Austudy Regulations (Amendment) (Cth)

Statutory Rules 1997No. 302 1

__________________

AUSTUDY Regulations2 (Amendment)

I, The Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following Regulations under the Student and Youth Assistance

Act 1973.

Dated 29 October 1997.

WILLIAM DEANE

Governor-General

By His Excellency’s Command,

DAVID KEMP

Minister for Employment, Education, Training and Youth Affairs

____________

1. Commencement

1.1 These Regulations commence on 1 January 1998.

2. Amendment

2.1 The AUSTUDY Regulations are amended as set out in these Regulations.

3. Regulation 12F (Interpretation)

3.1 Subregulation 12F (1) (definitions of “net rental property loss” and “rental property”):

Omit the definitions.

3.2 Subregulation 12F (1):

Insert the following definitions:

“‘loan’ includes:

(a)
a transaction (whatever its terms or form) that gives substantial effect to an advance of money; and

(b)
the provision of credit or another form of financial accommodation; and

‘net passive business loss’ means the amount by which the total amount of losses or outgoings, which are or will be deductible under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 because they were necessarily incurred in relation to a passive business, exceeds any gross income from the business;

‘passive business’, fora person, means a business in relation to which the person is usually engaged for less than 17.5 hours in a week.”.

3.3 Subregulation 12F (2) (definition of “business activity”):

Omit the definition.

3.4 Subregulation 12F (2):

Insert the following definitions:

“‘AIC scheme’ means the Commonwealth scheme known as the Assistance for Isolated Children scheme;

‘arm’s length loan’ means a loan, by a person or body whose usual business is to make loans to members of the public, to:

(a)
a designated parent for regulation 12K or a member of his or her family for subregulation 12N (5); or

(b)
a designated spouse for regulation 12R or a member of his or her family for subregulation 12U (5); or

(c)
the spouse of a designated student for regulation 12X or a member of his or her family for subregulation 12ZA (8); or

(d)
a designated student for regulation 12ZC or a member of his or her family for subregulation 12ZF (8);

‘income assistance’ means:

(a)
a payment under:

(i)
Part 2 or 4A of the Act; or

(ii)
the scheme known as the ABSTUDY scheme; or

(iii)
the AIC scheme; or

(b)
a payment under a scholarship; or

(c)
the amount (that is exempt from income tax under Division 1AA of Part 3 of the Income Tax Assessment Act 1936 or Subdivision 52-A, 52-B or 52-C of the Income Tax Assessment Act 1997) of a payment:

(i)
under the Veterans’ Entitlements Act 1986; or

(ii)
under the Social Security Act 1991, except a Family Tax Payment under Part 2.17AA of that Act; or

(d)
a payment by a State or Territory, or a State or Territory authority, to assist the primary, secondary or tertiary education of a student;

‘savings’, in relation to a person who:

(a)
has substantial influence over whether company profits are distributed to the person or a family member (within the meaning of the provision in which the expression is used) or a company or trust in which the person or family member has an interest; or

(b)
is a member of a partnership who has substantial influence over whether partnership profits are distributed to the personal family member (within the meaning of the provision in which the expression is used);

(i)
a power of appointment under the trust; or

(ii)
a power to rescind or vary a provision of, or the effect of the exercise of a power under, the trust; or

(iii)
substantial influence over whether trust profits are distributed to the person or family member;

includes the amount of those profits that is retained by the company, partnership or trust;”.

4. Regulation 12H (Interpretation)

4.1 Omit the regulation.

5. Regulation 12J (To whom this Subdivision applies)

5.1 Paragraph 12J (a):

Omit “regulation 12L”, substitute “regulation 12K”.

5.2 Paragraph 12J (b):

Omit all the words before subparagraph (i), substitute:

“(b)
qualifies for:”.

6. Regulation 12K (Actual means test:

parent)

6.1 Omit the regulation.

7. Regulation 12L (Who is a designated parent?)

7.1 Omit the regulation, substitute:

Who is a designated parent	“12K.(1) A parent is a designated parent if subregulation 85 (2) applies to the parent and he or she:
(a) within 10 years before 1 January in the year of study, first entered Australia under a permanent visa or entry permit within the meaning of the Migration Act 1958 for the grant of which a criterion or requirement was that the person demonstrate skills in business; or
(b) has an interest (the value of which is $2,500 or more) in assets outside Australia and its external territories; or
(c) in the last financial year ending before the year of study, had an interest in a proprietary company, an unlisted public company or a trust; or
(d) in the last financial year ending before the year of study, derived income of $2,500 or more from a source outside Australia and its external territories, except Norfolk Island, that does not consist only of income from a pension or similar payment that was income of the parent for Part 5 of Chapter 4; or
(e) in the last financial year ending before the year of study, derived income from a salary or wage and has claimed, or will claim, a tax deduction for a business loss (whether for that year or a previous year) that does not consist only of a net passive business loss; or
(f) in the last financial year ending before the year of study, was a member of a partnership; or
(g) in the last financial year ending before the year of study, was a self-employed person (except a self-employed person who was wholly or mainly engaged in a primary production business owned by the person).
“(2) In paragraph (1) (g):
‘self-employed person’ means a person who works for gain or reward other than under a contract of employment or apprenticeship, whether or not the person employs 1 or more other persons.”.

