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HECS - withheld payments paid off debt during financial year

Newbie

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Replies 7

Hi all, for this question, I am using hypothetical amounts to make it simpler to explain. The ATO website is vague on this.

 

I currently have a HECS debt balance of $4,000. Last financial year (i.e. 2017/18), the amount my employer withheld for HECS was $10,000. I am expecting that at the end of the 2018/19 financial year, my employer will also have withheld for HECS a total of $10,000. This results in a $6,000 "overpayment" (i.e. employer will end up withholding too much).

 

 

Summary version:

HECS = $4,000

Employer withholding estimate for 2018/19 (based on 2017/18 figure) = $10,000

Employer over-withheld estimate = $6,000

BUT

Employer withholding at February 2019 = $4000, which equals remaining HECS debt.

 

I would like to stop my employer withholding in February 2019. Can I do this? If I complete a Withholding declaration form advising my employer to stop withholding, then I am filling out the form incorrectly as 6a) states:

Do you have a Higher Education Loan Program (HELP), Student Start-up Loan (SSL) or Trade Support Loan (TSL) debt?

 

The answer is YES I have one but I want my employer to stop withholding because when my 2018/19 tax is processed, the amounts the employer has already withheld will cover my remaining HECS debt in full. Am I allowed to say NO to 6a if I am expecting my employer's already withheld amounts to FULLY pay off the remaining HECS debt?

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Most helpful response

Former Community Support

Replies 2

Hi @acollie,

 

Welcome to our Community!

 

We've checked in with our technical experts, who've advised that when you've calculated you've had enough compulsory HECS repayments withheld, you can complete a Medicare levy variation declaration form. This will advise your employer you don't need to have any compulsory repayments withheld from your pay.

 

You can find information about compulsory repayments and the Medicare levy variation declaration form on our website. You can also check if you have further questions you can phone us on 13 28 61 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks for the additional feedback - we'll pass it on to the relevant area.

 

Thanks, JodieH.

7 REPLIES 7

Taxicorn

Replies 6

The money taken out 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.


Repayment income is calculated from the amounts given on your income tax return for:
your taxable income;
reportable fringe benefits (reported on your payment summary);
total net investment loss (which includes net rental loss);
reportable super contributions; and
exempt foreign employment income amounts.

 

In answer to your question is YES I would do it that way but make sure that your figures are correct else you may end up with a surplus amount to pay towards HECS.

 

If you have a HECS debt and intend to pay it off yourself in installments then why would you give the ATO an interest free loan? In this case I would suggest answering NO as you don't want extra money taken out for nothing.

 

The ATO suggests answering YES as most don't pay in installments and will be upset when faced with a huge bill at tax time.

 

Newbie

Replies 5

Thanks for the response macfanboy.

 

I'm already aware that it is not "paid" but simply "withheld" until my tax return is lodged and processed. By the end of the 2018/19 financial year, my employer will have withheld more than enough to cover my remaining HECS debt in full plus any income tax I owe. I'd like to stop my employer from withhholding more now - I'd prefer that money in my pocket now rather than wait until the ATO has processed my tax return and sent me the (large) refund.

 

The Withholding declaration form states I declare that the information I have given on this form is true and correct.

 

If I answer NO to having a HECS debt (in 6a) in order to stop my employer from withholding more, then I am providing "false" information since technically, I have a HECS debt. I do not wish to lie on the form - I just want my employer to stop withholding.

Taxicorn

Replies 4

Unfortunately if you have a HECs debt then you have to answer truthfully....however many people don't...and pay it when they lodge their tax return.

 

The ATO like to have that extra money incase you end up with a tax debt and they can use it/part of it to pay it back immediately.

 

Newbie

Replies 3

Thanks macfanboy. 

 

Feedback to ATO: It would be useful if the ATO had another form to simply allow the employer to stop extra withholding, rather than have to declare that there is no HECS debt. That money being withheld could be put to more urgent matters eg other debts that actually charge interest.

Most helpful response

Former Community Support

Replies 2

Hi @acollie,

 

Welcome to our Community!

 

We've checked in with our technical experts, who've advised that when you've calculated you've had enough compulsory HECS repayments withheld, you can complete a Medicare levy variation declaration form. This will advise your employer you don't need to have any compulsory repayments withheld from your pay.

 

You can find information about compulsory repayments and the Medicare levy variation declaration form on our website. You can also check if you have further questions you can phone us on 13 28 61 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks for the additional feedback - we'll pass it on to the relevant area.

 

Thanks, JodieH.

I'm new

Replies 1

Umm, do you mean a Withholding Declaration?  Not sure what Medicare has to do with this. 

ATO Community Support

Replies 0

Hi @AndrewK2020,

 

If you are requesting your employer adjust the amounts of tax withheld then you can complete a Medicare levy variation form. This form is also used to claim an exemption from compulsory Higher Education Loan Program (HELP), VET Student Loan (VSL), Student Start-up Loan (SSL), Financial Supplement (FS) or Trade Support Loan (TSL) repayments.

 

You may use the link from the previous post.

 

All the best.