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Re: HECS debt and bonuses - final year

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I plan to pay off my HECS debt as at tax time 19-20. I will make a voluntary payment before indexation and then my employer payments will slightly more than cover the remainder of the debt when I lodge my tax. This should leave me with a small refund in circumstances with no further income.

 

However, in October I will receive a discretionary bonus that will push me in to the next repayment bracket (5.5% to 6%) when regarding my income for the entire year. This past year I got caught out as I had a bonus that did the same, and I'd had HECS taken out at the lower percentage for 11 months of the year, this left me with a tax debt, as not enough HECS had been deducted (I had also had issues with no allowances being made for HECS on a salary sacrifice arrangement).

 

What I want to know is if I will need to first pay a tax bill (accounting for the higher percentage that should have been taken out of my pay over the year) that would essentially be refunded immediately, or whether e-tax has the remaining balance of my HECS debt linked and therefore knows that even though a lower amount has been deduced than was strictly required according to the repayment rules, what has been deducted is enough to clear my debt.

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ATO Certified

Community Manager

Replies 0

Hi @contestablykati,

 

 

Great question! The second scenario that you described in your last paragraph is correct.

 

We keep track of your loan balance and if you have paid it off with the combination of your voluntary payment plus the amounts withdrawn from your pay then you wouldn't get a debt from having a lower percentage withdrawn from your pay.

 

Hope this helps! Thanks @NateATO

 

 

 

 

 

1 REPLY 1
Highlighted

Best answer

ATO Certified

Community Manager

Replies 0

Hi @contestablykati,

 

 

Great question! The second scenario that you described in your last paragraph is correct.

 

We keep track of your loan balance and if you have paid it off with the combination of your voluntary payment plus the amounts withdrawn from your pay then you wouldn't get a debt from having a lower percentage withdrawn from your pay.

 

Hope this helps! Thanks @NateATO