From 1 July 2016 onwards, the ATO now requires HECS debt repayment and HELP debt repayment for non-residents. Prior to 1 Juyly 2016 only Australian residents for tax purposes were required to repay their HECS or HELP debt. Now non-residents for Australian tax purposes will need to assess their repay their HECS/HELP debt based on their worldwide earnings. This will come as a shock for most Expats and will add another tax payment over and above any foreign taxes being withheld from salary. This extra payment can have a significant financial impact especially if you were not aware of the repayment or budgeting for this extra payment.
HECS debt repayment and HELP debt repayment for Non-residents – How much to pay?
Your repayment depends on firstly your worldwide earning and then secondly the amount of HECS/HELP debt you have outstanding to be repaid. If your worldwide earnings were the equivalent of AUD $54,868 or higher earned during the year ending 30 June 2017 then you will be required to repay to the ATO part or all of your HECS/HELP debt. You can calculate your estimated HECS/HELP repayment amount here by clicking the Expat option and ticking HECS/HELP debt option and entering your worldwide income in Australian dollars (AUD).
ATO Assessment process
The Australian Taxation Office (ATO) allows 3 methods to calculate and report your worldwide earnings:
- Simple self-assessment method
- relies on actual translation of your gross foreign income into Australian dollars
- ATO will subtract a standard tax deduction
- Overseas assessment method
- relies on your foreign Tax Return income (provided the foreign income year overlaps some of the Australian tax year – i.e. US calendar year ending 31 December 2016gorss income figure can be used for Australian year ending 30 June 2017 Tax Return
- Comprehensive tax-based assessment method
- relies on your foreign tax assessment and from gross foreign income deductions are applied in the same way as an Australian Tax Return is prepared
Further reading can be found at the ATO commentary page.
ATO assessment documentation
Importantly, the ATO will issue a Notice of Overseas Levy and will charge (debit) your ATO Income Tax Account with the debt that the ATO has calculated that you owe. The standard ATO Payment Slips will provide the payment instructions to allow repayment.
We can help
Our team of experts can advise regarding HECS debt repayment and HELP debt repayment for non-residents
n minimising your HECS/HELP repayment through various tax minimisation strategies. We can also help to spread the repayment over a longer period to ease the financial burden by negotiating a payment plan with the ATO over a 12 month period to assist you with your personal financial budget. Reach out to us for an obligation free telephone discussion.
Important: The above commentary is for information purposes only and does not constitute tax advice upon which you can rely. If you are seeking formal tax advice, please make contact with us. TXM Chartered Accountants provides nil warranty for any loss or damage caused as a result of relying on the above information.