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TasM(Newbie)Newbie
29 Feb 2024

Is the HECS repayment amount held by the employer a pre-tax or post-tax amount?


I am considering taking out a new loan that's a lower rate than the HECS indexation of ~7.1% to pay off HECS debt in full, and then continue making after-tax repayments to the new loan instead of the HECS loan.


Wondering if I will be better off closing the HECS loan with the proceedes of the new loan or to continue paying HECS loan from my salary, as its pre-tax amount (i.e. gives me a tax advantage)

13,595 views
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13,595 views
1 replies

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Most helpful reply

ExMember22(Champion)Champion
29 Feb 2024

It's not really either. It is in effect an additional amount your employer must withhold from your gross pay if you have a HELP loan. It is calculated on your gross salary (before tax), but it does not reduce your gross salary for the purposes of establishing your basic income tax liability. These additional amounts your employer withholds throughout the year don't actually get applied to your HELP loan until you lodge your annual tax return for that year.

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Most helpful reply

ExMember22(Champion)Champion
29 Feb 2024

It's not really either. It is in effect an additional amount your employer must withhold from your gross pay if you have a HELP loan. It is calculated on your gross salary (before tax), but it does not reduce your gross salary for the purposes of establishing your basic income tax liability. These additional amounts your employer withholds throughout the year don't actually get applied to your HELP loan until you lodge your annual tax return for that year.

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HECS repayment amount held by employer pre or post tax amount? | ATO Community