IRD Updates Student Loan Scheme Offences, Penalties and Interest

Offences and penalties associated with student loans have not changed since the Student Loan Scheme Act came into effect in 1992. This means that offences and penalties that apply to student loan borrowers have not kept up with the changes to offences and penalties that apply for not complying with tax obligations more generally.

The IRD have sought to rectify this by passing the Student Loan Scheme Act 2011 which seeks to align student loan offences and penalties with the offences and penalties imposed on tax obligations in general.

Key changes include the following:

  • Late filing penalties will be imposed for incomplete or absent declarations
  • The underestimation penalty that applies when a borrower has underestimated their repayment liability has been replaced with the ability to charge late payment interest
  • Penal repayment penalties that apply in the cases of evasion will be replaced with a student loan shortfall penalty for borrowers who have taken an incorrect tax position
  • Student loan shortfall penalties will be imposed at the same rate that would apply for taking an incorrect tax position
  • The previous student loan criminal offences “rules” relating to willfully or negligently failing to provide correct information will be replaced with criminal offences that apply for tax purposes
  • The IRD can enter into arrangements with borrowers for the repayment of outstanding amounts by way of instalments.

The majority of these changes take place from 1 April 2012.

2012-02-04T09:00:39+00:00February 4th, 2012|Accounting|