Student Loan Scheme Amendment Act 2005

1: Title
1: This Act is the Student Loan Scheme Amendment Act 2005.
2: In this Act, the Student Loan Scheme Act 1992 the principal Act
2: Commencement
This Act comes into force on the day after the date on which it receives the Royal assent.
3: Interpretation
Section 2 total interest rate total interest rate
a: in respect of any tax year ending on or before 31 March 2006, the sum of the base interest rate and the interest adjustment rate:
b: in respect of each tax year ending after 31 March 2006, the rate prescribed in respect of that tax year by regulations made under section 87
4: Borrower to advise Commissioner of absence from New Zealand
1: Section 37(1) ; and
c: any information that the Commissioner reasonably requires in order to determine whether the borrower is entitled to the full interest write-off set out in section 38AK
2: Section 37 subsections (2) (3)
2: When a borrower who is absent from New Zealand becomes aware that he or she will be absent from New Zealand for a period of more than 3 months, he or she must, as soon as practicable after becoming so aware, provide the Commissioner with the information required by subsection (1)
5: Non-resident borrower to advise Commissioner of return to New Zealand
The heading to section 38 Non-resident borrower Borrower
6: New heading substituted
The principal Act is amended by omitting the heading below section 38 Full interest write-off for borrowers present in New Zealand or granted an exemption
7: New sections 38AA to 38AK inserted
The principal Act is amended by inserting, before section 38A
38AA: Full interest write-off for certain borrowers
1: A borrower is entitled to the full interest write-off set out in section 38AK
a: the borrower satisfies the 183-day requirement in section 38AB
b: the Commissioner grants an exemption to the borrower under section 38AE or section 38AJ
2: The conditions in section 38AK(2) subsection (1)
38AB: 183-day requirement
1: A borrower satisfies the 183-day requirement if that borrower is personally present in New Zealand for a period of 183 or more consecutive days after 31 March 2006 (a 183-day period
2: For the purposes of subsection (1)
a: he or she is personally absent from New Zealand for a period, or periods in the aggregate, of no more than 31 days during a period of what would otherwise have been a 183-day period; and
b: he or she is personally present in New Zealand for the first day of that 183-day period.
3: A borrower who satisfies the 183-day requirement is entitled to the full interest write-off set out in section 38AK section 38AC
38AC: Full interest write-off ceases if borrower is personally absent from New Zealand for 184 days
1: A borrower who has satisfied the 183-day requirement in section 38AB a 184-day absence
2: For the purposes of subsection (1)
a: he or she is personally present in New Zealand for a period, or periods in the aggregate, of no more than 31 days during a period of what would otherwise have been a 184-day absence; and
b: he or she is personally absent from New Zealand for the first day of that 184-day absence.
3: However, a borrower must not be treated as being personally absent from New Zealand for any day on which that borrower may be treated as being personally present in New Zealand under section 38AB(2)
4: A borrower who has had a 184-day absence ceases to be entitled to the full interest write-off set out in section 38AK section 38AB
5: Subsection (4) section 38AE or section 38AJ
38AD: Treatment of partial days
For the purposes of sections 38AB to 38AK
38AE: Power of Commissioner to grant exemptions to borrowers who do not satisfy 183-day requirement
1: On the application of a borrower who does not satisfy the 183-day requirement in section 38AB
a: the borrower was personally absent from New Zealand in the service in any capacity of the Government of New Zealand; or
b: the borrower was personally absent from New Zealand because he or she was working as a volunteer or for token payment for a charitable organisation named in regulations made under this Act ( charity
c: of an unexpected delay; or
d: of an unplanned personal absence; or
e: the borrower is required to be personally absent from New Zealand because of the borrower's employment or occupation; or
f: the borrower was personally absent from New Zealand because the borrower accompanied his or her wife or husband, civil union partner, or de facto partner ( partner
2: If the Commissioner grants an exemption under subsection (1)
a: the start and end dates for the period for which the relevant borrower is treated as being personally present in New Zealand for the purposes of section 38AB
b: the conditions that must apply or be met in order for the relevant borrower to be treated as being personally present in New Zealand for the purposes of section 38AB
3: The Commissioner may grant an exemption—
a: under subsection (1)(b)
b: under subsection (1)(f)
4: The conditions in section 38AF subsection (1)(c)
5: The conditions in section 38AG subsection (1)(d)
6: The conditions in section 38AH subsection (1)(e)
7: The conditions in section 38AI subsection (1)(f)
8: A borrower who applies to the Commissioner under this section must supply the Commissioner with all information, and in the manner, that the Commissioner may reasonably require in order to establish whether 1 of the grounds for the grant of an exemption in subsection (1)(a) to (f)
38AF: Conditions to unexpected delay exemption
An applicant under section 38AE(1)(c)
a: have been a resident during the time in question; and
b: provide proof—
i: of the applicant's intended return to New Zealand; and
ii: that if the applicant had returned to New Zealand as intended, the applicant would have satisfied the 183-day requirement in section 38AB
c: provide proof of the unexpected delay that resulted in the applicant not being able to return to New Zealand as intended; and
d: provide proof that the unexpected delay was due to an event or to circumstances beyond the reasonable control of the applicant, like (for example)—
i: an airline strike, personal illness, or death of a family member:
ii: a fire, flood, storm, earthquake, landslide, volcanic eruption, or other act of God:
iii: an explosion or nuclear, biological, or chemical contamination:
iv: sabotage, terrorism, or an act of war (whether declared or not).
