The Australian Government has introduced changes relating to the Higher Education Loan Program (HELP, formerly known as HECS) and Trade Support Loan (TSL) obligations. Under these changes, Australians living overseas have the same repayment obligations as people who live in Australia.
If worldwide income exceeds the minimum HELP and TSL repayment thresholds, compulsory repayments against the loan are required to be made.
The changes apply to people already living overseas as well as those who intend to move overseas for a total of more than six months in any 12 month period.
The changes also apply to both new and existing HELP and TSL debts, but not to Student Start-up Loans (SSL), ABSTUDY Student Start-up Loans (ABSTUDY SSL) and Student Financial Supplement Scheme Loans (SFSS).
What must be reported
• Australians residing overseas for 183 days or more in any 12 month period, must update their contact details and submit an overseas travel notification. The overseas travel notification can be completed through myGov.
• Australians who have a HELP or TSL debt and are a non-resident for tax purposes must either report their worldwide income or lodge a non-lodgement advice. This can be done online or through a registered tax agent.
> If worldwide income for the 2016-17 year is below $13,717, then only a non-lodgement advice form is required. A nonlodgement advice form can be lodged via myGov.
> If worldwide income for the 2016-17 year is above $13,717, then worldwide income needs to be reported. Worldwide income can be reported via myGov or through a tax agent by lodging an income tax return as a non-resident for tax purposes.
What is the reporting deadline?
• Australians reporting their own worldwide income have until 31 October 2017 to report.
• Australians who use a tax agent to report their worldwide income may be able to lodge later than 31 October 2017, but only if they are registered as a client of the tax agent prior to 31 October 2017.
After lodgement, a notice will be issued by the ATO confirming the amount of HELP and TSL debt that is required to be repaid and the date that repayment is due.
What are the repayment thresholds?
For the 2016-17 financial year, the income threshold at which HELP and TSL repayments are required is $54,869. Repayment rates start at 4% and increase to 8% once income exceeds $101,900.
It was announced in the May 2017 Federal Budget that the income threshold will drop to $42,000 from 1 July 2018. Repayment rates will start at 1% and increase to 10% once income exceeds $119,882.