Social Security and Veterans' Affairs Legislation Amendment Act 1995 (Cth)

Social Security and Veterans’ Affairs Legislation Amendment Act 1995

Act No. 1 of 1996 as amended

This compilation was prepared on 26 March 2010

[This Act was amended by Act Nos. 5 and 157 of 1997; No. 100 of 2005; No. 8 of 2010]

Amendments from Act No. 5 of 1997

[Schedule 4 (item 1) amended item 26 of Schedule 5

Schedule 4 (item 2) repealed item 240 of Schedule 5

Schedule 4 (items 1 and 2) commenced immediately after 20 September 1996]

Amendment from Act No. 157 of 1997

[Schedule 8 (item 8) repealed and substituted item 13 of Schedule 17

Schedule 8 (item 8) commenced immediately after 9 January 1996]

Amendment from Act No. 100 of 2005

[Schedule 2 (item 23) amended item 114 of Schedule 5

Schedule 2 (item 23) commenced immediately after 20 September 1996]

Amendment from Act No. 8 of 2010

[Schedule 2 (item 17) repealed item 17 of Schedule 1

Schedule 2 (item 17) commenced on 1 March 2010]

Prepared by the Office of Legislative Drafting and Publishing,

Attorney‑General’s Department, Canberra

Contents

An Act to amend the law relating to social security and veterans’ affairs, and for related purposes

[Assented to 9 January 1996]

The Parliament of Australia enacts:

1Short title

This Act may be cited as the Social Security and Veterans' Affairs Legislation Amendment Act 1995.

2Commencement

1. (1)

   Subject to this section, this Act commences on the day on which it receives the Royal Assent.

2. (2)

   Part 1 of Schedule 8 is taken to have commenced on 1 January 1995.

3. (3)

   The following provisions commence, or are taken to have commenced, on 20 March 1996:

   1. (a)

      Schedules 2 and 3;

   2. (b)

      Part 1 of Schedule 10.

4. (4)

   The following provisions commence, or are taken to have commenced, on 1 July 1996:

   1. (a)

      Part 2 of Schedule 1;

   2. (b)

      Schedule 6 and Part 1 of Schedule 9;

   3. (c)

      Part 2 of Schedule 10;

   4. (d)

      Part 1 of Schedule 11;

   5. (e)

      Part 2 of Schedule 16.

5. (5)

   The following provisions commence, or are taken to have commenced, on 20 September 1996:

   1. (a)

      Schedules 4 and 5;

   2. (b)

      Part 2 of Schedule 9;

   3. (c)

      Part 3 of Schedule 10;

   4. (d)

      Division 1 of Part 2 of Schedule 11;

   5. (e)

      Schedules 12, 13, 14 and 15 .

6. (6)

   Division 2 of Part 2 of Schedule 11 commences on 1 July 1997.

7. (7)

   Subject to subsection (8), Schedule 7 and Schedule 17 commence on a day or days to be fixed by Proclamation.

8. (8)

   If Schedule 7 or Schedule 17 does not commence under subsection (7) within 6 months after the day on which this Act receives the Royal Assent, that Schedule commences on the first day after the end of that period.

3Amendments

1. (1)

   The Social Security Act 1991 is amended in accordance with the applicable items in Schedules 1, 2, 3, 4, 5, 6, 7 and 8 and the other items in those Schedules have effect according to their terms.

2. (2)

   The Veterans' Entitlements Act 1986 is amended in accordance with Schedules 9, 16 and 17.

3. (3)

   The National Health Act 1953 is amended in accordance with Schedule 10.

4. (4)

   The Income Tax Assessment Act 1936 is amended in accordance with Schedule 11.

5. (5)

   The Childcare Rebate Act 1993 is amended in accordance with Schedule 12.

6. (6)

   The Health Insurance Act 1973 is amended in accordance with Schedule 13.

7. (7)

   The Farm Household Support Act 1992 is amended in accordance with Schedule 14.

8. (8)

   The Disability Services Act 1986 is amended in accordance with Schedule 15.

Schedule 1Amendments of the Social Security Act 1991 relating to extended deeming

Section 3(1)

Part 1Amendments commencing on Royal Assent

1. Paragraph 1074A(1)(a):

Omit the paragraph, substitute:

1. (a)

   an accruing return investment that was made or acquired before 1 January 1988; or

2.

Sections 1075, 1076, 1077, 1079:

Repeal the sections.

3.

Schedule 1A:

Add at the end:

81AProvisions regarding the treatment of returns from the realisation of certain investments

1. (1)

   If:

   1. (a)

      before the commencement of this clause, a person realised an investment; and

   2. (b)

      section 1075 of this Act, as in force immediately before the commencement of this clause, applied to the person as a result of the realisation of the investment; and

   3. (c)

      the period of 12 months commencing on the day on which the investment was realised had not expired when this clause commenced;

sections 1075 and 1076 of this Act, as in force immediately before the commencement of this clause, are taken to continue to apply to the person in relation to the realisation of the investment until:

1. (d)

   the end of the period referred to in paragraph (c); or

2. (e)

   he end of 30 June 1996;

whichever is the earlier.

1. (2)

   If:

   1. (a)

      before the commencement of this clause, a person realised an investment; and

   2. (b)

      section 1077 of this Act, as in force immediately before the commencement of this clause, applied to the person as a result of the realisation of the investment; and

   3. (c)

      the period of 12 months commencing on the day on which the investment was realised had not expired when this clause commenced;

sections 1077 and 1079 of this Act, as in force immediately before the commencement of this clause, are taken to continue to apply to the person in relation to the realisation of the investment until:

1. (d)

   the end of the period referred to in paragraph (c); or

2. (e)

   the end of 30 June 1996;

whichever is the earlier.

Part 2Amendments commencing on 1 July 1996

4.

Section 3 (Index):

Omit the following entries:

accruing return investment 9(1)

annual rate of return 9(3)

eligible investment 9(1)

investment product 9(1)

investment product 9(1), (2)

market‑linked investment 9(1)

SSAT rate of return decision 22

statutory rate of return 9(1)

5. Section 3 (Index):

Insert the following entries in the Index in their appropriate alphabetical positions, determined on a letter‑by‑letter basis:

deprived asset 9(4)

financial asset 9(1)

financial investment 9(1)

loan 9(2), (3)

money that attracts interest 1080

pensioner couple 9(1)

unlisted public security 9(1)

6. Subsection 8(1) (definition of available money):

Omit paragraph (c), substitute:

1. (c)

   is not the subject of a loan made by the person;

7. Subsection 8(1) (definition of income):

Omit Notes 1, 2 and 3, substitute:

Note 1: See also sections 1074 and 1075 (business income), sections 1076‑1084 (deemed income from financial assets) and sections 1095‑1099 (income from retirement funds and annuities).

8. Subsection 8(1) (definition of income) (Note 4):

Omit "4", substitute "2".

9. Subsection 8(1) (definition of income) (Note 5):

Omit "5", substitute "3".

10. Subsection 8(1) (definition of ordinary income):

Omit Note 3, substitute:

Note 3: For provisions affecting the amount of a person's ordinary income see sections 1072 and 1073 (ordinary income concept), sections 1074 and 1075 (business income), sections 1076‑1084 (deemed income from financial assets) and sections 1095‑1099 (income from retirement funds and annuities).

11. Subsection 9(1) (definition of friendly society):

Omit all words after paragraph (b).

12. Subsection 9(1) (definition of return):

Omit "investment (including an investment in the nature of superannuation)", substitute "investment in the nature of superannuation".

13. Subsection 9(1) (definitions of accruing return investment, annual rate of return, eligible investment, investment product, market‑linked investment, statutory rate of return):

Omit the definitions.

14. Subsection 9(1):

Insert:

financial asset means:

1. (a)

   a financial investment; or

2. (b)

   a deprived asset.

   Note: For deprived asset see subsection 9(4).

financial investment means:

1. (a)

   available money; or

2. (b)

   deposit money; or

3. (c)

   a managed investment; or

4. (d)

   a listed security; or

5. (e)

   a loan that has not been repaid in full; or

6. (f)

   an unlisted public security; or

7. (g)

   gold, silver or platinum bullion.

pensioner couple means a couple, one or both of the members of which are receiving a social security pension, a service pension or a rehabilitation allowance.

unlisted public security means:

1. (a)

   a share in a public company; or

2. (b)

   another security;

that is not listed on a stock exchange.

15. Paragraph 9(1C)(e):

Omit the paragraph, substitute:

1. (e)

   a loan;

16. Subsection 9(1C) (Note 3):

Omit the Note, substitute:

Note 3: For provisions relating to when a loan is taken to be made see subsection (2).

18. Paragraph 9(10)(b):

Omit the paragraph.

19. Section 22 (definition of SSAT rate of return decision):

Omit the definition.

20. Section 1064 (Pension Rate Calculator A—point 1064‑E1—Note 2):

Omit ".• investment income (sections 1073 to 1099);", substitute:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• deemed income from financial assets (sections 1076 to 1084);

• income from retirement funds and annuities (sections 1095 to 1099);

21. Section 1066 (Pension Rate Calculator C—point 1066‑E1—Note 2):

Omit ".• investment income (sections 1073 to 1099);", substitute:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• deemed income from financial assets (sections 1076 to 1084);

• income from retirement funds and annuities (sections 1095 to 1099);

22. Section 1066A (Pension Rate Calculator D—point 1066A‑F1—Note 2):

Omit ".• investment income (sections 1073 to 1099);", substitute:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• deemed income from financial assets (sections 1076 to 1084);

• income from retirement funds and annuities (sections 1095 to 1099);

23. Section 1067 (Benefit Rate Calculator A—point 1067‑H1—Note 3):

Omit ".• investment income (sections 1073 to 1099);", substitute:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• deemed income from financial assets (sections 1076 to 1084);

• income from retirement funds and annuities (sections 1095 to 1099);

24. Section 1067E (Sickness Allowance Rate Calculator—point 1067E‑G1—Note 2):

Omit ".• investment income (sections 1073 to 1099);", substitute:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• deemed income from financial assets (sections 1076 to 1084);

• income from retirement funds and annuities (sections 1095 to 1099);

25. Section 1068 (Benefit Rate Calculator B—point 1068‑G1—Note 3):

Omit ".• investment income (sections 1073 to 1099);", substitute:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• deemed income from financial assets (sections 1076 to 1084);

• income from retirement funds and annuities (sections 1095 to1099);

26. Section 1068A (Parenting Allowance Rate Calculator—point 1068A‑D1—Note 3):

Omit ".• investment income (sections 1073 to 1099);", substitute:

• the general concept of ordinary income (sections 1072 and 1073);

• business income (sections 1074 and 1075);

• deemed income from financial assets (sections 1076 to 1084);

• income from retirement funds and annuities (sections 1095 to 1099);

27. Section 1071 (Seniors Health Card Ordinary Income Test

Calculator—point 1071‑1—Note):

Omit the Note, substitute:

Note: The application of the ordinary income test is affected by the following provisions:

• sections 1072 and 1073 (the general concept of ordinary income);

• sections 1074 and 1075 (business income);

• sections 1076‑1084 (deemed income from financial assets);

• sections 1095‑1099 (income from retirement funds and annuities).

28. Division 1AA of Part 3.10:

Repeal the Division, substitute:

Division 1—Ordinary income concept

1072General meaning of ordinary income

A reference in this Act to a person's ordinary income for a period is a reference to the person's gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.

Note 1: For ordinary income see subsection 8(1). See also point 1068A‑D4 (Parenting Allowance Rate Calculator).

Note 2: For other provisions affecting the amount of a person's ordinary income see sections 1074 and 1075 (business income), sections 1076 to 1084 (deemed income from financial assets) and sections 1095 to 1099 (income from retirement funds and annuities).

1073Certain amounts taken to be received over 12 months

If a person receives, whether before or after the commencement of this section, an amount of income that:

1. (a)

   is not income within the meaning of Division 1B or 1C of this Part; and

2. (b)

   is not:

   1. (i)

      income in the form of periodic payments; or

   2. (ii)

      ordinary income from remunerative work undertaken by the person;

the person is, for the purposes of this Act, taken to receive one fifty‑second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.