8. Regulation 12M (What is the after tax income of a notional parent?)

8.1 Omit the regulation, substitute:

Students not entitled to living allowance	“12L. A student who has a designated parent is not entitled to living allowance in a year of study unless the details of the actual means of the parent under subregulation 12M (1) or (2) for the relevant financial year supplied by or for the student in relation to the student’s application for AUSTUDY are materially correct.
Actual means: designated parents	“12M.(1) The actual means of a designated parent for the year of study is taken to be the amount that equates to total expenditure by, and savings of, the parent and each member of his or her family (a ‘family member’) in the last financial year ending before the year of study.
“(2) However, the actual means of a designated parent for the year of study is taken to be the amount that equates to the total expenditure by, and savings of, the parent and each family member in the financial year ending in the year of study, if:
(a) that amount is substantially less than the amount mentioned in subregulation (1); and
(b) the difference between the 2 amounts is attributable to an event that is beyond the control of the parent or family member; and
(c) the first amount mentioned in paragraph (a) is likely to apply for 2 years after the later of:
(i) the day on which the event happened; and
(ii) 1 January in the year of study.
“(3) For paragraph (2) (b), an expected decrease in the profitability of a business in which the parent or a family member has an interest is not ordinarily to be taken to be an event that is beyond the control of the parent or family member.
“(4) In this regulation:
‘family’ has the meaning given by subregulation 12N (5).”.

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

9.1 Subregulations 12N (1), (1A), (1B) and (1C):

Omit the subregulations, substitute:

“(1) For subregulations 12M (1) and (2), the actual means of a designated parent for the relevant financial year does not include:
(a) expenditure or savings from any income assistance to the parent or a member of his or her family (a ‘family member’) in the relevant financial year; or
(b) expenditure by the parent or his or her spouse for the maintenance of:
(i) a child of the parent or spouse if the parent or spouse does not have responsibility for the day-to-day care, welfare and development of the child; or
(ii) a former spouse of the parent or spouse; or
(c) if the parent or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for boarding allowance under the AIC scheme—the lesser of:
(i) the amount of the expenditure; and
(ii) $5,274 less the amount of the boarding allowance; or
(d) if the parent or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for the away-from-home living allowance under subregulation 77 (1)—the lesser of:
(i) the amount of the expenditure; and
(ii) $5,274 less the amount of the secondary student’s after tax income compensation; or
(e) if the parent or a family member is a person with a disability—expenditure by the parent or family member to acquire, or modify, property for the person to assist him or her to overcome the disability; or
(f) expenditure or savings from any arm’s length loan made to the parent or a family member in the relevant financial year; or
(g) expenditure to repay the principal or interest in relation to any loan made to the parent or a family member in the relevant financial year that is not an arm’s length loan; or
(h) expenditure, not otherwise mentioned in this subregulation, that equates to the amount of any reduction in the relevant financial year of liquid assets of the parent or a family member at the beginning of that year; or
(i) expenditure, and any increase in savings, of the parent or a family member from the proceeds of any liquidation in the relevant financial year of assets of the parent or family member at the beginning of that year; or
(j) expenditure or savings from the amount of any windfall gain in the relevant financial year of the parent or a family member that is not a gift to the parent or family member; or
(k) expenditure from the income of any business of the parent or a family member that equates to the amount that was or will be deductible under the Income Tax Assessment Act 1936 or Income Tax Assessment Act 1997 because the expenditure was or will be necessarily incurred in carrying on the business; or
(l) expenditure or savings of not more than $6,000 from any pay and allowances that are mentioned in paragraph 23 (s) of the Income Tax Assessment Act 1936, or item 1.4 of section 51-5 of the Income Tax Assessment Act 1997, and paid to the parent or family member in the relevant financial year; or
(m) expenditure or savings of not more than $6,000 from any income in the relevant financial year from independent employment by each family member described in paragraph (b) or (d) of the definition of ‘family’ in subregulation (5).
“(1A) However, paragraph (1) (k) does not apply to:
(a) expenditure by the designated parent or a family member that equates to the total amount of any losses from the business that are carried forward from the preceding financial year; and
(b) expenditure by the parent or a family member that equates to the amount of the contribution to a superannuation fund in relation to the business that exceeds:
(i) for a person employed in the business—the minimum contribution for the employee under the Superannuation Guarantee (Administration) Act 1992; or
(ii) for the parent or a family member engaged in the business other than as an employee—the lesser of $3,000 and the total amount of the contributions for the parent and each family member for the relevant financial year.
“(1B) For subparagraph (1) (d) (ii), the after tax income compensation of a secondary student is calculated using the following formula:
where:
‘AT1’ is the amount of the after tax income of the student’s designated parent calculated using the following formula:
where:
‘PI’ is the minimum income of the parent at which on a notional application of the parental income test the student becomes ineligible to get the away-from-home living allowance;
‘DC’ is the total amount of any deductions for children of the parent that would be applicable under regulation 87;
‘T’ is the amount of income tax, before any rebates, that would be notionally payable by the parent for the relevant financial year if his or her income were PI +DC;
‘M’ is the amount of Medicare levy that would be notionally payable by the parent for the relevant financial year if his or her income were PI + DC if:
(a) each child of the parent mentioned in paragraph (b) or (d) of the definition of ‘family’ in sub-regulation (5) who were under 25 had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 1936; and
(b) each child of the parent mentioned in paragraph (c) of that definition also had no separate net income;
‘FP’ isthe total amount of any family payments at the basic rate that could be paid under Part 2.17 of the Social Security Act 1991 for children of the parent who have not turned 16;
‘FTI’ is:
(a) for an application for AUSTUDY for 1998 to which sub-regulation 12M (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and
(b) for any other application for AUSTUDY—20% of the amount calculated under subsection 20C (2) of that Act;
without regard to section 20K of that Act; and
‘AT2’ is the notional amount of AT1 calculated as if the student were getting the standard living allowance; and
‘N’ is the number of secondary students in the parent’s family who qualify for the away-from-home living allowance.”.

