• “(c) any interest calculated and accrued under section 135(1)”.

“adjusted net income has the meaning given to it in section 88A

“net pre-taxed income has the meaning given to it in section 73”.

• “(g) the borrower’s right to object to the details of loan advances set out in a notification given to the borrower in accordance with section 18:

• “(h) the timeframe within which an objection by a borrower under section 167 must be received by the loan manager (see section 18(2)(e)):”.

“16A Loan manager must notify Commissioner of any details held about borrower’s contact person

• “(1) In any case where a borrower has advised the loan manager of the details of the borrower's contact person, the loan manager must notify the Commissioner of the following details, to the extent that they are available:

  • “(a) the name of the individual:

  • “(b) a postal address for the individual:

  • “(c) a telephone number for the individual:

  • “(d) an electronic address for the individual:

  • “(e) any further information specified in regulations.

  “(2) The Commissioner and the loan manager may, for the purpose of this section, determine by written agreement between them—

  • “(a) the frequency with which that notification must be supplied; and

  • “(b) the form in which that notification must be supplied; and

  • “(c) the method by which that notification must be supplied.

  “(3) Subsection (2)(b) and (c) apply despite section 211.”

• “(2) The repayment code ‘STC’ applies to a borrower if—

  • “(a) the employer is issued with a special tax code certificate under section 24F of the Tax Administration Act 1994; or

  • “(b) the Commissioner requires or permits its use in any other case.

• “(3) If another Act requires an employer to withhold an amount of tax for a PAYE income payment to a borrower and pay the amount to the Commissioner,—

  • “(a) the repayment code ‘SL’ may be combined with another code under that Act; and

  • “(b) the repayment code ‘STC’ may be combined into another code under that Act.”

• “(b) if an ‘STC’ repayment code ceases to apply to the borrower.”

• “(2A) If the amount of the deduction determined under subsection (2)(b) is zero, then sections 34 and 35 do not apply.”

• “(i) an error or omission by the borrower's employer or PAYE intermediary; or”.

• “(2) An additional deduction rate notice issued to an employer or a PAYE intermediary in relation to a borrower revokes an additional deduction rate notice previously issued to that employer or PAYE intermediary in relation to the borrower.”

• “(b) reasonably expects that the annual repayment threshold for year A will not be exceeded by his or her—

  • “(i) gross income from salary or wages; and

  • “(ii) in the case of a borrower to whom subpart 2 applies, net pre-taxed income; and

  • “(iii) in the case of a borrower to whom subpart 3 applies, adjusted net income.”

• “(2A) In any case where there is also, in relation to the borrower and any tax year, a significant under-deduction or an unpaid amount that the Commissioner has at any time identified, the significant under-deduction or unpaid amount may be offset against the significant over-deduction before any refund is made.”

“73 Meaning of net pre-taxed income

• “(1) In this Act, net pre-taxed income, in relation to a borrower for a tax year, means the amount calculated in accordance with the formula—

  a = b – c

  where—

  a

  is the borrower’s net pre-taxed income for the tax year

  b

  is the borrower’s pre-taxed income (as defined in section 4(1)) for the tax year

  c

  is the borrower’s allowable expenses for the tax year.

  “(2) However, the pre-taxed income and allowable expenses for any investment activity for a tax year are ignored when calculating a borrower's net pre-taxed income for that tax year if, treating the borrower as having only the pre-taxed income and allowable expenses of that activity, the borrower would have a net loss for that year.

  “(3) For the purposes of applying subsection (2), 2 or more investment activities may be treated as a single activity if the Commissioner considers that those investment activities are of a kind that are normally carried on in association with each other.

  “(4) For the purposes of applying subsection (2), as modified by subsection (3), allowable expenses that relate to an asset used in carrying on 2 or more investment activities must be appropriately apportioned between those activities on the basis of the use of that asset in those activities.