Division 1A—Business income

1074Ordinary income from a business—treatment of trading stock

1. (1)

   If:

   1. (a)

      a person carries on a business; and

   2. (b)

      the value of all the trading stock on hand at the end of a tax year is greater than the value of all the trading stock on hand at the beginning of that tax year;

the person's ordinary income for that tax year in the form of profits from the business is to include the amount of the difference in values.

1. (2)

   If:

   1. (a)

      a person carries on a business; and

   2. (b)

      the value of all the trading stock on hand at the end of a tax year is less than the value of all the trading stock on hand at the beginning of that tax year;

the person's ordinary income for that tax year in the form of profits from the business is to be reduced by the amount of the difference in values.

1075Permissible reductions of business income

1. (1)

   Subject to subsection (2), if a person carries on a business, the person's ordinary income from the business is to be reduced by:

   1. (a)

      losses and outgoings that relate to the business and are allowable deductions for the purposes of section 51 of the Income Tax Assessment Act; and

   2. (b)

      depreciation that relates to the business and is an allowable deduction for the purposes of subsection 54(1) of that Act; and

   3. (c)

      amounts that relate to the business and are allowable deductions under subsection 82AAC(1) of that Act.

2. (2)

   If, under Division 1B, a person is taken to receive ordinary income on a financial investment, that ordinary income is not to be reduced by the amount of any expenses incurred by the person because

of that investment.

Note: For financial investment see subsection 9(1).

29. Heading to Division 1 of Part 3.10:

Omit the heading, substitute:

Division 1B—Deemed income from financial assets

30. Subdivisions A, AA and B of Division 1 of Part 3.10:

Repeal the Subdivisions, substitute:

1076Deemed income from financial assets—persons other than members of couples

1. (1)

   This section applies to a person who is not a member of a couple.

2. (2)

   A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.

3. (3)

   This is how to work out the ordinary income the person is taken to receive:

Method statement

Step 1. If any part of the person's deposit concession money attracts interest, multiply the amount of each such part by the rate of interest and add together the amounts so worked out.

Note: For deposit concession money see section 1079.

Step 2. Subtract the total amount of the person's deposit concession money from the person's deeming threshold or, if the total value of the person's financial assets is less than that threshold, from that total value.

Note: For deeming threshold see subsection 1081(1).

Step 3. Multiply the remainder (if any) worked out at Step 2 by the below threshold rate.

Note: For below threshold rate see subsection 1082(1).

Step 4. If the total value of the person's financial assets exceeds the person's deeming threshold, subtract the person's deeming threshold from the total value of those assets.

Step 5. Multiply the remainder (if any) worked out at Step 4 by the above threshold rate.

Note: For above threshold rate see subsection 1082(2).

Step 6. The total of the amounts worked out at Steps 1, 3 and 5 represents the ordinary income the person is taken to receive per year on the financial assets.

EXAMPLE OF HOW DEEMED INCOME OF A PERSON WHO IS NOT A MEMBER OF A COUPLE IS WORKED OUT

(using rates in force on 1 July 1996)

Facts:

Elaine, a single pensioner, has $36,500 worth of financial assets. $1,500 is in a cheque account not earning any interest. $25,000 is earning 6% in interest and $10,000 is earning 8% in interest. The below threshold rate is 5%. The above threshold rate is 7%.

Application:

Step 1. Elaine's deposit concession money amounts to $1,500 (see section 1079) which earns no interest. Under this Step, $1,500 is multiplied by 0%, giving a nil amount.

Step 2. Elaine's deeming threshold is $30,000 (see subsection 1081(1)). Her deposit concession money totals $1,500. The difference is $28,500.

Step 3. The amount of $28,500 is multiplied by the below threshold rate (5%):

Step 4. Elaine's deeming threshold of $30,000 is subtracted from the total value of her financial assets ($36,500). The remainder is $6,500.

Step 5. The amount of $6,500 is multiplied by the above threshold rate (7%):

Step 6 The amounts worked out at Steps 1, 3 and 5 are added together:

$

1. Step 1

   0

2. Step 3

   1,425

3. Step 5

   455

1,880

The ordinary income Elaine is deemed to receive per year from her financial assets is $1,880.

1. (4)

   The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) as ordinary income of the person during each week.

1077Deemed income from financial assets—members of pensioner couples

1. (1)

   This section applies to the members of a pensioner couple.

2. (2)

   If one or both of the members of a couple have financial assets, the members of the couple are taken, for the purposes of this Act, to receive together ordinary income on those assets in accordance with this section.

3. (3)

   This is how to work out the ordinary income the couple is taken to receive:

Method statement

Step 1. If any part of the couple's deposit concession money attracts interest, multiply the amount of each such part by the rate of interest and add together the amounts so worked out.

Note: For deposit concession money see section 1079.

Step 2. Subtract the total amount of the couple's deposit concession money from the couple's deeming threshold or, if the total value of the couple's financial assets is less than that threshold, from that total value.

Note: For deeming threshold see subsection 1081(2).

Step 3. Multiply the remainder (if any) worked out at Step 2 by the below threshold rate.

Note: For below threshold rate see subsection 1082(1).

Step 4. If the total value of the couple's financial assets exceeds the couple's deeming threshold, subtract the couple's deeming threshold from the total value of those assets.

Step 5. Multiply the remainder (if any) worked out at Step 4 by the above threshold rate.

Note: For above threshold rate see subsection 1082(2).

Step 6. The total of the amounts worked out at Steps 1, 3 and 5 represents the ordinary income the members of the couple are taken to receive per year on the financial assets.

EXAMPLE OF HOW DEEMED INCOME OF A PENSIONER COUPLE IS WORKED OUT

(using rates in force on 1 July 1996)

Facts:

Maree and Peter, a pensioner couple, have $68,500 worth of financial assets. They have $3,500 in a savings account earning interest at 2.8% and deposits of $25,000 and $40,000 earning 5% p.a. and 8% p.a. in interest respectively. The below threshold rate is 5%. The above threshold rate is 7%.

Application:

Step 1. The couple's deposit concession money amounts to $3,500 (see section 1079) earning interest at 2.8%. The interest amounts to $98.

Step 2 The couple's deeming threshold is $50,000 (seesubsection 1081(2)). Their deposit concession money amounts to $3,500.The remainder is $46,500.

Step 3. The amount of $46,500 is multiplied by the below threshold rate (5%):

Step 4. The couple's deeming threshold of $50,000 is subtracted from the total value of their financial assets ($68,500). The remainder is $18,500.

Step 5. The amount of $18,500 is multiplied by the above threshold rate (7%):

Step 6. The amounts worked out at Steps 1, 3 and 5 are added

together:

$

1. Step 1

   98

2. Step 3

   2,325

3. Step 5

   1,295

3,718

The ordinary income Maree and Peter are deemed to receive per year from their financial assets is $3,718. (Subsection (4) shows how this amount is divided between Maree and Peter.)

1. (4)

   Each member of the couple is taken, for the purposes of this Act, to receive, as ordinary income during each week, an amount calculated according to the formula:

1078Deemed income from financial assets—members of non‑pensioner couples

1. (1)

   This section applies to a person who is a member of a couple, other than a pensioner couple.

2. (2)

   A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.

3. (3)

   This is how to work out the ordinary income the person is takento receive:

Method statement

Step 1. If any part of the person's deposit concession money attracts interest, multiply the amount of each such part by the rate of interest and add together the amounts so worked out.

Note: For deposit concession money see section 1079.

Step 2. Subtract the total amount of the person's deposit concession money from the person's deeming threshold or, if the total value of the person's financial assets is less than that threshold, from that total value.

Note: For deeming threshold see subsection 1081(3).

Step 3. Multiply the remainder (if any) worked out at Step 2 by the below threshold rate.

Note: For below threshold rate see subsection 1082(1).

Step 4. If the total value of the person's financial assets exceeds the person's deeming threshold, subtract the person's deeming threshold from the total value of those assets.

Step 5. Multiply the remainder (if any) worked out at Step 4 by the above threshold rate.

Note: For above threshold rate see subsection 1082(2).

Step 6. The total of the amounts worked out at Steps 1, 3 and 5 represents the ordinary income the person is taken to receive per year on the financial assets.

1. EXAMPLE OF HOW DEEMED INCOME OF A MEMBER OF A NON‑PENSIONER COUPLE IS WORKED

   OUT

   (using rates in force on 1 July 1996)

   Facts:

Kerry, who is married and receiving newstart allowance, has $1,200

worth of financial assets. Her spouse, Robert, is not receiving a

pension. Kerry has a cheque account containing $200 on which no

interest is paid. The remaining $1,000 is held in a savings account on

which interest is paid at 3%. The below threshold rate is 5%.

Application:

Step 1. Kerry's deposit concession money amounts to $1,200

(section 1079). Of that amount, $200 earns no interest. The remaining

$1,000 earns interest at less than the below threshold rate. Amounts

are worked out as follows:

•

• .

Step 2. As Kerry has no financial assets other than deposit concession money, the result of this Step is a zero remainder. Kerry's deeming threshold is $25,000.

Step 3. Because of the outcome of Step 2, Steps 3 to 5 have no application, and no income is assessed under those Steps.

Step 6. The only amount of income worked out is the amount of $30 under Step 1. Therefore, the ordinary income Kerry is deemed to receive per year from her financial assets is $30.

1. (4)

   The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) as ordinary income of the person during each week.

1079Deposit concession money

1. (1)

   This is how to work out which money constitutes, at a particular time, the deposit concession money of a person who is not a member of a couple:

Method statement

Step 1. Start with the amount of $2,000.

Step 2. Set off against this amount any available money of the person.

Step 3. Set off against the remainder any deposit money of the person that does not attract interest.Step 4.

Set off against the remainder any deposit money of the person that attracts interest at a rate lower than the below threshold rate: this money is to be set off in ascending order of interest rate.

Note: For below threshold rate see subsection 1082(1).

Step 5. The total of the available money or deposit money that can be set off under Steps 2 to 4 is the deposit concession money of the person at that time.

1. Note:

   Because of subsection (5), the total worked out under this Step cannot exceed $2,000.

1. (2)

   This is how to work out which money constitutes, at a particular time, the deposit concession money of a pensioner couple:

Method statement

Step 1. Start with the amount of $4,000.

Step 2. Set off against this amount any available money of the couple.

Step 3. Set off against the remainder any deposit money of the couple that does not attract interest.

Step 4. Set off against the remainder any deposit money of the couple that attracts interest at a rate lower than the below threshold rate: this money is to be set off in ascending order of interest rate.

Note: For below threshold rate see subsection 1082(1).

Step 5. The total of the available money or deposit money that can be set off under Steps 2 to 4 is the deposit concession money of the couple at that time.

1. Note:

   Because of subsection (5), the total worked out under this Step cannot exceed $4,000.

Note: For pensioner couple see subsection 9(1).

1. (3)

   This is how to work out which money constitutes, at a particular time, the deposit concession money of a person who is a member of a couple other than a pensioner couple:

Method statement

Step 1. Start with the amount of $2,000.

Step 2. Set off against this amount any available money of the person.

Step 3. Set off against the remainder any deposit money of the person that does not attract interest.

Step 4. Set off against the remainder any deposit money of the person that attracts interest at a rate lower than the below threshold rate: this money is to be set off in ascending order of interest rate.

Note: For below threshold rate see subsection 1082(1).

Step 5. The total of the available money or deposit money that can be set off under Steps 2 to 4 is the deposit concession money of the person at that time.

1. Note:

   Because of subsection (5), the total worked out under this Step cannot exceed $2,000.

1. (4)

   For the purposes of this section:

   1. (a)

      the available money of a pensioner couple is the total of the available money of the members of the couple; and

   2. (b)

      the deposit money of a pensioner couple that does not attract interest is the total of the deposit money of the members of the couple that does not attract interest; and

   3. (c)

      the deposit money of a pensioner couple that attracts interest at a particular rate is the total of the deposit money of the members of the couple that attracts interest at that rate.

