Student Loan Scheme Bill

  • enacted

Hon Peter Dunne

Student Loan Scheme Bill

Government Bill

198—2

As reported from the Finance and Expenditure Committee

Contents

Commentary

Key

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

4A Meaning of unpaid amount

5 Application of Act

6 Application of Act to bonded scholarships

7 Act binds Crown

Subpart 2Establishment of student loan

Student loan establishment fee

8 Student loan establishment fee

Transfer of information and loan advance debts from loan manager to Commissioner

9 Purposes of sections 10, 10A, 11, and 12

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

10A Commissioner must confirm information provided by loan manager

10B Loan manager must provide copy of loan contract

10C Certain information must be disclosed in loan contract

10D Student loan establishment fee

10E Right to cancel loan contract

11 Loan manager must notify Commissioner of borrower's details

12 Loan manager must notify Commissioner of loan advances made or charged to borrowers

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

12A Commissioner must notify borrowers of loan advances

13 Commissioner must inform borrowers about consolidated loan balance

14 Loan manager must transfer loan advance debts to Commissioner

15 Loan manager must notify borrowers of loan advance debts to be transferred to Commissioner

14 Borrower must be notified of certain changes to obligations

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

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

17 Meaning of New Zealand-based

18 Meaning of overseas-based

19 Treatment of partial days

Certain borrowers may be treated as being physically in New Zealand

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

21 Method of making application and provision of evidence and information

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

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

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

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

Part 2
Repayment obligations of borrowers

25 Borrower's liability to repay consolidated loan balance

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

27 Interrelationship between subparts 1 to 3

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

28 Application of this subpart

Repayment codes

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

30 Borrowers with SL repayment code must notify employers

Salary or wage deductions

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

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

33 Employer or PAYE intermediary must make further deductions from salary or wages

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

33A Employer or PAYE intermediary must make borrower deductions from salary or wages

34 Deductions from income-tested benefits

Unused repayment threshold may be allocated to secondary employment earnings

35 Definitions relating to repayment thresholds

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

37 Determining estimated salary or wages

38 Calculating borrower's unused repayment threshold for pay period

39 Special deduction rate certificate for unused repayment threshold

40 Issue and application of special deduction rate certificate

41 Ongoing obligations of borrower to review and notify

42 Time when special deduction rate ceases to apply

Commissioner deductions may be used to recover amounts that remain unpaid

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

44 Procedures for issue of additional deduction rate notice

45 Time when additional deduction rate ceases to apply

Further means of recovering amounts that remain unpaid

46 Assessment of standard deductions that ought to have been made

47 Recovery of assessed amounts

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

48 Borrowers who are eligible for exemption from salary or wage deductions

48 Definitions relating to exemption for full-time students

48A Borrowers who are eligible for exemption from standard deductions

49 Declaration by eligible borrowers for exemption from standard deductions

50 Notice from Commissioner

51 Consequences of exemption from standard deductions

52 Withdrawal of declaration

53 Notice of change of circumstances

54 When exemption from standard deductions ceases to apply

Information and determinations

55 Information to show salary or wage deductions made

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

Significant under-deductions and over-deductions

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

58 Standard deductions are full and final unless significant error

59 Significant over-deduction identified by borrower

60 Commissioner must determine whether significant over-deduction made

61 Procedure if significant over-deduction made

61 Procedure if significant over-deduction made

62 Applicable procedures if significant under-deduction

Matters of general application to salary or wage deductions

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

64 PAYE rules apply to salary or wage deductions

65 Salary or wage deductions in addition to income tax withheld

Subpart 2New Zealand-based borrowers' repayment obligations for pre-taxed income

66 Application of this subpart

67 Definitions relating to net pre-taxed income

Declaration of pre-taxed income and assessment of pre-taxed repayment obligation

68 Declaration of pre-taxed income

69 Extension of time for making declaration of pre-taxed income

70 Commissioner to assess borrower's pre-taxed repayment obligation

Calculation of pre-taxed repayment obligation

71 Calculation of borrower's pre-taxed repayment obligation if salary or wages are less than annual repayment threshold

72 Calculation of borrower's pre-taxed repayment obligation if salary or wages are equal to or more than annual repayment threshold

