House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families and Social Services, Senator the Hon Anne Ruston)

Notes on Clauses

Abbreviations and Acronyms used in this explanatory memorandum

•

ABSTUDY scheme means the Aboriginal Study Assistance Scheme.

•

AIC scheme means the Assistance for Isolated Children Scheme.

•

current special educational assistance scheme means the ABSTUDY scheme and the AIC scheme.

•

financial supplement has the same meaning as in the Act but is essentially a loan made by certain financial corporations under a financial supplement contract.

•

Social Security Act means the Social Security Act 1991.

•

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

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SIR Act means the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Act 2020.

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Student Assistance Act means the Student Assistance Act 1973.

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Student Assistance Regulations means the Student Assistance Regulations 2003.

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Student Financial Supplement Scheme is the scheme constituted by Part 4A of the Student Assistance Act for the payment of financial supplement to students.

•

TFN means tax file number.

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services and Other Legislation Amendment (Student Assistance and Other Measures) Act 2021.

Clause 2 provides a table setting 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Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule, and any other item in a Schedule to the Bill has effect according to its terms.

Schedule 1 - Tax File Numbers

Summary

Schedule 1 repeals the existing section 44A of the Student Assistance Act which deals with the collection of TFNs and replaces it with a regime that is more closely aligned to the model in the social security law (specifically, sections 75 to 77 of the Social Security Administration Act). The new provisions do not deal with the collection of TFNs for the financial supplement as the Student Financial Supplement Scheme was administratively closed to new entrants from 31 December 2003 and legislatively closed on 22 May 2006 by the Student Assistance Legislation Amendment Act 2006.

Background

The key purposes of the measures in Schedule 1 are: to align the collection and use of TFNs under the Student Assistance Act more closely with the social security law; and, make TFN collection more effective. Claimants of ABSTUDY and AIC benefits will have greater certainty about what is required when they are asked to provide a TFN and how they may be exempted from the requirements in appropriate cases.

Section 44A of the Student Assistance Act was inserted in 1991 and has been amended on occasion. Section 44A currently provides, among other things, that a benefit is not payable under a current special educational assistance scheme, or a financial supplement is not to be paid to a person under the Student Financial Supplement Scheme, unless the Secretary is given the applicant's TFN and the TFN of any other person whose income and assets are required to be taken into account for the purpose of calculating the benefit. Subsection 44A(4) allows for regulations to be made that prescribe circumstances in which a benefit or supplement may be paid even though a TFN has not been given. The provision also sets out some limited circumstances where a TFN is not required.

The current TFN regime in the Student Assistance Act is different to the regime in the social security law. The social security regime is applied to recipients of social security benefits such as austudy and youth allowance (who receive benefits under the Social Security Act similar to those granted to ABSTUDY recipients). For effective program delivery, portfolio provisions with regard to the collection, use and disclosure of TFNs will be streamlined. The changes also provide an opportunity to remove redundancy with existing section 44A.

The new TFN provisions are consistent with the Privacy (Tax File Number) Rule 2015, issued by the Privacy Commissioner under section 17 of the Privacy Act 1988 to regulate the handling of TFN Information. The TFN Rule provides that TFN information must only be collected, used or disclosed for a purpose authorised by a taxation law, superannuation law or personal assistance law (which is defined in the Rule to include the Student Assistance Act). The amendments do not affect an individual's choice to refuse to quote their TFN but financial consequences may be imposed where a TFN is not provided. The Student Assistance Act provides a high level of protection for personal information through its confidentiality provisions.

The amendments made by Schedule 1 will commence on the day after the Bill is given the Royal Assent.

Explanation of the changes

Student Assistance Act 1973

Item 1 inserts a new definition of 'TFN declaration' into subsection 3(1) of the Student Assistance Act, which is the interpretation section. The definition provides that this term has the same meaning as in Part VA of the Income Tax Assessment Act 1936.

Item 2 inserts a new heading before section 44A 'Division 1-Provision and use of Tax File Numbers'. This is a machinery change intended to assist the reader in the light of the insertion of several new provisions.

Item 3 repeals section 44A of the Student Assistance Act, relating to TFNs, which is no longer needed as it is being replaced by new sections 45 to 47A to be inserted by item 4 below. The provisions with respect to persons accessing financial supplements are no longer needed due to the legislative closure of that scheme to new entrants.

