As your Nelson based Chartered Accountants it’s our job to keep you abreast of changes that may affect you. Are you an overseas-based Student Loan borrower?
The government’s clampdown on overseas-based Student Loan borrowers has moved up another gear with John Key and Tony Abbott confirming an extension of information sharing arrangements during their annual leaders meeting late last month.
The arrangements are designed to give Inland Revenue more teeth to enforce the collection of Student Loan debt and follow on from a suite of tough measures introduced in last year’s budget, including potential arrest at the border for borrowers who persistently fail to meet repayment obligations.
Inland Revenue’s moves to beef up its capability across the Tasman drive off the fact that two-thirds of the nearly $700 million in delinquent non-resident Student Loan debt currently resides with Kiwis in Australia. The latest round of talks confirmed that tax officials in Australia would be able to provide up to date contact information to their colleagues in New Zealand.
Inland Revenue’s expanded reach means it has progressively initiated more legal proceedings in Australia in its own right. While this is to be expected some aspects which are less widely understood are that Inland Revenue also has the ability to use statutory powers granted to the ATO to enforce New Zealand court judgments for Student Loan debt. This may be done through a combination of charging orders on assets, compulsory deduction orders on salary payments, seizures of property and, in worst case scenarios, forced bankruptcy.
Because targeted funding and increased enforcement capabilities have made Inland Revenue more active and more effective in this space, the collection of Student Loan arrears is expected to remain a major focus for compliance and enforcement activities over the months and years ahead.
We note that arrangements similar to the trans-Tasman framework are also being made with other countries, including the UK, although they are in most respects works in progress.
Given the surge of activity in this area we recommend that anyone who needs further information about Student Loan obligations for non-resident borrowers consults the IRD website HERE.