Does the school have mixed level classes? If so if ask for him to be in a prep/1 class and kind of see how things go next year. Actual year levels aren't really referred to too much within the classroom situation in younger grades as you shouldn't be grouping based on year level but rather ability. You could ask the school to have on official record that he's a year 1 if you want, but maybe ask the teacher to refer to him as prep if needed to differentiate between the year levels. Anyway, at the end of the year you could decide if he's caught up enough or not and then decide what to do then. If you think he will be ok in year 2 the following year you could tell him he's going straight there because he's so clever and worked so hard. If you think year 1 would be best them he wouldn't know the difference if he'd been referred to as a prep all year....