Tax Returns - HECS Debt Help

Hi guys,

I am currently in the process of getting my tax returns done but it is not looking very good.

It came down to me owning the tax office roughly $2000 because of my HECS debt. Is this normal for people who recently graduated ?

I work as a pencil pusher during the day, and also have an investment property. The problem is that I don't have any receipts for maintenance done.

Does any one have any advice on what I can claim do decrease this value?

Also, I am married but my partner currently does not work full time. Does that help at all ?

Any help is really appreciated.

Thanks !


  • It came down to me owning the tax office roughly $2000 because of my HECS debt. Is this normal for people who recently graduated ?

    So you earnt over the threshold, but your current employer isn't deducting tax automatically to pay for the HECS?

    If so then yes, totally normal. Have to deal with it myself because my employer didn't deduct it when I started, even though I ticked that box!

    Just part of it that you pay that loan back once you earn over the threshold. Don't bother telling your work, just know that you'll have to organise a payment plan every year to pay it off.

    • Ah Ok.
      I got excited when I saw that I get some returns until I inputted the HECS part.

      Just hard to see a chunk like that go..

      • Yeah its annoying, but you're gonna see it keep disappearing for a few years ;)

      • Don't take Spackbace's advice blindly. You need to consider the following might happen:

        If your tax payable is too high the ATO will ask you to prepay next year's tax which means you have to pay tax periodically throughout the year (called instalments). You can vary the instalment amount but if you get it wrong and vary it too far in your favour then you can get penalised and be charged interest.

        PAYG Instalments

        Please see a tax professional as you haven't provided enough information to give any helpful suggestions. They'll be able to ask the questions that might identify additional deductions or tax offsets you are eligible for.

    • So you earnt over the threshold, but your current employer isn't deducting tax automatically to pay for the HECS?

      I'm earning over the threshold now and got told I had to fill out a tax form and a small request on our intranet to get it taken out, so much for automatically like I thought… Lucky I knew I would be paying HECs back this year to be on it quick… I remember ticking the box as well when I started.

  • +2

    Not professional here, but this is my thought:
    With the return of investment property, would not hurt to invest few hundreds for a proper accountant. It is tax deductible. Also deadline for tax return through a tax professional is more flexible than DYI, especially you may like to pay back later rather than sooner.

    • I do have an accountant too but he won't do anything without receipts cause he says it's very risky now.

      But he did say that the accounting fees are tax deductible for the next year :)

      • Do you have bank statements that could back it up instead?

        Alternatively, could you try contact whoever did the work for duplicate receipts?

        • +2

          Like Enforcer mentions

          1) Go through your bank statements and highlight all the expenses paid but you don't have receipts for. This is generally substantial evidence for a deduction within reason.

          2) Lodge your tax return with an accountant. If you lodged on time last year, you should have until 15 May 2016 to save up and pay the ~$2000 tax bill

          3) Get a depreciation schedule done for your investment property. It may cost you $300-500 but it will save you 3000%++++ in the future. This can be back dated as well

          Are you sure you're claiming as much as possible regarding the rental property? Are you expensing the borrowing costs over the first 5 years? Water? Strata? Insurance? Council Rates? Management fees?

          Are you sure your accountant has your best interest at heart or if he's just churning out returns as fast as possible?

        • Thanks for this.
          Most of the things are paid by cash cause we didn't go through a proper company. Most of the stuff was done ourselves and was referring to the things we bought.
          I am getting this done by an accountant but haven't heard anything about the deadline for when it's all due.
          And thanks for the top on the depreciation schedule. Will definitely look into that.

      • And why don't you have receipts. If you have genuinely spent money on that investment property, you should have receipts.

        • It wasn't any major work done.
          Just when the previous tenants moved out we went in to clean and repaint the place. But can't find any of the receipts for the paint and stuff.

  • +1

    Employers don't take into account hecs when doing deductions… I got a $7k bill once.

    • Wow that's HUGE !

      I won't even know where to begin to find that kind of money lying around.

      • +2

        If you're earning enough to pay 7k in HECS a year, then you really should have 7k sitting around ;) You need a salary of about $110,000 to pay 7k in HECS debt.

      • +2

        The trick is to know it's coming, and then provision accordingly. I used to do contracting and had to withhold my own tax.. Those were big bills, but at the time I had the money earning interest for me, rather than the government.

    • +2

      They should if you filled out the TFN declaration form properly.

      • Sometimes it was overlook, it is best to mention that to the HR person to fools proof.

      • Exactly, I thought it was common knowledge you note it on the TFN declaration just like if you want to claim the tax free threshold or not. However you do need to tell them when your HECS is paid out or it'll keep being deducted but at least you would get a nice tax return that financial year if that's the case.

  • It happened to me once. I thought I calculated everything would be just under the HECS threshold, but then the xmas bonus pay put me over the line. It wasn't much of a bonus after all.

    Are you claiming every possible thing for your property that might bring you back under the HECS threshold? You should because you are entitled to do so.
    Do you have a depreciation schedule? They may cost $700 upfront, but that will be deductible and they can calculate several thousand $ of deductions per year for decades.

    As long as HECS indexation stays linked to CPI, which I think it still is, it's not worth paying it back in a hurry if you can avoid it.

