Kiwis living in Australia with overdue repayments on student debts are being warned that they could be arrested on returning to New Zealand.
Under new laws passed earlier this year, New Zealand's Inland Revenue - their Tax Office - can seek an arrest warrant for Kiwis who arrive in New Zealand if all other efforts to persuade the borrower to make repayments have failed.
The tougher line on recovering student debts anticipates a likely increase in defaults as new obligations on overseas-based borrowers to repay loans more quickly takes effect.
Overseas-based borrowers are responsible for almost 90 per cent of all overdue student loan repayments, which amounts to about $NZ683 million ($A614 million).
One-third of overseas-based borrowers are based in Australia. Under the change for overseas-based borrowers, interest is charged on the loan and the annual repayment obligation is a fixed amount based on the size of the loan, not based on income as it is for domestic borrowers.
Paula Knaap, collections manager with the Inland Revenue, says: "We are asking all Kiwis living in Australia to connect with us to ensure you have all the information you need under the new rules, and to make sure you are meeting your repayment obligations".
She says it is never too late for any borrower to contact Inland Revenue so that a repayment plan can be worked out. Overseas-based borrowers are required to make two repayments each year towards student loan debt. These are due on September 30 and March 31.
They can either make two lump sum payments or make regular payments throughout the year, provided they meet the minimum repayments.
Inland Revenue has expanded its PayWay service so borrowers in Australia can set up direct debits for their repayments.
This means they can pay-back their loans in Australian dollars from an Australian bank account. Inland Revenue bears the cost of currency conversion.
For more information visit www.ird.govt.nz/obbsl-free.
