Latest / Best of Business / Robyn Walker: Deloitte tax partner on the IRD cracking down on overseas student loan borrowers

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Robyn Walker: Deloitte tax partner on the IRD cracking down on overseas student loan borrowers · Best of Business

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  Speaker 2: So it turns out that the IID crackdown on the
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  Speaker 2: overseas student loan defaults is bearing fruit. IID has collected
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  Speaker 2: more than two hundred million dollars in student loan repayments
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  Speaker 2: in the past nine months, and that represents a forty
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  Speaker 2: three percent increase on the same period the previous year.
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  Speaker 2: Deloitte tax partner Robin Walker is with me on this. Hey, Robin, Hi,
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  Speaker 2: you surprised at how much they've managed to rake in.
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  Speaker 3: I think there's definitely plenty to be collected from overseas.
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  Speaker 3: So it is good to see that the investment that
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  Speaker 3: ID has made an increasing their focus on this area
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  Speaker 3: is actually paying dividends in terms of that increase in collections.
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  Speaker 2: What does this tell us? What do you reckon this
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  Speaker 2: is down to? Is this down to increased resources for
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  Speaker 2: IID or more direction for IID.
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  Speaker 3: I think it's a bit of both, right. So in
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  Speaker 3: budget last year, IOD was allocated I think twenty nine
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  Speaker 3: million dollars a year for the next four years to
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  Speaker 3: increase their audit activity and that was split across that
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  Speaker 3: was to be split across general audit work and also
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  Speaker 3: specifically in relation to student loan borrowers. So what they
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  Speaker 3: said last year was that they actually increased their FTEs
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  Speaker 3: working on student loans from twenty to forty five, so
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  Speaker 3: more than double the number of people focusing on on this.
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  Speaker 3: So I think they will have really ramped up their
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  Speaker 3: efforts to contact people to just give them a bit
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  Speaker 3: of a nudge along to say, hey, we know you're
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  Speaker 3: not in New Zealand, and we know you owe us
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  Speaker 3: money and we want you to start making some repayments,
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  Speaker 3: become compliant.
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  Speaker 2: Again, does it pay for itself? Like the amount that's
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  Speaker 2: being put the extra funding that's been put in to
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  Speaker 2: actually beef up this team is they are collecting much
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  Speaker 2: more than we're funding them.
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  Speaker 3: That's right, That's right. So normally on your when Iody
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  Speaker 3: puts more money into audits, the return is around you know,
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  Speaker 3: eight to nine dollars per dollar. And so I haven't
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  Speaker 3: done the math on this particular one, but it's definitely
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  Speaker 3: proving to be worthwhile.
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  Speaker 2: Now, Robin, I am so desperate to believe that this
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  Speaker 2: represents a change in attitude towards how much we respect
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  Speaker 2: the tax payer because historically we have just been so
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  Speaker 2: frivolous with money, right, loans like the COVID small business
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  Speaker 2: loans just given out unsecured. Does this mean what we're
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  Speaker 2: seeing here that we are prepared to be more respectful
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  Speaker 2: towards it or am I just hoping too much?
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  Speaker 3: Well, this is more about collecting the money that people. Oh,
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  Speaker 3: so obviously it's great for people to get an education
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  Speaker 3: and the student loan facilitates people being able to do that.
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  Speaker 3: And obviously we've got this real incentive for people to
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  Speaker 3: stay in New Zealand after the finish they're studying because
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  Speaker 3: if they stay here then it's interest free. But as
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  Speaker 3: soon as you leave New Zealand you suddenly start incurring interest.
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  Speaker 3: But the issue there is that it's a lot harder
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  Speaker 3: for you know, New Zealand to get its claws on
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  Speaker 3: those repayments as soon as somebody leaves New Zealand. And
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  Speaker 3: there's various statistics that are available, but it's quite it's
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  Speaker 3: quite telling that what IDY has available, generally New Zealand
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  Speaker 3: based borrowers are ninety five percent compliant, but overseas borrowers
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  Speaker 3: the compliance varies. Like back in twenty twelve, when the
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  Speaker 3: statistics started, about fifty percent of people were consistently compliant,
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  Speaker 3: and then it dropped down and I think the lowest
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  Speaker 3: I've seen is twenty twenty three, it was nineteen percent
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  Speaker 3: were compliant, and at the moment it's only thirty thirty
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  Speaker 3: percent of people are compliant as of the end of
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  Speaker 3: twenty twenty four. So yeah, there's definitely a lot of
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  Speaker 3: people overseas that could start repaying more of their loans.
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  Speaker 2: Interesting. Hey, Robin, always good to talk to you. Thank
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  Speaker 2: you so much, Robin Walker, Deloitte Tax Partner.
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