Student Loan info to be shared with Australia

A tax bill introduced to Parliament today will allow information on student loan borrowers living in Australia to be shared between Inland Revenue and the Australian Taxation Office, ensuring defaulters pay their outstanding loan balances.  

Tertiary Education, Skills and Employment Minister Steven Joyce and Revenue Minister Todd McClay say measures included in the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill will bring into New Zealand law an Arrangement for the Exchange of Information signed between the countries in March this year.

At the end of September this year, there were approximately 725,000 student loan borrowers. Fifteen per cent of borrowers live overseas, with the majority in Australia. An estimated $3.2 billion is owed by borrowers living overseas.

"We are making steady progress in tracking down student loan defaulters and getting them to pay up," said Mr Joyce. "However there is still too many who have spent a long time in Australia refusing to meet their obligations. This new initiative will give IRD up to date contact details to track down those deliberately avoiding their payments and being unfair to other taxpayers."

The information-sharing arrangement will form part of a successful Inland Revenue initiative to increase overseas-based borrowers’ compliance with their student loan obligations.

Approximately $227 million in additional repayments have been received since the compliance initiative began in 2010.  The initiative has helped to achieve the following results:

• Inland Revenue receiving 27 per cent more calls from overseas-based borrowers in September 2015 than in the same period last year
• A 24 per cent increase in repayments received this financial year to 30 September, compared with the same period last year
• An increase of 12.7 per cent of overseas-based borrowers making repayments towards their 2016 repayment obligation compared with the same time last year.

Inland Revenue also offers facilities to make it easier for borrowers to comply with their obligations with options such as fee-free payments for borrowers living anywhere in the world through online money transfer companies.
Once the information-sharing arrangement passes into law in both countries, it will be another valuable tool for Inland Revenue to obtain up-to-date contact details for student loan borrowers believed to be living in Australia.

“This will help Inland Revenue to maintain borrowers’ contact with the scheme and, when appropriate, help with the collection of any outstanding payment obligations,” says Mr McClay.

The bill also proposes a small number of technical measures designed to keep the student loan scheme rules clear and current.

They include streamlining the rules applying to borrowers who work overseas but are entitled to interest-free loans because they work for approved charitable organisations, and standardising the treatment of over-deductions from a borrower’s salary or wages.