2. (5)

   For the purposes of subsections (1), (2) and (3) if available money or deposit money is to be set off against an amount, only so much of the money as does not exceed the amount can be set off against the amount.

3. (6)

   In this section:

available money does not include money specified in a determination under subsection 1084(1).

Note: For available money see subsection 8(1).

deposit money does not include money specified in a determination under subsection 1084(1).

Note: For deposit money see subsection 8(1).

1080Meaning of money that attracts interest

A reference in any of sections 1076 to 1079 to money that attracts interest is a reference to money on which interest accrues, whenever the interest is paid.

1081Deeming threshold

1. (1)

   The deeming threshold for a person who is not a member of a couple is $30,000.

2. (2)

   The deeming threshold for a pensioner couple is $50,000.

3. (3)

   The deeming threshold for a member of a couple, other than a pensioner couple, is an amount equal to one‑half of the amount fixed by subsection (2).

   Note: The amounts fixed by subsections (1) and (2) are indexed every 1 July. See sections 1190‑1192.

1082Below threshold rate, above threshold rate

1. (1)

   For the purposes of this Division, the below threshold rate is the rate determined by the Minister to be the below threshold rate for the purposes of this Division.

2. (2)

   For the purposes of this Division, the above threshold rate is the rate determined by the Minister to be the above threshold rate for the purposes of this Division.

3. (3)

   A rate determined under this section must be in the form of a specified percentage.

4. (4)

   A determination under this section:

   1. (a)

      must be in writing; and

   2. (b)

      is a disallowable instrument.

1083Actual return on financial assets not treated as ordinary income

1. (1)

   Subject to subsection (2), any return on a financial asset that a person actually receives is taken, for the purposes of this Act, not to be ordinary income of the person.

2. (2)

   If, because of a determination under subsection 1084(1), a financial investment is not to be regarded as a financial asset for the purposes of section 1076, 1077 or 1078, subsection (1) does not apply to any return on the investment that the person actually receives.

1084Certain money and financial investments not taken into account

1. (1)

   The Minister may determine that:

   1. (a)

      specified financial investments; or

   2. (b)

      a specified class of financial investments;

are not to be regarded as financial assets for the purposes of section 1076, 1077 or 1078.

1. (2)

   Money that constitutes a financial investment to which a determination under subsection (1) applies is not to be taken into account under section 1079.

2. (3)

   A determination under subsection (1) must be in writing.

3. (4)

   A determination under subsection (1) takes effect on the day on which it is made or on such other day (whether earlier or later) as is specified in the determination.

1084AValuation and revaluation of certain financial investments

The total value of a person's listed securities and managed investments (being listed securities and managed investments that fluctuate depending on the market) (the relevant investments) is determined in accordance with the following:

1. (a)

   an initial total valuation is to be given to the relevant investments on 1 July 1996, or when a new claim is determined, by the method set out in departmental guidelines;

2. (b)

   that total valuation continues in effect until the relevant investments are revalued by the method set out in departmental guidelines, and that revaluation must occur:

   1. (i)

      on 20 March in each calendar year after 1996; and

   2. (ii)

      on 20 September in each calendar year after 1996; and

   3. (iii)

      when the person requests a revaluation of one or more of the person's listed securities and managed investments; and

   4. (iv)

      following an event that affects the relevant investments and is the subject of a recipient notification notice.

31. Subdivision D of Division 1 of Part 3.10:

Repeal the Subdivision, substitute:

Division 1C—Income from retirement funds and annuities

Subdivision A—Investments taken into account on realisation

1095Treatment of superannuation fund investments before pension age

If:

1. (a)

   a person has an investment in:

   1. (i)

      a superannuation fund; or

   2. (ii)

      an approved deposit fund; or

   3. (iii)

      a deferred annuity; and

2. (b)

   the person has not reached pension age; and

3. (c)

   the person has not commenced to receive a pension or annuity from the investment;

the investment is treated as follows:

1. (d)

   the return on the investment is not treated as ordinary income

(see paragraph 8(8)(b));

Note: The investment is also disregarded for the purposes of the assets test (see paragraph 1118(1)(f)).

1. (e)

   if the investment is realised, the return is spread across the following 12 months (see section 1096).

1096Early withdrawal from superannuation fund

If:

1. (a)

   a person realises an investment in a superannuation fund, approved deposit fund or deferred annuity before the person reaches pension age; and

2. (b)

   the amount is not rolled over into

   1. (i)

      a superannuation fund; or

   2. (ii)

      an approved deposit fund; or

   3. (iii)

      a deferred annuity; or

   4. (iv)

      an immediate annuity;

the person is taken to receive one fifty‑second of the assessable growth component of that amount as ordinary income of the person during each week in the period of 12 months commencing on the day on which the person realises the investment

Note: For assessable growth component see subsection 9(1).

1097Adjustment of ordinary income for investment losses

1. (1)

   If:

   1. (a)

      a person realises an investment to which section 1096 applies; and

   2. (b)

      the investment is realised at a loss;

the person's ordinary income is taken to be reduced during each week in the 12 months commencing on the day on which the person realises the investment by the amount worked out using the formula:

where:

assessable loss is so much (if any) of the amount of the loss as is attributable to the person's assessable period.

Note: For assessable period see subsection 9(1).

1. (2)

   The reduction under subsection (1) in a person's rate as at a particular day is not to exceed the increase to be made under section 1096 in working out the person's rate as at that day.

32. Heading to Subdivision E of Division 1 of Part 3.10:

Omit "Subdivision E", substitute "Subdivision B".

33. Divisions 1A, 1B and 1C of Part 3.10:

Repeal the Divisions.

34. Section 1190 (Table):

Add at the end the following heading and items:

Deeming thresholds
63.	Deeming threshold for a person who is not a member of a couple	Deeming threshold individual	Subsection 1081(1)
64,	Deeming threshold for a pensioner couple	Deeming threshold pensioner couple	Subsection 1081(2)

5. Subsection 1191(1) (CPI Indexation Table):

Add at the end the following heading and items:

Deeming thresholds
35.	Deeming threshold individual	1 July	March	highest March quarter before reference quarter (but not earlier than March 1994 quarter)	$200.00
36.	Deeming threshold pensioner couple	1 July	March	highest March quarter before reference quarter (but not earlier than March 1994 quarter)	$200.00

36. Section 1192:

Add at the end:

1. (7)

   The first indexation of amounts under items 35 and 36 of the CPI Indexation Table in subsection 1191(1) is to take place on 1 July

1997.

37. Subsection 1283(4) (Note):

Omit the Note.

38. Schedule 1A:

Add at the end (after proposed clause 87 added by item 81 of Schedule 6):

88Saving: Determinations under repealed sections 1099E and 1099L

A determination in force under section 1099E or 1099L immediately before the commencement of this clause continues to have effect after that commencement as if:

1. (a)

   section 1084 of this Act, as in force immediately after the commencement of this clause, had been in force when the determination was made; and

2. (b)

   the determination had been made under that section as so in force; and

3. (c)

   any reference in the determination to section 1099B, 1099J or 099K were a reference to sections 1076 to 1078 of this Act.

89Saving: Benefit rates

If a social security benefit (including parenting allowance) is payable to a person for a fortnightly period that starts before 1 July 1996 and ends after that day, the rate of the person's payment for that period is to be worked out in accordance with this Act as in force immediately before 1 July 1996.

Schedule 2Amendments of the Social Security Act 1991 to end transfers from job search allowance and newstart allowance to sickness allowancePart 1Amendments of sickness allowance provisions

Section 3(1)

1. After paragraph 666(1)(c):

Insert:

1. (ca)

   either of the following applies:

   1. (i)

      immediately before the incapacity occurred the person was in employment (whether the person was self‑employed, or was employed by another person, on a full‑time, part‑time, casual or temporary basis) and the Secretary is satisfied that, when the incapacity ends, the employment will be again available to the person (whether or not the same kind of work will be available);

   2. (ii)

      immediately before the incapacity occurred the person was in full‑time education and was receiving payments under the AUSTUDY scheme or the ABSTUDY scheme and the Secretary is satisfied that the person is committed to resuming full‑time study under that scheme when the incapacity ends;

2. Paragraph 666(1)(d):

Omit, substitute:

1. (d)

   the person satisfies the Secretary that the person has suffered, or is likely to suffer, a loss of salary, wages or other income of a similar nature because of the incapacity; or

3. After paragraph 666(1A)(d):

Insert:

1. (da)

   immediately before the incapacity occurred the person was in employment (whether the person was self‑employed, or was employed by another person, on a full‑time, part‑time, casual or temporary basis) and the Secretary is satisfied that, when the incapacity ends, the employment will be again available to the person (whether or not the same kind of work will be available);

4. Subparagraphs 666(1A)(e)(ii) and (iii):

Omit.

5. Subsections 666(2) and (3):

Omit, substitute:

1. (2)

   In this section:

work, in relation to a person, means work that the person has contracted to perform under a contract of employment that:

1. (a)

   the person had immediately before the person becomes incapacitated; and

2. (b)

   continues after the person becomes incapacitated.

6. Subsections 666(7) and (8):

Omit.

7. Subsection 666(9):

After "obtaining" insert "job search allowance, newstart allowance, youth training allowance,

8. Subsection 666(10):

Omit.

9. Paragraph 667(3)(a):

Omit, substitute:

1. (a)

   immediately before the rehabilitation period began the person was receiving sickness allowance in respect of a period; and

10. Paragraph 667(3)(d):

Omit "benefit or".

11. Subsection 667(5):

After "obtaining" insert "job search allowance, newstart allowance, youth training allowance,".

12. Paragraphs 677(1)(c) and (ca):

Omit.

13. Paragraph 677(1)(m):

Omit "721", substitute "720".

14. Sections 682, 683 and 684:

Repeal.

15. Subsection 686(1):

Add at the end ", a job search allowance, a newstart allowance or a youth training allowance".

16. Sections 690, 691 and 692:

Repeal.

17. Paragraph 694(1)(b):

Omit.

Note: The heading to subsection 694(1) is omitted.

18. Subsection 694(2):

Omit.

19. Paragraph 695(2)(b):

Omit "an unemployment benefit,", substitute "a".

20. Paragraph 696(6)(b):

Omit "an unemployment benefit,", substitute "a".

21. Sections 711 and 712:

Repeal.

22. Paragraph 728N(b):

Omit "pension" (wherever occurring), substitute "allowance".

Part 2Amendments of job search allowance provisions

23. After paragraph 513(1)(ba):

Insert:

Note: A person who, under Subdivision BAA, is not required to satisfy the activity test is not to be required to enter into a Job Search Activity Agreement (see subsection 525A(1A)).

24. Subparagraph 513(1)(c)(iii):

Before "is" insert "subject to subsection (1B),".

25. Subsection 513(1) (Note 12):

Omit.

26. After paragraph 513(1A)(ca):

Insert:

Note: A person who, under Subdivision BAA, is not required to satisfy the activity test is not to be required to enter into a Job Search Activity Agreement (see subsection 525A(1A)).

27. Subparagraph 513(1A)(f)(iv):

Before "is" insert "subject to subsection (1B),".

28. Subsection 513(1A) (Note 12):

Omit.

29. After subsection 513(1A):

Insert:

1. (1B)

   For the purposes of subparagraphs (1)(c)(iii) and (1A)(f)(iv),if:

   1. (a)

      a person is, under Subdivision BAA, not required to satisfy the activity test; and

   2. (b)

      the person is temporarily absent from Australia; and

   3. (c)

      the person is absent in order to seek medical treatment of a kind that is not available in Australia;

the person is taken to be in Australia during:

1. (d)

   if the period is not more than 3 months—the whole of the period; or

2. (e)

   if the period is more than 3 months—the first 3 months of the period.

30. Section 514:

Repeal.

31. Subsection 519(3):

Omit "subsection (4)", substitute "subsections (3AA) and (4)".