Item 4 inserts new sections 45 to 47A into the Student Assistance Act. The provisions are modelled on sections 75 to 77 of the Social Security Act and largely reflect current processes adopted in the absence of any detail prescribed by current section 44A. The differences in the provisions reflect the different basis on which the ABSTUDY and AIC schemes operate.

The details of benefits payable under the ABSTUDY and AIC schemes are set out in policy manuals published on the Department of Social Services website. The schemes were developed in this way to ensure that the Australian Government could respond flexibly to the needs of Indigenous people and young students living away from home or undertaking education remotely.

New section 45 - Requesting tax file numbers

New section 45 will empower the Secretary of the Department of Social Servcies to request, but not compel a person who is making, or has made a claim, or is receiving a benefit, under a current special educational assistance scheme, to provide a TFN. This is cast in different terms to existing section 44A, which provides that certain benefits are not payable unless the Secretary is given the applicant's TFN or the TFN of another person whose income or assets are required to be taken into account for the purpose of calculating the benefit. However, the provisions have proven to be inflexible and the operation of the provision in some circumstances is uncertain.

Subsection 45(1) sets out the basic rule that the Secretary may request, but not compel, a person in Australia to give a statement of the person's TFN if they are making, or have made a claim for a benefit, or are receiving a benefit, under a current special educational assistance scheme, that is, the ABSTUDY or AIC schemes.

The note after subsection 45(1) directs the reader to section 47 for the consequences of not satisfying the request.

Subsection 45(2) provides that a request under section 45 may be made orally or in writing. This is intended to override the rule in subsection 340(1) of the Student Assistance Act, which otherwise requires decisions to be in writing, with respect to requests made by the Secretary under section 45.

New section 46 - How request for tax file number is satisfied

Section 46 sets out how a person may satisfy a request by the Secretary for a TFN.

Subsection 46(1) provides that where the Secretary makes a request, the person satisfies the request if, within the period mentioned in subsection 46(2), the person provides either:

(a)

a statement of their TFN; or

(b)

both of the following:

(i)

a TFN declaration in accordance with new subsection 46(3); and

(ii)

a document in which the person authorises the Commissioner of Taxation to tell the Secretary the matters mentioned in subsection 46(4).

Under new paragraph 46(1)(a), a person may satisfy the requirement to give a statement of their TFN by providing an oral statement. The ABSTUDY scheme presently allows for telephone-assisted claims such that an oral statement of a TFN may be needed for the claim to succeed.

Subsection 46(2) specifies that the period within which a person who is receiving a benefit under a current special educational scheme must satisfy a TFN request is the period that is within 28 days after the Secretary makes the request.

Subsection 46(3) provides that for the purposes of the statement under subparagraph 46(1)(b)(i), the statement is that the person has a TFN but does not know what it is and has asked the Commission of Taxation to inform the person of the person's TFN or that an application by the person for a TFN is pending.

Subsection 46(4) provides that for the purposes of matters under subparagraph 46(1)(b)(ii), the matters are:

(a)

if the TFN declaration contains a statement mention in paragraph 46(3)(a):

(i)

whether the person has a TFN; and

(ii)

if the person has a TFN-that number; or

(b)

if the TFN declaration contains a statement mentioned in paragraph 46(3)(b):

(i)

if a TFN is issued to the person-that number; or

(ii)

if the application for a TFN is refused or is withdrawn-that fact.

New section 47 - Consequences of not giving tax file number

Section 47 sets out the consequences where a person fails to satisfy the Secretary's request for a TFN.

Subsection 47(1) provides that if the Secretary makes a request of a person under section 45 and the person does not satisfy the request as per section 46, the consequences for the person are as set out in the table. The table in subsection 47(1) then sets out the relevant consequences. The consequences differ according to the stage the person has reached in the claim cycle. As indicated by the note at the foot of subsection 47(1), the Secretary may exempt a person from the operation of the subsection or, more practically speaking, from the consequences being applied to them, under subsection 47(3).

Table item 1(a) applies to a person who is making, but has not yet completed, a claim for a benefit under a current special educational assistance scheme. This table item is needed because it clarifies that the Secretary may request a TFN from a person before they lodge their claim. Such a request is most likely to be made through an electronic or paper claim form but, for some claimants, the request may be made over the phone where the claimant is engaged in a telephone-assisted claim. This process is currently only available for ABSTUDY claimants. The consequence of not satisfying the TFN request in this circumstance is that the benefit is not payable.

