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Re: HECS-HELP repayments

Newbie

Views 434

Replies 1

I have a HECS-HELP debt and earn roughly the same amount each fortnight, but cannot determine how the amount that is taken from my fortnightly pay is calculated. The amount that is taken from my pay generally correlates with the amount earned, but in some instances, nothing is taken out, usually, this happens when I have earned significantly more than the average fortnight. How exactly is this calculated? Also, the amount that is deducted from each pay by my employer to contribute to the debt doesn't cover the amount I am required to pay back at tax time, even though my employer knows about my debt and that I salary sacrifice. Why would this be the case? I have since been making voluntary contributions to cover the balance, what happens if at tax time I have paid more than is required? Will I be refunded the difference? Or would I be better off putting the money aside each pay and make up the difference at tax time?

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hi @gds84,

 

How your employer shows the amount of compulsory student loan repayments taken from your gross pay can be different depending on employers.

 

Some may explicitly state an amount taken for your compulsory repayments, and some will just include this in your total tax withheld.

 

You can get an idea on what they should be withholding from you by using our tax tables.

 

If you have a salary sacrifice arrangement, you may want to ask them to withhold a little bit more to make sure they cover your compulsory repayments since your repayment income is different to your taxable income. If you haven't already, of course.

 

Voluntary contributions you make towards your student debt throughout the year won't impact any compulsory ones. This is because they're calculated and processed differently.

 

Your "invoice" for your compulsory repayment goes on your tax return and income tax account, not your student loan account where the resulting credit from the repayment eventually ends up - sounds more complicated than it is, promise.

 

If you're worried about having a compulsory repayment to make at the end of the year, you've got three options to help counteract it:

  • ask your employer to withhold more by completing an upwards variation
  • pay these extra amounts into your income tax account, not your student loan account (since that's where the compulsory repayment debit/invoice goes)
  • put the money aside in your own bank accounts (you earn some bank interest this way, but might be inclined to spend it, too)

 

Hope this helps! Smiley Happy

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @gds84,

 

How your employer shows the amount of compulsory student loan repayments taken from your gross pay can be different depending on employers.

 

Some may explicitly state an amount taken for your compulsory repayments, and some will just include this in your total tax withheld.

 

You can get an idea on what they should be withholding from you by using our tax tables.

 

If you have a salary sacrifice arrangement, you may want to ask them to withhold a little bit more to make sure they cover your compulsory repayments since your repayment income is different to your taxable income. If you haven't already, of course.

 

Voluntary contributions you make towards your student debt throughout the year won't impact any compulsory ones. This is because they're calculated and processed differently.

 

Your "invoice" for your compulsory repayment goes on your tax return and income tax account, not your student loan account where the resulting credit from the repayment eventually ends up - sounds more complicated than it is, promise.

 

If you're worried about having a compulsory repayment to make at the end of the year, you've got three options to help counteract it:

  • ask your employer to withhold more by completing an upwards variation
  • pay these extra amounts into your income tax account, not your student loan account (since that's where the compulsory repayment debit/invoice goes)
  • put the money aside in your own bank accounts (you earn some bank interest this way, but might be inclined to spend it, too)

 

Hope this helps! Smiley Happy