New HELP Repayment Threshold to Capture More Aussie Expats

New HELP Repayment Threshold to Capture More Aussie Expats

New HELP Repayment Threshold to Capture More Aussie Expats

 

The Senate recently met in August before the leadership spill and voted to change the Higher Education Loan Program which results in the new HELP repayment threshold to capture more aussie expats.

The recent amendment known as Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill 2018 passed as of the 24th August 2018 and is effective from 1 July 2019.

The amended legislation is designed to capture a greater number of Australian Expats living and working overseas permanently. If we look at the current legislation a compulsory repayment is required by an Australian expat if their worldwide income is greater than $51,957, with the first repayment rate tier being 2%.

We have previously written a blog about what Australian expats are required to do when declaring their worldwide income to satisfy the new expat HELP debt repayment regime. That blog can be found here – Overseas Repayments For Australian Expats With HELP HECS Debts

Let’s look at a typical example during the 2018-2019 financial year.

Jane is 25 and works over in Saudi Arabia as a Registered Nurse. She currently earns the equivalent of AUD$75,000 per annum and has a HELP balance of $59,000.

 

Jane’s estimated repayment levy for her outstanding HELP debt is $4,125. This means that Jane falls into the 5.5% repayment band (5.5% x $75,000).

The HELP repayment lodgements fall on the same time as our Financial Year (1 July to 30 June) and much like our tax returns the lodgement is required before the 31st October each year.

The amended legislation has lowered the minimum worldwide income level to AUD$44,999 at a repayment rate of 1%. With the introduction of this lower repayment threshold, it has the potential to capture a lot of part-time and casual employees working abroad.

Australian expats must remember that the repayment amount is not based on your outstanding HELP balance and the repayment rate is based on your income level. Many aussie expats forget this and can be quite common when your income goes up and your lifestyle adjusts to this income level.

To see the current compulsory repayment thresholds visit: https://www.ato.gov.au/Rates/HELP,-TSL-and-SFSS-repayment-thresholds-and-rates/

If you want to run a what-if scenario the ATO has this useful calculator to assist with planning come the end of the Australian Financial Year: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=STLoanRepay#STLoanRepay/questions

Along with the above threshold changes, the amendment also accounts for a larger HELP loan limit to $104,440 and for a person who is studying Medicine, Dentistry or Vetinerary Science the limit has been increased to $150,000.

If you are unsure as to what you need to do regarding your outstanding HELP balance it might be time to have a review and make sure you doing everything correctly.

Brett Evans is the Managing Director and a Financial Planner with Atlas Wealth Management which is the first financial services firm in Australia to specialise in providing financial advice to Australian expatriates. With over 20 years of experience in the finance and investments industry, Brett has worked for blue chip companies which include the Australian Stock Exchange (ASX), HSBC, Suncorp and Citi Smith Barney.

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