Table item 1(b) applies to a person who has made a claim which has not been determined. This item is necessary to allow the Secretary to make a further request of the claimant where they have failed to provide TFN information in their claim. Again, the consequence of not satisfying the TFN request in this circumstance is that the benefit is not payable.

Table item 2 applies to a person who is receiving a benefit under a current special educational assistance scheme. In this case, the consequence is that at the end of 28 days after the Secretary made the request, the benefit ceases to be payable. That is, a current benefit recipient may receive a request and their claim will cease to be payable at the end of 28 days after the Secretary made the request. This provides a grace period the same as is applied under the social security law for people who are receiving payments. If a person's payment ceases to be payable, then the consequences fall to be managed under the relevant scheme manual. Generally, a loss of payability would result in the payment being suspended or cancelled (and potentially suspended followed by cancellation).

As previously mentioned, the note at the foot of subsection 47(1) indicates that the Secretary may exempt a person from the operation of subsection 47(1) and therefore from the consequences of failing to provide a TFN. This is consistent with the position under the social security law.

The table in subsection 47(2) sets out the consequences of a person not having a TFN after they have given a TFN declaration containing the statement required by subsection 46(3) and authorised certain communications between the Secretary and the Commissioner of Taxation. The consequences apply where the Commissioner of Taxation has told the Secretary that the person has not applied for a TFN or their TFN application has been refused or withdrawn. Again, different consequences are applied according to the person's stage of the claim cycle.

Table item 1(a) provides that for a person who is making a claim for a benefit under a current special educational assistance scheme, the consequence is that the benefit is not payable. Table item 1(b) provides that the same consequence applies to a person who has made a claim for such a benefit but the claim has not been determined. Table item 2 provides that the consequence for a person who is receiving a benefit under a current special educational assistance scheme is that the benefit ceases to be payable. A note at the foot of the table provides that the Secretary may exempt a person from the operation of subsection 47(2) under subsection 47(3).

Subsection 47(3) provides the Secretary with a discretionary power to exempt a person from the consequences of failing to comply with a request for a TFN. Subsection 47(3) sets out the general exemption power in an open-ended way.

An exemption will last until such time as the Secretary issues a further request for a TFN under new section 45 of the Act. That is, subsection 33(1) of the Acts Interpretation Act 1901 will enable the request provision to be exercised from time to time as the occasion arises. When such a request is made, and the person is receiving ABSTUDY or AIC benefits, the 28 day period will recommence.

New section 47A - Use of tax file numbers

To streamline the student assistance TFN arrangements, item 4 also inserts new section 47A into the Student Assistance Act. This new provision is equivalent to section 204A of the Social Security Act. Subsection 47A(1) of the Student Assistance Act allows the Secretary to require the Commissioner of Taxation to provide information about people, including TFNs, that was contained in a TFN declaration lodged with the Commissioner under Division 3 of Part VA of the Income Tax Assessment Act 1936. This section is needed to obtain TFNs regarding third parties whose income and assets are relevant to a person's eligibility for, and rate of payment of, benefits under a current special educational assistance scheme.

Under new subsection 47A(2) of the Student Assistance Act, personal information obtained under subsection 47(2) can be used for the following three purposes:

(a)

to detect cases in which amounts of benefits under a current special educational assistance scheme have been paid when they should not have been paid;

(b)

to verify, in respect of persons who have made claims for benefits under a current special educational assistance scheme, the qualification of those persons for those benefits;

(c)

to establish whether the rates or amounts of benefits under a current special educational assistance scheme that are being, or have been, paid are, or were, correct.

The amendments are made for the purposes of ensuring that recipients of student assistance benefits receive correctly calculated benefits and are subject to a similar compliance regime as recipients of social security benefits. This provision will only be used to collect information in a TFN declaration where this is needed, for example, with respect to third parties.

Application and transitional provisions

Item 5 sets out the relevant application and transitional provisions for the amendments in items 1 to 4 above.

Subitems 5(1) and (2) are application provisions.

Subitem 5(1) applies new paragraph 45(1)(a) to new and pending claims for ABSTUDY and AIC benefits (that is, including claims for benefits underway or made before the item commences and which have not been determined) as well as to claims made on and after the day of commencement.