9.2 Subregulation 12N (5):

Add at the end:

“‘relevant financial year’ means:

(a)
in relation to subregulation 12M (1)—the last financial year ending before the year of study; and

(b)
in relation to subregulation 12M (2)—the financial year ending in the year of study.”.

10. Regulation 12P (Interpretation)

10.1 Omit the regulation.

11. Regulation 12Q (To whom this Subdivision applies)

11.1 Paragraph 12Q (a):

Omit “regulation 12S”, substitute “regulation 12R”.

11.2 Paragraph 12Q (b):

Omit the paragraph, substitute:

“(b)
qualifies for the independent living allowance under regulation 67.”.

12. Regulation 12R (Actual means test:

spouse)

12.1 Omit the regulation.

13. Regulation 12S (Who is a designated spouse?)

13.1 Omit the regulation, substitute:

Who is a designated spouse?	“12R.(1) A spouse is a designated spouse if subregulation 93 (2) applies to the spouse and he or she:
(a) within 10 years before 1 January in the year of study, first entered Australia under a permanent visa or entry permit within the meaning of the Migration Act 1958 for the grant of which a criterion or requirement was that the person demonstrate skills in business; or
(b) has an interest (the value of which is $2,500 or more) in assets outside Australia and its external territories; or
(c) in the last financial year ending before the year of study, had an interest in a proprietary company, an unlisted public company or a trust; or
(d) in the last financial year ending before the year of study, derived income of $2,500 or more from a source outside Australia and its external territories, except Norfolk Island, that does not consist only of income from a pension or similar payment that was income of the spouse for Part 6 of Chapter 4; or
(e) in the last financial year ending before the year of study, derived income from a salary or wage and has claimed, or will claim, a tax deduction for a business loss (whether for that year or a previous year) that does not consist only of a net passive business loss; or
(f) in the last financial year ending before the year of study, was a member of a partnership; or
(g) in the last financial year ending before the year of study, was a self-employed person (except a self-employed person who was wholly or mainly engaged in a primary production business owned by the person).
“(2) In paragraph (1) (g):
‘self-employed person’ means a person who works for gain or reward other than under a contract of employment or apprenticeship, whether or not the person employs 1 or more other persons.”.

14. Regulation 12T (What is the after tax income of a notional spouse?)

14.1 Omit the regulation, substitute:

Students not entitled to living allowance	“12S. A student who has a designated spouse is not entitled to living allowance in a year of study unless the details of the actual means of the spouse under subregulation 12T (1) or (2) for the relevant financial year supplied by or for the student in relation to the student’s application for AUSTUDY are materially correct.
Actual means: designated spouses	“12T.(1)The actual means of a designated spouse for the year of study is taken to be the amount that equates to total expenditure by, and savings of, the spouse and each member of his or her family (a ‘family member’) in the last financial year ending before the year of study.
“(2) However, the actual means of a designated spouse for the year of study is taken to be the amount that equates to the total expenditure by, and savings of, the spouse and each family member in the financial year ending in the year of study, if:
(a) that amount is substantially less than the amount mentioned in subregulation (1); and
(b) the difference between the 2 amounts is attributable to an event that is beyond the control of the spouse or family member; and
(c) the first amount mentioned in paragraph (a) is likely to apply for 2 years after the later of:
(i) the day on which the event happened; and
(ii) 1 January in the year of study.
“(3) For paragraph (2) (b), an expected decrease in the profitability of a business in which the spouse or a family member has an interest is not ordinarily to be taken to be an event that is beyond the control of the spouse or family member.
“(4) In this regulation:
‘family’ has the meaning given by subregulation 12U (5).”.

15. Regulation 12U (What is not the actual means of a designated spouse?)

15.1 Subregulations 12U (1), (1A), (1B) and (1C):

Omit the subregulations, substitute:

“(1) For subregulations 12T (1) and (2), the actual means of a designated spouse of a student for the relevant financial year does not include:

(a)
expenditure or savings from any income assistance to the spouse or a member of his or her family (a ‘family member’) in the relevant financial year; or

(b)
expenditure by the spouse or student for the maintenance of:

a child of the spouse or student if the spouse or student does not have responsibility for the day-to-day care, welfare and development of the child; or

(ii)
a former spouse of the spouse or student; or

(c)
if the spouse or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for boarding allowance under the AIC scheme—the lesser of:

(i)
the amount of the expenditure; and

(ii)
$5,274 less the amount of the boarding allowance; or

(d)
if the spouse or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for the away-from-home living allowance under subregulation 77 (1)—the lesser of:

(i)
the amount of the expenditure; and

(ii)
$5,274 less the amount of the secondary student’s after tax income compensation; or

(e)
if the spouse or a family member is a person with a disability—expenditure by the spouse or family member to acquire, or modify, property for the person to assist him or her to overcome the disability; or

(f)
expenditure or savings from any arm’s length loan made to the spouse or a family member in the relevant financial year; or

(g)
expenditure to repay the principal or interest in relation to any loan made to the spouse or a family member in the relevant financial year that is not an arm’s length loan; or

(h)
expenditure, not otherwise mentioned in this subregulation, that equates to the amount of any reduction in the relevant financial year of liquid assets of the spouse or a family member at the beginning of that year; or

