Student Loan Scheme Act 2011

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Reprint as at 1 April 2014

Student Loan Scheme Act 2011

Public Act2011 No 62
Date of assent29 August 2011
Commencementsee section 2

Note

Changes authorised by subpart 2 of Part 2 of the Legislation Act 2012 have been made in this official reprint.

Note 4 at the end of this reprint provides a list of the amendments incorporated.

This Act is administered by the Inland Revenue Department.


Contents

1 Title

2 Commencement

Part 1
Preliminary matters, loan advances, and New Zealand-based and overseas-based borrowers

Subpart 1Preliminary provisions

3 Purposes

4 Interpretation

5 Meaning of unpaid amount

6 Application of Act

7 Application of Act to bonded scholarships

8 Act binds the Crown

8A Application of provisions of Act

Subpart 2Establishment of student loan

9 Purposes of sections 10, 11, 16, and 17

10 Loan manager must notify Commissioner of persons who apply for student loan

11 Commissioner must confirm information provided by loan manager

12 Loan manager must provide copy of loan contract

13 Certain information must be disclosed in loan contract

14 Student loan establishment fee

15 Right to cancel loan contract

16 Loan manager must notify Commissioner of borrower's details

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

17 Loan manager must transfer loan advance debts to Commissioner for collection

18 Commissioner must notify borrowers of loan advances

19 Commissioner must inform borrowers about consolidated loan balance

20 Borrower must be notified of certain changes to obligations

Subpart 3Determining whether borrowers are New Zealand-based or overseas-based

21 Overview of being New Zealand-based or overseas-based

22 Meaning of New Zealand-based

23 Meaning of overseas-based

24 Treatment of partial days

Certain borrowers may be treated as being physically in New Zealand

25 Commissioner may treat certain borrowers as being physically in New Zealand

26 Method of making application and provision of evidence and information

27 Commissioner must notify borrower and specify period or conditions when granting application

Borrowers must notify Commissioner of absence from and return to New Zealand

28 Borrower to notify Commissioner of absence from New Zealand of 184 or more days

29 Borrower to notify Commissioner of return to New Zealand of more than 183 days

Part 2
Repayment obligations of borrowers

30 Borrower's liability to repay consolidated loan balance

31 Repayment obligations that apply to New Zealand-based borrowers and overseas-based borrowers

32 Interrelationship between subparts 1 and 2

Subpart 1New Zealand-based borrowers' repayment obligations for salary or wages

33 Application of this subpart

Repayment codes

34 Repayment codes for New Zealand-based borrowers who derive salary or wages

35 Borrowers with SL repayment code must notify employers

Salary or wage deductions

36 Employer or PAYE intermediary must make standard deductions from salary or wages

37 Deduction rates that apply to standard deductions from salary or wages

38 Employer or PAYE intermediary must make Commissioner deductions from salary or wages

39 Employer or PAYE intermediary must make borrower deductions from salary or wages

40 Deductions from income-tested benefits

Unused repayment threshold may be allocated to secondary employment earnings

41 Definitions relating to repayment thresholds

42 Application for unused repayment threshold to be allocated to secondary employment earnings

43 Determining estimated salary or wages

44 Calculating borrower's unused repayment threshold for pay period

45 Special deduction rate certificate for unused repayment threshold

46 Issue and application of special deduction rate certificate

47 Ongoing obligations of borrower to review and notify

48 Time when special deduction rate ceases to apply

Commissioner deductions may be used to recover amounts that remain unpaid

49 Commissioner must issue additional deduction rate notice to obtain Commissioner deductions

50 Procedures for issue of additional deduction rate notice

Further means of recovering amounts that remain unpaid

51 Assessment of standard deductions that ought to have been made

52 Recovery of assessed amounts

Exemption from standard deductions for borrowers who are full-time students

53 Definitions relating to exemption for full-time students

54 Borrowers who are eligible for exemption from standard deductions

55 Declaration by eligible borrowers for exemption from standard deductions

56 Notice from Commissioner

57 Consequences of exemption from standard deductions

58 Withdrawal of declaration

59 Notice of change of circumstances

60 When exemption from standard deductions ceases to apply

Information and determinations

