The interest rate for any specific day is a combination of two things: the base rate and the premium. For any specific day, these two things are combined and expressed as a daily effective rate.
The interest rate is calculated for a specific day by:
Daily effective rate = ((1+"per annum simple interest rate as %"/100)^(1/”Days in the year”)-1) x 100
The result is the interest rate expressed as a daily effective rate for the specific day.
The daily rate is applied to all days within a specific period. Prior to 1 January 2018 it is applicable from the second day of the month to the first day of the following month.
From 1 January 2018 onwards, the rate applies from the day after the Reserve Bank of New Zealand (RBNZ) publishes its new 6-monthly rate until the date the next rate is published (see When does the Reserve Bank release the 6-month term deposit rate?).
The base rate, which forms part of the interest rate, is the average of six observations (months) of the retail 6-month term deposit rate most recently published by the Reserve Bank of New Zealand on a specific day.
The 6-month term deposit rate is published every month by the Reserve Bank of New Zealand.
The 6-month term deposit rate is described on the RBNZ website(external link) as the advertised interest rate payable for a new 6-month term deposit of $10,000.
The 6-month term deposit rate is published monthly, usually 4-11 days following the end of the month.
The premium is a set percentage rate of 0.15% per annum, which is added to the annual base rate to form per annum simple interest rate, which is then converted into the daily effective rate.
This is the amount specified by the court in a money judgment, on which interest is to be awarded for a defined period.
When the court specifies the initial amount, it must include any amount paid by a liable party after commencement of a money claim, but before a judgment is given IF the judgment date is earlier than the date of that payment.
Judgment debt comprises two things:
A money judgment is a judgment or order made by a court in a civil proceeding that requires financial payment.
It also includes a judgment obtained by default or in accordance with a summary judgment procedure.
When a court is defining a period to award interest on, the start date is the date the period begins, which is either:
The end date or last day (as defined in the legislation) is defined as either:
Yes. The calculator allows you to add single payments or blocks of multiple payments during the debt period, to reduce the final amount owing at the end of the period and the amount of interest paid. The calculator will alert you if any such payments would result in overpayment.
You should talk to the judgment creditor about a refund and you may wish to seek legal advice about your options. Note that where an overpayment is shown by the calculator, the amount shown does not include interest on the overpayment (i.e. the calculator stops adding interest when the debt is repaid).
To enable calculations to be made in respect of debt periods with future end dates, the calculator applies the current daily effective rate to all future days for the next ten years.This rate can be considered accurate for future days until the date the next 6-month term deposit rate is published by RBNZ.
For days after this date, the current rate should be treated as indicative only and subject to change each month: see How is the interest rate applied to the debt?
Under current legislation, the Ministry is responsible for ensuring a calculator allows interest to be calculated:
The calculator must also comply with any prescribed rules or requirements governing the establishment or operation of the Internet site calculator.
An application can be made to the court either before the judgment is sealed, or later if permitted by the rules of the court, if the calculator has made an error when calculating interest. The court may make such orders as it considers fair, if the court is satisfied that:
When you are filing your application to the court (either a statement of claim or a counterclaim), you will need to provide the following information:
If you are claiming interest under special circumstances, for example in respect of a judgment expressed in foreign currency or under a contract, you must specify the amount or rate of interest claimed. In this type of case, the court may not award interest at a rate exceeding the amount or rate claimed.
No, you can’t be awarded interest under the new Act. You could be awarded interest, but it will be under the old legislation.
If you started your case in the High Court, the old section of the Judicature Act 1908, section 87 will still apply. If you started your case in the District Court, sections 62B and 65A of the District Courts Act 1947 will still apply.
Only cases commenced from 1 January 2018 can be awarded interest under the new Act. See question What do I have to do to be awarded interest by the court? for more information.
The Act can be viewed on Interest on Money Claims Act 2016(external link)