  “(5) In this section,—

  “allowable expenses means—

  • “(a) expenditure or interest for which a person is allowed a deduction under section DB 3, DB 5, or DB 6 of the Income Tax Act 2007:

  • “(b) a premium under a policy of income protection insurance for which a person is allowed a deduction under section DA 1 of the Income Tax Act 2007

  “investment activity has the same meaning as in section MB 3(5) of the Income Tax Act 2007.”

“88A Meaning of adjusted net income

• “(1) In this Act, adjusted net income means a borrower's income calculated in accordance with the formula—

  a = b – c

  where—

  a

  is the borrower's adjusted net income

  b

  is the borrower's annual gross income other than from salary or wages

  c

  is the borrower's annual total deductions.

  “(2) However, the income and deductions for any investment activity, or for any business, for a tax year are ignored when calculating a borrower's adjusted net income for that tax year if, treating the borrower as having only the income and deductions of that investment activity or of that business, the borrower would have a net loss for that year.

  “(3) For the purposes of applying subsection (2), 2 or more business or investment activities may be treated as a single activity if the Commissioner considers that those business or investment activities are of a kind that are normally carried on in association with each other.

  “(4) For the purposes of applying subsection (2), as modified by subsection (3), deductions that relate to an asset used in carrying on 2 or more business or investment activities must be appropriately apportioned between those activities on the basis of the use of that asset in those activities.

  “(5) In this section,—

  “business has the same meaning as in section YA 1 of the Income Tax Act 2007

  “investment activity has the same meaning as in section MB 3(5) of the Income Tax Act 2007.”

“90 Calculation of borrower's other income repayment obligation where salary or wages below threshold

• “(1) Subsection (2) applies if, in relation to a tax year,—

  • “(a) this subpart applies to a borrower; and

  • “(b) the gross income that the borrower derived from salary or wages is less than the annual repayment threshold.

  “(2) The borrower’s other income repayment obligation for the tax year must be calculated in accordance with the formula—

  a = b × (c – d)

  where—

  a

  is the borrower’s other income repayment obligation for the tax year

  b

  is the repayment percentage

  c

  is the income that the borrower derives from adjusted net income and from salary or wages for the tax year

  d

  is the annual repayment threshold.

  “(3) If the borrower’s other income repayment obligation for the tax year is zero or less, the borrower has no other income repayment obligation for the tax year.

“91 Calculation of borrower's other income repayment obligation where salary or wages equal to or above threshold

• “(1) Subsection (2) applies if, in relation to a tax year,—

  • “(a) this subpart applies to a borrower; and

  • “(b) the gross income that the borrower derived from salary or wages is equal to or more than the annual repayment threshold.

  “(2) The borrower’s other income repayment obligation for the tax year must be calculated in accordance with the formula—

  a = b × c

  where—

  a

  is the borrower’s other income repayment obligation for the tax year

  b

  is the repayment percentage

  c

  is the income that the borrower derives from adjusted net income for the tax year.

“106 Meaning of repayment holiday

• In this subpart, repayment holiday means a period during which a borrower’s overseas-based repayment obligation is reduced to zero.

“Repayment holiday from overseas-based repayment obligations

“107 Borrowers who intend to be overseas-based may apply for repayment holidays

• “(1) A borrower may, by notifying the Commissioner, apply to the Commissioner for a repayment holiday if he or she intends to be overseas-based.

  “(2) The application may be made from New Zealand or from overseas, but no application may be made by an overseas-based borrower.

“107A Contact person to be nominated

• “(1) At the time of making an application under section 107, the borrower must nominate, as the borrower's contact person, an individual who resides in New Zealand.

  “(3) The borrower nominates a contact person by notifying the Commissioner of an individual who is willing to act as the borrower's contact person and by specifying the following details in that notification:

  • “(a) the name of the individual:

  • “(b) a New Zealand postal address for the individual:

  • “(c) an electronic address for the individual (if the individual has one):

  • “(d) a New Zealand telephone number for the individual (if the individual has one):

  • “(e) any further information specified in regulations.

