Higher Education Funding Act 1988:
Factor to index an accumulated higher education contribution debt.
Explanatory Statement
General Outline of Instrument
This instrument calculates and publishes the indexation factor to be used to index the accumulated higher education contribution (HEC) debt on 1 June 2005.
The instrument is made under subsection 106N(9) of the Higher Education Funding Act 1988.
The proposed instrument would be a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Date of effect
This Instrument applies from 1 June 2005.
What is this instrument about:
This instrument is made by the Commissioner of Taxation (Commissioner) pursuant to the Higher Education Funding Act 1988 and provides for the calculation and publication of the indexation factor used to index the accumulated HEC debt.
What is the effect of this instrument:
The effect of the instrument is that it advises taxpayers of the indexation factor to be used to index their accumulated HEC debt on 1 June 2005. The instrument also provides the method for the calculation of the indexation factor.
Background:
Since the commencement of the Higher Education Funding Act 1988 on 1 January 1989, the Commissioner has been required to calculate and publish the indexation factor to be used to index every accumulated HEC debt the Australian Taxation Office (ATO) maintains.
Subsection 106N(9) of the Higher Education Funding Act 1988 requires the Commissioner to calculate and publish before each 1 June the indexation factor used to index an accumulated HEC debt existing on that 1 June.
The indexation factor is calculated for each 1 June of a given income year and is based on the last 8 quarters of index numbers. An index number is made up of the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, as compiled and published by the Australian Statistician.
The indexation factor is then used by the Commissioner to index every accumulated HEC debt the ATO maintains. Following indexation of the debt, the Commissioner issues an information statement in the first two weeks of June advising every client of the amount that their accumulated HEC debt has increased or decreased as a result of the indexation factor.
1 June 2005 will be the last time the Commissioner is required to calculate and publish an indexation factor under the Higher Education Funding Act 1988. From 1 June 2006 and onwards, the Commissioner will be required to publish and calculate the indexation factor pursuant to Division 140 of the Higher Education Support Act 2003.
Consultation:
The Commissioner is satisfied that consultation is unnecessary and inappropriate in relation to this Instrument.
The legislative requirement to calculate and publish the indexation factor is a machinery measure required by subsection 106N(9) of the Higher Education Funding Act 1988.
Commissioner of Taxation
11 May 2005
Previous draft:
[release date]
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