (such as a student start-up loan) into the simplified outlines at section 3 and 39 of that Act.

Item 110 factors student start-up loans into the formula in subsection 46(1) such that 'relevant income contingent loans liability' will include the sum of a person's liability to pay in respect of provisions dealing with their accumulated HELP debt, their accumulated SSL debt and their accumulated ABSTUDY SSL debt, for the purposes of reducing the persons repayable TSL debt liability for an income year (before these amendments, only a person's HELP liability was factored into this formula). This is effectively a priority rule so that, where a person has multiple income-contingent loan liabilities, a person's HELP debt, SSL debt and ABSTUDY SSL debt are repaid before any debt they may have under the Trade Support Loans scheme.

Saving provision

Item 111 ensures that an instrument made by the Minister to determine that a course is an approved scholarship course remains effective (for example, in relation to relocation scholarship payments) despite amendments made by this Bill to ensure continuity of qualification for payments which depends upon any such instrument.

Schedule 3 - Removal of the up-front payment discount

Summary

Currently students can make a full up-front payment by paying 90 per cent of the student contribution amount for all of their units in a course of study with the same census date and receive a 10 per cent discount for that payment. Students may also pay part of their student contribution up-front and receive a 10 per cent discount for any payments totalling $500 or more for units in a course of study with the same census date. The amount of the discount is paid by the Government to the student's higher education provider.

Schedule 3 implements a savings measure included in the 2013-14 Budget by amending the HESA to create a single set of payment arrangements for HECS-HELP that do not allow for an up-front payment discount.

The removal of the HECS-HELP up-front payment discount would take effect from 1 January 2017.

Detailed explanation

Items 1, 2, 4 and 5 will respectively repeal section 36-50, paragraph 90-1(f), subsection 93-15(3) and sections 96-1, 96-5 and 96-10 and insert a new paragraph 90-1(f) and a new section 96-1. The collective effect of these provisions is to remove the upfront discount of 10 per cent for students enrolled in Commonwealth-supported places who pay their student contributions upfront to a higher education provider.

Item 10 is an application provision which makes clear the circumstances in which the amendments made by Schedule 3 apply. The amendments in respect of an up-front payment only apply in relation to a unit of study that has a census date on or after 1 January 2017.

Item 10 ensures that a person making an upfront payment for his or her student contribution amount for a unit of study with a census date before 1 January 2017 would still be entitled to the 10 per cent discount, regardless of when the payment is made.

However, if a person were to make an upfront payment on or before 31 December 2016 for a unit of study to be undertaken in the following academic year (i.e. the unit's census date would occur on or after 1 January 2017), the person would not be eligible for the upfront payment discount.

Items 3, 6, 7, 8 and 9 make technical amendments for the purposes of Items 1, 2, 4 and 5.

Schedule 4 - Removal of the voluntary repayment bonus

Summary

People may make a voluntary repayment towards their HELP debt to the Australian Taxation Office at any time. Voluntary repayments of $500 or more currently attract a 5 per cent bonus on the payment amount. This means a person's account is credited with an additional 5 per cent of their payment amount.

Schedule 4 implements a savings measure included in the 2013-14 Budget by amending the HESA to remove the voluntary repayment bonus.

The removal of the voluntary repayment bonus for HELP debtors would take effect from 1 January 2017.

Detailed explanation

Items 2, 3, 4 and 5 will update the example set out in subsection 140-5(1) of HESA to ensure it is relevant and current.

Item 7 will repeal section 151-5 of HESA. The effect of this provision is to remove the voluntary repayment bonus of 5 per cent for HELP debtors who make a voluntary payment towards their accumulated HELP debt.

Item 8 is an application provision which makes clear the circumstances in which the amendments made by Schedule 4 will apply. The amendments in respect of a voluntary repayment will only apply to a repayment made on or after 1 January 2017, regardless of whether the repayment relates to a debt incurred before or after this date.

As a result, if a person wants to make a voluntary repayment any time up to and including 31 December 2016, he or she would still be eligible for the voluntary repayment bonus (e.g. for a degree completed three years ago). However, a payment made on the following day (1 January 2017) would not attract the bonus.

Items 1 and 6 make technical amendments for the purpose of Item 7.

