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1998-99-2000
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (DEBT RECOVERY) BILL 2000
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by authority of the Minister for Family and
Community Services,
Senator the Hon Jocelyn Newman)
ISBN: 0642 453942
FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (DEBT RECOVERY) BILL 2000
Amendments to be moved on behalf of the Government
OUTLINE AND FINANCIAL IMPACT STATEMENT
Schedule 1—Amendment of the Social Security Act 1991
The amendments to Schedule 1 provide the general rule that ensures that
action to recover debts under the social security law cannot be taken after the
expiration of the 6 year period starting on the first day on which an officer
becomes aware of the debt, or could reasonably have been expected to have done
so. This general rule is subject to certain exemptions that have not been
amended and are not relevant in this case.
There are no financial
implications for these amendments.
Schedule 3—Amendment of the A New Tax System (Family Assistance) (Administration) Act 1999
The amendments to Schedule 3 ensure that action to recover debts under
the family assistance law mirror the rules laid down in the social security law.
That is, recovery action cannot be taken after the expiration of the 6 year
period starting on the first day on which an officer becomes aware of the debt,
or could reasonably have been expected to have done so.
There are no
financial implications for these amendments.
Schedule 4— Amendment of the Veterans’ Entitlements Act 1999
The amendments to Schedule 4 ensure that action to recover debts under the Veterans’ Entitlements Act 1986 (VEA) mirror the rules laid down in the social security law. That is, recovery action cannot be taken after the expiration of the 6 year period starting on the first day on which an officer becomes aware of the debt, or could reasonably have been expected to have done so.
There are no financial implications for these amendments.
FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (DEBT RECOVERY) BILL 2000
Amendments to be moved on behalf of the Government
NOTES ON AMENDMENTS
(Amendments relating to the commencement date)
Amendment No. 1
This amendment omits “8” from Subclause 2(2) of the Bill and substitutes “8A”. This ensures that the commencement provisions in Subclause 2(2) of the Bill will be extended to cover the amendments made by new items 5A and 8A. The new items commence or are taken to have commenced on 1 January 2001.
(Amendments relating to the social security law)
Amendment No. 2
At present, current subsections 1231(2B), 1232(3) and 1233(7B) of the Social Security Act 1991 (the Act) provide that, where a debt arises due to a contravention of the Act, action to recover a debt by deduction, legal action and garnishee notice must be commenced within 6 years starting on the day an officer becomes aware of the circumstances that gave rise to the debt, or could reasonably be expected to have done so. This can be contrasted with subsections 1231(2A), 1232(2) and 1233(7A) of the Act. These provisions, which apply more generally and while they are similar in form, provide that, subject to exemptions not presently relevant, recovery action cannot be commenced after the end of the period of six-years commencing on the date the debt arose.
Amendments in the Family and Community Services and Veterans’ Affairs Legislation Amendment (Debt Recovery) Bill 2000 (the Debt Recovery Bill) seek to remove references to ‘contravention debts’ in the Act. Instead, the amendments substitute a reference to “the Act in force before 20 March 2000 or the social security law” (see, for instance, item 20 of Schedule 1). However, this has the effect of substantially widening the impact of the ‘contravention’ provisions mentioned above, so that they now cover all debts under the social security law (not just those relating to contravention). Thus, recovery of debts under the Act may be commenced within 6 years of an officer becoming aware, or could reasonably be expected to have become aware, of the circumstances that gave rise to the debt, as opposed to the date on which the debt arose. In addition, the amended subsections now overlap with the more general provisions. The result of this is that there are now two provisions which cover the same circumstances but which prescribe different outcomes.
Amendment No. 2 seeks to omit item 20 of Schedule 1 and insert new items 20A and 20B. Proposed item 20A repeals current subsection 1231 (2A) and (2B). Subsection 1231(2A) provides the general rule, while subsection 1231(2B) provides the rule pertaining to contravention debts. These two provisions are replaced by a new subsection 1231(2A), that makes it clear that action to recover a debt may not be taken after the expiration of the 6 year period starting on the first day on which an officer becomes aware of the debt, or could reasonably have been expected to have done so.
Amendment No.2 also makes consequential amendments to paragraphs 1231(2C)(a), 1231(2D)(a) and 1231(2E)(a), to remove redundant references to section 1231(2B) from those sections.