(i)
expenditure, and any increase in savings, of the spouse or a family member from the proceeds of any liquidation in the relevant financial year of assets of the spouse or family member at the beginning of that year; or

(j)
expenditure or savings from the amount of any windfall gain in the relevant financial year of the spouse or a family member that is not a gift to the spouse or family member; or

(k)
expenditure from the income of any business of the spouse or a family member that equates to the amount that was or will be deductible under the Income Tax Assessment Act 1936 or Income Tax Assessment Act 1997 because the expenditure was or will be necessarily incurred in carrying on the business; or

(l)
expenditure or savings of not more than $6,000 from any pay and allowances that are mentioned in paragraph 23 (s) of the Income Tax Assessment Act 1936, or item 1.4 of section 51-5 of the Income Tax Assessment Act 1997, and paid to the spouse or a family member in the relevant financial year; or

(m)
expenditure or savings of not more than $6,000 from any income in the relevant financial year from independent employment by each family member described in paragraph (a) or (c) of the definition of ‘family’ in subregulation (5).

“(1A) However, paragraph (1) (k) does not apply to:

(a)
expenditure by the spouse or a family member that equates to the total amount of any losses from the business that are carried forward from the preceding financial year; and

(b)
expenditure by the spouse or a family member that equates to the amount of the contribution to a superannuation fund in relation to the business that exceeds:

(i)
for a person employed in the business—the amount of the minimum contribution for the employee under the Superannuation Guarantee (Administration) Act 1992; or

(ii)
for the spouse or a family member engaged in the business other than as an employee—the lesser of $3,000 and the total amount of the contributions for the spouse and each family member for the relevant financial year.”.

“(1B) For subparagraph (1) (d) (ii), the after tax income compensation of a secondary student is calculated using the following formula:

where:

‘AT1’ is the amount of the after tax income of the student’s designated spouse calculated using the following formula:

where:

‘PI’
is the minimum income of the spouse at which on a notional application of the spouse income test the student becomes ineligible to get the away-from-home living allowance;

‘DC’
is the total amount of any deductions for children of the spouse that would be applicable under sub-regulation 94 (2A);

‘T’
is the amount of income tax, before any rebates, that would be notionally payable by the spouse for the relevant financial year if his or her income were PI +DC;

‘M’
is the amount of Medicare levy that would be notionally payable by the spouse for the relevant financial year if his or her income were PI + DC if:

(a)
each child of the spouse mentioned in paragraph (c) of the definition of ‘family’ in sub regulation (5) who were under 25 had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 193 6; and

(b)
each child of the spouse mentioned in paragraph (b) of that definition also had no separate net income;

‘FP’
is the total amount of any family payments at the basic rate that could be paid under Part 2.17 of the Social Security Act 1991 for children of the spouse who have not turned 16;

‘FTI’ is:

(a)
for an application for AUSTUDY for 1998 to which sub-regulation 12T (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and

(b)
for any other application for AUSTUDY—20% of the amount calculated under sub-section 20C (2) of that Act;

without regard to section 20K of that Act; and

‘AT2’ is the notional amount of AT1 calculated as if the student were getting the standard living allowance; and

‘N’ is the number of secondary students in the spouse’s family who qualify for the away-from-home living allowance.”.

15.2 Subregulation 12U (5):

Add at the end:

“‘relevant financial year’ means:

(a)
in relation to subregulation 12T (1)—the last financial year ending before the year of study; and

(b)
in relation to subregulation 12T (2)—the financial year ending in the year of study.”.

16. Regulation 12V (Interpretation)

16.1 Omit the regulation.

17. Regulation 12W (To whom this Subdivision applies)

17.1 Paragraph 12W (a):

Omit “regulation 12Y”, substitute “regulation 12X”.

17.2 Paragraph 12W (b):

Omit “regulation 12S”, substitute “regulation 12R”.

17.3 Paragraph 12W (c):

Omit the paragraph, substitute:

“(c)
qualifies for the independent living allowance under regulation 67.”.

18. Regulation 12X (Actual means test:

designated student with a spouse)

18.1 Omit the regulation.

19. Regulation 12Y (Who is a designated student?)

19.1 Omit the regulation, substitute:

Who is a designated student?	“12X.(1) A student is a designated student if the student:
(a) within 10 years before 1 January in the year of study, first entered Australia under a permanent visa or entry permit within the meaning of the Migration Act 1958 for the grant of which a criterion or requirement was that the person demonstrate skills in business; or
(b) in the year of study, has an interest (the value of which is $2,500 or more) in assets outside Australia and its external territories; or
(c) in the last financial year ending before the year of study, had an interest in a proprietary company, an unlisted public company or a trust; or
(d) in the last financial year ending before the year of study, derived income of $2,500 or more from a source outside Australia and its external territories, except Norfolk Island, that does not consist only of income from a pension or similar payment that was income of the student for Part 4 of Chapter 4; or
(e) in the last financial year ending before the year of study, derived income from a salary or wage and has claimed, or will claim, a tax deduction for a business loss (whether for that year or a previous year) that does not consist only of a net passive business loss; or
(f) in the last financial year ending before the year of study, was a member of a partnership; or
(g) in the last financial year ending before the year of study, was a self-employed person (except a self-employed person who was wholly or mainly engaged in a primary production business owned by the person).
“(2) In paragraph (1) (g):
‘self-employed person’ means a person who works for gain or reward other than under a contract of employment or apprenticeship, whether or not the person employs 1 or more other persons.”.

