TL;DR
- HECS debt does not pause or freeze when you leave Australia. Indexation continues every year.
- Since 2017, non-residents with HECS-HELP debt must self-assess and report their worldwide income to the ATO annually.
- Failure to lodge or repay can result in compulsory collection measures against Australian assets.
- A 20% HECS-HELP debt reduction was announced in November 2024, legislated via the Universities Accord (Cutting Student Debt by 20%) Act 2025, and applied by the ATO to all outstanding debts as at 1 June 2025, with most reductions processed by end of 2025 [3].
- Get clarity on your HECS-HELP status from a registered specialist to understand where you actually stand.
1. Does HECS Debt Actually Disappear When You Leave Australia?
No. HECS-HELP debt does not disappear, pause, or become inactive when you become a non-resident. The balance continues to index to the Consumer Price Index (CPI) every year on 1 June, compounding the amount you owe regardless of your location or employment situation overseas [1]. Many expats carry the assumption that “out of sight, out of mind” applies here. It does not. The debt is registered against your Tax File Number, which travels with you permanently.
You can track your current HECS-HELP balance and repayment history by logging into myGov at any time from overseas [2]. If you have not checked your balance since departing Australia, the figure may be meaningfully higher than what you remember.
2. Are You Still Required to Make Repayments as a Non-Resident?
Building on the indexation point above, the harder question for most expats is whether they are actually required to make repayments from overseas. The answer, since the ATO introduced the overseas notification and assessment framework in 2017, is yes.
If you hold a HECS-HELP debt and your worldwide income (converted to AUD) exceeds the minimum repayment threshold for the relevant financial year, you are required to make a compulsory repayment. This applies to non-residents in the same way it applies to Australian residents [1].
- You must notify the ATO that you are overseas and have a HECS-HELP debt.
- You must lodge an overseas levy assessment each year your worldwide income exceeds the threshold.
- The repayment rate is calculated against your income, not against what you earned in Australia specifically.
Many expats earning strong foreign salaries in finance, consulting, or tech are comfortably above the repayment threshold and do not realise it. This is where a tax specialist who understands non-resident obligations helps close the gap that generalist accountants often miss.
3. What Happens If You Simply Ignore the Obligation?
Stepping back from the technical detail, a separate concern is what the practical consequences look like for an expat who does nothing. The answer is that the ATO’s collection reach is longer than most people living overseas appreciate.
If you hold Australian assets, including property, shares, or superannuation, the ATO has domestic mechanisms to recover outstanding HECS debt and associated penalties. These include:
- Offsetting any Australian tax refunds against the outstanding HECS balance.
- Garnishing income from Australian sources (rental income, dividends, distributions).
- Escalating the debt balance through general interest charge if assessments are issued and unpaid.
The ATO does not typically pursue individual expats offshore through foreign jurisdictions for a HECS balance alone, but it does not need to if you have Australian assets or ever return to lodge tax returns. The unresolved liability will surface, and by that point the accrued indexation and penalties can add up to a materially larger sum than the original debt [1].
4. Is There Any Positive News in 2026 for Expats With Remaining HECS Balances?
A related but distinct question is whether any recent policy changes work in your favour. There is a meaningful development here worth understanding carefully. The Australian Government announced a 20% reduction to all outstanding HECS-HELP debts in November 2024, which was legislated via the Universities Accord (Cutting Student Debt by 20%) Act 2025. The ATO commenced processing reductions to debts as at 1 June 2025, before indexation, with most reductions completed by end of 2025 [3]. The ATO applied the cut automatically, with no action required from individuals [3].
Separately, for expats who also hold Australian property, the same 2025-26 Budget proposed that HECS-HELP debt would no longer reduce borrowing power for borrowers likely to repay their debt within a certain timeframe [4]. This is a meaningful structural change for expats trying to qualify for Australian mortgages from overseas.
| Policy Change | What It Means for Expats | Status |
|---|---|---|
| 20% HECS-HELP debt reduction | Outstanding balance reduced across the board; applied automatically by the ATO to debts as at 1 June 2025, with most reductions completed by end of 2025 | Enacted via the Universities Accord (Cutting Student Debt by 20%) Act 2025; applied by ATO [3] |
| HECS excluded from borrowing capacity assessments | HECS debt will not reduce mortgage borrowing power for eligible borrowers | Proposed; subject to legislation passing [4] |
Note: The HECS excluded from borrowing capacity assessment change is subject to formal parliamentary passage. Treat it as anticipated rather than confirmed until enacted.
