Help with Understanding HECS Repayment and How to Avoid

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• 

  godofpizza on 15/11/2016 - 09:28

  you really should pay off your hecs, it's only going to increase over time.

  based on your salary, 55K you hecs repayment is 2750$ or 52$ a week. so your 150$ isn't going to disappear completely.

  contribute the 200$ to super? look at making other deductions on your job?

  • 

    [Deactivated] on 15/11/2016 - 09:35

    Thanks, I've updated it. I know it's going to increase by CPI inflation which is very small this year (2%ish) I think they take super contributions into consideration.

• 

  cypher67 on 15/11/2016 - 09:30

  +2

  On $55k thats only $85 a fortnight not $150. If you have tax deduction that can get you under the cap would avoid it. If you took a pay cut and didnt accept the bonus, you would be out of pocket $1200, on the flip side if you keep it you need to pay $2200 in HECs. So we are really talking about a difference of $1000 and you need to pay back the loan one day. Id say just take the pay rise and bonus and do your best to find $1200 in tax deductions.

• 

  iamw0man on 15/11/2016 - 09:33

  Here's a good tool http://www.paycalculator.com.au/

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  altomic on 15/11/2016 - 09:45

  I was in a similar situation years ago. I got a grade promotion and the pay increase which sounds good at first but at my first fortnighly pay i discovered that it kicked me into to a new tax bracket and had to start paying hecs. I went from an easy laid back admin job to a high pressure, highly complex position(with heaps of stress) for an extra $25 a week in hand!!!

  Additional super or talk to your boss for an arrangement

• 

  sparkles on 15/11/2016 - 10:01

  +1

  Although it's in your best interest to pay down your HECS eventually and repay the government for the education they've given you in good faith, to get yourself some breathing room for a year you could always make a $200 donation to a eligible charity to ensure you are under the threshold. Perhaps ask your boss to defer your bonus to the following year or after July 1? You can ask your employer to not withhold HECS, and pay it in full come tax time.

  Even though it's only increases by CPI a large sitting HECS debt still jumps in substantial increments. Watching it rise and rise and rise, you will eventually want to see it gone.

  Better still, ask your boss for a payrise which will offset the HECS.

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  crazyj on 15/11/2016 - 10:08

  If you have say a $20K debt, it goes up $400 the first year, then compounding.

  Obviously the higher the debt…

  Maybe just pay the minimum amount until you can afford to pay it off.

• 

  Dumax on 15/11/2016 - 10:15

  +3

  HECS repayments are calculated on your total income, not your taxable income (i.e. donations or super contributions will not reduce your liability). The only way to avoid it is reduce your income.

  • 

    crazyj on 15/11/2016 - 10:17

    +2

    Yep, refer -

    https://www.ato.gov.au/Rates/HELP,-TSL-and-SFSS-repayment-th…

    From site - they call it repayment income -

    RI= Taxable income plus any total net investment loss (which includes net rental losses), total reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income.

    • 

      sparkles on 15/11/2016 - 10:41

      +1

      But isn't taxable income after deductions? Donations definitely reduce your taxable income.

      • 

        crazyj on 15/11/2016 - 11:13

        Absolutely!

        Donate vs pay off your HECS…

      • 

        tomsco on 15/11/2016 - 11:22

        Correct. One year due to a one off job, it was going to kick me over the threshold and present a large tax bill, so made sure I deducted everything I could (legally).

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  shaybisc on 15/11/2016 - 11:12

  Easy problem to fix if it's based on taxable income- make a donation.

  Although the ATO ATI calculator makes no provision for charitable donations so I'm probably wrong.

  • 

    tomsco on 15/11/2016 - 11:23

    -1

    Problem is the bonus, which now makes it $1200 instead of $200.

    OP, was is your occupation. Do you drive in between offices or to clients?

• 

  shaybisc on 15/11/2016 - 11:24

  -1

  What would Donald do?

  • 

    godofpizza on 15/11/2016 - 11:43

    +1

    claimed a business loss of few million dollars (shareholders monies), thereby reducing his taxable income to 0$

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  bobbified on 15/11/2016 - 13:56

  The best way is to find some tax deductions that'll bring down your taxable income below the HECS repayment threshold.
  It should be quite easy since you're not that far over that threshold.

  Depending on your occupation, even the internet connection at home for about $60/month can possibly net you about $380 if 50% of it is work-related. Or your mobile, car expenses, etc.

• 

  kryptoz on 15/11/2016 - 22:26

  Another way is to join the armed forces or get a cadetship where the employer pays your HECS debt on top of your salary.

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  Drifta on 16/11/2016 - 13:05

  What happens if I can’t afford the repayments?

  If you believe that making your compulsory repayment would cause you serious financial hardship or there are other reasons why you should not have to make a compulsory repayment, you can apply to the ATO to defer your repayment. You will need to complete the Deferring your compulsory HELP, HECS or Financial Supplement repayment form, which is available on the ATO website (opens in a new window). The form asks for a detailed statement of your household income and expenditure to justify your claim of serious hardship.

  The ATO will write to say whether your application is successful. If you are unhappy with the decision, you may apply to have it reviewed within 28 days of receiving the notice. If, after the review, you still believe the ATO has made the wrong decision, you may then apply to the Administrative Appeals Tribunal (AAT) for a review. You need to lodge your application with the AAT within 28 days of the day you receive the outcome of the ATO’s review.

  For more information on applying to defer a compulsory repayment, contact the ATO.