By Kim Reynolds
On 26 November 2015 the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 received Royal Assent and was enacted by the Parliament.
The stated objective of this legislation is to amend the Higher Education Support Act 2003 (HESA) and the Trade Support Loans Act 2014 (TSL Act) to allow for the government to recover Higher Education Loan Programme (HELP) and Trade Support Loan (TSL) debts from those who are residing overseas.
Prior to the introduction of these legislative amendments there was no requirement for individuals with HELP or TSL debts to make repayments while residing overseas, regardless of the level of their income. These amendments will mean that Australians living overseas will be subject to the same repayment obligations as those residing in Australia.
The new arrangements apply from 1 January 2016 at which point individuals with HELP or TSL debts who leave Australia with the intention to remain overseas for more than six months (183 days) will be required to notify the Australian Taxation Office (ATO) no later than 7 days after leaving Australia.
Those already living overseas on 1 January 2016, and intending to remain overseas for at least a further 183 days, must notify the ATO no later than 1 July 2017.
Repayment obligations will commence from 1 July 2017 for income earned in the 2016–17 financial year, with non-resident taxpayers being required to assess their Australian and their foreign-sourced income for the year. If this income exceeds the applicable minimum HELP or TSL repayment income threshold for the year, they will be liable to make a repayment.
Example: Individual living in the United States
Australian income (interest)
US income (salary and wage)
Assessed worldwide income
|Repayment income rate (per ATO 2015-16)||7.0%|
The legislative amendments refer to the registration and notification with the ATO to be in the “approved form” without defining the term.
While the “approved form” is not specified in the legislation, Christopher Pyne MP stated at the introduction of the Bill to the House of Representatives:
“From 1 January 2016, all Australians with current and new HELP and TSL debt who move overseas for six months or more will be required to notify the ATO via the myGov website to facilitate repayments”.
The media release from Mr Pyne MP on 17 September 2015 also states:
“The Australian Taxation Office will provide a simple online tool to enable debtors to easily assess their repayment income and make repayments.”
1. We recommend that all individuals with either HELP or TSL debts that are intending to leave Australia after 1 January 2016 for an extended period of time look into their notification and registration requirements and ensure they are able to satisfy those requirements.
2. We recommend that anyone who knows an Australian resident already living overseas that has a current HELP or TSL debt gets in contact with this individual to ensure they are aware of these changes. While such individuals have until 1 July 2017 to notify the ATO, the Tax Office acknowledges that their access to this information and their likelihood of being made aware of these changes may otherwise be limited.
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