Flaw with ATO Interest Calculation on HECS Loans
Last edited 24/02/2018 - 08:57
So, checking through my MyGov statement I noticed a something very interesting about the way the ATO calculate your interest payments.
To start off; The ATO charges interest on your HECS loan proportional to the CPI, which in itself is good value.
In traditional loans, anytime you make a payment that payment goes towards offsetting your interest charge as the principal is now lower.
However, if you have your HECS deducted from your weekly/fortnightly pay then that amount that is taken out is not applied to the principal until you file your return.
So essentially throughout the year you're giving the ATO thousands of dollars of your pay and it's not going towards anything until you file your return.
Just some food for thought.
Anyway, this is also to drive some discussion around different ways the OzB community approaches paying these debts.