Need help with HELP HECS Bills? Part TWO
In our previous blog, we discussed how a HECS-HELP debt is repaid and the kind of income that is assessed to determine whether you need to repay your HECS-HELP debt.
So how much HECS/HELP do you have to pay?
The amount you repay each year is a percentage of your repayment income. The percentage increases as your income increases, so the more you earn, the higher your repayment will be. For the 2017/18 year it starts at 4% of your repayment income, and for 2018/19 a starting point of 2%. The top rate is 8% of repayment income.
To avoid a nasty and expensive surprise at tax time, make sure you tell your employer you have a HECS/HELP debt
The repayment amount is calculated when you lodge your etax return and is part of your tax assessment for the year. There is no payment of the debt until the return is lodged. You may see HECS-help withholding on your payslip from your employer. This is them simply showing that they are withholding extra because of your debt. No payment is actually made at this stage. You need to make your employer aware that you have a debt through the tax file number declaration form or speaking to your payroll department. If you do not you may receive a nasty surprise at tax time.
Will I be charged interest on my HECS-help debt? There is no interest charged on HECS-help debts. However, the debt is subject to indexation in line with the consumer price index. This is an inflation thing. As a guide, the indexation rate used for the past few years has been between 1.5% and 1.9%.
If you want to get rid of the debt sooner, you can choose to make voluntary repayments. This can be done through the ATO at any time for any amount. Please note though, voluntary repayments are in addition to the calculated compulsory repayment. If you make a voluntary repayment during the year this does not reduce your compulsory repayment amount.
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Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.