Statement of compatibility with human rights

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

Labor 2013-14 Budget Savings (Measures No. 2) Bill 2015

Schedule 1 - Student start-up loans

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Schedule

Schedule 1 to the Bill amends the Social Security Act 1991 (Social Security Act) and the Student Assistance Act 1973 (Student Assistance Act) to cease the student start-up scholarship (SSS) for recipients of student payments who are participating in higher education. Students will instead be able to receive either an ABSTUDY student start-up loan or a student start-up loan (the loans), which are voluntary income-contingent loans, equivalent in value to the SSS. These loans will be available to full-time higher education students who are in receipt of youth allowance (student), austudy or ABSTUDY (Living Allowance).

Students will be limited to two loans per year of $1,025 each (indexed from January 2017), in line with the current SSS arrangements, and will be repayable under similar arrangements to Higher Education Loan Programme (HELP) debts. Students will only be required to begin repaying the loans once their earnings are above the repayment threshold (which will be consistent with the HELP repayment thresholds) and after any accumulated HELP debt has been paid.

The loans also provide grandfathering arrangements so that recipients who received an SSS or Commonwealth Education Costs Scholarship prior to the amendments taking effect will continue to be eligible to receive the SSS, whilst they continue to be in receipt of student payments.

Human rights implications

Right to education

Schedule 1 to the Bill engages the right to education contained in Article 13 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

In particular, article 13(2)(c) states that higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education.

Schedule 1 to the Bill does not limit the right to education. While the SSS will not be available for new student payment recipients, people who would otherwise be entitled to the SSS will be eligible for the student start-up loan. The purpose of the SSS and the loans are identical as both payments are designed to help students with the up-front costs of textbooks and equipment. Under the loans, students will be eligible for the same payment amount as the SSS ($1,025 twice per calendar year, to be indexed from January 2017). In this way, students will still have access to funds to assist them with the up-front costs of study.

Income-contingent loans do not place an onerous burden on debtors, as repayments are proportional to a person's income, meaning that those on lower incomes do not have to repay large amounts, unlike other types of loan (such as bank loans). The fact that the loans are repayable once the person reaches a particular income threshold will not limit a person's right to education.

Furthermore, students who never reach the minimum threshold, because they do not obtain the financial benefits of their studies in higher education, will not be required to repay the loan.

Various studies have concluded that income-contingent loans are not a deterrent to study. These studies have identified no significant effects on university enrolments, including from low socio-economic students, from either the introduction of, or changes to, HELP.

Right to social security

Schedule 1 to the Bill engages the right to social security contained in Article 9 of the ICESCR.

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security system must provide a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs.

The United Nations Committee on Economic, Cultural and Social Rights (the Committee) has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent (see General Comment No.19).

Article 4 of ICESCR provides that countries may limit the rights such as to social security in a way determined by law only in so far as this may be compatible with the nature of the rights contained within the ICESCR and solely for the purpose of promoting the general welfare in a democratic society. Such a limitation must be proportionate to the objective to be achieved.

To the extent that there is an impact on a person's right to social security by virtue of Schedule 1 to the Bill, the impact is limited. In practice, a person will still be entitled to the same amount of financial assistance under the loans as they would have received from an SSS, and will only be required to repay the loans once they reach the relevant threshold level of income. This threshold is set at a level of income at which a person would no longer require financial assistance to acquire essential health care, housing, water and sanitation, foodstuffs, and education. Given the above safeguards, and the fact that the loans will be given on a voluntary basis (that is, a debtor does not need to incur debt) the measures contained in Schedule 1 to the Bill are compatible with the rights to social security.

It is well established that higher education graduates gain substantial private benefits from their studies, including higher lifetime earnings than non-graduates, increased job satisfaction, higher social status and better health. As the community substantially pays the costs of these benefits through a range of services and supports for students, it is reasonable and proportionate that the students be expected to repay a proportion of those costs when they are financially able. This is the basis for the existing arrangements for assistance provided through HELP for tuition fees.

Converting the SSS into an income-contingent loan recognises the benefits students receive from higher education, while still ensuring that higher education is accessible to all socio-economic groups. Students from low socio-economic backgrounds will continue to receive fortnightly payments of youth allowance (student), austudy or ABSTUDY (Living Allowance).

Additionally, the Government is committed to providing continuing support to students. The relocation scholarship, for dependent students who are required to move from or to a regional area to study and some independent students, will continue to be provided as a grant to all eligible students. Other student payments will also remain unaffected by the loans measure.

