FEE-HELP Not Useful, if You Can Afford to Pay and Earning above Threshold?

curious101 on 28/07/2020 - 03:51
Last edited 28/07/2020 - 03:53

Hello Bargainers

Recently my tax agent mentioned that FEE-HELP is not tax claimable. So what I understand now is that, although the benefit is that the loan is simply indexed based on inflation, if you can afford to pay the fees upfront and if you are currently working and earning above the minimum payment threshold, then it is probably better to pay fees upfront as it is tax deductible.

I would be grateful if you can help me understand the pros and cons, or if there are any misunderstandings on my part.

Thank you peeps!

Financial

Comments

  • MrHyde on 28/07/2020 - 05:42
    +4

    First thing to determine is whether the fees are tax deductible or not. Is the course going to help you in your current job and role or is it for a future position? Only the former is tax deductible.

    Once you have determined that, you can then decide if using Fee help is beneficial or not

  • JR63 on 28/07/2020 - 06:16

    https://www.ato.gov.au/Individuals/Income-and-deductions/In-…

    The tuition fees you incur is tax deductible if it fits into these conditions:

    • you are upgrading your qualifications for your current employment – for example, upgrading from a Bachelor qualification to a Masters qualification
    • you are improving specific skills or knowledge used in your current employment – for example, a course that will allow you to operate more machinery at work
    • you are employed as a trainee and you are undertaking a course that forms part of that traineeship – for example, an overseas trained person employed as an intern while doing a bridging course
    • you can show that at the time you were working and studying, your course led, or was likely to lead, to an increase in employment income – for example, a teacher who will automatically get a pay increase as a result of completing the course.

    It's the repayments of FEE-HELP that are not tax deductible (prevents being able to claim it twice). i.e. you can deduct it when you incur the debt (as long as it meets the above criteria), but not when you pay it off.

    If it doesn't fit the above conditions, it doesn't matter whether you pay it up front or incur FEE-HELP, it's not deductible.

    • WreckTangle on 28/07/2020 - 06:38

      I was advised that if it goes on Hecs then its not tax deductible

      • kerfuffle on 28/07/2020 - 06:42

        HECS is different to FEE-HELP

      • [Deactivated] on 28/07/2020 - 07:24
        +1

        Hecs is a gift from tax payers to you, tax payers subsidise your university fee, and you pay the difference through your hecs loan.

      • Gamer Dad Reviews on 28/07/2020 - 08:35
        +1

        From the ATO website:

        Expenses you can claim
        If you meet one of the eligibility requirements above, the following self-education expenses are allowable tax deductions:
        tuition fees, including fees payable under FEE-HELP, VET Student Loan (formerly known as VET FEE-HELP) (but doesn't include expenses paid under HECS-HELP),"

        OP is right, you can't claim HECS-HELP debt as a tax deduction, but you CAN claim FEE-HELP debt.

        • AustriaBargain on 28/07/2020 - 10:17

          What's the difference between the two? I tried not to think too hard about all that debt stuff when studying.

          • star-ggg on 28/07/2020 - 10:27
            +1

            @AustriaBargain: The course fee is cheaper for HECS vs full paying student. With FEE-HELP everyone is a full paying student and pays the same amount- you just choose to either pay upfront or take it as a government loan.

    • AustriaBargain on 28/07/2020 - 10:17

      Can I claim it against my tax if I studied biology but now work with computers?

      • star-ggg on 28/07/2020 - 10:25

        no, the course has to be relevant to employment current at the time of study

        • AustriaBargain on 28/07/2020 - 10:26

          Nobody told me that. I'd have part timed in a lab if I knew it could save me money later on.

          • brad1-8tsi on 28/07/2020 - 12:15

            @AustriaBargain: I wou;dn't be overly concerned. Most of the of people I know that thought they could claim self-education expenses got knocked back.

            I couldn't claim my mech eng as a motor mechanic, aircraft ground engineer or workshop planner.

            • AustriaBargain on 28/07/2020 - 12:16

              @brad1-8tsi: Man I wish I studied something more vocational.

              • brad1-8tsi on 28/07/2020 - 12:26

                @AustriaBargain: It's never too late.

                I've had 2 mates do mature age apprenticeships in their late 20s/early 30s. Both became electricians - one is High Voltage qualified.

                The year 1 & 2 coin isn't great but you do get paid as an adult rather than a "child". I always have a laugh at my first full weeks pay packet which was $62.50 less $12.50 board to Mum. No tax as I was under the threshold.

                • AustriaBargain on 28/07/2020 - 12:44

                  @brad1-8tsi: They must feel very mature, being in their late 20s/early 30s.

                  • brad1-8tsi on 30/07/2020 - 12:11

                    @AustriaBargain: I'm not sure if you are being sarcastic or what but over 21 is classified as a mature age apprentice. It comes with increased pay and a reduced term of apprenticeship and a few other advantages for both the employee and employer.

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