HELP debts
Compulsory repayment amounts - when and how much?
HELP repayment income details 2007-08
HELP repayment income details 2008-09
Compulsory repayments for a payee under PAYG withholding
Compulsory repayments for a payer under PAYG instalments
Exemption from compulsory repayment
Voluntary repayments
Bonus for voluntary repayments
Tax deductibility of repayments
Further assistance
HELP debts
If you obtain a HELP loan from the Australian Government to pay for your studies, then a HELP debt is recorded for you with the Tax Office. You will repay your HELP debt by making:
- compulsory repayments through the tax system when your HELP repayment income is above the minimum repayment threshold; and / or
- voluntary repayments directly to the Tax Office.
Compulsory repayment amounts - when and how much?
Compulsory repayments are made when you lodge your tax return and your HELP repayment income is above the minimum threshold, $39,824 in 2007-08.
The compulsory repayment amount depends on your HELP repayment income for each income year.
Example: A person with a HELP repayment income of $40,000 in 2007-08 will make a repayment equivalent to 4% of their income, or $1600.
HELP repayment income is:
- your taxable income for an income year, plus
- any amount your taxable income had been reduced by a net rental loss, plus
- your total reportable fringe benefits amounts shown on your pay as you go (PAYG) payment summary, plus
- any exempt foreign employment income.
|
For HELP repayment income for 2007-08 in the range |
% rate to be applied to total repayment income |
| Below $39,825 |
Nil |
|
| $39,825-$44,360 |
4.0% |
| $44,361-$48,896 |
4.5% |
| $48,897-$51,466 |
5.0% |
| $51,467-$55,322 |
5.5% |
| $55,323-$59,915 |
6.0% |
| $59,916-$63,068 |
6.5% |
| $63,069-$69,405 |
7.0% |
| $69,406-$73,959 |
7.5% |
| $73,960 and above |
8.0% |
|
For HELP repayment income for 2008-09 in the range |
% rate to be applied to total repayment income |
| Below $41,595 |
Nil |
|
| $41,595-$46,333 |
4.0% |
| $46,334-$51,070 |
4.5% |
| $51,071-$53,754 |
5.0% |
| $53,755-$57,782 |
5.5% |
| $57,783-$62,579 |
6.0% |
| $62,580-$65,873 |
6.5% |
| $65,874-$72,492 |
7.0% |
| $72,493-$77,247 |
7.5% |
| $77,248 and above |
8.0% |
Top
Compulsory repayments for a payee under PAYG withholding
Under the pay as you go (PAYG) withholding system you may have amounts withheld if you receive payments for:
- work or services
- benefit or compensation payments, or
- retirement payments or annuities.
If amounts are withheld from your payments, you are a ‘payee’ for PAYG withholding purposes. The entity making the payment is your ‘payer’ (your employer in most circumstances).
The following table outlines the steps for repaying your HELP debt as a ‘payee’ under the PAYG withholding system.
|
Step |
Description |
| 1 |
If you are a ‘payee’ for PAYG withholding purposes then you must advise your payer that you have an accumulated HELP debt on your:
- Tax File Number (TFN) declaration, or
- Withholding declaration.
|
| 2 |
Your ‘payer’ (employer) will withhold additional amounts from your pay once you earn $765 or more per week in the 2007-08 income year.
Note: The additional amounts withheld:
- are an estimate of the amounts required to cover your anticipated compulsory repayment for the year
- are not credited to your HELP account during the year
- form part of the total amount shown on your annual PAYG payment summary at total tax withheld and on your income tax notice of assessment at label E ‘PAYG withholding credits'.
|
| 3 |
Your compulsory repayment is calculated when your income tax return for that year is processed. Your compulsory repayment is a percentage of your HELP repayment income
|
| 4 |
If you had excess amounts withheld during the year, and you have no other outstanding debts, the Tax Office will refund the excess to you.
|
Top
Compulsory repayments for a payer under PAYG instalments
PAYG instalments is a system for providing for the tax liability on your business and investment income. The Tax Office will notify you of an instalment rate and an instalment amount which take into account any accumulated HELP debt.
Top
Exemption from compulsory repayment
You will be exempt from making a compulsory repayment for an income year if you:
- have a spouse or dependants and you are entitled to a reduction of Medicare Levy, or
- do not have to pay the Medicare Levy due to low family income (under Section 8 of the Medicare Levy Act 1986).
Top
Voluntary repayments
You can make voluntary repayments towards your HELP debt at any time directly to the Tax Office.
Voluntary repayments:
- are made in addition to your compulsory repayments
- reduce your HELP debt immediately.
Top
Bonus for voluntary repayments
If you make a voluntary repayment of $500 or more, you will receive a bonus of 10% of the repayment you make.
Example: Tinka owes $5,250. She makes a $2,500 voluntary repayment. Tinka gets the 10% bonus, so the value of her repayment is now $2,750 ($ 2,500 x 1.10). Tinka’s bonus amount is $2,750 - $2,500 = $250. Her total debt after the payment is reduced to $2,500 ($ 5,250–$ 2,750).
If your total debt is less than $500 and you make a voluntary repayment to pay off the total amount, you will still receive the 10% bonus.
Do not make voluntary repayments to the Tax Office before you incur a debt. A bonus cannot be given on a payment where no debt exists.
The Tax Office records debts incurred between:
- January and June as being incurred on 31 March
- July and December as being incurred on 31 August.
If you intend to pay off your total debt with a voluntary repayment, please ensure you make the repayment before you lodge your income tax return. If your tax return is processed before your voluntary repayment is credited to your HELP account, a compulsory repayment may be raised on your income tax notice of assessment. If so, you will not receive the 10% bonus.
Top
Tax deductibility of repayments
Your repayments of HELP debts are not tax deductible.
If your payer makes repayments for you, they may be able to claim a tax deduction. However, they will be liable for Fringe Benefits Tax (FBT) on the repayments.
Top
Further assistance
You can obtain further information from the following sources.
Return to the Top of the page