“Ten percent bonus for excess repayments

“45A Interpretation

• In this section and sections 45B to 45H, unless the context otherwise requires,—

  “10% bonus means the bonus specified in, as appropriate, section 45C(2), 45D(2), or 45E(2)

  “excess repayment has the meaning set out in section 45B

  “final excess repayment means an excess repayment that, when combined with the resulting 10% bonus, results in the borrower's IRD loan balance being fully repaid.

“45B Meaning of excess repayment

• “(1) For the purposes of this Act, an excess repayment, in respect of a borrower, is any amount paid to the Commissioner in respect of a tax year in excess of that borrower's repayment obligation for that tax year.

  “(2) However, the following are not excess repayments:

  • “(a) any amount paid in respect of a tax year when a repayment obligation, repayment deduction, interim repayment, terminal repayment obligation, or penalty is, or will be, due and payable in respect of that tax year or any prior tax year (the due amount), except to the extent that the amount paid is in excess of all due amounts:

  • “(b) any amount that was paid before 1 April 2009:

  • “(c) any amount that is paid in respect of a tax year that ended on or before 31 March 2009.

  “(3) Excess repayments may be made—

  • “(a) by any means, including repayment deductions, interim repayments, and voluntary payments; and

  • “(b) in 1 or more payments in respect of a tax year; and

  • “(c) in respect of a tax year, at any time during that tax year and, if the borrower is a periodic payer, at any time up to and including the due date for payment of the final instalment of that borrower's interim repayments for that tax year.

“45C Borrower's entitlement to 10% bonus for total excess repayments of $500 or more

• “(1) Subsection (2) applies to a borrower if—

  • “(a) the borrower's total excess repayments in respect of a tax year are $500 or more; and

  • “(b) at the beginning of the tax year in respect of which the excess repayments were made, the borrower's IRD loan balance was $550 or more.

  “(2) If this subsection applies to a borrower, the Commissioner must reduce the borrower's IRD loan balance by an amount equal to 10% of the borrower's total excess repayments in respect of the relevant tax year.

“45D Borrower's entitlement to bonus if IRD loan balance is less than $550

• “(1) Subsection (2) applies to a borrower if—

  • “(a) the borrower's final excess repayment in respect of a tax year is $500; and

  • “(b) at the date on which the final excess repayment was made, the borrower's IRD loan balance was more than $500 but less than $550.

  “(2) If this subsection applies to a borrower, the Commissioner must reduce the borrower's IRD loan balance to zero.

“45E Borrower may be entitled to 10% bonus if under-deduction is due to PAYE system

• “(1) Subsection (2) applies to a borrower if—

  • “(a) the borrower's total excess repayments in respect of a tax year are less than $500; and

  • “(b) the difference between the borrower's total excess repayments in respect of that tax year and $500 (the shortfall) is because of an under-deduction through the PAYE system; and

  • “(c) the shortfall meets 1 or more of the following criteria:

    • “(i) it is less than $20:

    • “(ii) it is due to the borrower commencing or ceasing employment:

    • “(iii) it is due to an action or an omission of the borrower's employer; and

  • “(d) the Commissioner considers that the borrower's total excess repayments in respect of that tax year would have been $500 or more if the under-deduction referred to in paragraph (b) had not occurred; and

  • “(e) at the beginning of the tax year in respect of which the excess repayments were made, the borrower's IRD loan balance was $550 or more.

  “(2) If this subsection applies to a borrower, the Commissioner must reduce the borrower's IRD loan balance by an amount equal to 10% of the borrower's total excess repayments in respect of the relevant tax year that the Commissioner considers would have been made if the under-deduction referred to in subsection (1)(b) had not occurred.

“45F Manner in which 10% bonus is to be provided and restriction on amount of 10% bonus

• “(1) If a borrower's IRD loan balance will be fully repaid as a result of it being reduced by a 10% bonus, that bonus must be credited to that borrower's IRD loan balance as at the date on which the final excess repayment was made.

  “(2) If a borrower's IRD loan balance will not be fully repaid as a result of it being reduced by a 10% bonus, that bonus must be credited to that borrower's IRD loan balance as at 1 April in the tax year that follows the tax year in respect of which the excess repayments were made.

  “(3) Nothing in subsection (1) or (2) requires the Commissioner to credit a 10% bonus to a borrower's IRD loan balance before the Commissioner has determined that borrower's total excess repayments in respect of a tax year.

  “(4) The total amount of a 10% bonus that may be provided to a borrower must not exceed an amount equal to one-eleventh of that borrower's IRD loan balance on either—

  • “(a) the date on which the 10% bonus is provided; or

  • “(b) an earlier date determined by the Commissioner, at his or her discretion, that is within the relevant tax year.

  “(5) The Commissioner may only determine a date under subsection (4)(b) if, in respect of a borrower,—

  • “(a) 1 or more excess repayments are made in respect of a tax year; and

  • “(b) a final excess repayment was made in respect of the same tax year.

“45G Consequences of refund

• “(1) If a borrower elects that the whole or part of an excess repayment in respect of a tax year be refunded, any 10% bonus that was provided to that borrower must be reduced to an amount equal to 10% of the remaining excess repayment (if any) in respect of the tax year that is $500 or more.

  “(2) If the 10% bonus was provided under section 45E(2), then the remaining excess repayment (if any) in respect of the tax year that is $500 or more must be determined by reference to the borrower's total excess repayments in respect of the relevant tax year that the Commissioner considered (under section 45E) would have been made if the under-deduction referred to in section 45E(1)(b) had not occurred.

“45H Commissioner must advise borrowers to seek financial advice

• The Commissioner must, in all material that provides information about repayment bonuses and that is made available to all borrowers, include a statement to the effect that borrowers are advised to seek appropriate financial advice before making excess repayments in order to obtain a 10% bonus.

“45I Application of sections 45A to 45H

• Sections 45A to 45H apply with effect from 31 March 2009.”