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Student Loan Scheme Act 2011

Interest, relief, penalties and offences, rights of objection, and rights to challenge - Interest - Late payment interest

141A: Late payment interest reduced if deduction or extraction notice applies

You could also call this:

“You pay less extra money when the government takes some of what you're owed to pay your student loan”

If you have a student loan and you haven’t paid some of the money you owe, you might have to pay extra money called late payment interest. This is explained in section 139 of the law.

Sometimes, the government (called ‘the Commissioner’) can tell someone who owes you money (like your employer) to take some of that money and give it to the government instead of you. This is to help pay off your unpaid student loan. They do this using a rule called section 157 of the Tax Administration Act 1994.

When this happens, you still have to pay late payment interest on the money you haven’t paid back yet. But the government will charge you less interest than usual. Instead of charging you the base interest rate plus 4%, they will only charge you the base interest rate plus 2%.

This lower interest rate only applies for the days when the government is getting money from someone who owes you money. If they stop doing this, the interest rate will go back to the higher amount.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5991307.

Topics:
Education and learning > Higher education Money and consumer rights > Banking and loans
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141: Late payment interest reduced if instalment arrangement complied with, or

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Part 4 Interest, relief, penalties and offences, rights of objection, and rights to challenge
Interest: Late payment interest

141ALate payment interest reduced if deduction or extraction notice applies

  1. This section applies if—

  2. a borrower is liable to pay late payment interest on an unpaid amount under section 139; and
    1. the Commissioner has exercised powers available under section 157 of the Tax Administration Act 1994 to require any person to deduct or extract any amount from any moneys payable by that person to the borrower.

      1. For a month during which any unpaid amount remains unpaid and the Commissioner has received tax withheld or deducted in accordance with the requirements of a notice issued under section 157 of the Tax Administration Act 1994 (a deduction or extraction notice), any late payment interest that the borrower is liable to pay on the unpaid amount must be calculated as if, in the definition of late payment interest rate in section 139(3), the reference to base interest rate plus 4% were a reference to base interest rate plus 2%.

      2. However, subsection (2) applies only to the days in a month during which a deduction or extraction notice is in effect.

      Notes
      • Section 141A: inserted (with effect on 1 April 2013), on , by section 7 of the Student Loan Scheme Amendment Act 2014 (2014 No 6).