Interest charges and other write-offs
Interest reductionIn full-time study overseas
What you need to do
At the end of the income year (31 March) in which you met the qualifying criteria send evidence of your full-time study with a written application requesting the interest write-off to the Non-residents Centre.
Evidence of your study should be in the form of a letter from the university or educational institution you studied at. The letter should confirm your attendance and the start and end dates of your study. Please do not send in a copy of your enrolment document as it only shows your intention to study - not that you actually did study.
For each year that you qualify you will need to apply as set out above.
When the write-off happens
You will see the credited interest amount appear on the statement we send you shortly after we have calculated your interest write-off.
What is written off
We will calculate whether you are entitled for an interest write-off of all or part of your base interest.
An example of how the interest reduction works - for borrowers of student loans who are overseas.
Jenn is studying full time at Harvard University. She has made a written application to negotiate a nil non-resident repayment obligation for the 2007 year as she is not earning while studying. At the end of the year (31 March 2007) Jenn writes to request a base interest write-off.
Jenn's loan balance was $17,000 at the beginning of the tax year for which the base interest write-off applies.
Below is the effect of her base interest write-off.
|Negotiated non-resident repayment obligation to 31 March 2007||$0|
|Base interest charged for the year||$646|
|Less the non-resident repayment obligation||$0|
|Base interest written-off:||$646|
|Total interest charged (17,000 x 6.9%)||$1,173|
|Less the base interest write-off||$646|
|Interest to be added to the loan principal||$527|
|Loan balance calculation:|
|Loan balance at the beginning of the year||$17,000|
|Plus the interest calculated||$527|
|Total loan balance as at 1 April 2007||$17,527|
For more information see our student loan booklet Interest free student loans and other interest write-offs (IR222).
Date published: 30 Mar 2005
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