IRD is stepping up recovery efforts overseas
11 Nov 2016
IRD is in talks with foreign tax departments as it steps up efforts to recover money owed by overseas-based student loan borrowers.
Kiwis living overseas accounted for more than 90% of the $1.07 billion overdue repayments to the Student Loan Scheme as at 30 June 2016.
IRD said an information exchange agreement with Australia had identified 10,400 student loan borrowers living across the Tasman.
They are also working with debt collection agencies in other countries, but believe around 65% of overseas borrowers are in Australia.
In 2014, the government amended the Act to allow for border arrest of borrowers in default on their repayments. The first arrest was made in January 2016, with two further arrests since.
There was a 17% increase in loan repayments from overseas borrowers in the last financial year. IRD had been working on their communication with borrowers and trying to make it easier for repayments, but couldn't say whether the increase was in the second half of the financial year after the first arrest was publicised.
At least 18 Kiwis living in Australia declared bankruptcy to wipe their student loans (after the Government had done everything possible to recover the debt). 10 of the biggest overseas debts wiped over the past 4 years each exceeded $190,000!
If you are overseas and remain as such, your repayment obligations are based on your loan balance.
- Loan balance under $1,000 = Repayment obligation $1,000
- Loan balance $1,000-$15,000 = Repayment obligation $1,000
- Loan balance $15,000-$30,000 = Repayment obligation $2,000
- Loan balance $30,000-$45,000 = Repayment obligation $3,000
- Loan balance $45,000-$60,000 = Repayment obligation $4,000
- Loan balance over $60,000 = Repayment obligation $5,000
Repayment arrangements may be available if you are significantly behind in your repayment obligations (if you aren't stopped from leaving the country first). You may also have part-year overseas-based or NZ-based obligations if you leave or return during a tax year.
If you are living in New Zealand and earning salary or wages, you should be using a student loan (SL) repayment code so that your employer deducts the right amount of student loan repayments.
If you are living overseas, travelling overseas or would like some advice about your student loan, contact our office today.
Originally sourced from nzherald.co.nz