Explanatory Statement

Issued by the Authority of the Minister for Justice

Explanatory Statement

Bankruptcy Act 1966

Bankruptcy Regulations (Amendment)

Subsection 315(1) of the Bankruptcy Act 1966 provides that the Governor-General may make regulations prescribing matters required or permitted by the Bankruptcy Act 1966 to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the Bankruptcy Act 1966. Subsection 315(2) describes particular matters in relation to Which regulations may be made.

The purpose of the Bankruptcy Regulations (Amendment) is to protect payments of restart income support under the Farm Family Restart Scheme (FFRS) from bankruptcy creditors.

The Bankruptcy Regulations, (Amendment) is part of A package, of legislation to implement the FIRS Which is a, component of the Government's Integrated Rural Policy Package. The FFRS is being implemented principally by amendments to the Farm Household Support Act 1992 as made by the Farm Household Support Amendment (Restart and Exceptional Circumstances) Act 1997.

The FFRS includes restart scheme payments described in new subsection 3(2) of the Farm Household Support Act 1992. The restart scheme payments comprise, three components.

(a)

payments of restart income support;

(b)

payments of re-establishment grants; and.

(c)

payments of assistance under the restart advice scheme.

Under the FFRS, the first two of the above three components, payments of restart income support and payments. of re-establishment grants, Will he protected from creditors in bankruptcy. The Farm Household Support Amendment (Restart and Exceptional Circumstances) Act 1997 amends section 116 of the Bankruptcy Act 1966 to exclude the second of the above three components, payments of reestablishment grants, from being property divisible amongst the creditors of a bankruptcy. The first of the above three components, payments of restart income support, are protected from creditors, in bankruptcy, by means of the Bankruptcy Regulations (Amendment). How this, is done' is described below in, the explanation of regulation 3 of this Bankruptcy Regulations (Amendment).

Regulation 1 - commencement

This regulation provides that the Bankruptcy Regulations (Amendment) commences on 1 December 1997.

Regulation 2 - amendment

This regulation provides that the Bankruptcy Regulations are amended as set out in the Bankruptcy Regulations (Amendment).

Regulation 3 - new Division 6A

This regulation provides for the insertion of new Division 6A, "Restart scheme payments", after regulation 6.12 of the Bankruptcy Regulations. New Division 6A comprises new regulation 6.12A, "Definition of 'income' - restart scheme payments". Paragraph 139L(b) of the Bankruptcy Act 1966 describes a number of payments and amounts that are not income in relation to a bankrupt, and therefore are exempt from the income contribution scheme, as provided for generally under Division 4B of Part VI of the. Bankruptcy Act, 1966. The, objects of Division 4B as set out in section, 139J, of the Bankruptcy Act 1966 are to require a bankrupt who derives income, during the bankruptcy to pay contributions towards the bankrupt's. estate and to, enable -the recovery of certain money and property for the benefit of the bankrupt's estate. Subparagraph 1391(b)(v) of the, Bankruptcy Act 1966 describes one such payment as "a payment or amount that the regulations provide, is not income of the bankrupt.

New regulation 6.12A provides that, for the purposes of subparagraph 139L(b)(v), payments of restart income support are not income of a bankrupt. Because the term "payments of restart income support" is not provided with a definition in the Farm Household Support Amendment (Restart and Exceptional Circumstances) Act 1997 or the Farm Household Support Act 1992, no definition is given to that term, in the Bankruptcy Regulations. (Amendment) 'However,' any interpretation given to the term as used in the Farm Household Support Act. 1992 should also be given to that term as used in the Bankruptcy Regulations because regulation 6.12A refers to payments of restart income support as being payments of a kind mentioned in paragraph (a) of the definition of "restart scheme payments" in subsection 3(2) of the Farm Household Support Act 1992.

Regulation 4 - Regulation 16.09 (Fees in respect of the Index):

This regulation makes a minor amendment to regulation 16.09 of the Bankruptcy Regulations to alter the fee for the provision of an extract from the National Personal Insolvency Index from $2.00 per page to $1.00 per extract. This is to facilitate the recording of fees for computer search extracts., This amendment is unrelated to the FFRS.

The Bankruptcy Regulations (Amendment) commences on 1 December 1997.