    • I'm not sure if I am really claiming everything I can. Got stuck but my accountant does not help much. Will need a new one for next year.

  • +1

    Probably doesn't apply to you but if you in one of the following professions ;
    Early childhood education teachers,
    Maths or science graduates and Education a
    nd nursing (including midwifery) you can get a deduction upto $1900, it was suprising how many grads didn't know about it at my wife's work.

    Also what percentage of ownership does your wife have in the investment property?

    • +1

      Tell me more about this wonderful up to $1,900 deduction for being a Nurse et al.

      • +1

        See here

        I got it last year as a science graduate, and have applied for it this year. Basically if you have a job as Nurse, etc and paid a HECS component in the previous year, you get $1,716.85 (for 13/14 at least) and can get it every year for 5 years.

        • Crap
          Only for people who graduated post-June 2009.

        • Huh, TIL!

    • My partner is becoming a teacher soon so well definitely read up on this.

      • It is just a deduction, i.e. that financial year you don't have to pay the full HECS rate but the amount you would claim back goes back on to what you owe for HECS. It is really only useful if you need the money urgently for something - keep in mind the longer you take to pay your HECS off the more interest you would pay and also less desirable on applications for a mortgage. I have claimed it in the past but prefer to pay my HECS out quicker now rather than dip back into it.

        • Ahh, so the deduction is just a method of deferring the HECS payments but will still end up having to pay it anyways.
          I had the impression that it was a bonus and decreased my HECS.
          Oh well, wishful thinking :P

        • @Hello Stranger:

          That's the same impression I had when it started but a call to the ATO clarified it, so yeh the money you get back you will still owe on your HECS.

  • +1

    If the compulsory HELP repayment will cause you serious financial hardship you can apply to the ATO to defer your repayment.


    What is serious financial hardship>


  • +2

    Try not to think of HECS like a tax to avoid. In years to come, it would be paid off then you can see your pay packet rise by a few hundred dollars every month. Its quite satisfying.

    • Yeah, I agree. I always knew it was coming but didn't expect it to be so much :(

  • Net rental loss (assuming you have your investment property negatively geared) is added back on to your taxable income for the purposes of determining your HECS repayment. So even if you find more deductions for your investment property, the HECS element of your tax bill will not change.

    You may reduce your taxable income if you find additional deductions for your property. Have you had a depreciation schedule done you're claiming capital works and decline in value for your other capital assets? If not, start there - and the fee will be deductible next year too, however the information in the schedule will be deductible last financial year.

    • I thought my investment property was negatively geared, but it turned out to be positive (bummer).
      I am currently trying to find more deductions for the property, and will definitely look into the depreciation schedule. Never heard of it until today.

      • You should ask your accountant why they didn't ask you if you had one or intended to get one.

  • -1

    I don't understand why HECS isn't levied as a marginal tax. I had the same thing of having a massive surprise tax due at the end of the year because HECS is calculated as an percentage of the entire income, once you reach a certain income level.

    • I agree. HECS does hurt quite a bit. I won't mind it as much if I didn't see it in a lump sum so will speak to our HR department to deduct it throughout the year.

  • I sympathies with your situation.
    Having to pay a tax back to the ATO is very pleasant.

    One thing that comes to mind immediately is, do you have a depreciation schedule for your property? You could get a quality surveyor to do one now and have your accountant back date it to last years tax.

    Hopefully your account has already suggested that to you but you would be surprised how many don't bother advising there clients or say it is not worth the hassle.

    Also if you need to pay back the ATO delay submitting your tax to the last minute and start saving for it now.

    • Yeah, I asked my accountant what else I could do but he didn't mention the depreciation schedule at all. Something that I'm currently reading up on.

      • Time to find a new accountant who is more "informed" about property.
        I'll bet you've lost many thousands of dollars in deductions from prior years.
        It took me meeting many accountants to find someone who knew what they were talking about.
        In the end they had a property portfolio themselves and were not your shopping center high throughput operation. There full time job is accountancy. They save me at least 10x there cost.

        Once you find someone they may be able to apply to teh ATO for an amendment for prior years for you.
        Good luck.

      • +1

        Usually if the property is 30 years or older accountants don't recommend the depreciation report because the deduction isn't worth the cost.

        • It is worth noting that a capital allowance and tax depreciation report covers not only the capital works allowance but depreciation of plant and equipment as well. This means that all properties that obtain an income by the way of rent should be eligible to claim a deduction for the plant and equipment items contained within the property.

          Even if a property is too old to claim the capital works allowance for the building structure, the investor will still be eligible to claim the plant and equipment allowance.

          Additionally, if extensions or renovations were completed after 1982 (non-residential) or 1985 (residential), they will attract the capital works allowance.

          Many plant and equipment items contained within a property are able to be depreciated over their effective lives. Some of these items include:
          hot water service
          ceiling fans
          exhaust fans
          washing machines
          floating timber floors
          smoke alarms
          air conditioner
          freestanding spa
          security systems

        • @Yacht:

          Yes, but once the building is that old, the assets usually are either as old or the cost of the report outweighs the benefit of the depreciation of newer assets.

        • The building would've been from the ?1960's. It is half brick and half weather board. The house itself seems to be falling apart but the land size is huge.

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