38AG: Conditions to unplanned personal absence exemption
An applicant under section 38AE(1)(d)
a: have been a resident during the time in question; and
b: provide proof of the duration of the applicant's unplanned personal absence from New Zealand; and
c: provide proof that the applicant's unplanned personal absence was due to an event or to circumstances beyond the reasonable planning and control of the applicant, like (for example)—
i: the illness or death of a family member who is overseas:
ii: the applicant's employer requiring the applicant to attend a conference overseas.
38AH: Conditions to employment or occupation absence exemption
An applicant under section 38AE(1)(e)
a: have been a resident during the time in question; and
b: have a permanent place of abode only in New Zealand; and
c: provide proof that the applicant receives either—
i: a source deduction payment as defined in section OB 2(1) of the Income Tax Act 2004
ii: income from a business that has a permanent place of business in New Zealand; and
d: provide proof that the majority of the applicant's personal absences from New Zealand are because of the applicant's employment or occupation.
38AI: Conditions to marriage, civil union, or de facto exemption
An applicant under section 38AE(1)(f)
a: have been a resident during the time in question; and
b: provide proof of the applicant's relationship with his or her wife or husband, civil union partner, or de facto partner ( partner
c: provide proof that the applicant's personal absence from New Zealand was because the applicant was accompanying his or her partner overseas; and
d: provide proof that one of the following applies:
i: the applicant's partner was personally absent from New Zealand—
A: in the service in any capacity of the Government of New Zealand; or
B: because he or she was working as a volunteer or for token payment for a charitable organisation named in regulations made under this Act; or
ii: the applicant's partner satisfies the conditions in section 38AH
iii: the applicant's partner satisfies the conditions in section 38AJ(2)
38AJ: Power of Commissioner to grant exemption to borrowers undertaking post-graduate study overseas
1: On the application of a borrower who does not satisfy the 183-day requirement in section 38AB
2: An applicant under subsection (1)
a: must provide the Commissioner with a document from the NZQA verifying that the applicant's post-graduate course is at post-graduate level for the purposes of this section; and
b: must provide the Commissioner with evidence from the applicant's overseas education provider verifying that the applicant is enrolled full-time in the post-graduate course verified by the NZQA; and
c: must supply the Commissioner with all other information, and in the manner, that the Commissioner may reasonably require in order to establish whether the ground for the grant of an exemption under subsection (1)
3: If the Commissioner grants an exemption under subsection (1)
a: the start and end dates for the period for which the relevant borrower is treated as being personally present in New Zealand for the purposes of section 38AB
b: the conditions that must apply or be met in order for the relevant borrower to be treated as being personally present in New Zealand for the purposes of section 38AB
4: In this section,— NZQA Part 20 of the Education Act 1989 study at post-graduate level section 253(1)(c) of the Education Act 1989
38AK: Terms of full interest write-off
1: When a borrower is entitled to a full interest write-off under section 38AA
2: Subsection (1)
a: applies only to days on or after 1 April 2006 on which a borrower—
i: is personally present in New Zealand in accordance with the requirements of sections 38AB to 38AD
ii: is treated as being personally present in New Zealand under section 38AB(2) or section 38AE(2) or section 38AJ(3)
b: does not apply to the days on which a borrower is personally present in New Zealand but is treated as being personally absent from New Zealand under section 38AC(2)
8: New heading inserted
The principal Act is amended by inserting, immediately above section 38A Full interest write-off for certain students
9: Conditions for base interest write-off
1: Section 41 ; and
c: a maximum aggregate of 2 tax years each in respect of any 1 borrower.
