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Repayment of HECS-HELP and TSL Debts

Repayment of HECS-HELP and TSL Debts while Overseas

Until 2017, Australians proceeding overseas with a HECS-HELP (Higher Education Contribution Scheme - Higher Education Loan Program) or TSL (Trade Support Loan) debt were not required to continue making repayments, and would only begin compulsory repayments once they became resident again in Australia - with the debt attracting no interest in the meantime, but continuing to increase with inflation.

However, significant changes were announced in 2016 regarding the repayment responsibilities of expatriate Australians, summarised as follows:

  • Since 1 January 2016, Australians with a HECS-HELP or TSL debt have been required to update their contact details and submit an overseas travel notification if they intended to reside overseas for 183 days or more in any 12 month period. These details can be lodged online through your myGov account, and these contact details need to be kept current.
     
  • From 1 July 2017, if you were living overseas and earning an income that exceeded the minimum repayment threshold, you have been required to make compulsory repayments towards your debt. In this context, you need to lodge an annual advice regarding your worldwide income or a non-lodgement advice, through your myGov account or an Australian registered tax agent. The annual due date for lodging returns personally is October 31 - tax agents are able to lodge after this deadline, but clients need to be listed on the tax agent's client roll before October 31 to qualify for later lodgement.
On July 5, 2019 the ATO announced that a data matching program would obtain information from the Department of Home affairs (DHA) regarding individuals with existing HECS-HELP, VSL and TSL debts. The ATO will match this information, "... against ATO records and other data we hold to identify debtors that may not be meeting their registration lodgement and/or payment obligations."

Despite the above changes having been made several years ago, we believe that there are still a substantial number of expatriate Australians who are not making the required HECS-HELP/TSL repayments, possibly because of the perceived "hassle factor". That could be an expensive mistake, with substantial penalties possible, and it is strongly recommended that individuals ensure they meet all payment obligations, including backdating where required.

The table below provides details regarding current repayment thresholds and an indication of those applicable from July 1, 2020 - the repayments have a commencement threshold of $46,620 and a starting 1% payment rate.

Repayment Income (AUD)
Repayment Rate
Below $46,620
Nil
$46,620 - $53,826
1.0%
$53,827 - $57,055
2.0%
$57,056 - $60,479
2.5%
$60,480 - $64,108
3.0%
$64,109 - $67,954
3.5%
$67,955 - $72,031
4.0%
$72,032 - $76,354
4.5%
$76,355 - $80,935
5.0%
$80,936 - $85,792
5.5%
$85,793 - $90,939
6.0%
$90,940 - $96,396
6.5%
$96,397 - $102,179
7.0%
$102,180 - $108,309
7.5%
$108,310 - $114,707
8.0%
$114,708 - $121,698
8.5%
$121,699 - $128,999
9.0%
$129,000 - $136,739
9.5%
$136,740 and above
10.0%

The ATO page below provides some more detail in terms of how to prepare the required income statements and there is an understanding that different countries will have different tax years. You will either need to request an extract from the payroll department of your employer, seeking details of income earned from July 1 to June 30, or base your statement on your monthly salary statements.

https://www.ato.gov.au/Individuals/Study-and-training-support-loans/Overseas-repayments/

Secondly, note that within the above-referenced there is a link at the bottom of the page to a foreign currency calculator which will convert your foreign income to AUD.

https://www.ato.gov.au/calculators-and-tools/foreign-income-conversion-calculator/

If you would like to arrange professional advice please complete the Inquiry form below providing details and you will be contacted promptly.

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