I graduated from university at the end of last year and used a HELP loan to pay off my university course fees. I’ve just started working full-time. When do I start repaying my debt and how do I know how much I have to repay?
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You start repaying your HELP loan through the taxation system when your adjusted taxable income reaches a certain minimum level.
For the 2017-18 year, you will need to start repaying your HELP debt if your adjusted taxable income exceeds $55,874.
Your adjusted taxable income is the total income you earn in the financial year plus any reportable fringe benefits, reportable superannuation contributions, net investment losses and any exempt foreign employment income; less any deductions.
Once your adjusted taxable income is greater than $55,874, the amount which you will have to repay is based on a percentage of your actual adjusted taxable income level.
The repayment percentage starts at four per cent of your adjusted taxable income and increases to eight per cent when your income is greater than $103,766 for the current financial year.
Unfortunately, HELP debt repayments are not tax deductible.
You can view your HELP debt, and payment options online via the MyGov website.
Additionally, if you would like to check what repayment rate would apply to your level of income the rates are published on the Australian Taxation Office website.
Importantly, several changes to HELP repayments were announced in the recent federal budget to commence from July 1, 2018.
These include reducing the minimum repayment limit of $42,000, with a new repayment rate of one per cent. The top repayment rate of 10 per cent will be payable once your annual income hits $119,882.
Please keep in mind that these changes have not yet come into effect and will only take place if they pass through parliament and are legislated.
If you would like further information, you should discuss this with you accountant or business advisor.
This is just a brief overview of some of the options you may have available to you.
If you would like more information on this topic or have another tax question e-mail me at tax.albury@crowehorwath.com.au.
Any information in this article has been prepared without taking into account your personal circumstances.
You should seek professional advice before acting on any material.
While reasonable care is taken in the preparation of this information to the extent allowed by legislation, Crowe Horwath (Aust) Pty Ltd ABN 84 006 466 351, accepts no liability whatsoever for reliance on it.
