Interest write-offs if you study full-time overseas
Changes from 1 April 2007
From 1 April 2007 interest write-offs for full-time study overseas are not available. However, if you were studying full-time overseas prior to 1 April 2007 you can still apply for an interest write-off.
Full-time undergraduate study overseas
You may be eligible to have part, or all, of the base interest charged on your loan written off provided you meet the following criteria:
- You were studying full-time overseas prior to 1 April 2007.
- You were a non-resident for the period of the study.
- You have already negotiated a lower repayment obligation for the year (see "Find out more" below).
- You can provide evidence that you've been studying full-time outside New Zealand for the year.
- You didn't have a loan balance transferred from StudyLink during the year.
How it works
If you meet the criteria we'll write-off part, or all, of the base interest charged on your loan at the end of the tax year. Please note these interest write-offs are not available after the 2007 tax year (1 April 2006 - 31 March 2007).
Overseas study exemption
If you study full-time at under-graduate or post-graduate level (level 7 or above) overseas you may be eligible for an interest free student loan through an exemption from the 183-day requirement. See "Find out more" below, for details.
What you need to do
Send evidence of your full-time study with a written application requesting the interest write-off to:
Non-resident Centre
Inland Revenue
Private Bag 1932
Dunedin
Evidence
A letter from the university or educational institution you studied at that confirms your attendance and the start and end dates of your study.
Please do not send in a copy of your enrolment document as it only shows your intention to study - not that you actually did study.
What happens next:
We'll calculate whether you're entitled to an interest write-off of all or part of your base interest. You'll see the write-off appear on the statement we send you shortly after we've calculated it.
Example
Jenn's studying full time at Harvard University. She's made a written application to negotiate a nil non-resident repayment obligation for the 2007 tax year as she's not earning while studying. At the end of the year (31 March 2007) Jenn writes to request a base interest write-off.
Jenn's loan balance was $17,000 at the beginning of the tax year (1 April 2007).
Below is the effect of her base interest write-off.
| Negotiated non-resident repayment obligation to 31 March 2007 | $0 |
| Write-off calculation: | |
|---|---|
| Base interest charged for the year | $646 |
| Less the non-resident repayment obligation | $ 0 |
| Base interest written-off: | $646 |
| Interest calculation: | |
| Total interest charged (17,000 x 6.9% - the interest rate for the 2007 tax year) | $1,173 |
| Less the base interest write-off | $ 646 |
| Interest to be added to the loan | $527 |
Find out more:
Next steps
Date published: 04 Aug 2006
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