Hi ATO
Could you please advise what needs to be done to make early repayments and to avoid indexation on a portion of an outstanding HECS/HELP debt.
Let's say I finished uni in 2020 and have $50,000 remaining balance in the 2022-23 FY.
Let's assume my compulsory repayments based on my income for 2022-23 are $5,000.
Let's assume the indexation rate for 2022-23 will be 10% (not unthinkable if CPI continues to climb).
Let's assume I make a $10,000 non-deductible non-compulsory contribution by BPAY on 15 May 2023 (received by ATO well before the 1 June 2023 indexation date).
Will my indexation for the year be calculated based on the total outstanding $50,000? Or $40,000 (total less the non-compulsory contribution)? Or $35,000 (total less the compulsory and non-compulsory contributions)?
The guidance material from the ATO is confusing and suggests that early non-compulsory repayments do not affect application of indexation for a financial year unless you repay the full amount outstanding in that FY. E.g. a lump sum payment of $50,000 before 1 June 2023 in the above example.
Grateful for your guidance. I also strongly suggest updating your website page on this issue, particularly given the high CPI/indexation rates this FY a lot of savvy and deeply indebted young graduates will be looking to make early repayments this FY.
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