20. Regulation 12Z (What is the after tax income of the notional spouse?)

20.1 Omit the regulation, substitute:

Students not entitled to living allowance	“12Y. A designated student who has a spouse is not entitled to living allowance in a year of study unless the details of the actual means of the spouse under subregulation 12Z (1) or (2) for the relevant financial year supplied by or for the student in relation to the student’s application for AUSTUDY are materially correct.
Actual means: designated students with a spouse	“12Z.(1) The actual means of the spouse of a designated student for the year of study is taken to be the amount that equates to total expenditure by, and savings of, the spouse and each member of his or her family (a ‘family member’) in the last financial year ending before the year of study.
“(2) However, the actual means of the spouse of a designated student for the year of study is taken to be the amount that equates to the total expenditure by, and savings of, the spouse and each family member in the financial year ending in the year of study, if:
(a) that amount is substantially less than the amount mentioned in subregulation (1); and
(b) the difference between the 2 amounts is attributable to an event that is beyond the control of the spouse or family member; and
(c) the first amount mentioned in paragraph (a) is likely to apply for 2 years after the later of:
(i) the day on which the event happened; and
(ii) 1 January in the year of study.
“(3) For paragraph (2) (b), an expected decrease in the profitability of a business in which the spouse or a family member has an interest is not ordinarily to be taken to be an event that is beyond the control of the spouse or family member.
“(4) In this regulation:
‘family’ has the meaning given by subregulation 12ZA (8).”.

21. Regulation 12ZA (What is not the actual means of the spouse of a designated student?)

21.1 Subregulations 12ZA (1), (2), (3) and (4):

Omit the subregulations, substitute:

“(1) For subregulations 12Z (1) and (2), the actual means of a spouse of a designated student for the relevant financial year does not include:

(a)
expenditure or savings from any income assistance to the spouse or a member of his or her family (a ‘family member’) in the relevant financial year; or

(b)
expenditure by the spouse or student for the maintenance of:

(i)
a child of the spouse or student if the spouse or student does not have responsibility for the day-to-day care, welfare and development of the child; or

(ii)
a former spouse of the spouse or student; or

(c)
if the spouse or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for boarding allowance under the AIC scheme—the lesser of:

(i)
the amount of the expenditure; and

(ii)
$5,274 less the amount of the boarding allowance; or

(d)
if the spouse or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for the away-from-home living allowance under subregulation 77 (1)—the lesser of:

(i)
the amount of the expenditure; and

(ii)
$5,274 less the amount of the secondary student’s after tax income compensation; or

(e)
if the spouse or a family member is a person with a disability—expenditure by the spouse or family member to acquire, or modify, property for the person to assist him or her to overcome the disability; or

(f)
expenditure or savings from any arm’s length loan made to the spouse or a family member in the relevant financial year; or

(g)
expenditure to repay the principal or interest in relation to any loan made to the spouse or a family member in the relevant financial year that is not an arm’s length loan; or

(h)
expenditure, not otherwise mentioned in this subregulation, that equates to the amount of any reduction in the relevant financial year of liquid assets of the spouse or a family member at the beginning of that year; or

(i)
expenditure, and any increase in savings, of the spouse or a family member from the proceeds of any liquidation in the relevant financial year of assets of the spouse or family member at the beginning of that year; or

(j)
expenditure or savings from the amount of any windfall gain in the relevant financial year of the spouse or a family member that is not a gift to the spouse or family member; or

(k)
expenditure from the income of any business of the spouse or a family member that equates to the amount that was or will be deductible under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 because the expenditure was or will be necessarily incurred in carrying on the business; or

(l)
expenditure or savings of not more than $6,000 from any pay and allowances that are mentioned in paragraph 23 (s) of the Income Tax Assessment Act 1936, or item 1.4 of section 51-5 of the Income Tax Assessment Act 1997, and paid to the spouse or a family member in the relevant financial year; or

(m)
expenditure or savings of not more than $6,000 from any income in the relevant financial year from independent employment by each family member described in paragraph (a) or (c) of the definition of ‘family’ in subregulation (8).

“(2) However, paragraph (1) (k) does not apply to:

(a)
expenditure by the spouse or a family member that equates to the total amount of any losses from the business that are carried forward from the preceding financial year; and

(b)
expenditure by the spouse or a family member that equates to the amount of the contribution to a superannuation fund in relation to the business that exceeds:

(i)
for a person employed in the business—the minimum contribution for the employee under the Superannuation Guarantee (Administration) Act 1992; or

(ii)
for the spouse or a family member engaged in the business other than as an employee—the lesser of $3,000 and the total amount of the contributions for the spouse and each family member for the relevant financial year.

“(3) For subparagraph (1) (d) (ii), the after tax income compensation of a secondary student is calculated using the following formula:

where:

‘AT1’ is the amount of the after tax income of the designated student’s spouse calculated using the following formula:

where:

‘PI’
is the minimum income of the spouse at which on a notional application of the spouse income test the student becomes ineligible to get the away-from-home living allowance;

‘DC’
the total amount of any deductions for children of the spouse that would be applicable under subregulation 94 (2A);

‘T’
is the amount of income tax, before any rebates, that would be notionally payable by the spouse for the relevant financial year if his or her income were PI +DC;

‘M’
is the amount of Medicare levy that would be notionally payable by the spouse for the relevant financial year if his or her income were PI + DC if:

(a)
each child of the spouse mentioned in paragraph (c) of the definition of ‘family’ in sub-regulation (8) who were under 25 had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 1936 ; and

(b)
each child of the spouse mentioned in paragraph (b) of that definition also had no separate net income;

‘FP’
is the total amount of any family payments at the basic rate that could be paid under Part 2.17 of the Social Security Act 1991 for children of the spouse who have not turned 16;

‘FTI’ is:

(a)
for an application for AUSTUDY for 1998 to which sub-regulation 12Z (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and

(b)
for any other application for AUSTUDY—20% of the amount calculated under subsection 20C (2) of that Act;

without regard to section 20K of that Act; and

‘AT2’ is the notional amount AT1 calculated as if the student were getting the standard living allowance; and

‘N’ is the number of secondary students in the spouse’s family who qualify for the away-from-home living allowance.”.