“107B Grant of repayment holiday

• “(1) The Commissioner may grant a repayment holiday to a borrower who applies under section 107 if satisfied that the borrower—

  • “(a) has not reached the borrower's limit; and

  • “(b) has complied with section 107A.

  “(2) A borrower who is granted a repayment holiday becomes entitled to that repayment holiday on the day on which the borrower becomes overseas-based.

  “(3) For the purposes of this subpart, a borrower reaches the borrower's limit if—

  • “(a) the borrower has had 1 or more repayment holidays, granted under this Act, for a period of 365 days or for periods that total 365 days; or

  • “(b) the borrower has had 1 or more repayment holidays under Part 3 of the Student Loan Scheme Act 1992 for a period of 3 years or for periods that total 3 years; or

  • “(c) the borrower has had—

    • “(i) 1 or more repayment holidays under Part 3 of the Student Loan Scheme Act 1992 for a period of less than 3 years or for periods that total less than 3 years; and

    • “(ii) 1 or more repayment holidays, granted under this Act, for a period that equals, or for periods that in total equal, the lesser of—

      • “(A) 365 days; and

      • “(B) the remainder of the period of the repayment holiday to which the borrower would have been entitled under Part 3 of the Student Loan Scheme Act 1992 if that Act had not been repealed; or

  • “(d) the borrower has had his or her repayment holiday under Part 3 of the Student Loan Scheme Act 1992 continued under section 108A(2) for the maximum period prescribed for that continuation.

“108 Duration of repayment holiday

• “(1) Despite section 107B(2), for the purpose of determining the duration of a repayment holiday, the repayment holiday of a borrower who has become entitled to it under that subsection is deemed to have commenced on the first day of the period of the borrower's physical absence from New Zealand, being the period that resulted in the borrower becoming overseas-based.

  “(2) The repayment holiday of a borrower who has become entitled to it under section 107B(2) ends on the earlier of—

  • “(a) the day that the borrower reaches the borrower's limit; and

  • “(b) the day on which the borrower ceases to be overseas-based.

  “(3) A borrower's repayment obligation must be calculated in accordance with sections 110 and 111 if the borrower is, at any time, overseas-based after his or her repayment holiday has ended.

“108A Borrowers who have had, or are having, repayment holidays under Student Loan Scheme Act 1992

• “(1) A New Zealand-based borrower who has had 1 or more repayment holidays under Part 3 of the Student Loan Scheme Act 1992, but who has not reached the borrower's limit (within the meaning of section 107B(3)), must apply under section 107 if he or she wishes to have a repayment holiday under this Act.

  “(2) An overseas-based borrower who, as at 31 March 2012, has a repayment holiday under Part 3 of the Student Loan Scheme Act 1992 that, but for the repeal of that Act, would have continued under that Act continues to have a repayment holiday under this Act, but for no longer than the lesser of—

  • “(a) 365 days; and

  • “(b) the remainder of the period of the repayment holiday to which the borrower would have been entitled under Part 3 of the Student Loan Scheme Act 1992 if that Act had not been repealed.

  “(3) The repayment obligation of a borrower to whom subsection (2) applies must be calculated in accordance with sections 110 and 111 if the borrower is, at any time, overseas-based after his or her repayment holiday has ended in accordance with that subsection.”

• “(1) This section applies to an overseas-based borrower who is not, or is no longer, entitled to a repayment holiday under section 107B or 108A(2).”

• “(3) However, a borrower’s overseas-based repayment obligation for a tax year must be paid by the borrower in instalments as determined by the Commissioner if any repayment holiday granted to the borrower under section 107B or continued under section 108A(2) ends part-way through the tax year.”

“114A Extension of time for making notification of worldwide income

• “(1) This section applies if section 114(2) applies.

