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Re: Compulsory HECS Debt not withheld

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Initiate

Views 797

Replies 5

Hello,

I have fallen into the tax bracket that requires me to make compulsory HECS contributions. I have not notified my employer to withhold extra tax to account for my compulsory payments. Instead I have used the calculator to determine the amount I would owe each month based on the percentage/income bracket. I have been making the payments monthly to cover the total percentage of debt owed.

Will my voluntary payments be considered as compulsory payments if they meet the amount of debt owed for the tax year? Or will I be slapped with debt notice from the ATO when I lodge my tax return?
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Most helpful response

Taxicorn

Replies 0

@Jessweb 

The money taken out, as extra tax, is not used to immediately repay your debt but held as a credit by the ATO until you lodge your tax return at the end of the financial year.

 

Once your correct taxable income and repayment income is known any credit that is not needed to pay back any additional tax payable or government debts will then be used to repay the debt. Any surplus or shortfall will then be credit/debited to you.

Your extra payments would be seen as voluntary payments and your debt would reduce but your liability to repay would not as your repayment income would still exceed the limit.

If you 100% believe that your employer would not withhold extra tax (you can check) then you would be best not to repay the debt until you lodge your tax return and then pay the calculated amount back.

 

The way you are doing it will reduce the debt but not your obligation to repay it when you lodge your tax return.

 

 

 

 

5 REPLIES 5
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Devotee

Replies 3

If you are over the threshold amount they will be consided compulsory payments.

 

If you used the calculator and are withholding each month are you just putting this money aside into a bank account? Or where have you been making the payments?

 

The tax office won't know you've gone over the threshold until you lodge your tax return. So if you have been making the compulsory payments into your HELP account / have the moeny saved somewhere to pay your tax bill then you shouldnt have a debt. Any reason you decided not to ask your employer to withhold? 

 

 

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Initiate

Replies 2

Thanks for responding!

I’ve been making the payments in monthly instalments to my HECS debt account, so I can see the deductions being made. I was wondering if these will still be considered voluntary as opposed to compulsory. Say I pay X amount to cover what I owe for the year, will they still charge me that amount again upon tax return?

As for asking my employee, I regrettably don’t trust them to make these deductions oh my behalf.
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Devotee

Replies 1

Oh good question! 

 

Sorry I misunderstood. I'm not entirely sure, hopefully the ATO ( @NateATO @KylieATO ) can clear it up for you.

 

I was looking at the website and found this - Compulsory repayments are made through your tax return. You can also make voluntary repayments at any time to reduce your loan balance. https://www.ato.gov.au/Individuals/Study-and-training-support-loans/When-must-you-repay-your-loan/ 

 

Your payments during the year might be deemed as voluntary payments... best to get clarification so don't end up paying twice!

 

That's a shame about your employer. 

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Most helpful response

Taxicorn

Replies 0

@Jessweb 

The money taken out, as extra tax, is not used to immediately repay your debt but held as a credit by the ATO until you lodge your tax return at the end of the financial year.

 

Once your correct taxable income and repayment income is known any credit that is not needed to pay back any additional tax payable or government debts will then be used to repay the debt. Any surplus or shortfall will then be credit/debited to you.

Your extra payments would be seen as voluntary payments and your debt would reduce but your liability to repay would not as your repayment income would still exceed the limit.

If you 100% believe that your employer would not withhold extra tax (you can check) then you would be best not to repay the debt until you lodge your tax return and then pay the calculated amount back.

 

The way you are doing it will reduce the debt but not your obligation to repay it when you lodge your tax return.

 

 

 

 

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ATO Certified Response

Community Manager

Replies 0

@Jessweb if you're making voluntary repayments, you may still have to make a compulsory payment if you still have a debt and your repayment income is above the threshold.