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, through which you can also track your debt balance, and contact details must be kept current.
- Since 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.
Government figures indicate there were 40,200 Australians overseas with a HECS/HELP debt in 2021-22 with an average debt of around $26,000. We believe that there is still a substantial proportion that are not making the required HECS-HELP/TSL repayments, mainly because of the perceived "hassle factor". That could be an expensive mistake, with individuals facing a debt on their return to Australia equivalent to the amounts unpaid - it is not unusual to see balances owed of $10,000 or more - and the possibility of additional penalties being levied.
The table below provides details of the repayment thresholds for the 2024-25 tax year - the repayments have a current commencement threshold of $54,435 and a starting 1% payment rate. Although often labelled "good debt" because it doesn't attract an interest rate, the HELP debt is nevertheless indexed to inflation - and consequently the debt increased by 4.7% from June 1, 2024.
Note that the Government has announced that in the future the HELP indexation rate would be the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI) with effect from 1 June 2023. This backdating will result in a reduction in current debt because the indexation rate used for 1 June 2023 will reduce from 7.1% to 3.2% - generating a credit dependent on the size of the debt at the time. To provide some indication, a student debt of $25,000 would see a credit of $1,120.
| Income Thresholds: 2024-25 |
Repayment Rate |
| Below $54,435 | Nil |
| $54,435 - $62,850 | 1.0% |
| $62,851 - $66,620 | 2.0% |
| $66,621 - $70,618 | 2.5% |
| $70,619 - $74,855 | 3.0% |
| $74,856 - $79,346 | 3.5% |
| $79,347 - $84,107 | 4.0% |
| $84,108 - $89,154 | 4.5% |
| $89,155 - $94,503 | 5.0% |
| $94,504 - $100,174 | 5.5% |
| $100,175 - $106,185 | 6.0% |
| $106,186 - $112,556 | 6.5% |
| $112,557 - $119,309 | 7.0% |
| $119,310 - $126,467 | 7.5% |
| $126,468 - $134,056 | 8.0% |
| $134,057 - $142,100 | 8.5% |
| $142,101 - $150,626 | 9.0% |
| $150,627 - $159,663 | 9.5% |
| $159,664 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/
In terms of making any payments to the ATO it is now possible to make direct payments via OFX, utilising up to 20 currencies. You simply establish an account with OFX (a specialist foreign currency transfer company listed on the ASX) and add the ATO as a payee, providing a PRN (Payment Reference Number) to ensure that it is reconciled to your ATO account. This should represent a considerable saving for individuals who have previously used credit cards or offshore bank transfers.
If you would like to arrange professional advice please complete the Inquiry form below providing details and you will be contacted promptly.