32. After subsection 519(3):

Insert:

1. (3AA)

   Subject to subsection (4), if the person:

   1. (a)

      is not a member of a couple; and

   2. (b)

      is, under Subdivision BAA, not required to satisfy the activity test;

the liquid assets test waiting period in relation to the claim starts on the day on which the person became incapacitated.

33. Subsection 519(3A):

Omit "subsection (4)", substitute "subsections (3B) and (4)".

34. After subsection 519(3A):

Insert:

1. (3B)

   Subject to subsection (4), if the person:

   1. (a)

      is a member of a couple; and

   2. (b)

      is, under Subdivision BAA, not required to satisfy the activity test;

the liquid assets test waiting period in relation to the claim starts on the last occurring of the following days:

1. (c)

   the day on which the person became incapacitated for work;

2. (d)

   if, when the claim is made, the person's partner is unemployed—the day on which the person's partner became unemployed;

3. (e)

   if, when the claim is made, the person's partner is incapacitated for work—the day on which the person's partner became incapacitated for work.

35. Section 521:

Add at the end:

1. (3)

   A person is qualified for job search allowance in respect of a period determined by the Secretary if:

1. 1. (a)

      immediately before the start of the period, the person:

      1. (i)

         was receiving job search allowance; and

      2. (ii)

         was incapacitated for work; and

      3. (iii)

         was, under Subdivision BAA, not required to satisfy the activity test; and

   2. (b)

      in the Secretary's opinion:

      1. (i)

         the person will comply with the requirements of this Act during the period; and

      2. (ii)

         the person may reasonably be expected to be qualified for job search allowance in respect of the period; and

      3. (iii)

         job search allowance may reasonably be expected to be payable to the person in respect of the period.

36. After Subdivision B of Division 1 of Part 2.11:

Insert:

Subdivision BAA—Exemption from activity test—people temporarily incapacitated for work

525ABInterpretation

A reference in this Subdivision to a person being exempt from the activity test, or ceasing to be exempt from the activity test, under, or under a provision of, this Subdivision is a reference to a person not being required to satisfy the activity test, or becoming required to satisfy the activity test, as the case may be, because of the operation of, or the operation of that provision of, this Subdivision.

525ACIncapacitated person not required to satisfy activity test

1. (1)

   Subject to this Subdivision, a person is not required to satisfy the activity test in respect of a period if:

   1. (a)

      throughout the period the person is incapacitated for work because of sickness or an accident; and

   2. (b)

      the incapacity is caused wholly, or virtually wholly, by a medical condition arising from the sickness or accident; and

   3. (c)

      the incapacity is, or is likely to be, of a temporary nature; and

   4. (d)

      if this Subdivision had not been enacted and paragraphs 513(1)(b), (ba), (bb) and (bc) were disregarded, the person would qualify for job search allowance; and

   5. (e)

      the person has, whether before or after the commencement of this section, given the Secretary a certificate of a medical practitioner, in a form approved by the Secretary, stating:

      1. (i)

         the medical practitioner's diagnosis; and

      2. (ii)

         the medical practitioner's prognosis; and

      3. (iii)

         that the person is incapacitated for work; and

      4. (iv)

         the period for which the person is incapacitated for work; and

   6. (f)

      the Secretary is satisfied that the incapacity has not been brought about with a view to obtaining an exemption from the activity test.

2. (2)

   In this section:

work, in relation to a person, means work (whether full‑time, part‑time, permanent or casual) that:

1. (a)

   is of a kind that the person could, in the Secretary's opinion, be reasonably expected to do; and

2. (b)

   is for at least 8 hours per week at award wages or above.

525ADPerson cannot obtain exemption from activity test in respect of same medical condition within 2 years

1. (1)

   Subject to subsection (2), if a person who, because of an incapacity resulting from a medical condition, was exempt, under section 525AC, from the activity test ceases to be so exempt because of the operation of section 525AG or 525AH, section 525AC does not apply to the person again during the period of 104 weeks after the person ceased to be exempt.

2. (2)

   Subsection (1) does not apply to a person:

   1. (a)

      if the person's incapacity for work is caused by a medical condition that is different from, or significantly more serious than, the medical condition referred to in subsection (1); or

   2. (b)

      if:

      1. (i)

         the medical condition referred to in subsection (1) is a chronically relapsing condition; and

      2. (ii)

         the person's incapacity for work is caused by a relapse of the condition; or

   3. (c)

      if:

      1. (i)

         the person is undergoing a program of counselling, treatment or therapy for drug or alcohol abuse; and

      2. (ii)

         the person's participation in the program is not likely to extend beyond 78 weeks; and

      3. (iii)

         the program is approved by the Secretary in writing for the purposes of this section; or

   4. (d)

      if:

      1. (i)

         the person's incapacity for work is caused by a medical condition (whether the same as or different from the medical condition referred to in subsection (1)); and

      2. (ii)

         arrangements have been made for the person to undergo surgery in respect of the condition; and

      3. (iii)

         the surgery is expected to result in the person's incapacity for work ceasing within 104 weeks from the date on which the person became exempt from the activity test in respect of the incapacity.

525AERefusal to attend interview etc. may result in person being required to satisfy activity test

1. (1)

   A person ceases to be exempt, under this Subdivision, from the activity test if:

   1. (a)

      the Secretary is of the opinion that the person should:

      1. (i)

         contact a particular officer of the Department; or

      2. (ii)

         attend an interview at a particular place; or

      3. (iii)

         complete a questionnaire; or

      4. (iv)

         attend a medical, psychiatric or psychological examination; and

   2. (b)

      the Secretary gives the person a written notice stating that the person is required, within a period stated in the notice, to:

      1. (i)

         contact the officer; or

      2. (ii)

         attend the interview; or

      3. (iii)

         complete the questionnaire; or

      4. (iv)

         attend the examination; or

      5. (v)

         if the person has undergone an examination—give the Secretary a report on the examination in the approved form; and

   3. (c)

      the Secretary is satisfied that it is reasonable for this section to apply to the person; and

   4. (d)

      the person does not take reasonable steps to comply with the requirement.

2. (2)

   A notice under paragraph (1)(b) must inform the person to whom it is given of the effect of failure by the person to take reasonable steps to comply with the requirement set out in the notice.

525AFTime limit for exemption from requirement to satisfy activity test

1. (1)

   A person ceases to be exempt, under this Subdivision, from the activity test if the person's maximum exemption period ends.

2. (2)

   Subject to this section, a person's maximum exemption period is:

   1. (a)

      if the person has, whether before or after the commencement of this section, given the Secretary a medical certificate for the purpose of enabling the Secretary to decide whether the person was required to satisfy the activity test—the lesser of the following periods:

      1. (i)

         the period stated in the certificate as the period for which the person would be incapacitated for work;

      2. (ii)

         the period of 13 weeks that started or starts on the first day of the period so stated in the certificate; or

   2. (b)

      otherwise—the period of 4 weeks that started or starts on the day determined by the Secretary to have been the day on which the person's incapacity for work began.

3. (3)

   If:

   1. (a)

      a person is exempt, under this Subdivision, from the activity test; and

   2. (b)

      the person has, whether before or after the commencement of this section, given the Secretary a certificate of a medical practitioner that states the matters listed in paragraph 525AC(1)(e) and is in accordance with the form approved under that paragraph; and

   3. (c)

      the Secretary is satisfied that the person's incapacity for work will continue after the end of the person's maximum exemption period;

the Secretary may extend the person's maximum exemption period by a period that is not more than the lesser of the following periods:

1. (d)

   a period equal to the period stated in the certificate as the period for which the person would be incapacitated for work;

2. (e)

   13 weeks.

1. (4)

   If:

   1. (a)

      a person is exempt, under this Subdivision, from the activity test; and

   2. (b)

      the person gives the Secretary written evidence (other than a certificate referred to in paragraph (3)(b)) that the person's incapacity for work will continue after the end of the person's maximum exemption period; and

   3. (c)

      the Secretary is satisfied that:

      1. (i)

         the person's circumstances make it unreasonable to expect the person to obtain a certificate referred to in paragraph (3)(b) before the end of the maximum exemption period; and

      2. (ii)

         the person's incapacity for work will continue after the end of the person's maximum exemption period;

the Secretary may extend the person's maximum exemption period by not more than 4 weeks.

1. (5)

   If:

   1. (a)

      a person is exempt, under this Subdivision, from the activity test; and

   2. (b)

      the person has, whether before or after the commencement of this section, given the Secretary a certificate referred to in paragraph (3)(b) before the end of the person's maximum exemption period; and

   3. (c)

      before the end of the person's maximum exemption period, the Secretary does not satisfy himself or herself that the person's incapacity for work will continue after the end of that period; and

   4. (d)

      the sole or dominant cause of the Secretary failing so to satisfy himself or herself is an act or omission of an officer of the Department;

the Secretary may extend the person's maximum exemption period by not more than 4 weeks.

525AGPerson ceases to be exempt from activity test after one year

Subject to section 525AH, a person ceases to be exempt, under section 525AC, from the activity test if the person has been so exempt in respect of the immediately preceding period of 52 weeks.

525AHIf Secretary makes determination, person ceases to be exempt after 2 years

1. (1)

   The Secretary may make a determination in writing that section 525AG does not apply to a person if the Secretary is satisfied that:

   1. (a)

      the person's incapacity for work will end during the next 52 weeks; or

   2. (b)

      the medical condition that wholly, or virtually wholly, causes the person's incapacity for work at the end of the period of 52 weeks referred to in section 525AG is different from, or significantly more serious than, the medical condition because of which the person was exempt, under section 525AC, from the activity test at the beginning of that period of 52 weeks; or

   3. (c)

      the person's incapacity is caused by a chronically relapsing medical condition; or

   4. (d)

      all the following circumstances apply:

      1. (i)

         the person is undergoing a program of counselling, treatment or therapy for drug or alcohol abuse;

      2. (ii)

         the person's participation in the program is not likely to extend beyond 78 weeks;

      3. (iii)

         the program is approved by the Secretary in writing for the purposes of this section.

2. (2)

   If the Secretary makes a determination under subsection (1) in relation to a person, section 525AG does not apply to the person but the person ceases to be exempt, under section 525AC, from the activity test if the person has been so exempt in respect of the immediately preceding period of 104 weeks.

3. (3)

   For the purposes of subsection (2), a person who has not been exempt, under section 525AC, from the activity test continuously in respect of the immediately preceding period of 104 weeks is taken to have been exempt, under that section, from the test in respect of that period if the period, or each period, during those 104 weeks in respect of which the person was not exempt was less than 6 weeks.

37. Subsection 525A(1):

Omit "If", substitute "Subject to subsection (1A), if".

38. After subsection 525A(1):

Insert:

1. (1A)

   A person who, under Subdivision BAA, is not required to satisfy the activity test is not to be required to enter into a Job Search Activity Agreement.

39. After paragraph 526(1)(ha):

Insert:

1. (hb)

   section 534B applies to the person and the person fails to comply with a requirement in a notice given to the person under that section; or

40. After paragraph 532(4)(b):

Insert:

1. (ba)

   the scheme to provide an allowance known as the Adult Migrant Education Program Living Allowance; or

2. (bb)

   the scheme to provide an allowance known as the English as a Second Language Allowance to the extent that the scheme applies to full‑time students; or

41. After subsection 533(1):

Insert:

1. (1A)

   Subject to the following provisions of this section, if a person is, under Subdivision BAA, not required to satisfy the activity test, the person's provisional commencement day is the day on which the person became incapacitated for work.

42. Subsection 533(5):

Omit "If", substitute "Subject to subsections (5A) and (5B), if".

43. After subsection 533(5):

Insert:

1. (5A)

   Subject to subsection (5B), if:

   1. (a)

      a person is a transferee to job search allowance; and

   2. (b)

      the person is, under Subdivision BAA, not required to satisfy the activity test; and

   3. (c)

      the person claims the job search allowance within 4 weeks after the person's transfer day;

the person's provisional commencement day is the person's transfer day.

1. (5B)

   If:

   1. (a)

      a person is, under Subdivision BAA, not required to satisfy the activity test; and

   2. (b)

      the person is subject to an education leaver's waiting period (see subsection 540(1)); and

   3. (c)

      the person became incapacitated for work while undertaking the course of education;

the person's provisional commencement day is the last day on which the person was undertaking the course.

