Is it better to have HECS Help fees stopped once you pay it off, or is it better to get a larger tax refund?
Is it better to have HECS Help fee stop?
niagraBozO on 06/02/2020 - 12:22
Comments
$1 today is worth more than $1 tomorrow.
Do you like other people having control over your money?Yeah in 6 months it could be $10 in interest or a wide variety of different potential gains from investing it.
what difference does it make, you are basically asking the ato to hold onto your money, why not just save it yourself, or hand it to me.
or if you cant save and like to overpay in tax temporarily, just to get a refund, you could over pay on purpose your whole life, by finding the appropriate forms.
If you are going to pay it off during next tax year you should consider paying it off before 1st June (when it is indexed) and just prior to end of tax year, take the discount (not sure how many % it is now) and save on the indexing. Simple calc you'd be saving like 8%.
LOL sucks about the discount.
Paying it off on the 31st May and save 1.8% in 1 day. That is better than leaving it in the bank for 365 days and getting 2.2% unless you have other non deductible (ie personal loan, home loan or credit card) debts to pay off.
Better to give some margin for error and pay it a little earlier.
Also don't get the money back for a couple months from tax.
If you're talking about an employer withholding a HELP repayment amount, I cancelled mine as soon as I was certain the remaining balance (+ a bit for indexation - mine was a paltry $40 though) had been withheld. Unlike voluntary repayments, employer HELP deductions aren't applied to the loan throughout the year; all deductions are just recorded as a tax credit towards your final assessment. They're applied as a lump sum after you complete a tax return, so you'll get a single "2020 HELP Compulsory Repayment Credit" applied from the effective date of the tax return, which will certainly be after June 1.
Since you can't do a tax return prior to indexation, the only way to avoid the final year of indexation would be to pay off the whole balance in a voluntary payment (make sure they receive it before June 1) and wait for the tax refund to get back what has been withheld by your employer.
If you're talking about an employer withholding a HELP repayment amount, I cancelled mine
How did you do this? Don't you have to declare that you have a HELP balance?
You may elect not to - just means you cop a big bill come tax time, but it is not compulsory by any means to have your pay deducted to factor in HECS, however it is compulsory that you pay the portion commensurate to your taxable income.
Correct, I went to my employer a few months into the final year and said they had already withheld enough to finalise my HELP debt. I think I filled out a form and then they stopped withholding any further amount for HELP. Technically they'd already withheld about $1000 more than necessary to pay it back, and at tax time I got about $1000 refunded to me.
A few years prior they had made a mistake when setting up the payroll and neglected to witthold any HELP for the entire year. The tax office didn't care and I had to pay thousands for that years HELP contribution after submitting my tax return.
If I recall correctly, the withholding tax form simply asks if you have a HELP debt and not whether you would like them to withhold additional money.
When you make a declaration to say you don't have a HECS debt and it's a lie then you're just hoping there will be no consequences. There's no doubt you're doing the wrong thing.
I would say that once you've had enough withheld to pay your entire HECS debt you're fine. You might technically not be entirely truthful but the ATO isn't going to hunt down people who at the end of the financial year don't have a HECS debt.
I’d cancel and get paid what I should rather than have a bigger tax back bonus
Wish the voluntary repayment discount was still around
Reckon I’ve got 4-5 more years. Can’t waitIt's still your money in the end and you're just choosing to receive it as part of each pay cycle or as a yearly return.
It's not really a case that you get extra money - so for me, I'd rather have access to my own money sooner
Take the bigger tax refund and try put it to good use i.e. pay off any other loans or invest in some shares.
HELP loan is the cheapest loan you will ever get so I wouldn't be rushing to pay it off.
My HECS has been paid off for many years, I ask this question as when I went to a mortgage broker, they said that the bank would likely give me less money on a loan, as it still looks like less money.
My mate kept his on so he gets a big mid year refund which he uses to pay his rego and a few other things for the rest of the year. he doesnt notice it BUT he could also put that in an investment. If you are a poor saver it can be a good option.