Interest-free loans for residents of realm countries
2010 legislation exempts residents of realm countries (Niue, the Cook Islands, Tokelau) from being in NZ to qualify for an interest-free student loan.
Sections 38AE, 38AIA and 65A of the Student Loan Scheme Act 1992
Borrowers in Realm countries may be granted an exemption from the requirement that they be present in New Zealand to qualify for an interest-free loan. This reflects the special relationship that Realm countries have with New Zealand and aims to encourage borrowers who want to remain in and make a contribution to these countries to do so.
Background
Interest-free loans were introduced from 1 April 2006 to encourage borrowers to remain in, or return to, New Zealand. Niue, the Cook Islands and Tokelau have a special relationship with New Zealand, which gives their residents an automatic right to reside and work here. Extending interest-free loans to borrowers residing in these countries recognises that special relationship.
Key features
The amendments add a further exemption to the requirement that borrowers reside in New Zealand to qualify for an interest-free loan. Borrowers will qualify for an interest-free loan if they are present in a Realm country - Niue, the Cook Islands or Tokelau - for 183 or more days. This is to encourage borrowers who want to live in and make a contribution to these countries to do so. As the Ross Dependency is also part of the Realm of New Zealand, borrowers who go there may also qualify for an interest-free loan.
Borrowers will need to apply for the exemption and provide Inland Revenue with whatever information is needed to establish their annual income and presence in one or more of these countries, and to pay their annual liability as it falls due.
Application date
The amendments apply from 1 April 2009.