  “(2) A borrower may apply to the Commissioner for an extension of time for the making of a notification of the borrower's annual gross income and annual total deductions in accordance with section 37(3) to (5) of the Tax Administration Act 1994, and those subsections apply, as far as applicable and with all necessary modifications, as if—

  • “(a) the reference to ‘the due date required under this section’ were a reference to ‘the due date required under section 114(3) of the Student Loan Scheme Act 2011’; and

  • “(b) every reference to a taxpayer were a reference to a borrower; and

  • “(c) every reference to a return or a return of income were a reference to a notification of the borrower's annual gross income and annual total deductions.”

• “(c) section 110(4) or 111 (as applicable) applies to any portion of the tax year during which the borrower is overseas-based and is not entitled to a repayment holiday (as defined in section 106); and”.

• “(2) In determining whether an excess repayment has been made, the Commissioner must—

  • “(a) disregard a salary or wage deduction or a payment made to the Commissioner that is subsequently refunded; and

  • “(b) treat a borrower's repayment obligation as if any relief granted under section 147 had not been granted; and

  • “(c) disregard any fee refunded by an education provider to the loan manager or the Commissioner.”

“total obligations means—

• “(a) all unpaid amounts; and

• “(b) any standard deductions that were deducted in the tax year except—

  • “(i) a significant over-deduction; or

  • “(ii) a standard deduction or Commissioner deduction for the purposes set out in section 49(1)(a) made (in accordance with section 116) from the salary or wages an overseas-based borrower derives from New Zealand; and

• “(c) any Commissioner deductions for the purposes set out in section 49(1)(a) that were deducted in the tax year; and

• “(d) any other income repayment obligations for the tax year; and

• “(e) any pre-taxed repayment obligation for the tax year; and

• “(f) any overseas-based repayment obligation for the tax year; and

• “(g) any amount that must be paid by a borrower in accordance with a written notification under section 52 for the tax year; and

• “(h) penalties imposed under subpart 3 of Part 4”.

• “(a) all salary or wage deductions that were deducted in the tax year (including salary and wage deductions made in accordance with section 116 from the salary or wages an overseas-based borrower derives from New Zealand); and”.

• “(3) So much of any cancelled late payment interest that has already been paid must be offset as follows:

  • “(a) first, against any unpaid amount the borrower has; and

  • “(b) secondly, any remainder must be offset against the borrower’s current year obligations; and

  • “(c) thirdly, any remainder must be offset against the borrower’s loan balance.

• “(4) Where any amount is, under subsection (3)(c), applied to the loan balance, the borrower may choose to have that amount refunded in whole or in part, and section 132(2) and (3) apply to that choice with all necessary modifications.”

“193A Contact person may be requested to assist

• “(1) The Commissioner may at any time advise a person that the person has been nominated as the contact person of a borrower.

  “(2) If, in any case where a borrower has an unpaid amount, the Commissioner does not have the current address details for the borrower or is uncertain as to the accuracy of the address details for the borrower, the Commissioner may request the borrower's contact person—

  • “(a) to notify the Commissioner of the borrower's current address details; or

  • “(b) to ask the borrower to notify the Commissioner of the borrower's current address details.

  “(2A) In subsection (2), address details, in relation to a borrower, means—

  • “(a) all postal addresses for the borrower; and

  • “(b) all electronic addresses for the borrower (if the borrower has any); and

  • “(c) all telephone numbers for the borrower (if the borrower has any).

  “(3) The Commissioner may not make a request under subsection (2) unless the contact person confirms that he or she is willing to act as the borrower's contact person.

  “(4) The Commissioner—

  • “(a) may not disclose any matters about the borrower other than those required to be disclosed for the purposes of this section; and

  • “(b) may use any information obtained from a request under this section only for the purposes of this Act.

  “(5) In this section and section 193B, contact person, in relation to a borrower, means—

  • “(a) an individual whose name has been notified under section 16A in relation to the borrower; or

  • “(b) an individual nominated by the borrower under section 107A or 193B.

“193B Changes relating to identity and details of contact person

• “(1) Whenever the contact person of a borrower dies or becomes incapacitated or is for any other reason ineligible, unable, or unwilling to act as the borrower's contact person, the borrower must nominate another contact person who resides in New Zealand in the manner provided by section 107A(3).