21.2 Subregulation 12ZA (8):

Add at the end:

“‘relevant financial year’ means:

(a)
in relation to subregulation 12Z (1)—the last financial year ending before the year of study; and

(b)
in relation to subregulation 12Z (2)—the financial year ending in the year of study.”.

22. Regulation 12ZB (Interpretation)

22.1 Omit the regulation.

23. Regulation 12ZC (To whom this Subdivision applies)

23.1 Paragraph 12ZC (a):

Omit “regulation 12Y”, substitute “regulation 12X”.

23.2 Paragraph 12ZC (c):

Omit the paragraph, substitute:

“(c)
qualifies for the independent living allowance under regulation 67.”.

24. Regulation 12ZD (Actual means test:

designated student without a spouse?)

24.1 Omit the regulation.

25. Regulation 12ZE (What is the after tax income of a notional student?)

25.1 Omit the regulation, substitute:

Students not entitled to living allowance	“12ZD. A designated student is not entitled to living allowance in a year of study unless the details of the actual means of the student under subregulation 12ZE (1) or (2) for the relevant financial year supplied by or for the student in relation to the student’s application for AUSTUDY are materially correct.
Actual means: designated students without a spouse	“12ZE.(1) The actual means of a designated student for the year of study is taken to be the amount that equates to total expenditure by, and savings of, the student and each member of his or her family (a ‘family member’) in the last financial year ending before the year of study.
“(2) However, the actual means of a designated student in the year of study is taken to be the amount that equates to the total expenditure by, and savings of, the student and each family member in the financial year ending in the year of study, if:
(a) that amount is substantially less than the amount mentioned in subregulation (1); and
(b) the difference between the 2 amounts is attributable to an event that is beyond the control of the student or family member; and
(c) the first amount mentioned in paragraph (a) likely to apply for 2 years after the later of:
(i) the day on which the event happened; and
(ii) 1 January in the year of study.
“(3) For paragraph (2) (b), an expected decrease in the profitability of a business in which the student or a family member has an interest is not ordinarily to be taken to be an event that is beyond the control of the student or family member.
“(4) In this regulation:
‘family’ has the meaning given by subregulation 12ZF (8).”.

26. Regulation 12ZF (What is not the actual means of a designated student?)

26.1 Subregulations 12ZF (1), (2), (3) and (4):

Omit the subregulations, substitute:

“(1) For subregulations 12ZE (1) and (2), the actual means of a designated student for the relevant financial year does not include:

(a) expenditure or savings from income assistance to the student or a member of his or her family (a ‘family member’) in the relevant financial year; or
(b) expenditure by the student for the maintenance of:
(i) a child of the student if the student does not have responsibility for the day-to-day care, welfare and development of the child; or
(ii) a former spouse of the student; or
(c) if the student or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for boarding allowance under the AIC scheme—the lesser of:
(i) the amount of the expenditure; and
(ii) $5,274 less the amount of the boarding allowance; or
(d) if the student or a family member incurs expenditure in boarding away from home another family member who is a student qualifying for the away-from-home living allowance under subregulation 77 (1)—the lesser of:
(i) the amount of the expenditure; and
(ii) $5,274 less the amount of the secondary student’s after tax income compensation; or
(e) if the student or a family member is a person with a disability—expenditure by the student or family member to acquire, or modify, property for the person to assist him or her to overcome the disability; or
(f) expenditure or savings from an arm’s length loan made to the student or a family member in the relevant financial year; or
(g) expenditure to repay the principal or interest in relation to any loan made to the student or a family member in the relevant financial year that is not an arm’s length loan; or
(h) expenditure, not otherwise mentioned in this subregulation, that equates to the amount of a reduction in the relevant financial year of the liquid assets of the student or a family member at the beginning of that year; or
(i) expenditure, and any increase in savings, of the student or a family member from the proceeds of a liquidation in the relevant financial year of assets of the student or family member at the beginning of that year; or
(j) expenditure or savings from the amount of a windfall gain in the relevant financial year of the student or a family member that is not a gift to the student or family member; or
(k) expenditure from the income of a business of the student or a family member that equates to the amount that was or will be deductible under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 because the expenditure was or will be necessarily incurred in carrying on the business; or
(l) expenditure or savings of not more than $6,000 from any pay and allowances that are mentioned in paragraph 23 (s) of the Income Tax Assessment Act 1936, or item 1.4 of section 51-5 of the Income Tax Assessment Act 1997, and paid to the student or a family member in the relevant financial year; or
(m) expenditure or savings of not more than $6,000 from any income in the relevant financial year from independent employment by each family member described in paragraph (b) of the definition of ‘family’ in subregulation (8).
“(2) However, paragraph (1) (k) does not apply to:
(a) expenditure by the student or a family member that equates to the total amount of any losses from the business that are carried forward from the preceding financial year; and
(b) expenditure by the student or a family member that equates to the amount of the contribution to a superannuation fund in relation to the business that exceeds:
(i) for a person employed in the business—the minimum contribution for the employee under the Superannuation Guarantee (Administration) Act 1992; or
(ii) for the student or a family member engaged in the business other than as an employee—the lesser of $3,000 and the total amount of the contributions for the student and each family member for the relevant financial year.
“(3) For subparagraph (1) (d) (ii), the after tax income compensation of a secondary student is calculated using the following formula:
where:
‘AT1’ is the amount of the after tax income of the designated student calculated using the following formula:
where:
‘PI’ is the minimum income of the student at which on a notional application of the student income test the student becomes ineligible to get the away-from-home living allowance;
‘DC’ is the total amount of any deductions for children of the student that would be applicable under regulation 87;
‘T’ is the amount of income tax, before any rebates, that would be notionally payable by the student for the relevant financial year if his or her income were PI + DC;
‘M’ is the amount of Medicare levy that would be notionally payable by the student for the relevant financial year if his or her income were PI + DC if:
(a) each child of the spouse mentioned in paragraph (a) of the definition of ‘family’ in subregulation (8) had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 1936; and
(b) each child of the spouse mentioned in paragraph (b) of that definition who were under 25 also had no separate net income;
‘FP’ is the total amount of any family payments at the basic rate that could be paid under Part 2.17 of the Social Security Act 1991 for children of the student who have not turned 16;
‘FTI’ is:
(a) for an application for AUSTUDY for 1998 to which sub-regulation 12ZE (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and
(b) for any other application for AUSTUDY—20% of the amount calculated under subsection 20C (2) of that Act;
without regard to section 20K of that Act; and
‘AT2’ is the notional amount of AT1 calculated as if the student were getting the standard living allowance; and
‘N’ is the number of secondary students in the student’s family who qualify for the away-from-home living allowance.”.

