How interest is calculated, charged and compounded

2012 amendment inserts 'accrued' into the Student Loan Scheme Act 2011 to show the amount of interest calculated up to the date of the statement but not yet charged.

Sections 4, 135, 196(2) and schedule 7, clause 1AA

An amendment inserts a new term "accrued" into the Student Loan Scheme Act 2011 to reflect the current administrative practice for statements to show the amount of interest calculated up to the date of the statement but not yet charged.

For the 2012-13 tax year, interest on outstanding loan balances is calculated daily, and charged and compounded annually.

However, statements also show the amount of interest that has accrued to date. To ensure the legislation reflects the current administrative practice, a new term of interest "accrued" has been inserted into the Act to reflect the interest calculated up to the date of the statement.

The way interest on outstanding loan balances is charged and compounded will change from the 2013-14 tax year onwards and the term "accrued" will not be required. Therefore this change will only apply for a year.

Application date

The change applies for the 2012 tax year only.