Author: RileyATO(Community Moderator)Community Moderator 22 July 2024
Hi @DanyCidd,
Let's try to clear this up a bit!
It sounds like you may not have been over the repayment threshold in earlier years to start making payments and your HECS debt increases each year on 1 June due to indexation.
The fortnightly contributions don't go directly to paying your HECS. They're just extra taxes that are included with all the taxes you normally pay. They're included in your notice of assessment (NOA) under Pay as you go (PAYG) credits and other entitlements. The reason your fortnightly contributions don't equal your compulsory repayment is because:
- your employer estimates how much extra tax they need to withhold to cover your compulsory repayment based on your earnings, and
- your compulsory repayment is worked out as a percentage of your income. For example, if you earn $60,000 your compulsory repayment for 2024 is 2% = $1,200.
When you lodge your return, you're telling us how much income you earned and therefore we can work out how much your compulsory repayment is. At that stage, your PAYG credits are applied to your HELP loan account to cover the compulsory repayment amount. If you've had more than enough tax withheld to cover all your liabilities (like HECS, Medicare levy, etc), that's when you get a tax refund.
Your HELP loan account shows all contributions made towards your HECS and your NOA shows all your taxes withheld.
The only way to pay your HELP loan off faster is by making voluntary contributions. However, these are on top of your compulsory repayments and won't reduce them.
We have a helpful guide to Paying your HECS HELP student loan that answers a lot of common questions and will give you more details. Check it out.
Hi RileyATO,
Thanks so much for responding to my question. I had no idea none of my contributions go towards my HECS, I've been paying extra through my work to pay it off faster.
I lived overseas and wasn't above the threshold until 2021, when I started paying, what I thought was, extra.
Am I understanding you right that, my tax refund will be any extra contributions I've paid towards my HECS through my tax, rather than doing the voluntary contributions manually outside of my work?
Meaning I've only been paying the minimum contributions the past three years?
Thanks,
Author: TamaraATO(Community Support)Community Support 25 July 2024
Hi @DanyCidd
Let's see if we can explain it more! 😀
My tax refund will be any extra contributions I've paid towards my HECS through my tax, rather than doing the voluntary contributions manually outside of my work?
Yes, and no. Your refund will be based the usual variety of things.
The extra tax taken out by your employer/yourself will go towards trying to make sure you don't have a Tax debt once you lodge your return, and the Compulsory repayment is taken.
Whatever is left (if any) will be returned to you in a refund.
Meaning I've only been paying the minimum contributions the past three years?
Yes. The repayments you've been making over the past years were your Compulsory repayments after doing your tax each year.
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