EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO. 139
FIRST HOME OWNERS REGULATIONS (AMENDMENT)
Issued by authority of the Minister for Community Services and Health.
The First Home Owners Act 1983 (“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 for an earlier year (ie, the “preceding year”).
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, 1984/85, 1985/86, 1986/87, 1987/88 or 1988/89 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 1989/90 year.
Overview
The First Home Owners Regulations (Amendment) Statutory Rules 1990, issued under the authority of the Minister for Community Services and Health, amend the First Home Owners Act 1983 to refine the mechanisms for assessing the eligibility of applicants for first home owner assistance. This legislation addresses the issue of ensuring equitable assessment of applicants based on their income, particularly in cases where the prescribed date for assessing income falls in a year different from the financial year immediately preceding the home purchase. The policy objective is to maintain fairness and consistency in the application of income limits for first home owner assistance by providing updated formulae for reducing taxable income when the prescribed date falls in specific years. The Regulations amend existing provisions to include additional formulae for calculating the reduced amount of taxable income when the relevant year of income is the 1989/90 year, thereby ensuring that the assessment remains accurate and reflective of economic conditions at the time.
Scope and Application
The First Home Owners Act 1983 applies to individuals seeking assistance in purchasing or building their first home, ensuring that eligibility is contingent upon their taxable income not exceeding a prescribed limit for the relevant year. Typically, this relevant year is the financial year preceding the contract date for home purchase or the construction commencement date for owner-builders. However, under certain circumstances, the Act allows for eligibility to be assessed based on the income of the current year or the succeeding year. To maintain fairness, the Act mandates that when such alternative years are used, the applicant's income must be adjusted according to the Regulations to align with the income limits of the preceding financial year. These Regulations, amended through Statutory Rules, provide specific formulae to calculate the adjusted income based on changes in Average Weekly Earnings, ensuring consistent and equitable application across different financial years. The scope of these regulations extends to applicants whose relevant income years fall within specified financial years, with the amendments ensuring that additional formulae are available for the 1989/90 year.
Key Provisions
The main operative sections of the First Home Owners Regulations (Amendment) concern the calculation of the reduced amount of taxable income for applicants seeking first-time home buyer assistance. Under section 22 of the First Home Owners Act 1983, an applicant's eligibility for assistance may be assessed based on the income of the year in which they entered into a contract to purchase or build their home (the "current year") or the following year (the "succeeding year"). To ensure equity with applicants assessed on earlier years, subsection 19(2) mandates that the applicant's income in the relevant year must be reduced in accordance with the Regulations to be tested against the income limits applicable in the financial year preceding the home purchase. Regulation 4A provides the formulae for calculating this reduced income, which are based on yearly changes to Average Weekly Earnings.
The Act imposes obligations on applicants to accurately report their income and on the relevant authorities to correctly apply the provisions of the Regulations when assessing eligibility. Applicants must provide their income data for the relevant financial years and authorities must use the specified formulae in Regulation 4A to determine the reduced income amount. This process ensures that the assessment of income is consistent and equitable across all applicants.
Breaches of the requirements outlined in the Act and Regulations can lead to serious consequences. If an applicant knowingly provides false or misleading information, they may be subject to penalties under the Act, including fines and potential disqualification from receiving assistance. The severity of the penalties can vary, but they are intended to deter fraudulent behaviour and maintain the integrity of the assistance program. While the specific penalties are not detailed in the explanatory statement, they are designed to enforce compliance with the legislative requirements.
The Regulations amend the existing formulae in Regulation 4A to include additional formulae for cases where the applicant's relevant year of income is the 1989/90 year. This amendment ensures that the formulae remain current and applicable to all relevant financial years, thereby maintaining the fairness and effectiveness of the income assessment process. The statutory rules ensure that the assistance program can adapt to changes in economic conditions and income levels over time.