61 Information to show salary or wage deductions made

62 Commissioner must determine question about amount of salary or wage deductions

Significant under-deductions and over-deductions

63 Commissioner determines what is significant under-deduction or significant over-deduction

64 Standard deductions are full and final unless significant error

65 Significant over-deduction identified by borrower

66 Commissioner must determine whether significant over-deduction made

67 Procedure if significant over-deduction made

68 Applicable procedures if significant under-deduction

Matters of general application to salary or wage deductions

69 Prohibition on applications or declarations to maintain integrity of student loan scheme

70 PAYE rules apply to salary or wage deductions

71 Salary or wage deductions in addition to income tax withheld

Subpart 2Repayment obligations for New Zealand-based borrowers with income other than, or as well as, salary or wages

72 Application of this subpart

73 Meaning of adjusted net income

74 Declaration of adjusted net income

75 Extension of time for making declaration of adjusted net income

76 Commissioner to assess borrower's end-of-year repayment obligation

76A Commissioner must assess borrowers to whom section 72(b) applies as having zero repayment obligation

77 Calculation of borrower's end-of-year repayment obligation if salary or wages less than annual repayment threshold

78 Calculation of borrower's end-of-year repayment obligation where salary or wages equal to or more than annual repayment threshold

79 Payment of end-of-year repayment obligation

80 Calculation of terminal payment for tax year

81 Due date for terminal payment

82 Calculation of interim payments for next tax year

83 Commissioner may assess interim payments if information for preceding year not provided

84 Due dates for payment of interim payments

85 Commissioner's powers in relation to due dates

86 Interim payments to be paid in same manner as provisional tax

87 Consequence of failure to meet repayment obligations

Subpart 3New Zealand-based borrowers' repayment obligations for other income

[Repealed]

88 Application of this subpart [Repealed]

88A Meaning of adjusted net income [Repealed]

Assessment of other income repayment obligation

89 Commissioner to assess borrower's other income repayment obligation [Repealed]

Calculation of other income repayment obligations

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

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

Payment of other income repayment obligations

92 Payment of other income repayment obligations [Repealed]

93 Calculation of remaining repayments for tax year [Repealed]

94 Due dates for payment of remaining repayments [Repealed]

95 Calculation of interim payments for next tax year [Repealed]

96 Commissioner may assess interim payments if information for preceding year not provided [Repealed]

97 Due dates for payment of interim payments [Repealed]

98 Commissioner's powers in relation to due dates [Repealed]

99 Interim payments to be paid in same manner as provisional tax [Repealed]

100 Consequence of failure to meet repayment obligations [Repealed]

Reduction of deduction rate for borrower with lower repayment obligation

[Repealed]

101 Borrower may apply for reduction of deduction rate to reflect lower repayment obligation [Repealed]

102 Special deduction rate certificate for lower repayment obligation [Repealed]

103 Issue and application of special deduction rate certificate [Repealed]

104 Time when special deduction rate ceases to apply [Repealed]

Subpart 4Overseas-based borrowers' repayment obligations

105 Application of this subpart

106 Meaning of repayment holiday

Repayment holiday from overseas-based repayment obligations

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

107A Contact person to be nominated

107B Grant of repayment holiday

108 Duration of repayment holiday

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

Assessment of overseas-based repayment obligation

109 Assessments for years in which borrower is overseas-based

Calculation and payment of overseas-based repayment obligation

110 Repayment obligations of overseas-based borrowers

111 Exceptions to repayment obligations of overseas-based borrowers

112 Repayment to be made by instalments

113 Consequence of failure to meet repayment obligations

Subpart 5New Zealand-based non-resident borrowers and borrowers with New Zealand-based and overseas-based repayment obligations

114 Notification of worldwide income by New Zealand-based non-resident borrowers

114A Extension of time for making notification of worldwide income

115 Repayment obligations of borrowers who are overseas-based for part of tax year

115A Reassessment of borrower's overseas-based repayment obligations in year of return to New Zealand