5. What Should an Expat Actually Do Right Now?
Given everything above, the practical question is where to start. The priority actions depend on your specific situation, but the common thread is that inaction is the most expensive choice available.
- Check your current HECS-HELP balance via myGov. If you have not done this since leaving Australia, do it before anything else [2].
- Determine whether you were required to lodge overseas levy assessments in prior years. If your worldwide income exceeded the threshold and you did not lodge, you may have outstanding obligations.
- Do not conflate your Australian tax return with your HECS overseas assessment. These are separate obligations. Many expats file one but not the other.
- Understand that the 20% reduction does not eliminate remaining obligations. It reduces the balance, but the repayment framework and indexation mechanism remain.
- If you have overdue lodgments, engage a registered specialist before approaching the ATO. Voluntary disclosure managed correctly can substantially reduce penalty exposure.
ODIN Tax works through this exact process with non-resident clients across 40+ countries as part of broader Australian tax non-resident compliance engagements. The objective is always to understand the full picture first, then lodge strategically.
Frequently Asked Questions
Does HECS debt get written off if I never return to Australia?
No. HECS-HELP debt is not written off based on non-residency or extended absence. It remains registered against your Tax File Number indefinitely and continues to index annually [1].
Do I need to tell the ATO I have left Australia and still have HECS debt?
Yes. You are required to notify the ATO that you are living overseas and hold a HECS-HELP balance. This triggers the overseas levy assessment framework that calculates your annual repayment obligation based on worldwide income [1].
Will the 20% HECS reduction apply to non-residents and expats?
Yes. The reduction, enacted via the Universities Accord (Cutting Student Debt by 20%) Act 2025, applies to all outstanding HELP debts as at 1 June 2025, including those held by non-residents and expats. The ATO applied the cut automatically without individuals needing to take any action, and most reductions were processed by end of 2025 [3].
Can the ATO take money from my Australian rental income to cover unpaid HECS?
The ATO has the ability to offset outstanding tax-related liabilities, including HECS assessments, against income sourced in Australia. If you receive Australian rental income and have unresolved HECS assessments, your Australian assets are within the ATO’s collection reach.
What is the difference between a HECS overseas levy assessment and an Australian tax return?
They are separate obligations. An Australian tax return covers your Australian-sourced income and tax position. The HECS overseas levy assessment is a standalone annual obligation to self-report your worldwide income for the purpose of calculating your HECS repayment as a non-resident [1]. You may need to lodge both.
What happens if I have multiple years of unfiled HECS overseas assessments?
You may have accumulated unpaid repayment amounts plus indexation on those amounts. The right approach is to understand the full scope of the outstanding obligations before lodging, as voluntary disclosure managed proactively typically results in a better outcome than the ATO raising assessments unilaterally.
Does HECS debt affect my ability to get an Australian mortgage as a non-resident?
Historically yes, because lenders factored HECS repayment obligations into serviceability calculations. The 2025-26 Budget proposed removing this for eligible borrowers, which would be a meaningful change for expats seeking Australian mortgages [4]. Subject to legislation passing.
About ODIN Tax
ODIN Tax is Australia’s specialist tax agent practice for Australian expats and non-residents, and a Registered Australian Tax Agent. Part of the ODIN Group alongside Odin Mortgage, ODIN Tax prepares Australian tax returns, manages overdue lodgments, and provides tax residency and CGT advice to Australians living across 40+ countries. HECS-HELP compliance for non-residents is a core part of the practice’s work, handled in coordination with broader Australian tax non-resident obligations rather than in isolation. Headquartered in Hong Kong and led by Tax Director Pau Lam, the team brings specialist expat tax experience to every client engagement. ODIN Tax has served over 10,000 expats across 40+ countries.
Not sure where your HECS obligations actually stand?
ODIN Tax works with Australian expats across 40+ countries to clarify HECS-HELP obligations, clear overdue lodgments, and bring your full Australian tax position into order. No flying home required.
Disclaimer: This article contains general information only and does not constitute personal tax advice. HECS-HELP obligations, repayment thresholds, and ATO policy are subject to change. The proposed 2025-26 Budget measures referenced in this article are subject to formal legislative passage and should not be relied upon as enacted law. For advice specific to your circumstances, please consult a Registered Australian Tax Agent.
References
- Understanding HECS-HELP in Australia | H&R Block (www.hrblock.com.au)
- Understanding HECS debt: what you need to know | The Australian National University (study.anu.edu.au)
- Tax experts on the 20 per cent HECS-HELP discount and your tax return – ABC News (www.abc.net.au)
- under the 2025-26 Budget, your HECS-HELP debt will no … (www.threads.com)
