Understanding Your HECS-Help Debt
- HECS-HELP is a loan scheme that assists eligible Commonwealth supported students to pay their tuition fees.
- The Australian Government pays the amount of the loan directly to your education institution.
- Loan repayments are made through the Australian taxation system
- Voluntary repayments can be made at any time regardless of income.
- A HECS-HELP debt is incurred immediately after the census date for each course of study for which students have received HELP assistance
- Repaying your HECS-HELP debt commences once your Help Repayment Income (HRI) is above the minimum repayment threshold for compulsory repayment.
- The HRI thresholds are adjusted each year.
- The minimum HRI threshold to make a loan repayment for 2014-15 is $53,344. Where income exceeds this threshold, a compulsory repayment of 4% of the HELP repayment income is raised in the individual’s income tax assessment.
- A new minimum repayment threshold for HELP will be introduced from the 2016-17 income year (1 July 2016 30 June 2017). In that year, individuals will commence repaying their HELP debt once their HELP repayment income reaches an estimated $50,638. A 2% repayment rate will apply for those with HELP repayment incomes above this new threshold, up to the existing threshold. The other HELP repayment rates will not change.
What is Help Repayment Income?
- Taxable income for an income year, plus
- Total net investment loss, plus
- Any total reportable fringe benefits amounts shown on the PAYG payment summary
- Reportable super contributions, and
- Any exempt foreign employment income from the current income year.
How to Repay Your HECS-Help Debt Through the Taxation System
- When commencing any new job make sure you tick the box on your TAX DECLARATION FORM advising your employer that you have a HECS-HELP debt
- Your employer will withhold additional tax from each pay to cover your estimated HECS-HELP debt liability based on your annual HRI.
- Your employer only withholds additional tax based on the Income THEY pay you.
- Your employer does not send this additional tax withheld as HELP debt repayment to the ATO.
- The amount of HECS-HELP debt repayment each year is based on your HRI after you lodge you Tax Return
- The additional tax withheld by your employer should cover this repayment
Tax Tips for Repaying Your Help Debt
- Keeping receipts and reducing your HRI can mean that you could reduce your compulsory annual repayment amount. It is important to keep all work related receipts to be tax effective and maximise your refund.
- If you are working more than one job, each employer will only withhold additional tax to cover your HECS-HELP debt based on the Income they pay you. If your combined income from multiple employers is over the minimum repayment threshold, you will still be liable to make a repayment towards your HECS-HELP debt when you lodge your tax return.