116 Overseas-based borrowers who derive salary or wages from New Zealand

117 Overseas-based borrower's standard and Commissioner deductions satisfy overseas-based repayment obligation [Repealed]

Part 3
Excess repayments

118 Interpretation [Repealed]

119 Meaning of excess repayment

120 Commissioner must notify borrower of excess repayment

121 Options that apply to excess repayments

122 Exception to general rule if repayment obligations for prior tax years reassessed

Subpart 1Excess repayment bonus

[Repealed]

123 Borrower's entitlement to 10% bonus for excess repayment of $500 or more [Repealed]

124 Borrower's entitlement to bonus if loan balance is less than $550 [Repealed]

125 Borrower may be entitled to 10% bonus if under-deduction is due to PAYE system [Repealed]

126 Time at which 10% bonus is credited [Repealed]

127 Restriction on amount of 10% bonus [Repealed]

128 Application of sections 118 to 122 and this subpart to part years [Repealed]

129 Consequences of refund or credit to next tax year [Repealed]

130 Commissioner must advise borrowers to seek financial advice [Repealed]

Subpart 2Refund of excess repayments and satisfaction of future repayment obligation

131 Limit on use of excess repayments

132 Borrower may receive refund or apply excess repayment to future repayment obligations

Part 4
Interest, relief, penalties and offences, rights of objection, and rights to challenge

Subpart 1Interest

133 No interest applied to student loans except as specified in this Part

Loan interest charged for all borrowers

134 Loan interest charged for all borrowers

135 Loan interest calculated daily and charged and compounded annually

136 Notification that loan interest has compounded

137 Full interest write-off for New Zealand-based borrowers

138 Loan interest written off for quick repayment of consolidated loan balance

Late payment interest

139 Late payment interest charged on unpaid amount

140 Notification of late payment interest

141 Late payment interest reduced if instalment arrangement complied with

141A Late payment interest reduced if deduction or extraction notice applies

Matters of general application to interest

142 No interest on consolidated loan balance in credit

143 Commissioner's power to correct interest when charged in error

Subpart 2Relief

Different types of relief

144 Power of Commissioner in relation to small amounts

145 Application for different types of relief for borrower

Relief from late payment interest

146 Commissioner may grant relief from late payment interest

Relief from penalties

146A Commissioner may grant relief from penalties

Hardship relief

147 Hardship relief for any tax year

148 Special deduction rate certificate for hardship relief

149 Issue and application of special deduction rate certificate

150 Time when special deduction rate ceases to apply

151 Effect of Commissioner's decision under section 147

152 Borrowers must notify Commissioner of change of circumstances

153 Commissioner may review grant of hardship relief

Instalment arrangements

154 Application for instalment arrangement

Subpart 3Penalties and offences

Late filing penalties

155 Late filing penalty for certain declarations

156 Due dates for payment of late filing penalty

Student loan shortfall penalties

157 Definitions relating to student loan shortfall penalties

158 Student loan shortfall penalties may be imposed on certain borrowers

159 Commissioner may impose student loan shortfall penalties

160 Notification and payment obligations if Commissioner imposes student loan shortfall penalty

161 Student loan shortfall penalty reduced or removed to reflect change to shortfall penalty

Underestimation penalty

161A Underestimation penalty where interim payments underestimated as at last interim payment date

Offences

162 Certain offence provisions in Tax Administration Act 1994 apply to borrowers

162A Offence for default of overseas-based repayment obligation

162B Arrest of liable person

163 Offence to prejudice employees because of student loan repayment liability

164 Proceedings to be commenced by Commissioner

165 Charging document may charge several offences

166 Time for filing charging document

Subpart 4Borrower's right to object to loan manager about details of loan advances

