Issuing an additional deduction rate or a special assessment to collect a significant under-deduction

2012 amendments to the student loan provisions enabling an additional deduction rate notice to be issued.

Sections 49(1)(a)(i), 50(2) and 51(1)(a)(i)

Three amendments have been made to the provisions enabling an additional deduction rate notice to be issued.

The first amendment clarifies that when a significant under-deduction has occurred because of an employer/PAYE intermediary or borrower error or omission, the Commissioner can issue an additional deduction rate notice for the recovery of the under-deducted amount.

The second provides that the Commissioner can also issue a special assessment to a borrower if the significant under-deduction occurred due to a deliberate action or omission by the borrower or employer/PAYE intermediary.

Previously there was a risk that the additional deduction rate and special assessment provisions would not apply in situations when the employer omitted or deliberately intended not to make a deduction, as this is not an employer "error". This was not the policy intent as the special assessment provisions should be available for all situations when significant under-deduction occurs.

The third amendment clarifies that when the Commissioner issues an additional deduction rate notice, that notice replaces all previous notices issued to that employer in relation to a borrower. This amendment would overcome the situation where a notice issued to one employer could replace all previous notices issued to all employers of the borrower, which was not intended.

Application date

The changes apply from 1 April 2012.