Skip to main content
Inland Revenue

Tax Policy

Interest-free loans for borrowers returning to New Zealand

(Clause 16)

Summary of proposed amendment

Borrowers who return to New Zealand will be allowed an interest-free loan if they fully repay their loan before they have been back in New Zealand for 183 days. The amendment corrects a technical error relating to the requirement to be in New Zealand for 183 days to qualify for an interest-free loan.

Application date

The change will apply from 1 April 2006.

Key features

New section 38AM will allow borrowers who return to New Zealand, and fully repay their loan before they have been back for 183 days, to be granted an interest-free loan from the date they return until the date of repayment.

Background

Borrowers who return to New Zealand and fully repay their loan before they have been back for 183 days technically cease to be borrowers and therefore cannot be allowed an interest-free loan from the date they returned to New Zealand to the date they repaid their loans. The bill corrects this technicality.