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Update on HECS Debt Repayment Obligations For Australians Living Overseas

Rules on HECS debt repayment obligations for Australians living overseas are changing. Time is running out for Australians living overseas who have a HECS debt to notify the Australian Government of their new contact details and start reporting their global income to the ATO.

Back in 2015 we reported on What Australian expats need to do if they have a HELP Debt (HECS Debt or TSL Debt).  Since then, the ATO have provided more detail on how Australians living overseas with a HECS debt can comply with the new government requirements.

What are the HECS debt repayment obligations for Australians living overseas?

In 2015, the Australian government passed changes to legislation requiring Australian expats / Australians living overseas who had an outstanding HECS Debt / HELP Debt (Higher Education Loan Program Debt) or TSL Debt (Trade Support Loan Debt) to start making repayments on their outstanding liabilities. For simplicity in this article, unless stated otherwise a reference to HECS Debt also means a reference to HELP Debt and TSL Debt.

As of 1 July 2017, your HECS debt repayment obligations will be determined based on your worldwide income for the 2016-2017 tax year.  Should your worldwide income exceed the relevant repayment thresholds (approx A$55,000 for HELP debt in 2017), then you will be required to make repayments against your loan.

Your debt will continue to be indexed every year until the entire debt is repaid, and you can make additional voluntary repayments to reduce your outstanding liability.

2017–18 repayment income thresholds and rates for HELP, SSL, ABSTUDY SSL and TSL

Repayment income (RI*) Repayment rate

Below $55,874

Nil

$55,874 – $62,238

4.0%

$62,239 – $68,602

4.5%

$68,603 – $72,207

5.0%

$72,208 – $77,618

5.5%

$77,619 – $84,062

6.0%

$84,063 – $88,486

6.5%

$88,487 – $97,377

7.0%

$97,378 – $103,765

7.5%

$103,766 and above

8.0%

Source : ATO Website

Update: In the May 2017 Australian Federal Budget, the Australian government announced they were lowering the repayment threshold to A$42,000 effective 1 July 2018.  We will provide an update when / if this legislation passes the Senate, or check out the latest on the budgets and its implications for Aussie expats on our 2017 Australian Federal Budget page.

HECS debt repayment obligations for Australians living overseas Australian expats

What do I need to do?

To comply with your HECS debt repayment obligations when living overseas, you need to do the following :

  • Update your contact details with the Australian government mygov website
  • Advise the government of your worldwide income, or submit a non-lodgement advice

We’ll expand on these two aspects now :

Updating your contact details

If you have a HECS debt repayment obligation (or HELP Debt or TSL Debt) then you are supposed to advise the Australian government within 7 days after leaving Australia of your new contact details (if you intend to reside overseas for more than 183 days in any 12 month period).

Your contact details will generally include your email address, and your residential address overseas.

If you are already living overseas and have an outstanding HECS debt, you have until 1 July 2017 to update your contact details.

Accessing your myGov account from overseas

The ATO website talks about some complications involved in accessing the mygov website from overseas.  Principally it relates to the security code feature utilising an Australian mobile phone number.  Unless you continue to use your Australian mobile phone number whilst overseas, what you will want to do is before you move overseas turn off the mygov mobile phone security code feature.

If you are already living overseas and no longer have access to your Australian mobile number, then you won’t be able to access your mygov account.  The simplest thing to do then is to create a new account.  When creating a new mygov account, the ATO advise to skip the step regarding the mobile phone security code (as mygov does not accept international mobile phone numbers).

Advising the Australian Government of Your Worldwide Income

If you are a resident for Australian tax purposes, then you need to complete an Australian tax return and declare your worldwide income.  If your HECS debt repayment income is above the relevant thresholds then you will be required to make a compulsory repayment to your HECS debt (as if you were still living in Australia).

If you are a non-resident for Australian tax purposes, and have an outstanding HECS Debt (or HELP debt or TSL debt) you will need to declare your worldwide income via the myGov website.  If your worldwide income is above the relevant repayment thresholds, then you will be required to make a compulsory repayment (called the overseas levy).

There is an exception to needing to advise the government of your worldwide income…

Non-lodgment advice

If your worldwide income is less than 25% of the minimum repayment threshold for HELP or TSL repayments, then you won’t need to advise the ATO of your worldwide income.  In place of this, you will however need to submit a non-lodgement advice document.

 

For more details and the latest information on your HECS debt repayment obligations for Australians living overseas, you should visit the ATO website.

If you would like to understand more about the tax implications for Australians Working Abroad, you can download my special report below.  As a bonus, you will also receive my free fortnightly newsletter which will keep you informed of further developments in this area, and offers other useful information and tips to help Australian Expats build their wealth while living abroad.

Download Special Report – Tax Implications For Australians Working Abroad
 

Do you need assistance with your Australian tax return and HECS reporting obligations?

If you need to file an Australian tax return, report your global income for HECS, or need tax planning advice as an Australian expat, contact GM Expat Tax using the form below.  GM Expat Tax is a firm of accountants specialising in assisting Australian expats living and working around the world.

GM Expat Tax

  • GM Expat Tax Inquiry Form

Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.

About the author

Craig

Craig is an Australian Expat and the founder of The Australian Expat Investor. Craig is passionate about investing, and while Craig cannot give personal financial or tax advice, Craig enjoys sharing investing, tax, and other tips for Australian expats to help them to build their wealth while living abroad and get the most out of their time living overseas. Get his free ebook on 9 Financial Surprises That Could Cost Australian Expats Thousands of Dollars

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