Subitem 5(2) applies the new paragraph 45(1)(b) to people who are receiving the benefits on or after the commencement of the item regardless of the time the person's claim was made or determined.

Subitem 5(3) is a transitional provision which provides that a TFN of a person given in accordance with the repealed section 44A in relation to the ABSTUDY or AIC schemes will, on and after the commencement of the Bill, be taken to be given under new section 46 of the Student Assistance Act. The purpose of this amendment is to ensure that the benefits paid pursuant to existing claims remain payable after the commencement of the Act and are not subject to further TFN requests unless the person undergoes a change of circumstances, for example, by entering a new domestic relationship.

Subitem 5(4) provides that paragraphs 47A(2)(a) and (c) of the Student Assistance Act, as inserted by Schedule 1, apply in relation to the payment of benefits on or after the commencement of this item.

Subitem 5(5) provides that paragraph 47A(2)(b) of the Student Assistance Act, as inserted by Schedule 1, applies in relation to a claim made by a person on or after the commencement of this item or a claim made by a person before that commencement that had not been determined before that commencement.

In essence, subitems 5(4) and (5) mean that the information the Secretary obtains about people from the Commissioner of Taxation cannot be used to raise debts on payments that were made prior to the commencement of the provisions.

Schedule 2 - Information management provisions

Summary

Schedule 2 amends certain information management provisions in the Student Assistance Act and the Social Security Act to clarify that these relate to information obtained, used and disclosed with respect to the administration of the AIC scheme (that is, as well as the ABSTUDY scheme).

This Schedule will commence on the day after the Bill receives the Royal Assent.

Background

The principal purpose of the measures in this Schedule is to ensure that the legal effect of the provisions is beyond doubt on the face of the Student Assistance Act - that is, that the information management provisions apply to all matters arising under the Act including both the ABSTUDY scheme and the AIC scheme - collectively termed 'current special educational assistance schemes'. This is desirable to confirm that all personal information collected for the purposes of the Act is appropriately protected.

Explanation of the changes

For the avoidance of doubt, the amendments made by Schedule 2 will clarify matters related to information management relating to certain student assistance benefits, but particularly with respect to the AIC scheme.

Social Security Act 1991

Item 1 amends subsection 23(1) of the Social Security Act to insert a new definition for the term 'current special educational assistance scheme'. The term will be defined to mean the AIC scheme or the ABSTUDY scheme. This definition is needed as a consequence of the amendments made by this Schedule.

Item 2 amends new subparagraphs 1073BB(8)(a)(vi) and (b)(vi) of the Social Security Act which will be inserted by the SIR Act. Section 1073BB is an anti-avoidance provision that operates to prevent a person deferring the payment of employment income from their employer where the deferral of payment is for the sole or dominant purpose of obtaining a social security advantage for a person. As some payments under the AIC scheme are means-tested, this provision has equal application to that scheme as well as the ABSTUDY scheme.

Student Assistance Act 1973

Items 3, 4, 5 and 8 amend several provisions of the Student Assistance Act in order to replace references to 'the ABSTUDY scheme' with a reference to 'a current special educational assistance scheme'. The affected provisions are:

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paragraph (a) of the definition of 'protected information' in subsection 3(1);

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paragraph 343(1)(e), dealing with the general power to obtain information;

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subsection 348(1), concerning the interaction between the information gathering provisions with state and territory laws; and

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paragraph 351(2)(d), relating to making a record of, disclosing and otherwise using protected information.

The intention of these amendments is to put beyond doubt that where the provision creates a function, power or duty for the purposes of the Student Assistance Act (including the administration of the ABSTUDY scheme), it is clear that the provision also operates in respect of the AIC scheme. This is an important protection aimed at ensuring that personal information is lawfully obtained, used and disclosed in accordance with the Student Assistance Act.

Item 6 performs a function similar to the above items. This item omits from subsection 351(1), dealing with the protection of personal information, the words 'or the Dental Benefits Act 2008 (including the purposes of the administration of the ABSTUDY scheme)' and substitutes these with the words '(including the purposes of the administration of a current special educational assistance scheme) or the Dental Benefits Act 2008'. This amendment makes the same clarification as for the above items, and corrects a typographical error.

