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Student loans
Nga putea taurewa akonga
Interest charges and other write-offs

Interest write-off and reduction entitlements if currently studying

Flowchart of interest write-off criteria if studying in NZ as per text on page.

If you do not meet the 183-day requirement for the interest free student loan scheme, but you remain a New Zealand tax resident, you may still be entitled to have all or some interest written off. This will depend on the length of time you are out of New Zealand, and whether you meet certain conditions

Full interest write-off

Full-time, full year student, New Zealand resident

What you need to do

If you gave your IRD number to your tertiary provider when you completed your enrolment form then you don't have to do anything. Your write-off will be processed automatically.

If you haven't done this, or you're not sure, you can apply online or you can contact us with your student ID and tertiary provider code. This information will then be sent to the Ministry of Education to confirm whether you studied full-time or part-time.

When the write-off happens

Once the Ministry of Education confirms your full-time study status your interest write-off will be processed. We can't calculate the amount of your write-off until after the end of the tax year. You will see the credited interest amount appear on the statement you receive from us in May.

What is written off

All the interest you were charged for the specific year you met the criteria will be wiped.

Full interest write-off

Part-time, part year student, New Zealand resident

What you need to do

Your write-off entitlement will be automatically calculated and processed when you either:

  • complete an Individual tax return (IR3) or
  • receive a personal tax summary and end-of-year repayment calculation from us in July.

If you haven't provided your IRD number to your tertiary provider when you completed your enrolment form, or you're not sure, you can apply online or you can contact us with your student ID and tertiary provider code.

This information will then be sent to the Ministry of Education to confirm whether you studied full-time or part-time.

When the write-off happens

You will see the interest write-off amount appear on the next statement you receive from us after 31 March.

What is written off

All the interest you were charged for the specific year you met the criteria will be wiped.

Base interest write-off

Earning less than $17,160, New Zealand resident

What you need to do

Your write-off entitlement will be automatically calculated and processed when you either:

  • complete an Individual tax return (IR3) return or
  • receive a personal tax summary and end-of-year repayment calculation from us in July.
When the write-off happens

You will see the credited interest amount appear on the statement we send you shortly after you complete an Individual tax return (IR3) or receive a personal tax summary and end-of-year repayment calculation from us.

What is written off

All of the base interest charged for the year will be written off.

Interest reduction

Earning more than $17,160, New Zealand resident

What you need to do

Your write-off entitlement will be automatically calculated and processed when you either:

  • complete an Individual tax return (IR3) return or
  • receive a personal tax summary and end-of-year repayment calculation from us in July.
When the write-off happens

You will see the credited interest amount appear on the statement we send you shortly after you complete an Individual tax return (IR3) or receive a personal tax summary and end-of-year repayment calculation from us.

What is written off

If half of your repayment obligation is less than the base interest calculated on your loan then the difference is your interest reduction.

An example of how a student loan base interest write-off is calculated.

Jamie earned $13,000 before tax for the 2007 income year (to 31 March 2007). Because his earnings are below the repayment threshold ($17,160) he has no minimum repayment obligation.

Below is the effect of his base interest write-off entitlement.

Base interest write-off entitlement
Loan balance as at 31 March 2007 $12,000
Write-off calculation:
Base interest charged for the year
(loan balance $12,000 x 3.8%)
$456
Interest calculation:
Total interest charged (12,000 x 6.9%) $828
Less the base interest write-off $456
Interest to be added to the loan principal $376
Loan balance calculation:
Loan balance at the beginning of the year
$12,000
Plus the interest calculated $376
Total loan balance as at 1 April 2007 $12,376

For more information see our student loan booklet Interest free student loans and interest write-offs (IR222).

 

 


Date published: 30 Mar 2005

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