44. Section 534:

Add at the end (before the Notes):

1. (2)

   This section does not apply to a person who is, under Subdivision BAA, not required to satisfy the activity test.

Note: The heading to section 534 is replaced by "Commencement of job search allowance—person subject to activity test".

45. After section 534:

Insert in Subdivision C of Division 1 of Part 2.11:

534ACommencement of job search allowance—person not subject to activity test

1. (1)

   If a person who is, under Subdivision BAA, not required to satisfy the activity test is qualified for job search allowance, the allowance is not payable to the person before the day worked out in accordance with the following provisions of this section.

2. (2)

   If the person:

   1. (a)

      claims the allowance within 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the person is not subject to a waiting period;

the allowance is not payable to the person before the person's provisional commencement day.

Note 1: A waiting period is:

(a) an unused annual leave waiting period (see sections 535 to 537); or

(b) an ordinary waiting period (see sections 538 and 539); or

(c) an education leavers waiting period (see sections 540 to 541A); or

(d) a newly arrived resident's waiting period (see sections 541B and 541C).

Note 2: For provisional commencement day see section 533.

1. (3)

   If the person:

   1. (a)

      claims the allowance within 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the person is subject to a waiting period;

the allowance is not payable to the person before the first day after the end of the waiting period.

Note 1: If the person:

(a) is subject to an unused annual leave waiting period; and

(b) is subject to an ordinary waiting period;

the ordinary waiting period will follow the unused annual leave waiting period (see subsection 539(2)).

Note 2: If the person is subject to an education leavers waiting period and another waiting period, the education leavers waiting period runs concurrently with the other waiting period and the job search allowance will not be payable until the longest waiting period has ended.

Note 3: If the person is subject to a newly arrived resident's waiting period and another waiting period, the newly arrived resident's waiting period runs concurrently with the other waiting period and the job search allowance will not be payable until the longest waiting period has ended.

1. (4)

   If:

   1. (a)

      the person claims the allowance more than 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the Secretary is satisfied that the incapacity is the sole or dominant cause for the failure to claim the allowance within 5 weeks after that day;

the allowance is not payable to the person before the day determined by the Secretary.

1. (5)

   The day determined under subsection (4):

   1. (a)

      must not be more than 4 weeks before the day on which the person lodges the claim for the allowance; and

   2. (b)

      if the person is subject to a waiting period—must not be earlier than the first day after the end of the waiting period.

      Note 1: If the person:

      (a) is subject to an unused annual leave waiting period; and

      (b) is subject to an ordinary waiting period;

      the ordinary waiting period will follow the unused annual leave waiting period (see subsection 539(2)).

      Note 2: If the person is subject to an education leavers waiting period and another waiting period, the education leavers waiting period runs concurrently with the other waiting period and the job search allowance will not be payable until the longest waiting period has ended.

      Note 3: If the person is subject to a newly arrived resident's waiting period and another waiting period, the newly arrived resident's waiting period runs concurrently with the other waiting period and the job search allowance will not be payable until the longest waiting period has ended.

2. (6)

   If:

   1. (a)

      the person claims the allowance more than 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the Secretary is not satisfied that the incapacity is the sole or dominant cause of the failure to claim the allowance within 5 weeks after that day;

the allowance is not payable to the person before the day on which the claim is lodged.

534BRefusal to attend interview etc.

1. (1)

   A job search allowance is not payable to a person who is not required to satisfy the activity test if:

   1. (a)

      the person is receiving a job search allowance; and

   2. (b)

      the Secretary is of the opinion that the person should:

      1. (i)

         contact a particular officer of the Department; or

      2. (ii)

         attend an interview at a particular place; or

      3. (iii)

         complete a questionnaire; or

      4. (iv)

         attend a medical, psychiatric or psychological examination; and

   3. (c)

      the Secretary gives the person a written notice stating that the person is required, within a period stated in the notice, to:

      1. (i)

         contact the officer; or

      2. (ii)

         attend the interview; or

      3. (iii)

         complete the questionnaire; or

      4. (iv)

         attend the examination; or

      5. (v)

         if the person has undergone an examination—give the Secretary a report on the examination in the approved form; and

   4. (d)

      the Secretary is satisfied that it is reasonable for this section to apply to the person; and

   5. (e)

      the person does not take reasonable steps to comply with the requirement.

2. (2)

   A notice under paragraph (1)(c) must inform the person to whom it is given of the effect of failure by the person to take reasonable steps to comply with the requirement set out in the notice.

46. Paragraph 546C(1)(a):

After "person" insert "(other than a person who is not required to

satisfy the activity test).".

Part 3Amendments of newstart allowance provisions

47. Paragraph 593(1)(b):

Omit, substitute:

1. (b)

   throughout the period, or for each period within the period, the person either:

   1. (i)

      satisfies the activity test; or

   2. (ii)

      is not required to satisfy the activity test; and

48. Paragraph 593(1)(c):

Before "at all times" insert "if subsection 604(1) applies to the

person,".

49. Paragraph 593(1)(d):

Before "at all times" insert "if subsection 604(1) applies to the

person,".

50. Paragraph 593(1)(e):

Omit "when", substitute "if".

51. Subparagraph 593(1)(g)(iii):

Before "is" insert "subject to subsection (1A),".

52. Subsection 593(1) (Note 14):

Omit.

53. After subsection 593(1):

Insert:

1. (1A)

   For the purposes of subparagraph (1)(g)(iii), if:

   1. (a)

      a person is, under Subdivision BA, not required to satisfy the activity test; and

   2. (b)

      the person is temporarily absent from Australia; and

   3. (c)

      the person is absent in order to seek medical treatment of a kind that is not available in Australia;

the person is taken to be in Australia during:

1. (d)

   if the period is not more than 3 months—the whole of the period; or

2. (e)

   if the period is more than 3 months—the first 3 months of the period.

54. Subsection 593(2) (Note 11):

Omit.

55. Section 594:

Repeal.

56. Subsection 598(3):

Omit "subsection (4)", substitute "subsections (3AA) and (4)".

57. After subsection 598(3):

Insert:

1. (3AA)

   Subject to subsection (4), if the person:

   1. (a)

      is not a member of a couple; and

   2. (b)

      is, under Subdivision BA, not required to satisfy the activity test;

the liquid assets test waiting period in relation to the claim starts on the day on which the person became incapacitated.

58. Subsection 598(3A):

Omit "subsection (4)", substitute "subsections (3B) and (4)".

59. After subsection 598(3A):

Insert:

1. (3B)

   Subject to subsection (4), if the person:

   1. (a)

      is a member of a couple; and

   2. (b)

      is, under Subdivision BA, not required to satisfy the activity test;

the liquid assets test waiting period in relation to the claim starts on the last occurring of the following days:

1. (c)

   the day on which the person became incapacitated for work;

2. (d)

   if, when the claim is made, the person's partner is unemployed—the day on which the person's partner became unemployed;

1. (e)

   if, when the claim is made, the person's partner is incapacitated for work—the day on which the person's partner became incapacitated for work.

60. Section 600:

Add at the end:

1. (3)

   A person is qualified for newstart allowance in respect of a period determined by the Secretary if:

   1. (a)

      immediately before the start of the period, the person:

      1. (i)

         was receiving newstart allowance; and

      2. (ii)

         was incapacitated for work; and

      3. (iii)

         was, under Subdivision BA, not required to satisfy the activity test; and

   2. (b)

      in the Secretary's opinion:

      1. (i)

         the person will comply with the requirements of this Act during the period; and

      2. (ii)

         the person may reasonably be expected to be qualified for newstart allowance in respect of the period; and

      3. (iii

         newstart allowance may reasonably be expected to be payable to the person in respect of the period.

61. After Subdivision B of Division 1 of Part 2.12:

Insert:

Subdivision BA—Exemption from activity test—people temporarily incapacitated for work

603BInterpretation

A reference in this Subdivision to a person being exempt from the activity test, or ceasing to be exempt from the activity test, under, or under a provision of, this Subdivision is a reference to a person not being required to satisfy the activity test, or becoming required to satisfy the activity test, as the case may be, because of the operation of, or the operation of that provision of, this Subdivision.

603CIncapacitated person not required to satisfy activity test

1. (1)

   Subject to this Subdivision, a person is not required to satisfy the activity test in respect of a period if:

   1. (a)

      throughout the period the person is incapacitated for work because of sickness or an accident; and

   2. (b)

      the incapacity is caused wholly, or virtually wholly, by a medical condition arising from the sickness or accident; and

   3. (c)

      the incapacity is, or is likely to be, of a temporary nature; and

   4. (d)

      if this Subdivision had not been enacted and paragraphs 593(1)(b), (c), (d) and (e) were disregarded, the person would qualify for newstart allowance; and

   5. (e)

      the person has, whether before or after the commencement of this section, given the Secretary a certificate of a medical practitioner, in a form approved by the Secretary, stating:

      1. (i)

         the medical practitioner's diagnosis; and

      2. (ii)

         the medical practitioner's prognosis; and

      3. (iii)

         that the person is incapacitated for work; and

      4. (iv)

         the period for which the person is incapacitated for work; and

   6. (f)

      the Secretary is satisfied that the incapacity has not been brought about with a view to obtaining an exemption from the activity test.

2. (2)

   In this section:

work, in relation to a person, means work (whether full‑time, part‑time, permanent or casual) that:

1. (a)

   is of a kind that the person could, in the Secretary's opinion, be reasonably expected to do; and

2. (b)

   is for at least 8 hours per week at award wages or above.

603DPerson cannot obtain exemption from activity test in respect of same medical condition within 2 years

1. (1)

   Subject to subsection (2), if a person who, because of an incapacity resulting from a medical condition, was exempt, under section 603C, from the activity test ceases to be so exempt because of the operation of section 603G or 603H, section 603C does not apply to the person again during the period of 104 weeks after the person ceased to be exempt.

2. (2)

   Subsection (1) does not apply to a person:

   1. (a)

      if the person's incapacity for work is caused by a medical condition that is different from, or significantly more serious than, the medical condition referred to in subsection (1); or

   2. (b)

      if:

      1. (i)

         the medical condition referred to in subsection (1) is a chronically relapsing condition; and

      2. (ii)

         the person's incapacity for work is caused by a relapse of the condition; or

   3. (c)

      if:

      1. (i)

         the person is undergoing a program of counselling, treatment or therapy for drug or alcohol abuse; and

      2. (ii)

         the person's participation in the program is not likely to extend beyond 78 weeks; and

      3. (iii)

         the program is approved by the Secretary in writing for the purposes of this section; or

   4. (d)

      if:

      1. (i)

         the person's incapacity for work is caused by a medical condition (whether the same as or different from the medical condition referred to in subsection (1)); and

      2. (ii)

         arrangements have been made for the person to undergo surgery in respect of the condition; and

      3. (iii)

         the surgery is expected to result in the person's incapacity for work ceasing within 104 weeks from the date on which the person became exempt from the activity test in respect of the incapacity.

603ERefusal to attend interview etc. may result in person being required to satisfy activity test

1. (1)

   A person ceases to be exempt, under this Subdivision, from the activity test if:

   1. (a)

      the Secretary is of the opinion that the person should:

      1. (i)

         contact a particular officer of the Department; or

      2. (ii)

         attend an interview at a particular place; or

      3. (iii)

         complete a questionnaire; or

      4. (iv)

         attend a medical, psychiatric or psychological examination; and

   2. (b)

      the Secretary gives the person a written notice stating that the person is required, within a period stated in the notice, to:

      1. (i)

         contact the officer; or

      2. (ii)

         attend the interview; or

      3. (iii)

         complete the questionnaire; or

      4. (iv)

         attend the examination; or

      5. (v)

         if the person has undergone an examination—give the Secretary a report on the examination in the approved form; and

   3. (c)

      the Secretary is satisfied that it is reasonable for this section to apply to the person; and

   4. (d)

      the person does not take reasonable steps to comply with the requirement.

