Hi all,
I have a question.
Currently, i am paying a HECS amount every month deducted from my pay. This year i have had additional HECS deducted from my tax return being a big amount 2k+ even though im paying a good amount every month.
As far as im aware, it should be about 4% of your income. Do i have a right to contact them about it or it has to be paid this way?
Cheers
I think payroll is deducting the right amount but im not sure why im required to pay it again come tax time, its like im paying double.
your not, and you dont,.. they dono how much you earn, if you earn alot in the next 6 months you will pay a higher % on MORE, if you lose ur job and dont work, then you have over paid and ull get some back… as the % is lower and u earned less than billed for…
it will all come out at tax time when you have to lodge and it will be a % based on ur total earnings after deductions.
It seems that the ATO think you are not paying enough. Ask your employer to check their calculations.
It is not a flat rate for all. It has different percentages based on your income bracket. If you've had a pay increase or something it may have gone to the next percentage bracket. Or someone has screwed up.
https://www.ato.gov.au/rates/help-repayment-thresholds-and-r…
I was hit with this in my first year of working…worked 2 part time jobs for 6 months in my last semester, and while my wage was above the threshold it meant that for the whole year across 3 jobs I was over a higher threshold and owed them $2k.
Most likely you received a bonus/deduction that pushed it up. Better to pay it now then have it indexed and pay more later. I kept telling myself, at least its not more tax you are paying back something you did. It would annoy me if my tax was wrong.
My employer calculates how much HECS to withhold based on each pay packet. That was when I was on around $50k a year so it worked out as no HECS. Then right at the end of the year they give me a bonus that put me over the threshold. Meaning I had to pay a full years HECS repayments in 1 hit. The bonus left me more out of pocket than if I didnt recieve one at all.
couldnt u find enough deductions?
Was a $5k bonus, I tried but fell short.
HECS is based on HRI. Claiming deductions does not reduce this. Even if you had enough deductions to reduce your income tax liability to zero you will still have to pay HECS.
Also assuming you had full income of 55k including bonus HECS would be 2.2k (4%) even with HECS
Bonus of 5k = $2800 better off.
Unless you spent the 5k immediately.
My understanding is you're not actually "paying" HECS each month/pay cycle… your employer is merely withholding a percentage, much like they do when they withhold tax.
Come tax time, the ATO calculates the amount of HECS/HELP you owe based off your taxable income when you do your return. So if it ends up being $2k, the amount withheld by your employer should offset that amount.
The payroll deduction is based on percentage of your pay https://www.ato.gov.au/rates/help-repayment-thresholds-and-r…
Come tax return time, you may also need to factor investment losses, fringe benefits, etc.
If you believe that payroll is deducting too much, just contact them and ask them to explain their calculations.