2: Section 41
2: Subsection (1)(c) applies from 31 March 2006.
10: New heading and sections 45A to 45D inserted
The principal Act is amended by inserting, after section 45 Amnesty from payment of late payment penalties
45A: Amnesty in respect of late payment penalties
1: The Commissioner must write off any late payment penalties to which a borrower has become liable under section 44 late payment penalties
a: the Commissioner is satisfied that the borrower is a non-resident on 31 March 2006; and
b: the borrower meets the condition in section 45B(1)
c: the Commissioner receives an application (in any form or manner acceptable to the Commissioner) by or on behalf of that borrower before the close of 31 March 2007.
2: This section applies—
a: from 31 March 2006; and
b: only to those late payment penalties that the borrower is already liable to pay on the date on which the Commissioner receives the borrower's application under subsection (1)(c)
45B: Conditions of amnesty
1: The condition that a borrower must meet for the purposes of section 45A(1)(b) section 45A(1)(c)
2: In accordance with the borrower's undertaking given under subsection (1) section 45A(1)(c)
45C: Effect of amnesty on repayment obligation and interest
1: If the Commissioner writes off late payment penalties under section 45A(1)
a: the relevant borrower is not required to make, and the Commissioner is not required to collect, payments in respect of the repayment obligation on which those penalties were written off (the relevant repayment obligation
b: for the purposes of paragraph (a)
c: the amount that was to be paid in respect of the relevant repayment obligation is subject to interest from the date that the relevant repayment obligation was originally due at the total interest rate that applied over the period of non-payment of that obligation on the daily amount outstanding.
2: For the avoidance of doubt, the amount that was to be paid in respect of the relevant repayment obligation remains part of the relevant borrower's loan balance, and that loan balance remains outstanding and due for repayment in accordance with subsequent repayment obligations assessed by the Commissioner.
45D: Repayment obligation and penalties may be reinstated if amnesty condition breached
1: If the Commissioner is satisfied that a borrower has breached the condition in section 45B(2) section 45A
2: In order to reinstate part or all of a late payment penalty under subsection (1) section 45C
3: The Commissioner must, as soon as practicable after reinstating a late payment penalty, give the borrower written notice of—
a: the amount of that penalty; and
b: any action taken under subsection (2)
11: New sections 57A to 57D inserted
The principal Act is amended by inserting, after section 57
57A: Application of sections 57B to 57D
Sections 57B to 57D
a: apply despite anything to the contrary in this Act; and
b: only apply to a refund that was elected or requested by a borrower under section 56 section 57
57B: No refunds for deductions or payments made prior to 1 April 2004
No refund may be made under section 56 or section 57 section 56(1)(a) to (e) or section 57(1)
57C: Certain refunds not entitled to full interest write-off under section 38AK
1: This section applies to refunds made under section 56 or section 57 section 56(1)(a) to (e) or section 57(1) section 57D relevant refund
2: The amount of any relevant refund must be excluded from the amount of a borrower's loan balance for the purposes of section 38AK(1)
3: Until such time as the relevant refund and all interest charged on it are repaid in full to the Commissioner,—
a: all payments in respect of the borrower's repayment obligation must be off-set only against the portion of that borrower's loan balance that consists of the relevant refund that remains outstanding and the interest charged on it (the priority portion
b: any amount deducted or paid in excess of the borrower's repayment obligation must be off-set only against the priority portion; and
c: section 50 paragraphs (a) and (b)
4: In their application to a borrower who is entitled to a full interest write-off under section 38AA sections 38C, 39, and 40 IRD loan balance loan balance
57D: Commissioner's discretion in cases of significant financial hardship
1: On the application of a borrower, the Commissioner may exempt part or all of a relevant refund made to that borrower from section 57C
2: The Commissioner may only exempt a relevant refund if the Commissioner is satisfied that that refund was necessary to alleviate the borrower's significant financial hardship.
3: If the Commissioner grants an exemption under subsection (1) section 57C
4: In this section, significant financial hardship
a: a borrower's inability to meet minimum living expenses; or
b: a borrower's inability to carry out his or her usual occupation because of his or her temporary or permanent illness, injury, or disability; or
c: a borrower's inability to meet mortgage repayments on his or her principal family residence resulting in the mortgagee seeking to enforce the mortgage on the residence; or
d: the cost of modifying a residence to meet special needs arising from a disability of a borrower or a borrower's dependant; or
e: the cost of medical treatment for an illness or injury of a borrower or a borrower's dependant; or
f: the cost of palliative care for a borrower or a borrower's dependant; or
g: the cost of a funeral for a borrower's deceased dependant.
