Commonwealth Numbered Regulations - Explanatory Statements

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AUSTUDY REGULATIONS (AMENDMENT) 1998 NO. 132

Statutory Rules 1998 No. 132

Issued by the authority of the Minister for Schools, Vocational Education and Training

Subject:         Student and Youth Assistance Act 1973

AUSTUDY Regulations (Amendment)

The Student and Youth Assistance Act 1973 (the Act) provides the legislative authority for the AUSTUDY scheme. Section 56 of the Act provides that the Governor-General may make regulations for the purposes of the Act.

Since 1 January 1994 AUSTUDY parental and spouse income has included the value of certain fringe benefits provided by an employer to an employee who is a student's parent or spouse. Similar provisions apply in relation to the Department of Social Security (DSS) family payment income test. Many religious organisations have approached DSS and the Department of Employment, Education, Training and Youth Affairs (DEETYA) seeking to have their religious practitioners exempted from the fringe benefits provisions on the grounds that their practitioners are not employees. While exemptions have been granted by both Departments, DEETYA has taken legal advice to the effect that the AUSTUDY Regulations do not make the position absolutely clear.

These regulations amend the definition of "employee" and omit the definition of "employment". The amendments are intended to ensure that persons who are not employees within the ordinary meaning of the word are not subjected to the fringe benefits provisions in the parental and spouse income tests (subregulation 3.2 and regulations 5 and 6).

The regulations also omit certain subregulations relating to the parental and spouse income tests and substitute redrafted subregulations. These amendments are of a technical nature and they do not change the effect of the provisions (subregulation 3.1 and regulation 4).

Regulation 1 provides that the regulations are taken to have commenced on 1 January 1994, that is, the date on which the fringe benefits provisions commenced. As the amendments do not disadvantage clients, their retrospective commencement does not contravene subsection 48(2) of the Acts Interpretation Act 1901.

The Attachment contains more details about the amendments.

ATTACHMENT

DETAILS OF THE AUSTUDY REGULATIONS (AMENDMENT)

Regulation 1 Commencement

Regulation 1 provides that the regulations are taken to have commenced on 1 January 1994. This is the date on which the fringe benefits provisions in the parental and spouse income tests commenced.

Regulation 2 Amendment

Regulation 2 provides that the AUSTUDY Regulations are amended as set out in these regulations.

Regulation 3        Regulation 86 What is parental income?

Regulation 4        Regulation 94 What is the spouse's income?

Regulation 5        Schedule 6 Fringe Benefits

Regulation 6         Regulation 113 Definitions

Background

Regulation 86 provides what is parental income. Subregulation 86(1) provides that parental income is the amount calculated using the formula (GPI + FB + NPBL) - DC. "FB" means the value of all fringe benefits received by the student's parent, or the total value of the fringe benefits received by both of the student's parents, that exceeds $1,000, being fringe benefits that are received in a particular period and that are described in subregulation 86(9) unless the Department is given a statement in accordance with subregulation (8).

Subregulation 86(8) provides that if a student's parent gives the Department a statement by the parent's employer or each of the parent's employers, of the amount for which tax is payable by the employer, or employers, under the Fringe Benefits Tax Assessment Act 1986 (the FBTA Act), or would have been payable if the benefit were not an exempt benefit under section 57 or 57A of the FBTA Act, or had the employer not been a rebatable employer, that amount or the total of those amounts, is taken to be the value of fringe benefits received by the parent. (Sections 57 and 57A of the FBTA Act deal with exempt benefits -employees of religious institutions and exempt benefits - public benevolent institutions respectively.) Subregulation 86(9) describes the fringe benefits, by reference to Schedule 6, the value of which comprise part of parental income.

Subregulations 94(1), 94(1B) and 94(1C) provide similarly in the spouse income test.

Subregulations 86(8) and 94(1B) are intended to apply only to parents or spouses who are employees within the meaning of that word in Schedule 6.

Schedule 6 deals with the circumstances in which fringe benefits are assessable under the parental and spouse income tests, and their valuation for those tests. Schedule 6 provides that various benefits given to employees or associates of employees, or third parties for employees or their associates, are fringe benefits.

Generally, for a benefit to be a fringe benefit for the income tests the benefit must be provided:

*       by an employer, or an associate of the employer, or a third party for the employer or associate; to

*       an employee, or an associate of an employee, or a third party for the employee or associate.

Clause 1 of Schedule 6 provides that "employee" means a student's parent or a student's spouse who is, or was, in employment and includes certain constitutional and government appointments and positions. 'Employment" in relation to a person means the holding of any office or appointment the performance of any functions or duties, the engaging in of any work or the doing of any act or thing that results, will result or has resulted in the person being treated as an employee. Strict application of these provisions to religious practitioners would see them being regarded as employees for the purposes of the AUSTUDY Regulations. In cases where religious practitioners demonstrate that they are not employees, this is not the desired outcome.

Regulation 113 contains an index of definitions found in particular provisions within the AUSTUDY Regulations that apply to the rest of the regulations.

Amendments made by these regulations

Subregulation 3.1 and regulation 4 omit subregulations 86(8) and 94(1B) respectively and substitute new subregulations. The phrase "is an employee who" is inserted after "parent" in subregulation 86(8) and after "spouse" in subregulation 94(1B). This is intended to ensure that these provisions only apply to parents and spouses who are employees.

Subregulation 3.2 inserts into subregulation 86(10) anew definition of "employee" that allows the ordinary meaning of the word to apply. The definition specifies persons who are included within the meaning of "employee". This is intended to clarify the status of particular classes of persons. These amendments are intended to enable persons who demonstrate they are not employees to be excluded from the fringe benefits measure in the parental and spouse income tests.

Given the amendments made by regulations 3 and 4, regulation 6 omits the definitions of "employee" and "employment" from clause 1 of schedule 6.

Regulation 5 adds the definition of "employee" in subregulation 86(10) to the index in regulation 113.