Notifying borrowers of excess repayments

Sections 72, 76A, 120 and 132

The amendments in section 120 remove the requirement to notify borrowers of excess repayments if they are predominately a salary and wage earner or an overseas-based borrower. Borrowers in these situations knowingly make excess payments through voluntary payments or deductions and therefore do not need to be advised that they have made excess repayments.

Only borrowers who have an end-of-year repayment obligation assessment will be notified of excess repayments they have made. Repayment obligations for these borrowers are confirmed at the end of the tax year when their actual income is known and can sometimes be less than the interim payments originally required during the year.

The amendment in section 132 retains the ability for borrowers to request a refund of excess repayments. However a request must be made within six months or the later of:

• the date on which a borrower is notified of their end-of-year repayment obligation and excess repayment
• the day after the end of the tax year the excess repayment was made, or
• the day after the due date of the final instalment of a borrowers overseas-based repayment obligation for a tax year.

Amendments in sections 72(b) and new section 76A also provide that in certain circumstances the Commissioner must assess a borrower's end-of-year repayment obligation as zero and notify the borrower of any excess repayments made. This provides a borrower six months from when the notification was made to request a refund. These circumstances can occur when a borrower was required to make interim payments or issued a default assessment of an end-of-year repayment obligation and upon confirmation of the borrower's actual income for the tax year there is no obligation for the year (eg, their non-salary and wage income is less than the $1,500 threshold).

Application date

The amendments in sections 72 and 76A apply retrospectively from 1 April 2012, for the 2012-13 and later tax years. The amendments in sections 120 and 132 apply from the day after Royal assent, being 30 March 2013.