Payment of pre-taxed repayment obligation

73 Payment of pre-taxed repayment obligation

74 Calculation of remaining repayments for tax year

75 Due dates for payment of remaining repayments

76 Calculation of interim payments for next tax year

76 Calculation of interim payments for next tax year

76A Commissioner may assess interim payments if declaration for preceding year not made

77 Due dates for payment of interim payments

78 Commissioner's powers in relation to due dates

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

80 Consequence of failure to meet repayment obligations

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

81 Application of this subpart

Assessment of other income repayment obligation

82 Commissioner to assess borrower's other income repayment obligation

Calculation of other income repayment obligations

83 Certain borrowers have no other income repayment obligations

84 Calculating borrower's other income repayment obligation

Payment of other income repayment obligations

85 Payment of other income repayment obligations

86 Calculation of remaining repayments for tax year

87 Due dates for payment of remaining repayments

88 Calculation of interim payments for next tax year

88 Calculation of interim payments for next tax year

88A Commissioner may assess interim payments if information for preceding year not provided

89 Due dates for payment of interim payments

90 Commissioner's powers in relation to due dates

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

92 Consequence of failure to meet repayment obligations

Reduction of deduction rate for borrower with lower repayment obligation

93 Borrower may apply for reduction of deduction rate to reflect lower repayment obligation

94 Special deduction rate certificate for lower repayment obligation

95 Issue and application of special deduction rate certificate

96 Time when special deduction rate ceases to apply

Subpart 4Overseas-based borrowers' repayment obligations

97 Application of this subpart

98 Definitions used in this subpart

Repayment holiday from overseas-based repayment obligations

99 Overseas-based borrowers are entitled to 3-year repayment holiday

100 Borrowers may choose to opt out of repayment holiday

Assessment of overseas-based repayment obligation

101 Assessments for years in which borrower is overseas-based

Calculation and payment of overseas-based repayment obligation

102 Repayment obligations of overseas-based borrowers

103 Exceptions to repayment obligations of overseas-based borrowers

104 Repayment to be made by instalments

105 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

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

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

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

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

Part 3
Excess repayments

110 Interpretation

111 Meaning of excess repayment

111 Meaning of excess repayment

112 Commissioner must notify borrower of excess repayment

113 Options that apply to excess repayments

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

Subpart 1Excess repayment bonus

115 Borrower's entitlement to 10% bonus for excess repayment of $500 or more

116 Borrower's entitlement to bonus if loan balance is less than $550

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

118 Time at which 10% bonus is credited

119 Restriction on amount of 10% bonus

119A Application of sections 110 to 114 and this subpart to part years

120 Consequences of refund or credit to next tax year

121 Commissioner must advise borrowers to seek financial advice

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

122 Limit on use of excess repayments

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

123 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

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

Overseas-based interest charged for borrowers who are overseas-based

125 Overseas-based interest charged for borrowers who are overseas-based

126 Overseas-based interest calculated daily, charged monthly, and compounded annually

127 Notification that overseas-based interest has compounded

128 Overseas-based interest written-off for quick repayment of consolidated loan balance

Late payment interest

129 Late payment interest charged on unpaid amount

130 Late payment interest reduced if instalment arrangement complied with

131 Late payment interest calculated daily, charged monthly, and compounded annually

132 Initial notification that late payment interest is payable

133 Ongoing notification requirements regarding late payment interest

Loan interest charged for all borrowers

125 Loan interest charged for all borrowers

126 Loan interest calculated daily and charged and compounded annually

127 Notification that loan interest has compounded

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

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

Late payment interest

130 Late payment interest charged on unpaid amount

131 Notification of late payment interest

132 Monthly late payment interest written off if instalment arrangement complied with

Matters of general application to interest

134 No interest on consolidated loan balance in credit

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

Subpart 2Relief

Different types of relief

136 Power of Commissioner in relation to small amounts

137 Application for different types of relief for borrower

Relief from late payment interest

138 Commissioner may grant relief from late payment interest

Hardship relief

139 Hardship relief for any tax year

