Higher Education Loan Program (HELP) debt for non-residents

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By Michael Craig

Michael Craig, Rental property deductions

If you have a Higher Education Loan Program (HELP) debt including HECS-HELP; FEE-HELP; OS-HELP and SA-HELP and plan to leave Australia for at least 183 days or have already left Australia and have been away for at least 183 days new repayment obligations apply to you. For purposes of this article we will refer to all the above loans as HELP debts. These changes ensure that HELP debts are repaid even if an individual no longer resides in Australia.

Higher Education Support Act (HESA) law changes received royal accent on 1 January 2016 and requires individuals who plan to leave Australia for at least 183 days and who have HELP debts to declare their intent to leave Australia and report worldwide income annually.

The intent to leave Australia declaration must be made within 7 days of leaving Australia. This declaration can be made using your myGov account or contacting your accountant. If you have been outside of Australia for at least 183 days and have not made the declaration it should be done as soon as possible.

Next you need to declare your worldwide income on an annual basis for each Australian tax year. Once the full HELP debt has been repaid you will no longer be required to declare your worldwide income to the Australian Taxation Office (ATO).

There are three methods available to calculate worldwide income for these purposes, namely:

  1. The simple self-assessment method;
  2. The overseas assessed method; and
  3. The comprehensive tax-based assessment method

Under the simple self-assessment method gross worldwide income for the Australian tax year period is declared to the ATO along with your occupation code. The ATO will then apply a standard deduction based on your occupation. The net worldwide income amount after applying the ATO standard deduction will then be used to calculate any HELP debt liability for the year.

Using the overseas assessed method taxable worldwide income per a foreign tax return is declared to the ATO and used to calculate any HELP debt liability for the year. To be able to use this method you may only have one foreign tax assessment (cannot be assessed in multiple countries) and the assessment must cover a full 12 months. If these conditions are not met this method will not be available to you.

The comprehensive tax-based assessment method requires worldwide taxable income to be calculated using the Australian taxation rules. Using this method deductible expenses under Australian taxation rules are offset against gross worldwide income to calculate worldwide income for the purposes of HELP debt repayment.

You are able to change the method used to calculate worldwide income on an annual basis to ensure that the best result is achieved.

The ATO will apply the applicable repayment rate to your worldwide income to calculate the HELP liability for the year. The thresholds and rates used to calculate the yearly HELP liability is the same as Australian resident thresholds and rates. This ensures that HELP debts are repaid at the same rate regardless of the country that you choose to reside in.

Calculating worldwide income for HELP debt repayment purposes can be complicated, please contact our office if you would like further information or require assistance.

Want to know more?

If you have any further questions about HELP debts, please contact Michael Craig, our Business Advisory Associate Director, for assistance.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

 

 

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