HECS/HELP repayment

[alsoknownasDean]

Hello all,

So I have $x as an outstanding HELP debt, and to date I've had $>x withheld from my salary for covering the debt (and by June 30 it'll be well over the outstanding balance). Obviously it's not cleared until I complete my 2017-18 tax return, but that's probably in August/September of the new financial year, and there'll be a couple of months of contributions made in the new financial year that'll be held by the ATO until I finish my 2018-19 tax return. I'd rather that money be in my pocket than give an interest-free loan to the ATO. :)

For those who have paid off your HECS, how have you handled this? Can you request your tax details be updated on July 1, even if the return hasn't yet been lodged?

[mrcheese]

If you are sure that you have paid enough to cover the remaining debt then all you need to do is fill out an ATO Withholding Variation form declaring that you no longer have a HECS debt and give it to your payroll person so they can stop withholding the extra.  Payroll can't change your tax set up without your directive to do so.
You would still need to do one of these forms even if you waited until July. I have lost count of how many people rang up to complain that we were still withholding HECS repayments when they had never bothered to tell us to stop. The ATO can't tell your employer for you...

[Primm]

^^^ This.

You just need to fill in a new deduction form. Which you'll have to do anyway, even after 1 July, or your employer will continue to deduct the HECS/HELP amount. Forever and ever and ever if you like.

[Luckyvik]

You can also call the no on the hecs statement and they can confirm that you have paid off the hecs debt. I then emailed payroll and told them to stop deducting hecs and they did so.


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[alsoknownasDean]

Thanks for the replies.

I probably should have worded my original post a bit differently. I'm aware of how to change tax details (fwiw, I am the payroll person at my workplace :) ), but my main query is when the change can be made. I thought there'd be a few others here who have been in the same situation.

ie: Whether the form can be completed:

1) As soon as the amount withheld for the year passes the available balance (probably unlikely)
2) 1 July of the year after it has been fully repaid, even if the tax return hasn't been completed yet.
3) After the tax return has been completed, officially wiping out the return.

Number 3 sounds like the most likely, but of course if I complete my tax return in September, then my HELP contributions made in July and August aren't refunded until the following year's tax return. :)

[Eucalyptus]

I may be wrong, but could you not do it immediately, even if you haven't paid off yet? In your tax return, the liability to HECS-HELP will also be calculated. They will send you a bill for the remainder.


In the past I've been charged HECS repayments for part of the year, as my earning rates for those periods were high enough. But then I didn't even earn enough to pay tax for the year, let alone the minimum to repay HECS. So on my return I got those HECS repayments returned to me. Can't see why it wouldn't work in reverse, just like tax...if you don't give enough in PAYG for various reasons then they'll send you a bill for the remainder.


Bills aren't a problem if you are otherwise saving and investing that money and can just pull it to pay off (or quite likely just save it in the weeks until its due and then pay. Or ask for a payment plan and meter it out to them).

[middo]

It's my understanding that you can change it when you want.  Ultimately, it will be sorted out when your tax return reconciles the amount owing with your tax payments in the financial year.

More importantly, what are you going to do with the extra money?  You haven't had it until now.  If I was in my 20's again, I would immediately put it into super, unless you have maxxed that out already.  Hindsight is wonderful.  I used my extra to pay for lifestyle creep. :/

[mrcheese]

I changed mine in a November - I had the figure for the remainder of my HECS debt from the tax return I had done in the August and I kept track of the amount of extra tax withheld over what the normal PAYG amount would have been on a spreadsheet. Then I realised it had got to a point where I had enough spare cash to just wipe it out so I made a final BPay payment (taking into account the 5% voluntary repayment bonus you could get back then)and ceased the HECS/HELP withholdings.
My next tax return proved my maths to be right ;)
I also had the added incentive of some sweet salary packaging options that just weren't worth it while I had an outstanding HECS/HELP debt due to FBT rules. But which have since saved me a couple of grand a year.

[Primm]

Ok, right.

The answer is 1) As soon as the amount withheld for the year passes the available balance.

Or be like me and do it when it hasn't actually passed the available balance, but there are only a couple of hundred $ to go, and be prepared to pay a small tax bill at tax return time.

[cakie]

Shouldn't you pay it off with savings now? The amount will be indexed on 1st june (the full amount that was left after last year's tax return). So if you have the cash, pay it off now and then get refunded all the payg money when you lodge...

Haven't done this myself, but I've heard others mention this strategy in the final year of payments.

[alsoknownasDean]

Shouldn't you pay it off with savings now? The amount will be indexed on 1st june (the full amount that was left after last year's tax return). So if you have the cash, pay it off now and then get refunded all the payg money when you lodge...

Haven't done this myself, but I've heard others mention this strategy in the final year of payments.

I just decided on a whim to do this, of course the day after indexation ($60, ah well).

I was holding off because i’m also looking around at buying a place and didn’t want to affect that by taking money from the deposit amount saved, but i’ll probably wait until August before looking anyway. I’ll get a decent amount back in the tax return :)