26.2 Subregulation 12ZF (8):

Add at the end:

“‘relevant financial year’ means:

(a)
in relation to subregulation 12ZE (1)—the last financial year ending before the year of study; and

(b)
in regulation to subregulation 12ZE (2)—the financial year ending in the year of study.”.

27. Regulation 82 (Effect of student income test on living allowance)

27.1 Subregulation 82 (1B):

Omit the subregulation, substitute:

“(1B) If the student is a designated student for regulation 12ZC, his or her relevant income for a year of study is the greater of:

(a)
the amount calculated in accordance with regulation 83 for the relevant financial year mentioned in whichever of subregulations 12ZE (1) and (2) applies to the student; and

(b)
the amount calculated using the formula:

where:

‘AM’ is the actual means of the student for the financial year mentioned in whichever of subregulations 12ZE (1) and (2) applies to the student;

‘T’ is the amount of income tax, before any rebates, without regard to any increase in the tax free threshold because of section 20C or 20D of the Income Tax Rates Act 1986, that would be notionally payable by the student for the year to achieve an after tax income of ;

‘M’ is the amount of Medicare levy that would be notionally payable by the student for the relevant financial year to achieve an after tax income of if:

(a)
each child of the student mentioned in paragraph (a) of the definition of ‘family’ in subregulation 12ZF (8) had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 1936; and

(b)
each child of the student mentioned in paragraph (b) of that definition who were under 25 also had no separate net income;

‘FTI’ is:

(a)
for an application for AUSTUDY for 1998 to which subregulation 12ZE (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and

(b)
for any other application for AUSTUDY—20% of the amount calculated under subsection 20C (2) of that Act;

without regard to section 20K of that Act.”.

27.2 After subregulation 82 (2), insert:

“(2A)The maximum living allowance that a student to whom subregulation (1B) applies can get is reduced by $1 for every $2 by which the student’s relevant income for that subregulation exceeds $6,000.”.

28. Regulation 86 (What is parental income?)

28.1 Subregulation 86 (1):

Omit “NRPL” from the formula, substitute “NPBL”.

28.2 Subregulation 86 (1) (definition of “NRPL”):

Omit the definition, substitute:

“‘NPBL’ means a net passive business loss (if any) incurred by each parent of the student:

(a)
if the prescribed event mentioned in paragraph 109 (1) (d) happens—in the financial year ending in the year of study; or

(b)
if the event does not happen—in the last financial year ending before the year of study; and”.

28.3 Subregulation 86 (1A):

Omit the subregulation.

29. Regulation 87A (Parental income—designated parents)

29.1 Subregulation 87A (1):

Omit the subregulation, substitute:

“(1) If the student is described in regulation 12J, parental income for a year of study is the greater of:

(a)
the amount calculated in accordance with regulation 86 for the financial year mentioned in whichever of subregulations 12M (1) and (2) applies to the parent; and

(b)
the amount calculated using the formula:

where:

‘AM’ is the actual means of the student’s designated parent for the financial year mentioned in whichever of subregulations 12M (1) and (2) applies to the parent;

‘T’ is the amount of income tax, before any rebates, without regard to any increase in the tax free threshold because of section 20C or 20D of the Income Tax Rates Act 1986, that would be notionally payable by the parent for the year to achieve an after tax income of ;

‘M’ is the amount of Medicare levy that would be notionally payable by the parent for the relevant financial year to achieve an after tax income of if:

(a)
each child of the parent mentioned in paragraph (b) or (d) of the definition of ‘family’ in subregulation 12N (5) who were under 25 had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 1936; and

(b)
each child of the parent mentioned in paragraph (c) of that definition also had no separate net income;

‘FTI’ is:

(a)
for an application for AUSTUDY for 1998 to which subregulation 12M (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and

(b)
for any other application for AUSTUDY—20% of the amount calculated under subsection 20C (2) of that Act;

without regard to section 20K of that Act;

‘NPBL’ is the net passive business loss (if any) of each parent of the student in the year;

‘DC’ is the total amount of any deductions for children of the parent for the year that are applicable under regulation 87.”.