12: New section 58A inserted
The principal Act is amended by inserting, after section 58
58A: Repayment obligation paid in excess may be refunded when assessments reopened
1: This section applies to any case where, upon investigation by the Commissioner of a borrower's liability for a repayment obligation for the tax year ending on 31 March 2006 or any prior tax year, the Commissioner is satisfied that—
a: the repayment obligation assessed by the Commissioner was incorrect; and
b: as a result, any repayment obligation has been paid in excess of the amount properly payable by that borrower (a difference in assessment amounts
2: In any case to which this section applies,—
a: the Commissioner must notify the relevant borrower of the amount of the difference in assessment amounts; and
b: the borrower may request the Commissioner, within 6 months of the date on which the Commissioner issued the notice, to refund the whole or part of the portion of the repayment obligation that is the difference in assessment amounts.
3: A refund that is made under this section must be made in the manner required under section 184A of the Tax Administration Act 1994
4: If no request for a refund is made by a borrower within the required 6 months, the difference in assessment amounts must be applied in reduction of the relevant borrower's loan balance.
5: This section applies despite anything to the contrary in this Act.
13: New section 65A inserted
The principal Act is amended by inserting, after section 65
65A: Objection to decision concerning grant of exemption
A borrower may challenge a decision by the Commissioner—
a: not to grant that borrower an exemption to the 183-day requirement under section 38AE(1) or section 38AJ
b: that the conditions in section 38AF, 38AG, 38AH, 38AI, or 38AJ(2)
c: specifying the start and end dates for the period for which that borrower is treated as being personally present in New Zealand under section 38AE(2)(a) or section 38AJ(3)(a)
i: not fair and reasonable; or
ii: erroneous:
d: specifying the conditions that must apply or be met in order for that borrower to be treated as being personally present in New Zealand under section 38AE(2)(b) or section 38AJ(3)(b)
i: not fair and reasonable; or
ii: erroneous.
14: New sections 66A and 66B inserted
The principal Act is amended by inserting, after section 66
66A: Objection to decisions concerning penalty amnesty
A borrower may challenge a decision by the Commissioner—
a: not to write off that borrower's late payment penalties under section 45A
b: concerning the amount of that borrower's late payment penalties that the Commissioner writes off under section 45A
c: that that borrower has breached the condition in section 45B(2)
d: to reinstate some or all of that borrower's late payment penalties in accordance with section 45D(1)
66B: Objection to decision concerning significant financial hardship
A borrower may challenge a decision by the Commissioner under section 57D section 57C
15: New section 69 substituted
The principal Act is amended by repealing section 69
69: Objector
A challenge under any of sections 64 to 68
16: Regulations
1: Section 87(1)(a)(ii) (iii)
2: Section 87(1) paragraph (a)
ab: specifying a formula or methodology, and other requirements, in accordance with which the following interest rates must be set or reset for the purposes of this Act:
i: the base interest rate; and
ii: the interest adjustment rate; and
iii: the total interest rate:
ac: determining, in accordance with the formula or methodology and requirements specified under paragraph (ab)
i: the base interest rate; and
ii: the interest adjustment rate; and
iii: the total interest rate: .
3: Section 87(1) paragraph (ba)
bb: specifying a list of charitable organisations for the purposes of section 38AE(1)(b) .
4: Section 87(2) (3)
5: Section 87(4) subsection (1)(a) or subsection (1)(ac)
17: Transitional provision for initial 183-day period
1: The Commissioner may at his or her discretion, if the Commissioner considers that it is fair and reasonable to do so, reduce the amount of interest calculated on an eligible borrower's loan balance to zero for interest chargeable during some or all of the period starting on 1 April 2006 and ending on 30 September 2006.
2: If the Commissioner reduces the amount of interest calculated on an eligible borrower's loan balance to zero under subsection (1)
3: In this section, eligible borrower
18: Transitional provision concerning section 21 of principal Act
1: This section applies to borrowers who, on or after 30 November 2005,—
a: apply to the Commissioner for the issue of a special repayment deduction rate certificate under section 21(1)
b: are deemed to have made such an application under section 21(2)
2: Despite anything to the contrary in the principal Act or in any other Act, the amount or rate of repayment deductions specified in a certificate issued by the Commissioner under section 21
a: so much of the primary employment earnings paid to the borrower as exceeds the proportional repayment threshold (as defined in section 20(2)
b: any secondary employment earnings paid to the borrower; and
c: any extra emolument paid to the borrower.