How Much HECS Will I Have to Pay Back?

[Deactivated] on 15/04/2017 - 12:04

Hi OzBargain,

In my previous job I was earning a salary that was under the HECS repayment threshold ($55K) I had been working in this position for the entire year and only left last week.

Due to my salary falling under the repayment threshold no tax was deducted from my salary.

When I left this job I had a fair bit of annual leave that was paid out ($5,000)

This and my new salary which is above the threshold will mean my taxable income at the end of the year will be higher than the minimum payment amount.

I have been paying back HECS in my new position but will the government charge my HECS based on the entire year not just the last 2 months of the financial year?

If this is the case I would be looking at a significant tax bill instead of a decent refund that I would of received if I never change positions.

Thank you.

Financial

Comments

  • j24bauer on 15/04/2017 - 12:24
    +1

    I have been paying back HECS in my new position but will the government charge my HECS based on the entire year not just the last 2 months of the financial year?

    Unfortunately, even if your taxable income for the year ends up being only $1 over the repayment threshold which is about $55k, you will become liable for the full amount of the HECS repayment that year (~$2.2k at $55k)

  • redfox1200 on 15/04/2017 - 12:25

    they will charge you on total earnings

  • polol on 15/04/2017 - 12:43

    "If this is the case I would be looking at a significant tax bill instead of a decent refund that I would of received if I never change positions."

    because you literally earned more money. ATO calculates it based on your total taxable income.

  • spackbace on 15/04/2017 - 13:58

    Do you really plan on earning under the threshold your entire life?

    At some point you will have to pay it back…

    I have been paying back HECS in my new position but will the government charge my HECS based on the entire year not just the last 2 months of the financial year?

    Obviously it will be assessed on your full financial year earnings.

    • [Deactivated] on 15/04/2017 - 14:12
      -2

      Did you even read what I said? This was not about having to pay back HECS, simply the way the system only deducts HECS when your weekly income reaches a certain level which can leave you with a huge tax bill you were not expecting.

      • spackbace on 15/04/2017 - 14:17

        Why wouldn't you expect it? If your tax year earnings go over the threshold, you pay it. If your earnings over 1 pay period go over the threshold, you pay it, but could get it back at the end of the tax year if your earnings are under the threshold.

        Doesn't seem like much of a surprise?

        • [Deactivated] on 15/04/2017 - 14:29

          Because you can't always predict the need to change your position or a sudden increase in pay.

          Example: You're earning $54,000 P.A for have done for 11 months, no HECS tax has been reserved as you are below the threshold. 15th of June you receive a bonus from work of $1000, after tax you get about $600. Come June 30 you're now liable to pay $2408 in HECS debt your work did not deduct and you were not expecting.

          Similar situation for me where I had to change positions due to my Wife's job. My annual leave payout which I was expecting to use instead gets paid out and i'm liable for a $2408 bill in 2 months.

        • spackbace on 15/04/2017 - 14:35
          -1

          @Mysterymeat:

          Very easy to do a repayment plan over 12 months, which you would've had deducted from your pay anyway, this just delayed it

    • ronnknee on 15/04/2017 - 15:14

      This. OP, you have a higher income now and also the $5000 from cashing out leave. I'm sure you can afford your HECS liability.

      If this is the case I would be looking at a significant tax bill instead of a decent refund that I would of received if I never change positions.

      If you were expecting a decent refund, then that means you were overpaying your tax? At the end of the day, you will be paying what you should be paying. More pay means more tax. By your logic, that means you should stick to a low salary job (under $18200) so that you don't have to pay tax at all (which is very silly).

    • ATTS on 16/04/2017 - 17:19

      "At some point you will have to pay it back… "

      Just curious, what happens if someone has a hecs debt and never works? or leaves the country?

      • spackbace on 16/04/2017 - 18:32
        +1

        Yeah it goes unpaid :/

  • peterpeterpumpkin on 15/04/2017 - 14:22
    +1

    Yes, you're assessed on your final income as others have said. Here's the calculator: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=ST…

    It's so frustrating when you're right on the edge of any threshold. If your taxable income is only a few hundred over the threshold then you might be able to find a deduction.

    When you start making fancy money working for someone else, that's when salary packaging (cars, insurance, personal expenses etc) start to look much more attractive (https://www.moneysmart.gov.au/managing-your-money/income-tax…). You'll still pay HECS on the equivalent income (since it takes fringe benefits into account) but your taxable income might decrease significantly and your employer pays a flat 15% tax on the fringe benefit. It's basically tax deductions for the "salaried rich".

    • [Deactivated] on 15/04/2017 - 14:31

      Good advice, thanks.

Login or Join to leave a comment
Login Join