Taking into account the continued access to fund the costs of study, the amendments to the SSS are consistent with a person's rights to social security and to an adequate standard of living.

Right to equality and non-discrimination

To avoid doubt, Schedule 1 to the Bill does not engage the right to equality and non-discrimination contained in Articles 2 and 26 of the International Covenant on Civil and Political Rights either on the basis of race or 'other' status.

Article 2(1) of the International Covenant on Civil and Political Rights obligates each State party to respect and ensure to all persons within its territory and subject to its jurisdiction the rights recognised in the Covenant without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status1.

Article 26 not only entitles all persons to equality before the law as well as equal protection of the law, but also prohibits any discrimination under the law and guarantees to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status2.

It is important to note, however, that not all differential treatment will be considered discriminatory. The Committee on Economic, Social and Cultural Rights has provided the following commentary on when differential treatment will be considered discriminatory:

Differential treatment based on prohibited grounds will be viewed as discriminatory unless the justification for differentiation is reasonable and objective. This will include an assessment as to whether the aim and effects of the measures or omissions are legitimate, compatible with the nature of the Covenant rights and solely for the purpose of promoting the general welfare in a democratic society. In addition, there must be a clear and reasonable relationship of proportionality between the aim sought to be realised and the measures or omissions and their effects. A failure to remove differential treatment on the basis of a lack of available resources is not an objective and reasonable justification unless every effort has been made to use all resources that are at the State party's disposition in an effort to address and eliminate the discrimination, as a matter of priority3.

Discrimination on the basis of other 'status'

While the provisions of Schedule 1 to the Bill will establish an ABSTUDY student start-up loan (which, given the eligibility criteria for ABSTUDY, will mean that loan recipients are necessarily of Aboriginal or Torres Strait Islander descent), an equivalent student start-up loan will also be established for those who are eligible for youth allowance (student) and austudy (where youth allowance (student) and austudy are available to non-Indigenous and Indigenous people). As the provisions for the student start-up loan mirror the provisions for the ABSTUDY student start-up loan, there will be no effective distinction between Indigenous and non-Indigenous recipients of these loans.

For these reasons, Schedule 1 to the Bill will not engage the right of equality and non-discrimination.

Conclusion

This Schedule is compatible with human rights. To the extent that it may have limited adverse impact on a person's access to education, social security, an adequate standard of living or the right to equality and non-discrimination, the limitation is reasonable, proportionate to the policy objective and for legitimate reasons.

Schedules 3 and 4 - Removal of the upfront payment discount and voluntary repayment bonus

The purpose of schedules 3 and 4 to the Bill is to amend the Higher Education Support Act 2003 (HESA) to make savings in higher education expenditure. HESA provides for funding of education providers and the legislative authority for the Government's income-contingent loan programs including HECS-HELP, FEE-HELP, OS-HELP, SA-HELP and VET-FEE HELP.

Schedule 3 to the Bill amends HESA to remove the HECS-HELP up-front payment discount for units of study with a census date (the date on which a student's HECS-HELP liability is calculated) on or after 1 January 2016.

Schedule 4 to the Bill amends HESA to remove the bonus for voluntary repayment of debt incurred under the Higher Education Loan Program (HELP) for repayments made on or after 1 January 2016.

Human rights implications

Right to education

Schedules 3 and 4 to the Bill engage the right to education. In particular, Article 13(2)(c) of the International Covenant on Economic, Social and Cultural Rights (ICESCR) states that higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education.

Schedules 3 and 4

Schedules 3 and 4 to the Bill contain amendments that remove financial incentives for up-front payment of student contribution amounts and voluntary repayment of HELP debts. Currently, a 10 per cent discount is applied to up-front student contribution payments of $500 or more. The amount of the discount is paid by the Government to the student's higher education provider. The voluntary repayment bonus currently reduces a person's HELP debt by 5 per cent of the payment amount when the person makes a voluntary repayment of $500 or more. Removing the up-front discount and voluntary repayment bonus is estimated to provide in the order of $200 million in savings over the forward estimates.

Student contribution amounts and tuition fees may still be deferred under HELP.

The upfront discount offers little incentive to students to pay their fees upfront, rather than through a HECS-HELP loan. It was reduced from 20 per cent to 10 per cent on 1 January 2012 and this has only had a minor effect on the proportion of student contributions that have been deferred.

Conclusion

Schedules 3 and 4 to the Bill are compatible with human rights.