Simplifying and aligning the Student Loan definitions of income
The Government wants to simplify the rules and definitions used in Student Loans so borrowers are certain about what they must pay and can easily make payments.
It is proposing to amend the definition of “income” used in Student Loans to align it more closely with the definition used for Working for Families, taking into account:
- an adjustment for undistributed income from close companies, including an “associated persons test”
- retirement savings contributions adjustment
- depreciation loss allowed on the sale of a building.
More flexibility for Inland Revenue to work with Student Loan borrowers
Student Loan borrowers have many different circumstances, and it is impossible to legislate for every different situation.
Sometimes applying the law to a particular circumstance doesn’t result in the right result for a borrower.
The Government acknowledges that a “one-size-fits-all” approach doesn’t work for all borrowers. It is proposing to give Inland Revenue the power to use its discretion when a borrower has unusual or exceptional circumstances to ensure the right result for that borrower.
In general it is expected that Inland Revenue would use discretion for the borrower’s benefit.