157 Low flying
(1) The pilot in command of an aircraft must not fly the aircraft over:
(a) any city, town or populous area at a height lower than 1,000 feet; or
(b) any other area at a height lower than 500 feet.
(4) Subregulation (1) does not apply if:
(e) the aircraft is flying in the course of actually taking-off or landing at an aerodrome; or
166 Operation on and in the vicinity of an aerodrome
(1) The pilot in command of an aircraft which is being operated on or in the vicinity of an aerodrome shall:
(f) before landing, descend in a straight line commencing at such a distance from the perimeter of an aerodrome as is common to the ordinary course of navigation for the aircraft type concerned, the commencement of that straight line not being nearer the perimeter of an aerodrome than 500 metres; and
(g) after take-off, not alter heading from the take-off heading at a height less than 500 feet above the terrain, if the alteration was not:
(i) directed by air traffic control; or
(ii) necessary due to the terrain.
I was never taught to turn at 500 feet. In fact I usually turn much higher, 600-700 feet and make a steeper approach. That way you aren't so dependent on the engine 'dragging' you in to the threshold, but using your altitude to glide. The only reasons I can think for teaching a 500 foot turn are that it makes the circuit simpler for students to remember and more symmetrical. YMMV.