2. (2)

   A notice under paragraph (1)(b) must inform the person to whom it is given of the effect of failure by the person to take reasonable steps to comply with the requirement set out in the notice.

603FTime limit for exemption from requirement to satisfy activity test

1. (1)

   A person ceases to be exempt, under this Subdivision, from the activity test if the person's maximum exemption period ends.

2. (2)

   Subject to this section, a person's maximum exemption period is:

   1. (a)

      if the person has, whether before or after the commencement of this section, given the Secretary a medical certificate for the purpose of enabling the Secretary to decide whether the person was required to satisfy the activity test—the lesser of the following periods:

      1. (i)

         the period stated in the certificate as the period for which the person would be incapacitated for work;

      2. (ii)

         the period of 13 weeks that started or starts on the first day of the period so stated in the certificate; or

   2. (b)

      otherwise—the period of 4 weeks that started or starts on the day determined by the Secretary to have been the day on which the person's incapacity for work began.

3. (3)

   If, immediately before the day on which a person became qualified for newstart allowance, the person was qualified for job search allowance and was, under section 525AC, not required to satisfy the activity test, the person's maximum exemption period is the period that, immediately before that day, was the person's maximum exemption period under section 525AF.

4. (4)

   If:

   1. (a)

      a person is exempt, under this Subdivision, from the activity test; and

   2. (b)

      the person has, whether before or after the commencement of this section, given the Secretary a certificate of a medical practitioner that states the matters listed in paragraph 603C(1)(e) and is in accordance with the form approved under that paragraph; and

   3. (c)

      the Secretary is satisfied that the person's incapacity for work will continue after the end of the person's maximum exemption period;

the Secretary may extend the person's maximum exemption period by a period that is not more than the lesser of the following periods:

1. (d)

   a period equal to the period stated in the certificate as the period for which the person would be incapacitated for work;

2. (e)

   13 weeks.

1. (5)

   If:

   1. (a)

      a person is exempt, under this Subdivision, from the activity test; and

   2. (b)

      the person gives the Secretary written evidence (other than a certificate referred to in paragraph (4)(b)) that the person's incapacity for work will continue after the end of the person's maximum exemption period; and

   3. (c)

      the Secretary is satisfied that:

      1. (i)

         the person's circumstances make it unreasonable to expect the person to obtain a certificate referred to in paragraph (4)(b) before the end of the maximum exemption period; and

      2. (ii)

         the person's incapacity for work will continue after the end of the person's maximum exemption period;

the Secretary may extend the person's maximum exemption period by not more than 4 weeks.

1. (6)

   If:

   1. (a)

      a person is exempt, under this Subdivision, from the activity test; and

   2. (b)

      the person has, whether before or after the commencement of this section, given the Secretary a certificate referred to in paragraph (4)(b) before the end of the person's maximum exemption period; and

   3. (c)

      before the end of the person's maximum exemption period, the Secretary does not satisfy himself or herself that the person's incapacity for work will continue after the end of that period; and

   4. (d)

      the sole or dominant cause of the Secretary failing so to satisfy himself or herself is an act or omission of an officer of the Department;

the Secretary may extend the person's maximum exemption period by not more than 4 weeks.

603GPerson ceases to be exempt from activity test after one year

Subject to section 603H, a person ceases to be exempt, under section 603C, from the activity test if the person has been so exempt in respect of the immediately preceding period of 52 weeks.

603HIf Secretary makes determination, person ceases to be exempt after 2 years

1. (1)

   The Secretary may make a determination in writing that section 603G does not apply to a person if the Secretary is satisfied that:

   1. (a)

      the person's incapacity for work will end during the next 52 weeks; or

   2. (b)

      the medical condition that wholly, or virtually wholly, causes the person's incapacity for work at the end of the period of 52 weeks referred to in section 603G is different from, or significantly more serious than, the medical condition because of which the person was exempt, under section 603C, from the activity test at the beginning of that period of 52 weeks; or

   3. (c)

      the person's incapacity is caused by a chronically relapsing medical condition; or

   4. (d)

      all the following circumstances apply:

      1. (i)

         the person is undergoing a program of counselling, treatment or therapy for drug or alcohol abuse;

      2. (ii)

         the person's participation in the program is not likely to extend beyond 78 weeks;

      3. (iii)

         the program is approved by the Secretary in writing for the purposes of this section.

2. (2)

   If the Secretary makes a determination under subsection (1) in relation to a person, section 603G does not apply to the person but the person ceases to be exempt, under section 603C, from the activity test if the person has been so exempt in respect of the immediately preceding period of 104 weeks.

3. (3)

   For the purposes of subsection (2), a person who has not been exempt, under section 603C, from the activity test continuously in respect of the immediately preceding period of 104 weeks is taken to have been exempt, under that section, from the test in respect of that period if the period, or each period, during those 104 weeks in respect of which the person:

   1. (a)

      was not exempt under section 525AC or 603C from an activity test; and

   2. (b)

      was not in receipt of sickness allowance;

was less than 6 weeks.

62. Subsection 604(1):

Omit "For", substitute "Subject to this section, for".

63. After subsection 604(1):

Insert:

1. (1A)

   Subsection (1) does not apply to a person who, under Subdivision BA, is not required to satisfy the activity test.

64. Subsection 605(1):

Omit "If a person", substitute "Subject to this section, if a person".

65. Subsection 605(2):

Omit "The Secretary", substitute "Subject to this section, the

Secretary".

66. After subsection 605(2):

Insert:

1. (2A)

   Subsections (1) and (2) do not apply to a person who, under Subdivision BA, is not required to satisfy the activity test.".

67. After paragraph 608(1)(ha):

Insert:

1. (hb)

   ection 616B applies to the person and the person fails to comply with a requirement in a notice given to the person under that section; or

68. After paragraph 614(4)(b):

Insert:

1. (ba)

   the scheme to provide an allowance known as the Adult Migrant Education Program Living Allowance; or

2. (bb)

   the scheme to provide an allowance known as the English as a Second Language Allowance to the extent that the scheme applies to full‑time students; or

69. After subsection 615(1):

Insert:

1. (1A)

   Subject to the following provisions of this section, if a person is, under Subdivision BA, not required to satisfy the activity test, the person's provisional commencement day is the day on which the person became incapacitated for work.

70. Subsection 615(5):

Omit "If", substitute "Subject to subsections (6) and (7), if".

71. Section 615:

Add at the end:

1. (6)

   Subject to subsection (7), if:

   1. (a)

      a person is a transferee to newstart allowance; and

   2. (b)

      the person is, under Subdivision BA, not required to satisfy the activity test; and

   3. (c)

      the person claims the newstart allowance within 4 weeks after the person's transfer day;

the person's provisional commencement day is the person's transfer day.

1. (7)

   If:

   1. (a)

      a person is, under Subdivision BA, not required to satisfy the activity test; and

   2. (b)

      the person is subject to an education leaver's waiting period (see subsection 622(1)); and

   3. (c)

      the person became incapacitated for work while undertaking the course of education;

the person's provisional commencement day is the last day on which the person was undertaking the course.

72. Section 616:

Add at the end (before the Notes):

1. (2)

   This section does not apply to a person who is, under Subdivision BA, not required to satisfy the activity test.

Note: The heading to section 616 is replaced by "Commencement of newstart allowance—person subject to activity test".

73. After section 616:

Insert in Subdivision D of Division 1 of Part 2.12:

616ACommencement of newstart allowance—person not subject to activity test

1. (1)

   If a person who is, under Subdivision BA, not required to satisfy the activity test is qualified for newstart allowance, the allowance is not payable to the person before the day worked out in accordance with the following provisions of this section.

2. (2)

   If the person:

   1. (a)

      claims the allowance within 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the person is not subject to a waiting period;

the allowance is not payable to the person before the person's provisional commencement day.

Note 1: A waiting period is:

(a) an unused annual leave waiting period (see sections 617 to 619); or

(b) an ordinary waiting period (see sections 620 and 621); or

(c) an education leavers waiting period (see sections 622 and 623); or

(d) a newly arrived resident's waiting period (see sections 623A and 623B).

Note 2: For provisional commencement day see section 615.

1. (3)

   If the person:

   1. (a)

      claims the allowance within 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the person is subject to a waiting period;

the allowance is not payable to the person before the first day after

the end of the waiting period.

Note 1: If the person:

(a) is subject to an unused annual leave waiting period; and

(b) is subject to an ordinary waiting period;

the ordinary waiting period will follow the unused annual leave waiting period (see subsection 621(2)).

Note 2: If the person is subject to an education leavers waiting period and another waiting period, the education leavers waiting period runs concurrently with the other waiting period and the newstart allowance will not be payable until the longest waiting period has ended.

Note 3: If the person is subject to a newly arrived resident's waiting period and another waiting period, the newly arrived resident's waiting period runs concurrently with the other waiting period and the newstart allowance will not be payable until the longest waiting period has ended.

1. (4)

   If:

   1. (a)

      the person claims the allowance more than 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the Secretary is satisfied that the incapacity is the sole or dominant cause for the failure to claim the allowance within 5 weeks after that day;

the allowance is not payable to the person before the day determined by the Secretary.

1. (5)

   The day determined under subsection (4):

   1. (a)

      must not be more than 4 weeks before the day on which the person lodges the claim for the allowance; and

   2. (b)

      if the person is subject to a waiting period—must not be earlier than the first day after the end of the waiting period.

      Note 1: If the person:

      (a) is subject to an unused annual leave waiting period; and

      (b) is subject to an ordinary waiting period;

      the ordinary waiting period will follow the unused annual leave waiting period

      (see subsection 621(2)).

      Note 2: If the person is subject to an education leavers waiting period and another waiting period, the education leavers waiting period runs concurrently with the other waiting period and the newstart allowance will not be payable until the longest waiting period has ended.

      Note 3: If the person is subject to a newly arrived resident's waiting period and another waiting period, the newly arrived resident's waiting period runs concurrently with the other waiting period and the newstart allowance will not be payable until the longest waiting

      period has ended.

2. (6)

   If:

   1. (a)

      the person claims the allowance more than 5 weeks after the day on which the person becomes incapacitated for work; and

   2. (b)

      the Secretary is not satisfied that the incapacity is the sole or dominant cause of the failure to claim the allowance within 5 weeks after that day;

the allowance is not payable to the person before the day on which the claim is lodged.

616BRefusal to attend interview etc.

1. (1)

   A newstart allowance is not payable to a person who is not required to satisfy the activity test if:

   1. (a)

      the person is receiving a newstart allowance; and

   2. (b)

      the Secretary is of the opinion that the person should:

      1. (i)

         contact a particular officer of the Department; or

      2. (ii)

         attend an interview at a particular place; or

      3. (iii)

         complete a questionnaire; or

      4. (iv)

         attend a medical, psychiatric or psychological examination; and

   3. (c)

      the Secretary gives the person a written notice stating that the person is required, within a period stated in the notice, to:

      1. (i)

         contact the officer; or

      2. (ii)

         attend the interview; or

      3. (iii)

         complete the questionnaire; or

      4. (iv)

         attend the examination; or

      5. (v)

         if the person has undergone an examination—give the Secretary a report on the examination in the approved form; and

   4. (d)

      the Secretary is satisfied that it is reasonable for this section to apply to the person; and

   5. (e)

      the person does not take reasonable steps to comply with the requirement.

2. (2)

   A notice under paragraph (1)(c) must inform the person to whom it is given of the effect of failure by the person to take reasonable steps to comply with the requirement set out in the notice.".

74. Paragraph 630C(1)(a):

After "person" insert "(other than a person who is not required to satisfy the activity test).".