Items 7, 9, 11, 12 and 13 amend several provisions of the Student Assistance Act in order to replace each reference to 'the ABSTUDY scheme' with a reference to 'a current special educational assistance scheme'. The affected provisions are:

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the notes at the end of subsections 351(1) and 351(2), dealing with the protection of personal information; and

•

subsections 351A(1) and 351A(2) and paragraph 351A(3)(c), dealing with the obtaining, making a record of, disclosure of or use of protected information relating to taxation information.

The intention of these amendments is to clarify that, where the provision creates a function, power or duty for the purposes of the Student Assistance Act (including the administration of the ABSTUDY scheme), it is clear that the provision operates also in respect of the AIC scheme. This is an important protection aimed at clarifying that personal and protected information, including taxation information, is lawfully obtained, used and disclosed in accordance with the Act, particularly in a data-matching context.

Item 10 amends the heading immediately before subsection 351(4) of the Student Assistance Act by removing the words 'ABSTUDY scheme'. This provision was inserted in response to a 2008-2009 Budget measure which had specific operation for the ABSTUDY scheme. However, as school enrolment and attendance information for children is also required in respect of students under the AIC scheme, this amendment is made to ensure that the Secretary's power to obtain this information is not limited by the heading to this section. This amendment is not intended to limit the general information gathering power in section 343 of the Student Assistance Act, which has general application including with respect to adult students and other education institutions such as universities.

Schedule 3 - Other amendments

Summary

Schedule 3 makes technical amendments to confirm that the definition of 'social security law' includes subordinate legislation.

Schedule 3 commences the day after Royal Assent.

Background

The Social Security Act defines the term 'social security law'. It includes the Social Security Act, the Social Security (Administration) Act and the Social Security (International Agreements) Act 1999, which are the main parts of the social security legislative scheme.

The term is used in various places in those Acts. For example, the protected information provisions in Division 3 of Part 5 of the Social Security (Administration) Act allow collection, use and disclosure of protected information 'for the purposes of the social security law' and the power of delegation in section 234 of the Social Security (Administration) Act applies to powers 'under the social security law'.

Explanation of the changes

Social Security Act

Items 1 and 2 replace the definition of the 'social security law' in subsections 23(17) and (18) of the Social Security Act. Currently the term covers the Social Security Act, the Social Security Administration Act and the Social Security (International Agreements) Act 1999. Those are the Acts that make up the social security legislative scheme.

New subsection 23(17) clarifies that a provision of an Act can be expressed to form part of the social security law. This clarification makes existing subsection 23(18) redundant.

Various legislative instruments made under the three Acts referred to above are also important parts of the social security legislative scheme. The amendments confirm that any legislative instrument made under one of those Acts will also be part of the social security law. For example, the amendments confirm that the Adult Disability Assessment Determination 2018, made under section 38C of the Social Security Act and known as the Adult Disability Assessment Tool, is part of the social security law.

Social Security Administration Act

Items 3 and 5 repeal subsections 3(3) and (4), and section 4, as a consequence of items 1 and 2:

•

subsection 3(3), which defines 'social security law' for the Social Security Administration Act, is not necessary because subsection 3(2) means that the Social Security Act definition of 'social security law' applies;

•

subsection 3(4) is no longer necessary given the clarification in new subsection 23(17) of the Social Security Act;

•

section 4, which declares the Social Security Administration Act to be part of the social security law, is not necessary because new subsection 23(17) of the Social Security Act, in combination with subsection 3(2) of the Social Security Administration Act, has that effect.

Item 4 repeals subsection 3(6) and substitutes new subsection 3(6) as a consequence of items 1 and 2. New subsection 3(6) has been amended to remove the reference to 'the social security law'.

Social Security (International Agreements) Act 1999

Items 6 and 7 repeal subsections 3(2) and (3), as a consequence of items 1 and 2:

•

subsection 3(2), which defines 'social security law' for the Social Security (International Agreements) Act 1999, is not necessary because existing subsection 3(1) means that the Social Security Act definition of 'social security law' applies;

•

subsection 3(3) is no longer necessary given the clarification in new subsection 23(17) of the Social Security Act.

Veterans' Entitlements Act

Item 8 amends subsection 5Q(1) to replace the definition of 'social security law' so that it has the same meaning as in the Social Security Act.

Application provision

Item 9 is an application provision. The amendments made by items 1 and 2 to section 23 of the Social Security Act relating to the 'social security law' definition apply to instruments made before, on or after the amendments commence.