The Australian Government has announced they are closing a tax loophole available to Australians living overseas with a student debt or a Higher Education Loan Program (HELP) debt.
Currently if you live overseas (and are a non-resident for tax purposes) there is no obligation to repay the HELP debt you accumulated while studying at university in Australia. However in the May 2015 Federal budget, the Federal government has announced that Australians living overseas will now be required to repay their HELP loans.
If you are living overseas, and are a non-resident for taxation purposes, there is no obligation to do a tax return, and so there is no way for the Australian government to know if you are earning above the income thresholds that trigger repayment of your HELP debt. While the administrative details are yet to be finalised, it is envisaged that Australians with an existing or new HELP debt that move overseas will be required to register with the Australian Tax Office, and be required to declare their worldwide income every year. If your worldwide income exceeds the income threshold for repaying your HELP loan, you will be required to make the relevant payment to the Australian Tax Office.
Repayment obligations will commence from 1 July 2017 based on the debtors worldwide income for the 2016-2017 tax year.
While on the face of it, this change might appear to be reasonably fair, it is going to add enormous complexity for many Australian expats who currently don’t declare their foreign income to the Australian Tax Office.
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