30. Regulation 90 (Concession to the parental income test:

fall in income)

30.1 Paragraph 90 (1) (c):

Omit the paragraph, substitute:

“(c)
NPBL, within the meaning of subregulation 86 (1), means NPBL in the financial year ending in the year of study.”.

31. Regulation 94 (What is spouse’s income?)

31.1 Paragraph 94 (1) (d):

Omit all the words before subparagraph (i), substitute:

“(d)
the net passive business loss (if any) of the student’s spouse:”.

31.2 Subregulation 94 (1AA):

Omit the subregulation.

32. Regulation 94A (Spouse income—designated spouse)

32.1 Subregulation 94A (1):

Omit the subregulation, substitute:

“(1) If the student is described in regulation 12Q, the income of the student’s spouse for a year of study is the greater of:

(a)
the amount calculated in accordance with regulation 94 for the financial year mentioned in whichever of subregulations 12T (1) and (2) applies to the spouse; and

(b)
the amount calculated using the formula:

where:

‘AM’ is the actual means of the designated spouse for the financial year mentioned in whichever of subregulations 12T (1) and (2) applies to the spouse;

‘T’ is the amount of income tax, before any rebates, without regard to any increase in the tax free threshold because of section 20C or 20D of the Income Tax Rates Act 1986, that would be notionally payable by the spouse for the year to achieve an after tax income of ;

‘M’ is the amount of Medicare levy that would be notionally payable by the spouse for the relevant financial year to achieve an after tax income of if:

(a)
each child of the spouse mentioned in paragraph (c) of the definition of ‘family’ in subregulation 12U (5) who were under 25 had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 1936; and

(b)
each child of the spouse mentioned in paragraph (b) of that definition also had no separate net income;

‘FTI’ is:

(a)
for an application for AUSTUDY for 1998 to which subregulation 12T (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and

(b)
for any other application for AUSTUDY—20% of the amount calculated under subsection 20C (2) of that Act;

without regard to section 20K of that Act;

‘NPBL’ is the net passive business loss (if any) of the spouse in the year;

‘DC’ is the total amount of any deductions for children of the spouse for the year that are applicable under subregulation 94 (2A).”.

33. Regulation 94B (Spouse income—designated students with a spouse)

33.1 Subregulation 94B (1):

Omit the regulation, substitute:

“(1) If the student is described in regulation 12W, the income of the student’s spouse for a year of study is the greater of:

(a)
the amount calculated in accordance with regulation 94 for the financial year mentioned in whichever of subregulations 12Z (1) and (2) applies to the spouse; and

(b)
the amount calculated using the formula:

where:

‘AM’ is the actual means of the student’s spouse for the financial year mentioned in whichever of subregulations 12Z (1) and (2) applies to the spouse;

‘T’ is the amount of income tax, before any rebates, without regard to any increase in tax free threshold because of section 20C or 20D of the Income Tax Rates Act 1986, that would be notionally payable by the spouse for the year to achieve an after tax income of ;

‘M’ is the amount of Medicare levy that would be notionally payable by the spouse for the relevant financial year to achieve an after tax income of if:

(a)
each child of the parent mentioned in paragraph (c) of the definition of ‘family’ in subregulation 12ZA (8) who were under 25 had no separate net income within the meaning of subsection 159J (6) of the Income Tax Assessment Act 1936; and

(b)
each child of the parent mentioned in paragraph (b) of that definition also had no separate net income;

‘FTI’ is:

(a)
for an application for AUSTUDY for 1998 to which subregulation 12Z (1) applies—20% of the amount calculated under subsection 20C (1) of the Income Tax Rates Act 1986; and

(b)
for any other application for AUSTUDY—20% of the amount calculated under subsection 20C (2) of that Act;

without regard to section 20K of that Act;

‘NPBL’ is the net passive business loss (if any) of the spouse in the year;

‘DC’ is the total amount of any deductions for children of the spouse for the year that are applicable under subregulation 94 (2A).”.

34. Regulation 96 (Concession to the spouse’s income test: (b) fall in income)

34.1 Paragraph 96 (1) (c):

Omit “the net rental property loss”, substitute “the net passive business loss”.

35. Regulation 113 (Definitions)

35.1 Subregulation 113 (1) (Index):

Omit:

“net rental property loss......................12F (1)”.

35.2 Subregulation 113 (1) (Index):

Omit:

“rental property.................................. 12F (1)”.

35.3 Subregulation 113 (1) (Index):

Insert in the appropriate alphabetical position determined on a letter‑by letter basis:

“loan.......................................................12F (1)

net passive business loss........................12F (1)

passive business...............................................12F (1)”.

36. Schedule 6 (Fringe benefits)

36.1 Part 5:

Clause 13 (definition of “loan”):

Omit the definition.

_____________________________________________________

NOTES

1. Notified in the Commonwealth of Australia Gazette on 29 October 1997.
2. Statutory Rules 1990 No. 443 as amended by 1991 No. 480; 1992 Nos. 24 and 399; 1993 No. 367; 1994 Nos. 13, 91 and 409; 1995 Nos. 132 and 393 (disallowed in the Senate on 10 September 1996); 1996 Nos. 21, 245, 246, 261 and 275; 1997 Nos. 83, 159 and 187.