Amendment No. 3
Amendment No 3 makes similar amendments to those in Amendment No. 2 by omitting item 21 of Schedule 1 of the Debt Recovery Bill and amending section 1232 (which relates to the recovery of debts by legal proceedings).
Amendment No. 4
Amendment No 4 omits item 22 of Schedule 1 of the Debt Recovery Bill and amends section 1233 (recovery by garnishee notice) in a similar manner to Amendment No. 2.
(Amendments relating to the family assistance law)
Amendment No. 5
Amendment No. 5 makes amendments to the family assistance law in a similar manner to those undertaken in relation to the social security law. The amendment inserts new items 7A to 7H in the Debt Recovery Bill.
Items 7A and 7B amend section 86, which relates to the general time limit on recovery action). In particular, item 7A repeals current subsections 86(1) and (2), that set up the two different limitation periods for the current regime. In its place, item 7A inserts new subsection 86(1) which states the new rule that recovery action may not be taken after the expiration of the 6 year period starting on the first day on which an officer becomes aware of the debt, or could reasonably have been expected to have done so. Item 7B makes consequential amendments to section 86.
Items 7C and 7D amend section 87 (application of income tax refund owed to person). Item 7C amends subsection 87(3), to insert the general limitation rule tying recovery action to the date an office became aware of the debt (or the date an officer should have done so). Item 7D amends subsection 87(4), to insert a similar rule in this subsection.
Section 88 (which relates to legal proceedings) is amended by items 7E and 7F. Item 7E repeals subsections 88(2) and (3), replacing them with a new subsection 88(2), which provides the general rule that debt recovery action cannot commence more than 6 years after the first day on which an officer becomes aware of the debt, or could reasonably have been expected to have done so. Item 7F makes consequential amendments to several paragraphs in section 88.
Finally, items 7G and 7H amend section 90 (limitation on recovery action by garnishee). These amendments are along the same lines as those in items 7E and 7F.
Amendment No. 6
The application clause in item 17 of Schedule 3 of the Debt Recovery Bill is amended by Amendment No. 6. This application clause makes it clear that the amendments made by items 7, 8 and 15 apply to debts that are owed at the commencement of 1 January 2001 and debts that arise after that time. Amendment No. 6 makes it clear that this application clause also applies to the amendments inserted by Amendment No. 5.
(Amendments relating to the Veterans’ Entitlements Act 1986)
Amendment No. 7
Amendment No. 7 inserts new item 5A into Schedule 4 of the Bill New item 5A is a technical amendment to omit “or (3)” from subsection 205(3). Subsection 205(3) is repealed by Amendment No. 8.
Amendment No. 8
Amendment No. 8 inserts new item 8A into Schedule 4 of the Bill. New item 8A repeals subsections 206(2) and (3) and substitutes a new subsection 206(2).
At present subsections 206(2) and (3) of the VEA mirror current subsections 1231(2B) et al and subsections 1231(2A) et al of the Social Security Act 1991 (SSA).
That is, subsection 206(2) provides that where a debt arises through other than a contravention of the Act, action to recover a debt must be commenced within 6 years, starting on the date the debt arose.
Subsection 206(3) provides that, where a debt arises due to a contravention of the VEA, action to recover a debt must be commenced within 6 years, starting on the day an officer becomes aware of the circumstances that gave rise to the debt, or could reasonably be expected to have done so.
To maintain consistency with the social security law, the same rules will apply to debts under the VEA as are to be applied to social security law in relation to the 6 year debt recovery action limitation period.
Item 8A achieves this parity by repealing subsections 206(2) and (3) and substituting a new subsection 206(2). New subsection 206(2) provides that debt recovery proceedings against a person by the Commonwealth, under or as a result of the Veterans’ Entitlements Act 1986 may not be commenced after the end of the period of 6 years. The period of 6 years starts on the first day on which an officer becomes aware, or could reasonably be expected to have become aware of the circumstances that gave rise to the debt.
Amendment 9
Amendment No. 9 inserts a new subclause at the end of Item 9 of Schedule 4 of the Debt Recovery Bill. New subclause 9(6) makes it clear that the amendments made by items 5A and 8A of the Bill apply to debts that are owed at the commencement of 1 January 2001 and debts that arise after that time.