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Tax return HECS

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Hi! I'm trying to lodge my tax return, but it wants to deduct 2% of my salary for HELP load repayment, however, in the fincancial year, I already paid surpluss to the required amount as it is deducted from my pay. I have confirmed on MyGov that these payments have been processed, so how can I resolve this issue and get the correct tax refund?

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ATO Certified

Community Manager

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Hi @DavidSpiller27 

 

I might need some more information to better understand your question. Are you saying that you had extra tax withheld from your pay to cover more of your HELP debt? Or did you make voluntary repayments directly to your HELP debt? 

 

Some points to note about HELP debts:

  • if you have an outstanding HELP debt, when you lodge your tax return a compulsory repayment amount will be calculated and included in your assessment. If you have told your employer that you have a HELP debt, they should have withheld money throughout the year from your pay to cover the anticipated debt.  See here for the HELP thresholds and rates for 2018-19.
  • a compulsory repayment will be calculated as part of your income tax assessment irrelevant of the voluntary payments you have made directly to your account throughout the year. If you have a HELP debt and earn over the threshold you will be asked to pay a compulsory repayment.
  • when your employer withholds money from your pay throughout the year to cover your anticipated HELP debt, remember it will not be applied to your actually HELP account as a payment until you lodge your tax return. This is because we are unsure what your income will be until your final return is lodged and we use this figure to calculate your compulsory repayment amount.
  • If you have fully paid out your HELP debt (that is, no money is owing at all anymore), any extra money your employer withheld to cover your anticipated HELP repayment will be either used to offset any tax owed or potentially refunded to you.

 

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Best answer

ATO Certified

Community Manager

Replies 2

Hi @DavidSpiller27 

 

I might need some more information to better understand your question. Are you saying that you had extra tax withheld from your pay to cover more of your HELP debt? Or did you make voluntary repayments directly to your HELP debt? 

 

Some points to note about HELP debts:

  • if you have an outstanding HELP debt, when you lodge your tax return a compulsory repayment amount will be calculated and included in your assessment. If you have told your employer that you have a HELP debt, they should have withheld money throughout the year from your pay to cover the anticipated debt.  See here for the HELP thresholds and rates for 2018-19.
  • a compulsory repayment will be calculated as part of your income tax assessment irrelevant of the voluntary payments you have made directly to your account throughout the year. If you have a HELP debt and earn over the threshold you will be asked to pay a compulsory repayment.
  • when your employer withholds money from your pay throughout the year to cover your anticipated HELP debt, remember it will not be applied to your actually HELP account as a payment until you lodge your tax return. This is because we are unsure what your income will be until your final return is lodged and we use this figure to calculate your compulsory repayment amount.
  • If you have fully paid out your HELP debt (that is, no money is owing at all anymore), any extra money your employer withheld to cover your anticipated HELP repayment will be either used to offset any tax owed or potentially refunded to you.

 

Newbie

Replies 1

Sure, I earned $56,574.89 in the last financial year. My employer deducts money every fortnight for HECS (they have done it I have checked the progress on Mygov). The amount I am suposed to pay is 1414 (2.5% X $56,574.89), the amount taken out by my employer was $1430. Upon applying for my return I noticed the calculation was 1125 less than I had calculated, I checked the reason and with the medicare levy it had included a HECS replayment on $1125, given that I have already paid surpus to that amount I do not understand why this happening. 

 

Can you please explain it to me or provide me a number for which I can acvtually get in touch with someone, I have been trying to call for two days and everytime I get through the process of verifying who I am, I get a notice saying you ar eat capacity and the call is terminated, which I'll add is absolutely infuriating. 

ATO Certified

TaxTime Support

Replies 0

Hi @DavidSpiller27,

 

Thanks for the additional information!

 

Assuming that the $56,574.89 is your repayment income, and not just your taxable income, then the compulsory repayment would be 2% of your income for 2018-19 financial year.

 

The Medicare Levy is another 2% of your income, so you would have two amounts of approximately $1,131 on your Notice of Assessment, one for Medicare, and the other for the compulsory repayment.

 

When your employer withholds tax from your income, they should be including amounts for both HELP and Medicare liabilities, in order to ensure that you are paying the correct amount.

 

Here is an example using the figures you have given:

 

Taxable/Repayment income: $56,574

Tax payable on $56,574: $9,933

Medicare Levy: $1,131

HELP compulsory repayment: $1,131

Total tax obligation: $12,195

 

In this example, the amount of tax withheld by your employer would need to be at least $12,195 for the year in order to cover your obligations and ensure that you do not have a debt.

 

If you are eligible for any tax offsets, they would reduce the actual tax payable, but not the Medicare Levy or the compulsory repayment.

 

Hope this helps,

 

Rachael B.

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