Part 4Amendments of other provisions

75. Subsection 94(6):

Add at the end:

or with a view to obtaining an exemption, because of the person's incapacity, from the requirement to satisfy the activity test for the purposes of job search allowance, newstart allowance or youth training allowance

76. Subsection 95(2):

Add at the end:

or with a view to obtaining an exemption, because of the person's blindness, from the requirement to satisfy the activity test for the purposes of job search allowance, newstart allowance or youth training allowance

77. Subsection 409(7):

Add at the end:

or with a view to obtaining an exemption, because of the person's incapacity, from the requirement to satisfy the activity test for the purposes of job search allowance, newstart allowance or youth training allowance

78. Subsection 410(2):

Add at the end:

or with a view to obtaining an exemption, because of the person's blindness, from the requirement to satisfy the activity test for the purposes of job search allowance, newstart allowance or youth training allowance

79. Subparagraph 729(2)(d)(i):

Omit "subsection 546C(4) or 630C(4)", substitute "section 534B, subsection 546C(4), section 616B or subsection 630C(4);".

1. (b)

   the amount is not rolled over into:

   1. (i)

      a superannuation fund; or

   2. (ii)

      an approved deposit fund; or

   3. (iii)

      a deferred annuity; or

   4. (iv)

      an immediate annuity;

the person is taken to receive one fifty‑second of the assessable growth component of that amount as ordinary income of the person during each week in the period of 12 months commencing on the day on which the person realises the investment.

Note: For assessable growth component see subsection 5J(1).

46SAdjustment of ordinary income for investment losses

1. (1)

   If:

   1. (a)

      a person realises an investment to which section 46R applies; and

   2. (b)

      the investment is realised at a loss;

the person's ordinary income is taken to be reduced during each week in the 12 months commencing on the day on which the person realises the investment by the amount worked out using the formula:

where:

assessable loss is so much (if any) of the amount of the loss as is attributable to the person's assessable period.

Note: For assessable period see subsection 5J(1).

1. (2)

   The reduction under subsection (1) in a person's rate as at a particular day is not to exceed the increase to be made under section 46R in working out the person's rate as at that day.

29. Heading to Subdivision E of Division 2 of Part IIIB:

Omit "Subdivision E", substitute "Subdivision B".

30. Divisions 3, 4 and 5 of Part IIIB:

Repeal the Divisions.

31. Section 59A (Indexed and Adjusted Amounts Table):

Add at the end the following heading and items:

Deeming thresholds
20.	Deeming threshold for a person who is not a member of a couple	Deeming threshold individua	Subsection 46H(1)
21.	Deeming threshold for a couple	Deeming threshold couple	Subsection 46H(2)

32. Subsection 59B(1) (CPI Indexation Table):

Add at the end the following heading and items:

Deeming thresholds
11.	Deeming threshold individual	1 July	March	highest March quarter before reference quarter (but not earlier than March 1994 quarter)	$200.00
12.	Deeming threshold couple	1 July	March	highest March quarter before reference quarter (but not earlier than March 1994 quarter)	$200.00

33. Section 59C:

Add at the end:

1. (3)

   The first indexation of amounts under items 11 and 12 of the CPI Indexation Table in subsection 59B(1) is to take place on 1 July

1997.

34. Section 118ZAA (Seniors Health Card Ordinary Income Test Calculator—point 118ZAA‑1—Note 2):

Omit the Note, substitute:

Note 2: The application of the ordinary income test is affected by

the following provisions:

• sections 46 and 46A (the general concept of ordinary income);

• sections 46B and 46C (business income);

• sections 46D to 46L (deemed income from financial assets);

• sections 46Q to 46U (income from retirement funds and annuities);

• sections 48 to 48E (disposal of ordinary income).

35. Schedule 5:

Add at the end:

7Saving: Determinations under repealed sections 46Z and 46ZF

A determination in force under section 46Z or 46ZF immediately before the commencement of this section continues to have effect after that commencement as if:

1. (a)

   section 46L of this Act, as in force immediately after the commencement of this section, had been in force when the determination was made; and

2. (b)

   the determination had been made under that section as so in force; and

3. (c)

   any reference in the determination to section 46W, 46ZD or 46ZE were a reference to sections 46D to 46F of this Act.

Schedule 17Amendments of the Veterans' Entitlements Act 1986 relating to the pension loans scheme

Section 3(2)

1. Section 5 (Index of definitions):

Omit:

dispose 5L(1)

PLS assets 5L(1)

2. Section 5 (Index of definitions):

Insert in their respective appropriate alphabetical positions (determined on a letter‑by‑letter basis):

adjusted income reduced rate 52ZAAA(1)

assets reduced rate 52ZAAA(1)

dispose of assets 52E

dispose of real assets 52ZAAA(1)

guaranteed amount 52ZAAA(1)

income reduced rate 52ZAAA(1)

maximum payment rate 52ZAAA(1)

participating in the pension oans scheme 52ZAAA(3)

real assets 52ZAAA(1)

3. Subsection 5L(1) (definition of PLS assets):

Omit the definition and the Note immediately following the definition.

4. Subsection 5L(1) (definition of dispose):

Omit the definition, substitute:

dispose of assets has the meaning given by section 52E.

5. Section 41 (Service Pension Rate Calculator Where There Are No Dependent Children—Module A—point 41‑A1):

Omit from Note 1 all words following "provisions", substitute "dealing

with financial hardship (sections 52Y and 52Z).".

6. Section 41 (Service Pension Rate Calculator Where There Are No Dependent Children—Module A—point 41‑A1):

After Note 1, insert:

Note 1A: If a person's rate is, or is to be, an income reduced rate or an assets reduced rate, and at least one of those reduced rates is not a nil rate, the person may be able to take advantage of provisions dealing with the pension loans scheme (sections 52ZAAA to 52ZM).

7. Section 42 (Service Pension Rate Calculator Where There Are Dependent Children—Module A—point 42‑A1):

Omit from Note 1 all words following "provisions", substitute "dealing with financial hardship (sections 52Y and 52Z).".

8. Section 42 (Service Pension Rate Calculator Where There Are Dependent Children—Module A—point 42‑A1):

After Note 1, insert:

Note 1A: If a person's rate is, or is to be, an income reduced rate or an assets reduced rate, and at least one of those reduced rates is not a nil rate, the person may be able to take advantage of provisions dealing with the pension loans scheme (sections 52ZAAA to 52ZM).".

9. Section 45X (Income Support Supplement Rate Calculator Where There Are No Dependent Children—Module B—point 45X‑B1):

Omit from Note 2 all words following "provisions", substitute "dealing with financial hardship (sections 52Y and 52Z).".

10. Section 45X (Income Support Supplement Rate Calculator Where There Are No Dependent Children—Module B—point 45X‑B1):

After Note 2, insert:

Note 2A: If a person's rate is, or is to be, an adjusted income reduced rate or an assets reduced rate, and at least one of those reduced rates is not a nil rate, the person may be able to take advantage of provisions dealing with the pension loans scheme (sections 52ZAAA to 52ZM).".

11. Section 45Y (Income Support Supplement Rate Calculator Where There Are Dependent Children—Module B—point 45Y‑B1):

Omit from Note 1 all words following "provisions", substitute "dealing with financial hardship (sections 52Y and 52Z).".

12. Section 45Y (Income Support Supplement Rate Calculator Where There Are Dependent Children—Module B—point 45Y‑B1):

After Note 1, insert:

Note 1A: If a person's rate is, or is to be, an adjusted income reduced rate or an assets reduced rate, and at least one of those reduced rates is not a nil rate, the person may be able to take advantage of provisions dealing with the pension loans scheme (sections 52ZAAA to 52ZM).

13

Subsection 52(1)

After “52H,”, insert “52ZA, 52ZCA,”.

14. Before section 52ZA:

Insert in Subdivision E of Division 11 of Part IIIB:

52ZAAAPension loans scheme definitions

1. (1)

   In this Subdivision, unless the contrary intention appears:

adjusted income reduced rate means the rate worked out at the relevant Step of the Method statement in Module B of the relevant Income Support Supplement Rate Calculator.

assets reduced rate means the rate worked out at the relevant Step of the Method statement in Module A or B (as the case may be) of the relevant Service Pension or Income Support Supplement Rate Calculator.

dispose of real assets has its ordinary meaning.

guaranteed amount means the amount (if any) specified under paragraph 52ZD(1A)(b) or subsection 52ZE(1) (as the case may be).

income reduced rate means the rate worked out at the relevant Step of the Method statement in Module A of the relevant Service Pension Rate Calculator.

maximum payment rate means the rate worked out at the relevant Step of the Method statement in Module A or B (as the case may be) of the relevant Service Pension or Income Support Supplement Rate Calculator.

real assets, in relation to a person or couple, means the real property (including the principal home) of the person or couple in Australia, but does not include any real property specified under paragraph 52ZD(1A)(a).

1. (2)

   For the purposes of this Subdivision, a reference to a charge under section 52ZF includes a reference to a charge continued in force by subsection 52ZF(3) or paragraph 52ZG(2A)(b).

2. (3)

   For the purposes of this Subdivision, a person is participating in the pension loans scheme if:

   1. (a)

      the person has made a request to participate in the scheme under section 52ZD; and

   2. (b)

      because of the request, the rate of the pension payable to the person is:

      1. (i)

         the maximum payment rate; or

      2. (ii)

         some other rate nominated by the person;

   whichever is the lower; and

   1. (c)

      the person owes a debt to the Commonwealth under section 52ZC.

15. Paragraph 52ZA(1)(a):

Omit "to receive", substitute "for".

16. Paragraph 52ZA(1)(c):

Omit the paragraph, substitute:

1. (c)

   the pension or income support supplement rate is, or is to be:

   1. (i)

      an income reduced rate or an adjusted income reduced rate (as the case may be); or

   2. (ii)

      an assets reduced rate;

and at least one of those reduced rates is not a nil rate; and

17. Paragraphs 52ZA(1)(e) and (f):

Omit the paragraphs, substitute:

1. (e)

   the value of the person's real assets (after deduction of any guaranteed amount) is sufficient to secure the payment of any debt that may become payable to the Commonwealth under this Subdivision.

18. Subsection 52ZA(1) (Notes 1 to 3 (inclusive)):

Omit the Notes, substitute:

Note 1: For income reduced rate or adjusted income reduced rate and assets reduced rate see subsection 52ZAAA(1).

Note 2: For real assets see subsection 52ZAAA(1).

Note 3: For guaranteed amount see subsection 52ZAAA(1).

19. Paragraph 52ZA(2)(a):

Omit "to receive", substitute "for".

20. Paragraph 52ZA(2)(c):

Omit the paragraph, substitute:

1. (c)

   the pension or income support supplement rate is, or is to be:

   1. (i)

      an income reduced rate or an adjusted income reduced rate (as the case may be); or

   2. (ii)

      an assets reduced rate;

and at least one of those reduced rates is not a nil rate; and

21. Paragraphs 52ZA(2)(e) and (f):

Omit the paragraphs, substitute:

1. (e)

   the value of the couple's real assets (after deduction of any guaranteed amount) is sufficient to secure the payment of any debt that may become payable to the Commonwealth under this Subdivision.

22. Subsection 52ZA(2) (Notes):

Omit the Notes, substitute:

Note 1: For income reduced rate or adjusted income reduced rate and assets reduced rate see subsection 52ZAAA(1).

Note 2: For real assets see subsection 52ZAAA(1).

Note 3: For guaranteed amount see subsection 52ZAAA(1).

Note 4: For pension age see section 5QA.

23. Paragraph 52ZB(1)(c):

Omit the paragraph.

24. Paragraph 52ZB(1)(d):

Omit "Division", substitute "Subdivision".

25. Paragraphs 52ZB(1)(e) and (f):

Omit the paragraphs, substitute:

1. (e)

   the rate of the pension payable to the person by operation of the scheme is to be:

   1. (i)

      the maximum payment rate; or

   2. (ii)

      some other rate nominated by the person;

whichever is the lower.

Note: For maximum payment rate see subsection 52ZAAA(1).

26. Subsection 52ZB(1) (Note):

Omit the Note.

27. Subsections 52ZB(2) and (3):

Omit the subsections, substitute:

1. (2)

   The pension at the rate payable by operation of the scheme is to be paid on and after the first pension payday after the request is lodged.

2. (3)

   For the purposes of section 53A (fringe benefits), if but for the operation of the scheme the person would not have received a service pension or income support supplement, the person is to be taken to be a person who is not receiving a service pension or income support supplement.

