Skip to main content
Inland Revenue

Tax Policy


The main changes in the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill introduce amendments to extend interest-free loans to certain borrowers who are overseas. To encourage borrowers who want to live in and make a contribution to a Realm country – Niue, the Cook Islands, Tokelau or the Ross Dependency – borrowers who are present in one of these countries for 183 or more days will be entitled to an interest-free loan.

Interest-free loans will also be available to students engaged in full-time study overseas under a formal exchange programme approved by the New Zealand Government or a formal agreement between a New Zealand education provider and an overseas tertiary education provider.

The bill also makes eight minor or technical amendments to:

  • Allow the Commissioner of Inland Revenue to increase the standard rate for repayment deductions from salary and wages from 10 cents in the dollar to up to 15 cents for borrowers who have failed to have the correct deductions made or pay any other amount when it was due. The increased deductions will apply until any shortfall, including any late payment penalties, has been fully repaid.
  • Allow the loans of borrowers who return to New Zealand to be interest-free for the time they are back in New Zealand if they fully repay the loan before they have been back in New Zealand for 183 days.
  • Remove the current limitation on the prior tax years for which borrowers may seek relief on hardship grounds from payment of a repayment obligation. At present relief is limited to the year immediately preceding the current tax year.
  • Insert a formula to determine the student loan interest rate.
  • Increase the period in which a loan may be fully repaid without incurring any additional interest from 15 to 30 days.
  • Include world-wide income in an income-contingent assessment only for the period that a borrower is entitled to an interest-free loan.
  • Clarify that a borrower may only obtain the benefit of the volunteer exemption if the organisation for which the borrower is working was a “named” organisation at the time the borrower did that work.
  • Change the reference to the countries that volunteers must work in from the “United Nations” to the “Organisation of Economic Cooperation and Development”.