167 Borrowers may object to details of loan advances

168 Loan manager must consider objections

169 Power to require objection to be determined by chief executive

170 Chief executive must consider objections required to be determined by chief executive

171 Right to apply to Disputes Tribunal or District Court

172 Notification of Disputes Tribunal's or District Court's decision about objection

Subpart 5Dispute procedures and rights to challenge

Dispute procedures

173 Part 4A of Tax Administration Act 1994 applies to disputes under this Act

Rights to challenge and challenge procedures

174 Dispute process must be completed before challenge is made

174A Part 8A of Tax Administration Act 1994 applies to challenges under this Act

175 Challenge to details of consolidated loan balance

176 Challenge to decision concerning treating borrowers as being physically in New Zealand

177 Challenge to special deduction rate certificate for unused repayment threshold

178 Challenge to additional deduction rate notice

179 Challenge to determination of salary or wage deduction

180 Challenge to decision regarding significant over-deduction

181 Challenge to prohibition on applications or declarations

182 Challenge to assessments

182A Challenge to decision concerning repayment holiday

183 Challenge to interest charged

184 Challenge to decision concerning relief

185 Challenge to late filing penalty

186 Challenge to student loan shortfall penalty

187 Person who may make challenge

188 Commissioner's decision on challenges [Repealed]

Part 5
Matters of general application and miscellaneous matters

Subpart 1Matters of general application

189 Annual administration fee

190 Tax year other than 12 months due to change in balance date

191 Limit on repayment obligation for pay period or tax year

192 Payment date not otherwise specified

193 Recovery of unpaid amount

193A Contact person may be requested to assist

193B Changes relating to identity and details of contact person

193C Changes relating to contact details of borrower

194 Order in which salary or wage deductions and payments offset against borrower's consolidated loan balance

195 Date on which salary or wage deductions and payments treated as being made and credited

196 Cancellation of interest if consolidated loan balance repaid early

197 Write-off of consolidated loan balance

198 Commissioner may remedy incorrect application of Act

199 Manner of making refunds

200 Appropriation of refunds

201 Loan advances and other information may be altered

202 Provisions of Tax Administration Act 1994 and Income Tax Act 2007 to apply to this Act

Subpart 2Miscellaneous matters

Interaction with loan contracts and other enactments

203 This Act overrides loan contracts

204 Commissioner may exercise rights in loan contracts to recall loans

205 Loan contract enforceable against minor

206 Student loan contracts are not credit contracts

Disclosure of information

207 Disclosure of information between authorised persons

208 Disclosure of information between Inland Revenue Department and New Zealand Customs Service for information-matching purposes

209 Power of Commissioner to access arrival or departure information

Informing and notifying under this Act

210 Meaning of inform

211 Meaning of notify

212 Meaning of notify a person in writing

213 Meaning of formally notify

214 Notice requirements of Tax Administration Act 1994 do not apply

Regulations

215 Regulations

216 Transitional regulations

217 Application of Legislation Act 2012

Savings and transitional provisions

218 Transitional provisions concerning loan manager and loan advances [Repealed]

219 Early applications and issue of certificates for transition to this Act [Repealed]

220 Application, savings, and transitional provisions

Consequential amendments and repeals

221 Amendments to this Act [Repealed]

222 Amendments to Student Loan Scheme Act 1992 and Credit Contracts and Consumer Finance Act 2003

223 Amendments to other Acts

224 Amendments to other enactments

225 Student Loan Scheme Act 1992 repealed

226 Regulations revoked

Schedule 1
Conditions to borrower being treated as being physically in New Zealand

Schedule 2
Application of PAYE rules for purposes of section 70

Schedule 3
Adjustments to net income for purposes of section 73, applying from 1 April 2014 for 2014–2015 and later tax years

Schedule 4
Application of provisional tax rules for purposes of section 86

Schedule 5
Transitional provisions concerning loan manager and loan advances

[Repealed]

Schedule 6
Application, savings, and transitional provisions

Schedule 7
Amendments to this Act

[Repealed]

Schedule 8
Amendments to Student Loan Scheme Act 1992 and Credit Contracts and Consumer Finance Act 2003

Schedule 9
Amendments to other Acts

Schedule 10
Amendments to other enactments

Reprint notes


The Parliament of New Zealand enacts as follows: