Have you or are you currently studying at university? If so, you likely have a HELP/HECS debt.
Notifying Your Employer
You are required to let your employer know that you have a HELP debt, which can be done via an Employment Declaration form when you start your job or at any time thereafter should you commence studying. Your employer will withhold extra tax to cover your end-of-financial year HELP repayment when your tax return is completed. For the 2023–24 financial year, your employer will start withholding HELP/HECS if your wages exceed $991 per week.
At the end of the year, when you complete your tax return, the ATO will calculate how much HELP will need to be paid based on your repayment income (RI). RI includes your taxable income plus any total net investment loss (including net rental losses), total reportable fringe benefits amounts, reportable super contributions, and exempt foreign employment income. The rates for the 2023–24 year are set out in the table below.
HELP is calculated based on your HRI, and the extra tax withheld by your employer is usually enough to cover the amount of HELP due.
Reportable Fringe Benefits
In some cases, if you receive reportable fringe benefits, it may be wise to ask your pay office to withhold extra PAYG Withholding to cover a potential shortfall in HELP at the end of the year.
Clients often ask if salary sacrificing and receiving a reportable fringe benefit is worth it, considering the possibility of paying extra off the HELP loan. My answer is yes—the tax savings from salary sacrificing will generally outweigh any extra payments on your HELP loan. Additionally, extra payments will help pay off your loan sooner.
Living Overseas
If you have been living overseas and have a Higher Education Loan Program (HELP) or Trade Support Loan (TSL) for the year ending 30 June 2024, you will be required to lodge a worldwide income report to the ATO via the MyGov website. If the amount in Australian dollars exceeds the thresholds below, you must make a compulsory payment off your loan.
Deceased Estate
A trustee or executor must lodge all outstanding tax returns on behalf of a deceased person up to the date of the person’s death. Any compulsory repayment included on a notice of assessment or overseas levy related to the period before the person’s death must be paid from the estate. The remainder of the debt is cancelled. Neither the deceased person’s family nor the trustee is required to pay the rest of the debt.
Loan Indexation Rate
The loan indexation (interest) rate for 2024 is 4.7%, down from 7.1% in 2023. This reduction in the indexation rate means that the amount of interest added to your HELP debt annually will be lower, which can help manage and reduce your overall debt more effectively.
New HELP Rates
From 1 July 2023, all study and training loans are covered by one set of thresholds and rates.
The hierarchy in which compulsory repayments are applied to study and training loans is:
- HELP
- VSL
- SFSS
- SSL
- ABSTUDY SSL
- TSL
If you have a HELP debt and an SFSS debt, once the HELP debt is paid off, the ATO will start applying the payment to the SFSS Debt.
| Repayment Income (RI) | Repayment Rate |
|---|---|
| Below $51,550 | Nil |
| $51,550 – $59,518 | 1.0% |
| $59,519 – $63,089 | 2.0% |
| $63,090 – $66,875 | 2.5% |
| $66,876 – $70,888 | 3.0% |
| $70,889 – $75,140 | 3.5% |
| $75,141 – $79,649 | 4.0% |
| $79,650 – $84,429 | 4.5% |
| $84,430 – $89,494 | 5.0% |
| $89,495 – $94,865 | 5.5% |
| $94,866 – $100,557 | 6.0% |
| $100,558 – $106,590 | 6.5% |
| $106,591 – $112,985 | 7.0% |
| $112,986 – $119,764 | 7.5% |
| $119,765 – $126,950 | 8.0% |
| $126,951 – $134,568 | 8.5% |
| $134,569 – $142,642 | 9.0% |
| $142,643 – $151,200 | 9.5% |
| $151,201 and above | 10% |
Example of How the Payment Works
For example, if your income is $60,000, you will be required to repay 2.0% as your income is between $59,519 – $63,089 per annum. 2.0% of $60,000 is $1,200. It is important to note that the repayment rate is subject to change each financial year, so it is best to check the relevant government website for the most up-to-date information.
By keeping these updated thresholds, rates, and indexation changes in mind, you can better manage your HELP/HECS debt and ensure compliance with ATO requirements for the 2024 financial year.
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