EXPLANATORY STATEMENT
STATUTORY RULES 1989 NO 190
FIRST HOME OWNERS REGULATIONS (AMENDMENT)
Issued by the Authority of the Minister for Housing and Aged Care
Insertion of a perpetual lease as an “approved interest” for the purposes of the Act.
The purchaser or owner-builder of a first home is entitled to financial assistance in circumstances where amongst other things he or she will become entitled to ownership of a dwelling on land in Australia. The Act (s.9(2)) defines what constitutes ownership of an approved interest in land and “approved interest” is defined in section 4(1) to mean any of the provisions (a) to (g) set out therein.
The Attorney-General’s Department has advised that a perpetual lease from the Crown is not covered by any of the provisions (a) to (g) of the definition of “approved interest” in section 4(1) of the First Home Owners Act. Accordingly an applicant who seeks assistance under the Act in respect of a perpetual lease cannot be assisted, and conversely, applications cannot be disqualified by previous ownership if that ownership was of a perpetual leasehold interest. Paragraph (g) of the definition of “approved interest” provides for “any other interest declared by the regulations to be an approved interest for the purposes of this Act”. The proposed regulation will provide that a perpetual lease from the Crown be so declared.
Updating of income deflationary formula
The Act provides that assistance shall not be paid to an applicant if the amount of his or her taxable income for the relevant year exceeds a prescribed income limit. Ordinarily, the relevant year of income is the financial year preceding the date on which the applicant entered into the contract to purchase or build his or her home, or in the case of owner-builders, commenced the construction of his or her home (“the prescribed date”). However, section 22 of the Act under certain circumstances permits the applicant’s eligibility to be assessed on the income of the year in which the prescribed date falls (“the current year”), or the following year (“the succeeding year”). Where section 22 applies, subsection 19(2) provides for the applicant’s income in the relevant year to be reduced in accordance with the Regulations under the Act to enable that income to be tested against the income limits applicable in the financial year preceding home purchase. This ensures equity with applicants who have purchased their home in the same year but are being assessed on the basis of the income in the year preceding home acquisition.
The existing regulations provide certain formulae to be used in the calculation of the reduced amount of taxable income (Regulation 4A). The formulae are based on yearly changes to Average Weekly Earnings.
Currently, Regulation 4A provides appropriate formulae in cases where the applicant’s relevant year of income is the 1983/84 year, the 1984/85 year, 1985/1986 year, 1986/87 year or 1987/88 year. Statutory Rules No. will amend Regulation 4A to provide for additional formulae in cases where the applicant’s relevant year of income is the 1988/89 year.