140 Special deduction rate certificate for hardship relief

141 Issue and application of special deduction rate certificate

142 Time when special deduction rate ceases to apply

143 Effect of Commissioner's decision under section 139

144 Borrowers must notify Commissioner of change of circumstances

145 Commissioner may review grant of hardship relief

Instalment arrangements

146 Application for instalment arrangement

147 Instalment arrangement cancelled if non-compliance

Subpart 3Penalties and offences

Late filing penalties

148 Late filing penalty for certain declarations

149 Due dates for payment of late filing penalty

Student loan shortfall penalties

150 Definitions relating to student loan shortfall penalties

151 Student loan shortfall penalties may be imposed on certain borrowers

152 Commissioner may impose student loan shortfall penalties

153 Notification of student loan shortfall penalty

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

Offences

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

156 Offence to prejudice employees because of student loan repayment liability

157 Proceedings to be taken summarily

158 Information may charge several offences

159 Information may be laid within 10 years

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

160 Borrowers may object to details of loan advances

161 Loan manager must consider objections

162 Power to require objection to be determined by chief executive

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

164 Extension of time for objection

165 Right to apply to Disputes Tribunal or District Court

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

Subpart 5Dispute procedures and rights to challenge

Dispute procedures

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

Rights to challenge

168 Dispute process must be completed before challenge is made

169 Challenge to details of consolidated loan balance

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

170A Challenge to special deduction rate certificate for unused repayment threshold

171 Challenge to additional deduction rate notice

172 Challenge to determination of salary or wage deduction

173 Challenge to decision regarding significant over-deduction

173A Challenge to prohibition on applications or declarations

174 Challenge to assessments

175 Challenge to interest charged

176 Challenge to decision concerning relief

177 Challenge to late filing penalty

178 Challenge to student loan shortfall penalty

179 Person who may make challenge

180 Commissioner's decision on challenges

Part 5
Matters of general application and miscellaneous matters

Subpart 1Matters of general application

181 Annual administration fee

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

183 Limit on repayment obligation for pay period or tax year

184 Payment date not otherwise specified

185 Recovery of unpaid amount

186 Date on which deductions and payments treated as being made and credited

187 Satisfaction of requirements to pay obligations and penalties

188 Order in which deductions and payments offset against borrower's consolidated loan balance

189 Order in which identified payments are offset against borrower's consolidated loan balance

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

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

190 Cancellation of interest if consolidated loan balance repaid early

191 Write-off of consolidated loan balance

192 Associated matters unwound if position changed

192 Commissioner may remedy incorrect application of Act

193 Manner of making refunds

194 Appropriation of refunds

195 Loan advances and other information may be altered

196 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

197 This Act overrides loan contracts

197A Commissioner may exercise rights in loan contracts to recall loans

198 Loan contract enforceable against minor

199 Student loan contracts are not credit contracts

Disclosure of information

200 Disclosure of information between authorised persons

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

202 Power of Commissioner to access arrival or departure information

Informing and notifying under this Act

203 Meaning of inform

204 Meaning of notify

205 Meaning of notify a person in writing

206 Meaning of formally notify

207 Notice requirements of Tax Administration Act 1994 do not apply

Regulations

208 Regulations

209 Transitional regulations

210 Application of Regulations (Disallowance) Act 1989 and Acts and Regulations Publication Act 1989

Savings and transitional provisions

211 Transitional provisions concerning loan manager and loan advances

212 Early applications and issue of certificates for transition to this Act

213 Savings and transitional provisions

Consequential amendments and repeals

213A Amendments to this Act

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

215 Amendments to other Acts

216 Amendments to other enactments

217 Student Loan Scheme Act 1992 repealed

218 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 64

Schedule 3
Application of provisional tax rules for purposes of section 79

Schedule 4
Application of provisional tax rules for purposes of section 91

Schedule 5
Transitional provisions concerning loan manager and loan advances

Schedule 6
Savings and transitional provisions

Schedule 6A
Amendments to this Act

Schedule 7
Amendments to Student Loan Scheme Act 1992 and Credit Contracts and Consumer Finance Act 2003

Schedule 8
Amendments to other Acts

Schedule 9
Amendments to other enactments

Legislative history


The Parliament of New Zealand enacts as follows: