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Single Touch Payroll report HECS debt

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Initiate

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Replies 8

Does STP report the hecs debt to the ATO. How do you pay for the amount of hecs being withheld from the employee ?

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Devotee Registered Tax Practitioner

Replies 7

HECS is reported the same way it was before STP.

ie not through STP.

You withhold according to the withholding table (software should do this) having ticked the HECS debt box and it is withheld and the ATO do the rest

8 REPLIES 8
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Best answer

Devotee Registered Tax Practitioner

Replies 7

HECS is reported the same way it was before STP.

ie not through STP.

You withhold according to the withholding table (software should do this) having ticked the HECS debt box and it is withheld and the ATO do the rest

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Newbie

Replies 6

Hi Matthew

Could you please give me some more details on how this works?

"You withhold according to the withholding table (software should do this) having ticked the HECS debt box and it is withheld and the ATO do the rest"

Which software are you referring to? My employer says I need to advise them of the amount to withhold but I'm not 100% confident to make the calculation myself? Can you recommend something?

Thanks

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ATO Certified

Community Support

Replies 5

Hi @THop,

 

To expand on what @Matthew-at-ICB advised I'll provide a little more detail.

 

When you commence a job you complete the TFN declaration. If you have a HELP (HECS) debt you are required to select Yes to question 10:

 

"Do you have a Higher Education Loan Program (HELP), VET Student Loan (VSL), Financial Supplement (FS), Student Start up Loan (SSL) or Trade Support Loan (TSL) debt?"

 

By selecting Yes your payer (employer) will withhold additional amounts to cover any compulsory repayment that may be raised on your notice of assessment.

 

Your HELP debt is not reported through STP and additional amounts withheld due to a HELP debt aren't apportioned. Your employer will report tax withheld (including additional amounts for HELP) through STP in line with your pay cycle.

 

Back when you applied for your HELP loan through your education provider (e.g. university) they sent us the HELP loan debt information. A HELP account was created on your ATO account to have the loan repaid through our tax system.

 

When you lodge your tax return we receive the full information regarding your income, tax withheld, deductions, offsets etc. From there we assess if there is a compulsory HELP repayment required and if there is we allocate the credit/ payment to your HELP account. If you've had a compulsory payment towards your HELP loan it will appear on your Notice of Assessment (NOA).

 

It is your employer's obligation to withhold the correct amount from your pay based upon what you have completed on the TFN declaration.

 

Most employers will use payroll or accounting software that automatically calculates the amount to withhold taking in to account if you've indicated you have a HELP loan debt, if you've claimed the tax-free threshold etc.

 

Here's links to the Fortnightly tax table and the Study and training support loans fortnightly tax table for reference.

 

Also Tax tables 

 

Your employer needs to calculate the amount to withhold. It's not your responsibility to advise them. If you've completed the TFN declaration and indicated yes to having a HELP loan debt you've met your requirement.

 

I hope this helps,

JasonT

 

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Initiate

Replies 1

I’m going to be an employer so was wondering how it works and how it gets paid back to the ATO? Does it get included with the PAYG payments?
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Community Support

Replies 0

Hi @bunify

 

Thanks for your question.

 

The short answer is yes. The additional amount that you are required to withhold from your employee's pay is part of your PAYG withholding obligations. You send it to us with the rest of your PAYG withholding payment.

 

For more information about PAYG withholding and payments to employees, have a look at our website.

 

Hope this helps.

 

Thanks,

 

ChrisR

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Newbie

Replies 2

Thanks Jason, that's great information! 

When you say "Your employer needs to calculate the amount to withhold.", could you direct me to an ATO ruling or such that spells that out at all? My payroll said to me that they are unable to provide tax advice, which I understand, but if I'm enquiring about my HECS repayments after a remuneration increase (slight!) they should at least be able to confirm the amount that they have calculated to withhold rather than me directing them to withhold a certain amount?

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ATO Certified

Community Support

Replies 1

Hi @THop

 

Thanks for your reply.

 

You must start making compulsory repayments against your study or training support loan when your repayment income exceeds the minimum repayment threshold.

 

For more information about when you must repay your loan, check out our website.

 

Your employer is required to withhold an additional amount from your pay in preparation for when you submit your tax return. The amount that they are required to withhold depends on how much your pay is.

 

For example, if you are paid fortnightly and your gross (before-tax) payment amount is $3,000, assuming that you are claiming the tax-free threshold your employer will be required to withhold $862. This amount is based on tax of $712 plus an additional $150 due to your study and training loan debt.

 

You can find out how your employer determines these amounts by referring to the tax tables that JasonT has provided or you can use the tax withheld for individuals calculator. The calculator can be found on the tax withheld calculators page.

 

The study and training loan withholding amounts in the tax table and calculator are based on the study and training loan repayment thresholds and rates which you can look at on our website.

 

Using the same example, if you are paid $3,000 a fortnight, this works out to be $78,000 a year ($3,000 x 26). According to this year's repayment income thresholds and rates table, if your repayment income is $78,000, your repayment rate is 5%. This means that your compulsory repayment will be $3,900. Divide that by 26 and you get $150.

 

Hope this helps.

 

Thanks,

 

ChrisR

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Newbie

Replies 0

Thanks Chris, I'm clarifying this with my employer now. I really appreciate both you and Jason providing such helpful information! The links were great and have given me much more confidence in relation to my tax position.