  “(2) If there is a change in any of the details of a borrower's contact person, the borrower must promptly notify the Commissioner of the changed details.”

• “(3A) For the purpose of calculating loan interest,—

  • “(a) a salary or wage deduction is credited on the 16th day of the month in which the deduction is made; and

  • “(b) all other payments are credited on the day after the date on which they are received by the Commissioner.”

• “(2) The Commissioner must cancel any loan interest that is calculated and accrued between the date of the notification and the date on which the payment is received.”

“11 Certain exempt borrowers must notify Commissioner of their worldwide income

• “(1) This clause applies to a borrower who is treated as being physically in New Zealand under any of paragraphs (b),(g), (h), (i), and (j) of section 25(1).

  “(2) The borrower must notify the Commissioner of the borrower's annual gross income and annual total deductions in accordance with section 114(2), and sections 114(3) and (4) and 114A apply accordingly.”

• “(d) every reference to a tax code were a reference to, as applicable, the repayment codes ‘SL’, ‘STC’, ‘SLCIR’, or ‘SLBOR’; and”.

“1AA Interpretation

• The definition of consolidated loan balance in section 4(1) is amended by repealing paragraphs (b) and (c) and substituting the following paragraph:

  • “‘(b)  any unpaid amount’”.

“2 Overseas-based borrower's standard and Commissioner deductions satisfy overseas-based repayment obligation

• Section 117 is amended by adding the following subsection:

  • “‘(4) In relation to the tax year starting on 1 April 2013, and every subsequent year, this section overrides section 194A(1) and (2).’”

“4A Transitional provisions relating to late payment interest

• “(1) Subclause (2) applies to any interim payments payable by a borrower for the tax year starting 1 April 2012 if 1 or more of those interim payments are due before the commencement of clause 4 of this schedule and 1 or more of those interim payments are due after that commencement.

  “(2) In relation to interim payments to which this subclause applies, the term unpaid amount in sections 139 to 141 (as substituted by clause 4 of this schedule) is (despite section 5 as substituted by clause 1 of this schedule) taken to refer to an interim payment default (within the meaning of section 5 as in force before the commencement of clause 1 of this schedule) that has not been paid on or before the due date determined by section 5 (as so in force) and that has not been decreased, reduced, or written off by the Commissioner.

  “(3) Subclause (4) applies to any instalments of an overseas-based repayment obligation payable by a borrower for the tax year starting 1 April 2012 if 1 or more of those instalments are due before the commencement of clause 4 of this schedule and 1 or more of those instalments are due after that commencement.

  “(4) In relation to instalments of an overseas-based repayment obligation to which this subclause applies, the term unpaid amount in sections 139 to 141 (as substituted by clause 4 of this schedule) is (despite section 5 as substituted by clause 1 of this schedule) taken to refer to an overseas-based instalment default (within the meaning of section 5(2) as in force before the commencement of clause 1 of this schedule) that has not been paid on or before the due date determined by section 5(2) (as so in force) and that has not been decreased, reduced, or written off by the Commissioner.

  “(5) Subclause (6) applies to any remaining repayments payable by a borrower for the tax year starting 1 April 2012 if 1 or more of those remaining repayments are due before the commencement of clause 4 of this schedule and 1 or more of those remaining repayments are due after that commencement.

  “(6) In relation to remaining repayments to which this subclause applies, the term unpaid amount in sections 139 to 141 (as substituted by clause 4 of this schedule) is (despite section 5 as substituted by clause 1 of this schedule) taken to refer to the aggregate of those remaining repayments that have not been paid on or before the due date for the final of those remaining repayments and that have not been decreased, reduced, or written off by the Commissioner.”

• “(a) if late payment interest has been added to a borrower's unpaid amount under section 141; and”.

• “(gba) communicating to a contact person (within the meaning of section 193A of the Student Loan Scheme Act 2011), for the purposes of a request under that section, any information required to be communicated by that section:”.