06/07/2016 – Last year it was announced that the Australian government passed legislation in parliament that resulted in Australian expats being required to make repayments towards their HECS and HELP debt.
These changes come into effect on the 1st of July 2017 and today we’ve put together a video on a very simple strategy that you can employ to prepare for these repayments.
Whilst the best strategy is always to try and repay your HECS/HELP Debt repayments before the start of the new regime for those that cannot afford this then the next best option is to start putting money aside on a monthly basis to prepare for the ATO’s bill next year.
You can follow these steps to work out what your HECS/HELP debt balance is, roughly how much your payment will be after the 1st of July 2017 and what you can do to ease the burden of making this payment.
- The quickest way to find out your balance is speak to your accountant in Australia. They can find out what the outstanding amount is with the Australian Taxation Office (ATO). If you don’t have an accountant then you can either login to www.my.gov.au if you have an account already setup or alternatively you can call them on +61 2 6216 3444 between the hours of 8am and 10pm Australian time to discuss setting one up. If you want to speak to someone at the ATO about your balance you can call +61 2 6216 1111 though be warned that this number is only manned between the hours of 8am and 5pm AEST.
- The next step is determining approximately what repayment threshold you will fall into. These thresholds can be found in the image below (click on the image to expand). Remember that these amounts are in Australian dollars so you will need to do a currency conversion from the currency that you earn your salary in to Australian dollars.
- Once you’ve determined what threshold you will fall into its a simple exercise of multiplying your salary by your repayment rate to determine an approximate repayment amount. For example if you earned the equivalent of AUD$100,000 and you had a AUD$35,000 loan balance then you simply multiply 7.5% (the repayment rate for a AUD$100,000 salary) by your declared salary (AUD$100,000) which gives a repayment amount of AUD$7,500. The ATO have a nice little calculator as well that can assist you in calculating these numbers. Click on this link to use it.
- Now that you know roughly what your repayment amount will be next year its important to put a strategy in place to ensure that when you receive the ATO bill that you have the money put aside to fund this. We recommend you divide the repayment amount by 12 and then put this amount away every month. Obviously your declared salary may change between now and then due to fluctuations in the currency but you will have a rough idea of what you need to save on a monthly basis to avoid the shock next financial year.
Remember if you start saving this month you will only have to put away half the amount of an expat who starts doing this in 6 months time so make sure you start today.