Annual Report 2007: Part two - Key business results

Services for social support programmes

Student loans

Inland Revenue's role in administering the student loan scheme is to collect repayments from borrowers.

Repayments

This year we received $486.5 million in loan repayments, almost exactly the same as last year. Since the introduction of the interest-free loan policy, repayments received outside the PAYE system have dropped, but collections through employer deductions have increased. The increase in payments through the PAYE system is consistent with the high level of employment in the economy at present and the continuation of the trend in previous years, as more borrowers complete their studies and join the workforce.

The payments that come in outside the PAYE system are from borrowers overseas, self-employed people, and from borrowers making extra repayments on their loan.

Size of the loan portfolio

During 2006-07 the total loan borrowings under the scheme increased from $7.4 billion to $8.4 billion. There were 11,951 borrowers who repaid their loan this year, compared to 16,287 last year^[12].

As at 30 June 2007:

• there were 499,259 student loan borrowers, compared to 470,507 last year
• the median value of a student loan was $11,087, compared to $10,652 last year
• overseas-based borrowers^[13] were about 11.5% of all borrowers.

Figure 15 -
Total student loan balance and total amount repaid

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Changes to the student loan scheme

Major changes have been made to the student loan scheme over the last two years (see Figure 16).

For more detailed information see the Student Loan Scheme Annual Report, a joint publication of the Ministry of Social Development, the Ministry of Education and Inland Revenue.

The report is available at www.educationcounts.edcentre.govt.nz/publications

Working for Families Tax Credits

The Working for Families programme has increased the number of New Zealand families receiving tax credits. This year, we continued our focus on improving the way we deliver services to customers and on ensuring that customers receive their correct entitlements. We also started to use:

• the Families Service Initiative - a "one-stop shop" for both Working for Families Tax Credits and child support customers, introduced in November 2006. We also continue to work closely with Ministry of Social Development to improve services to our mutual customers.
• Language Line - a telephone-based interpreter service for customers whose first or preferred language is not English, was made available to Working for Families Tax Credits customers in November 2006. This service has been available to child support customers since 2005 and the service was extended to all Inland Revenue customers in August 2007.
• an online service - enabling customers to view and update their personal information. The enhanced registration process will make it easier for customers to register with us for an online services account.

Details of customers receiving regular payments from Inland Revenue are shown in Figure 17.

Child support

Child support^[15] serves as an intermediary for approximately 174,000 paying parents and 177,000^[16] custodians, who support an estimated 280,500 children.

Since the scheme began in 1992, we have collected 88.5 % of the total of $3.58 billion child support assessed. Our collection rates compare favourably with those of other countries^[17].

This year we collected $346.6 million in child support payments, compared to $341.3 million for 2005-06. This figure includes assessments and penalties collected for both this year and any previous years, less any refunds. Of the amount collected, 22% was for previous year assessment arrears and penalties.

Figure 19 -
Child support collected and assessed (current year)

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This year, we distributed $173.0 million of child support to custodians and $173.6 million to the Crown to offset benefits paid to custodians (through the Ministry of Social Development). Payments to the Crown include penalties as well as assessments paid.

Paid parental leave

Paid parental leave is a payment for parents who take leave from their job or business to care for a new baby or adopted child. Inland Revenue distributes paid parental leave on behalf of the Department of Labour.

This year we distributed $121 million in paid parental leave to 25,373 parents. From 1 July 2006, self-employed mothers became eligible for paid parental leave. They can transfer this leave to their eligible partners in the same way as employees. This year, 1,827 self-employed mothers received paid parental leave.

The maximum amount of paid parental leave is inflation-indexed each year. The maximum weekly rate increased from $357.30 to $372.12 from July 2006. The average payment this year was $359.42 per week and 87% of applicants received the maximum rate.

¹² As at the end of each year. Student loan accounts can be finalised after the end of the fiscal year, so the number of loans repaid each year will increase after 30 June. The number of loans repaid for 2004-05 was 16,287 as at 30 June 2006 and 20,713 as at 30 June 2007.

¹³ Overseas-based borrowers are generally borrowers who have been absent from New Zealand for a period of 184 consecutive days or more.

¹⁴ "Regular payments" means payments made on a weekly or fortnightly basis. It does not include customers who choose to receive their payment as a lump sum.

¹⁵ Child support is money paid by parents not living with their children, to help financially support those children.

¹⁶ Includes Australian Child Support Agency (ACSA) customers.

¹⁷ Child support schemes - Australia and comparisons (Child Support Agency, Australia, 2006).

Other pages in: Part two - Key business results

• Tax revenue
• Managing our debt portfolio
• Revenue identified through audits

Date published: 23 Oct 2007

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