3. (4)

   For the purposes of Subdivision C of Division 12 (treatment benefits), if but for the operation of the scheme the person would not have received a service pension or income support supplement, the person is to be taken to be a person who is not receiving an age or invalidity service pension.

28. Subsection 52ZB(3) (Note):

Omit the Note.

29. Subsection 52ZC(1):

Omit the subsection, substitute:

1. (1)

   If the rate of the pension payable by operation of the pension loans scheme is more than the rate that would have been received by the person but for the operation of the scheme, the person owes a debt to the Commonwealth.

30. Subsection 52ZC(2):

Omit the subsection and the Notes.

31. Subsection 52ZC(3) (Method statement—Step 1):

Omit "income reduced amount", substitute "primary loan amount".

32. Subsection 52ZC(3) (Method statement—Step 2):

Omit "income reduced amount", substitute "primary loan amount".

33. Subsection 52ZC(3) (Method statement—Step 2):

Omit "if the value of assets had not been disregarded under section 52ZB", substitute "but for the operation of the scheme".

34. Subsection 52ZC(3) (Method statement—Step 3):

Omit "amount of interest payable is worked out under subsection (4)", substitute "interest payable is compound interest at the rate fixed under subsection (4) and compounding fortnightly".

35. Subsection 52ZC(3) (Method statement—Step 4):

Omit "subject to subsection (2),".

36. Subsection 52ZC(4):

Omit the subsection, substitute:

1. (4)

   The rate at which compound interest is payable under subsection (3) is the rate fixed from time to time by the Minister for Social Security by determination in writing.

2. (5)

   A determination made under subsection (4) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

37. After section 52ZC:

Insert:

52ZCAEffect of participation in pension loans scheme—maximum loan available

1. (1)

   The maximum loan available to a person under the pension loans scheme is the amount worked out using the formula:

where:

age component amount means the amount specified in column 2 of the Table in subsection (3), in relation to:

1. (a)

   if the person is not a member of a couple—the age the person

turned on his or her last birthday; or

1. (b)

   if the person is a member of a couple—the age the younger member of the couple turned on his or her last birthday.

value of real assets means the value of the real assets (after deduction of any guaranteed amount).

Note 1: For real assets see subsection 52ZAAA(1).

Note 2: For guaranteed amount see subsection 52ZAAA(1).

1. (2)

   For the purposes of subsection (1), the following provisions have effect:

   1. (a)

      if, but for this paragraph, the value of real assets would be an amount that exceeds $10,000 but is not a multiple of $10,000, the value is to be taken to be the next lower amount that is a multiple of $10,000;

   2. (b)

      if, but for this paragraph, the value of real assets would be less than $10,000, the value is to be taken to be nil.

2. (3)

   The following is the Table referred to in subsection (1):

AGE COMPONENT AMOUNT TABLE
column 1 age	column 2 age component amount	column 1 age	column 2 age component amount
55,	75	$3,750.00
and each earlier year	$1,710.00	76	$3,900.00
56	$1,780.00	77	$4,050.00
57	$1,850.00	78	$4,210.00
58	$1,920.00	79	$4,380.00
59	$2,000.00	80	$4,560.00
60	$2,080.00	81	$4,740.00
61	$2,160.00	82	$4,930.00
62	$2,250.00	83	$5,130.00
63	$2,340.00	84	$5,330.00
64	$2,430.00	85	$5,550.00
65	$2,530.00	86	$5,770.00
66	$2,630.00	87	$6,000.00
67	$2,740.00	88	$6,240.00
68	$2,850.00	89	$6,490.00
69	$2,960.00	90,
70	$3,080.00	and each later year	$6,750.00
71	$3,200.00
72	$3,330.00
73	$3,460.00
74	$3,600.00

38. After subsection 52ZD(1):

Insert:

1. (1A)

   A request under subsection (1) must:

   1. (a)

      specify any real property that is not to be included in working out the value of real assets for the purposes of sections 52ZA and 52ZCA, or that is not to be subject to a charge under section 52ZF; and

   2. (b)

      specify the minimum amount (if any) that the person is to be entitled to retain out of the proceeds of the enforcement of a charge under section 52ZF; and

   3. (c)

      specify the rate of the pension (if any) nominated by the person for the purposes of subparagraph 52ZB(1)(e)(ii).

39. Subsection 52ZD(2):

Omit "A request under subsection (1)", substitute "The request".

40. Subsection 52ZD(2):

Omit "and", substitute "or".

41. Section 52ZE:

Repeal the section and the Notes, substitute:

52ZENeed for a request to later nominate or change guaranteed amount or rate of pension

1. (1)

   A person who is participating in the pension loans scheme and who wants to:

   1. (a)

      nominate a minimum amount that the person is to be entitled to retain out of the proceeds of the enforcement of the charge under section 52ZF; or

   2. (b)

      nominate a rate of pension for the purposes of subparagraph 52ZB(1)(e)(ii); or

   3. (c)

      change the guaranteed amount earlier specified; or

   4. (d)

      change the rate of the pension earlier specified;

must make a request that specifies the nomination or change (as the case may be).

1. (2)

   A request under subsection (1) must be signed:

   1. (a)

      if the person is not a member of a couple—by the person; or

   2. (b)

      if the person is a member of a couple—by both members of the couple.

2. (3)

   The request must:

   1. (a)

      be in writing; and

   2. (b)

      be lodged at an office of the Department in Australia.

42. Section 52ZF:

Omit "assets" (wherever occurring), substitute "real assets".

43. Subsection 52ZF(1):

Add at the end:

Note: If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

44. Subsection 52ZF(2):

Add at the end:

Note: If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

45. Section 52ZF:

Add at the end:

1. (3)

   If:

   1. (a)

      the pension loans scheme ceases to operate in relation to a person because of the effect of section 52ZJ or 52ZK; and

   2. (b)

      at the time the scheme ceases to operate, the person owes a debt to the Commonwealth because of the person's participation in the scheme;

any charge in favour of the Commonwealth under subsection (1) or (2) of this section continues in relation to the real assets until the debt is repaid or recovered.

Note 1: Section 52ZJ provides that a person ceases to participate in the scheme if the debt owed by the person exceeds the maximum loan available.

Note 2: Section 52ZK provides for a person to withdraw from the scheme.

Note 3: If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

46. After subsection 52ZG(2):

Insert:

1. (2A)

   In relation to the period between the person's death and the time of recovery of the debt by the Commonwealth:

   1. (a)

      compound interest continues to accrue, and forms part of the debt, in accordance with Step 3 of the Method statement in subsection 52ZC(3); and

   2. (b)

      the charge in favour of the Commonwealth under section 52ZF continues in relation to the real assets until the debt is recovered.

      Note: If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount (see subsection 52ZM(2)).

47. Subsection 52ZG(3):

Omit "sections", substitute "section".

48. Subsection 52ZG(3):

Omit "and 52ZK (automatic termination of participation in pension loans scheme)".

49. Section 52ZH:

Omit "assets" (wherever occurring), substitute "real assets".

50. Subsection 52ZH(1):

After "those proceeds" insert "but after deduction of any guaranteed amount".

51. Sections 52ZJ and 52ZK:

Repeal the sections and the Notes, substitute:

52ZJPerson ceases to participate in pension loans scheme if debt exceeds maximum loan available

If:

1. (a)

   a person is participating in the pension loans scheme; and

2. (b)

   the debt owed by the person under section 52ZC exceeds the maximum loan available to the person under the scheme;

the scheme ceases to operate in relation to the person on the first pension payday after the debt exceeds the maximum loan available.

Note 1: The maximum loan available is worked out by using the formula

set out in subsection 52ZCA(1).

Note 2: For repayment or recovery of the debt owed by the person see

section 52ZKA and section 52ZG.

52ZKPerson withdraws from pension loans scheme

1. (1)

   If a person who is participating in the pension loans scheme makes a request to withdraw from the scheme, the scheme ceases to operate in relation to the person on the first pension payday after the request is lodged.

2. (2)

   A request under subsection (1) must be signed:

   1. (a)

      if the person is not a member of a couple—by the person; or

   2. (b)

      if the person is a member of a couple—by both members of the couple.

1. (3)

   The request must:

   1. (a)

      be in writing; and

   2. (b)

      be lodged at an office of the Department in Australia.

52ZKARepayment or recovery of debt after pension loans scheme ceases to operate because debt exceeds maximum loan available or person withdraws

1. (1)

   The debt owed by a person under section 52ZC, at the time the pension loans scheme ceases to operate in relation to the person by operation of section 52ZJ or 52ZK, may be repaid by the person at any time.

   Note 1: Section 52ZJ provides that a person ceases to participate in the scheme if the debt owed by the person exceeds the maximum loan available.

   Note 2: Section 52ZK provides for a person to withdraw from the scheme.

2. (2)

   If the debt owed by the person is not repaid by the person at the time the scheme ceases to operate in relation to the person, compound interest continues to accrue, and forms part of the debt, in accordance with Step 3 of the Method statement in subsection 52ZC(3), until the debt is repaid or recovered.

3. (3)

   If the debt is not repaid under subsection (1) of this section, subject to section 52ZG the Commonwealth is entitled to recover the debt.

   Note: Section 52ZG provides that a debt cannot be recovered from a

   person until after the person's death.

52. Section 52ZL:

Omit "assets" (wherever occurring), substitute "real assets".

53. Subsection 52ZL(2):

Omit "a bill of sale or".

54. Section 52ZM:

Omit "assets" (wherever occurring), substitute "real assets".

55. Section 52ZM:

After "may" insert ", subject to subsection (2),".

56. Section 52ZM:

Add at the end:

1. (2)

   If there is a guaranteed amount, the charge is enforceable only to the extent that the value of the real assets exceeds the guaranteed amount.

57. Schedule 5:

Add at the end:

6Transitional and saving provisions applicable to the amendments relating to the pension loans scheme

1. (1)

   If:

   1. (a)

      a person has made a request to participate in the previous pension loans scheme; and

   2. (b)

      Schedule 17 to the Amending Act commences before the first pension payday after the lodging of the request;

for the purposes of this clause, the person is to be treated as a person who is participating in the previous pension loans scheme.

1. (2)

   Subject to subclause (3), in relation to a person who is participating in the previous pension loans scheme, subsections 5L(1) and 52(1) and Subdivision E of Division 11 of Part IIIB of this Act, as in force immediately before the commencement of Schedule 17 to the Amending Act, continue to have effect as if the Amending Act had not been enacted.

2. (3)

   If a person who is participating in the previous pension loans scheme:

   1. (a)

      is eligible to participate in the current pension loans scheme; and

   2. (b)

      makes a request to participate in the current scheme;

and the Commission is satisfied that the amount of any debt that would become payable by the person to the Commonwealth under the current scheme would be readily recoverable, the current scheme applies to the person on and after the first pension payday after the request is lodged.

1. (4)

   The debt owed by a person who was participating in the previous pension loans scheme and who is participating in the current pension loans scheme by operation of subclause (3) is, for the purposes of working out the debt owed by the person under the current scheme, to be added to the basic amount of debt accrued under the current scheme.

2. (5)

   In this clause:

Amending Act means the Social Security and Veterans' Affairs

Legislation Amendment Act 1995.

current pension loans scheme means the pension loans scheme in operation under the provisions of this Act, as amended by the Amending Act.

participating in the pension loans scheme has the same meaning as in subsection 52ZAAA(3).

previous pension loans scheme means the pension loans scheme in operation under the provisions of this Act, as in force immediately before the commencement of Schedule 17 to the Amending Act.

NOTES ABOUT SECTION HEADINGS

1. On the commencement of Part 2 of Schedule 1 to this Act, the heading to section 9 of the Social Security Act 1991 is omitted and the following heading is substituted:

Financial assets, retirement funds and annuities definitions

2. On the commencement of Part 2 of Schedule 16 to this Act, the heading to section 5J of the Veterans' Entitlements Act 1986 is omitted and the following heading is substituted:

Financial assets, retirement funds and annuities definitions