Overseas Repayments For Australian Expats With HELP HECS Debts
As of the 1st of July 2017, a new regime is going to be introduced for those Australian Expats With HELP HECS Debts back in Australia. What we want to run through the changes that are occurring and how they may affect you?
The first key one is for those who are about to become an Australian expat. As soon as you move overseas you have seven days to notify the ATO of your new overseas address details. Please ensure that you turn off your security functions on your myGov account because if you are moving overseas and you don’t retain your Australian mobile number, the two step authentication may fail and you may find yourself locked out of the account.
For those Australian expats already overseas, you have until the 1st of July 2017 to notify the ATO of your overseas contact details.
Australian Expats With HELP HECS Debts
If you’re a Australian expat with a HECS or HELP or TSL debt, you will need to declare your worldwide income using the online myGov services. You can also engage an Australian tax agent to submit this on your behalf. Your worldwide income is any Australian and foreign sourced income. If this is above the minimum HELP, HECS or TSL repayment thresholds, you will be required to make a compulsory repayment known as an overseas levy. The overseas levy is calculated on the HECS, HELP and TSL debt repayment thresholds below.
Currently the minimum threshold is AUD$54,869.00 or the overseas equivalent and the payment threshold kicks in at 4%. However, if you do not earn over this amount, this doesn’t mean you’re precluded from declaring your worldwide income.
You Earn Less Than AUD$13,717
If your income is at or below AUD$13,717.00 for the 2016/17 income year, you will need to submit a non-lodgement advice through the myGov portal. A non-lodgement advice is a document lodged in lieu of a return. This document tells the ATO that you will not be lodging a return as you are under the 25% minimum HECS, HELP and TSL repayment threshold.
You Earn More Than AUD$13,717 but Less Than AUD$54,869
If your salary is above AUD$13,717.00 and below AUD$54,869.00 for the 2016/17 income year, you will still need to declare your worldwide income to the ATO through the myGov portal. An overseas levy will not be raised as you are below the minimum payment threshold.
You Earn More Than AUD$54,869
If your salary is above AUD$54,869.00 for the 2016/17 income year, you will need to declare your worldwide income through the myGov portal. An overseas levy will be raised on your worldwide income as it exceeds the minimum repayment threshold and you will need to repay this amount.
When you’re converting currency, all foreign income, deductions and foreign tax paid must be converted to Australian dollars before being included in your return. The rate of conversion will be the average exchange rate for the Australian income year. The ATO has a foreign currency converting tool which will help you achieve this. If you require a foreign exchange rate of a currency that is not listed with the conversion tool, you may use a reasonably externally sourced exchange rate for the currency, for example from a bank.
Assessment Methods For Declaring Your Income
When you’re declaring your income to the ATO you will have three methods that you can use.
Simple Assessed Method
This method will allow you to provide the gross amount of your foreign income for the income year and state the occupation from which you derive most of your income from. A standardised deduction will be applied to reduce your foreign income based on your occupation. The standardised deduction is calculated on the average deductions claimed for that occupation from the previous income year.
Overseas Assessed Method
This method will allow you to enter the foreign income that you were assessed on from your most recent tax assessment from the foreign country that you are a resident of. The assessment must cover a 12 month period even if you did not earn income for the whole 12 months. There are limitations with using this method and these include:
- You did not receive from your foreign tax authority a tax assessment;
- The period of assessment does not overlap with the relevant Australian income year;
- You’ve received multiple assessments for the income made by different foreign countries; or
- You have previously used that income assessed to calculate your foreign income.
Comprehensive Tax-based Method
This method will require you to declare your gross foreign income and enter allowable deductions similar to how you would complete an Australian income tax return. If any expenses was for both work and private purposes, you can only claim a deduction for the work related portion.
We hope that clears up some of the confusion out there. We’ve seen a lot of chatter on social media about who has to and who doesn’t have to report. Pretty much any Australian expats with HELP HECS debts have to report but your level of obligations will be dictated by your overseas income.
If you have any questions about setting up a myGov account, we’ve included below a ‘how to set up a myGov account as a non-resident’ video from our YouTube channel.