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SOP extends overseas student loan interest exemption, 30 September 2016

On 29 September 2016, Supplementary Order Paper No 229 was released proposing amendments to the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill.

The Supplementary Order Paper (SOP) proposes amendments to the Student Loan Scheme Act 2011 (the Act) to extend the current student loan interest exemption for borrowers studying overseas to include recipients of New Zealand Government-funded scholarships who are studying full-time overseas or undertaking approved internships. The amendments are as follows:

• Section 25 of the Act is to be amended to include two new situations in which the Commissioner may treat certain borrowers as being physically in New Zealand. These relate to overseas study and overseas internships. A borrower who is treated as being physically in New Zealand for a certain number of days is treated as New Zealand-based for the purposes of the Act and loan interest on the borrower's loan balance is reduced to zero for each day that the borrower is New Zealand-based.

Schedule 1 of the Act is to be amended to insert new provisions containing the conditions that must be satisfied by a borrower who makes an application under the new overseas study or overseas internships provisions in s 25 and to make consequential amendments.

To summarise, the conditions for overseas study are that the borrower must:

• receive a qualifying government-funded scholarship for the study, and

• undertake the study overseas on a full-time basis.

To summarise, the conditions for overseas internships are that the borrower must:

• receive a qualifying government-funded scholarship for the internship, and

• undertake the internship overseas on a full-time basis or, if combined with study, on a part-time basis.

Source:www.taxpolicy.ird.govt.nz

 

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