How to Manage Your HECS-HELP Repayments on a Tax Return for a Non-Resident
The cost of tuition fees in Australia can be high. If you were lucky to receive financial aid from the government to cover your school expenses, you might be questioning the repayment procedure, including the timing of payments.
It may seem challenging to repay your HECS-HELP loan while residing overseas, but it could be more complex. We have provided a list of easy steps below to assist non-tax residents in managing their HECS-HELP repayments.
What is a HECS-HELP Loan?
The Australian government offers a financial scheme called HELP loan to assist students in funding their education. To be eligible, the student must have a commonwealth-supported place at a higher education institution, which the government partially funds.
The HELP loan only covers the student contribution amount and does not include expenses such as accommodation, textbooks, or electronic devices.
Before the census date, which is the deadline for finalising enrolment and making payment, students must either pay the cost upfront or choose to defer the cost to a HECS-HELP loan. To be eligible for a HECS-HELP loan, the student must:
- Be enrolled in a commonwealth-supported place.
- Be an Australian citizen who will study part of the course in Australia.
- Have a tax file number (TFN).
How much can I borrow?
Students who meet the eligibility criteria can obtain HELP loans, with a maximum limit of $109,206. Nevertheless, some approved courses have a higher limit.
How do I normally repay a HECS-HELP Loan?
After completing your education, you need to repay your HELP debt, and the repayment process varies based on your circumstances.
You also need to make compulsory payments through your tax return. You don’t need to provide any details about your loan, as the Australian Taxation Office (ATO) will calculate your repayment amount when you lodge your tax return.
The compulsory repayment rate is determined by your income level, with higher earners repaying more. Additionally, only your income is taken into account for the compulsory repayment calculation, and not that of your spouse or parents.
It is also possible to make voluntary payments towards your HELP loan to reduce your debt and prevent interest from accumulating.
When do I start repaying your loan?
Starting from the current tax year (2022-2023), you must repay a portion of your loans through the Australian Tax System if you earn above the compulsory repayment threshold of $48,361.
The repayment threshold is modified annually to account for average weekly wages and inflation.
How much will I repay?
The repayment amount for your loans is based on your income, and expats may also have to pay an overseas levy. The following are the repayment rates for various income thresholds:
Percentage You Pay to the ATO
$48,361 or below
No payment is required for income below this amount.
Between $48,361 and $55,836
1% payment required.
Between $55,837 and $59,186
2% payment required
Between $59,187 and $62,738
2.5% payment required.
Between $62,739 and $66,502
3% payment required.
Between $66,503 and $70,492
3.5% payment required.
Between $70,493 and $74,722
4% payment required.
Between $74,723 and $79,206
4.5% payment required.
Between $79,207 and $83,958
5% payment required.
Between $83,959 and $88,996
5.5% payment required.
Between $88,997 and $94,336
6% payment required.
Between $94,337 and $99,996
6.5% payment required.
Between $99,997 and $105,996
7% payment required.
Between $105,997 and $112,355
7.5% payment required.
Between $112,356 and $119,097
8% payment required.
Between $119,098 and $126,243
8.5% payment required.
If you earn between $126,244 – $133,818
9% payment required.
Between $133,819 and $141,847
9.5% payment required.
$141,848 and above
10% payment required.
How do expats repay HECS-HELP Loans?
Below are the instructions to repay your HECS-HELP loan through your tax return while living overseas.
Inform the ATO you're moving overseas
First, filling out an overseas travel notification is essential if you plan to stay abroad for more than 183 days within a year. This requirement applies to all expats, regardless of whether they owe any student loan payments. You must notify the ATO of your plans within seven days of leaving Australia.
Your notification should contain your contact information, such as phone number, international residential address, and email address. You can file your report via myGov or an Australian registered tax agent.
Determine your tax residency
Once you move abroad, you may no longer be considered a tax resident, and many Australians who leave the country become non-residents for tax purposes.
This implies that you will have to pay taxes at a higher rate without being eligible for any tax-free threshold. However, any income earned outside Australia is exempted from taxation.
You can determine your tax residency status by taking several tests the ATO offers. The ATO grants tax residency to individuals who have been in Australia continuously for at least six months, working in one job and living in the same place, while non-residents live and work abroad for 183 days or more within a year.
Report your worldwide income
As a non-resident, worldwide income includes all the money you earn from every country in the financial year. The process differs slightly for non-residents.
If your worldwide income is equal to or less than $11,753 (25% of the minimum repayment threshold), you must submit a non-lodgment advice form. However, if you earn income in Australia, you must still file a tax return.
If your worldwide income exceeds $11,753, you must report it. You can report your income or submit a non-lodgment advice form through a tax agent or online.
Calculate how much you owe
Suppose your income from all countries exceeds the minimum repayment threshold of $48,361 in Australian dollars. In that case, you will need to pay back your tuition fees, either in the form of compulsory repayment or overseas levy.
Luckily, you don’t have to compute the amount yourself. When you file your tax return or report your worldwide income, the ATO will determine the compulsory repayment, and overseas levy amounts you owe.
Example: Repaying tuition fees as a non-tax resident
Lucinda is a non-resident of Australia and resides in Singapore. She earns an annual income of $50,000 in Singapore and investment property in Australia, earning her $30,000 annually. She still owes $20,000 on her HECS-HELP loan.
As she plans to live outside Australia for more than 183 days, Lucinda notifies the Australian Taxation Office of her departure within seven days of leaving the country.
She seeks the assistance of a tax agent to report her worldwide income of $80,000, which exceeds the minimum repayment threshold of $11,753. Although Lucinda’s income in Australia is below the compulsory repayment threshold, she must pay an overseas levy of $4,000 towards her student loan.
To determine the amount of compulsory repayment, she can use the ATO’s study and training loan repayment calculator or seek the advice of a tax advisor.
Example: Repaying tuition fees as a tax resident
Victoria is an Australian citizen living in Hong Kong but maintains her tax residency status in Australia. She earns $60,000 annually in Australia and an additional $30,000 outside Australia, making her worldwide income $90,000.
She still owes $20,000 on her HECS-HELP loan. Even though she lives in Hong Kong, Victoria remains a tax resident in Australia. Therefore, she files her tax return at the end of the tax year, declaring her worldwide income of $90,000.
The ATO calculates that she needs to make a compulsory repayment of $5,400 for that tax year. Since she is a tax resident, she doesn’t have to pay an overseas levy.
What other student loans do I repay through ATO?
Various loans are available under the HELP scheme provided by the Australian government to support Australian students studying in the country. These loans include:
- FEE-HELP for students studying at private institutions with no Commonwealth support
- OS-HELP for eligible Commonwealth-supported students studying part of their course overseas
- SA-HELP for paying student service and amenities fees
- VET FEE-HELP for higher-level vocational education and training courses
The outstanding balance of these loans is indexed annually by the Consumer Price Index (CPI), and the Australian Taxation Office manages all HELP Student Loan debts. Once your taxable income reaches the repayment threshold of $48,361 or more, you will start repaying your HELP loan debt.
Non-resident student loan repayments
Paying off student loans can be challenging for Australian taxpayers, and it can be particularly complicated to understand how to repay your HECS-HELP loan when living overseas.
If you need help paying your loan as a non-resident, you can consult with a tax agent at Odin Tax, who specialise in filing expat tax returns.
Frequently asked questions
The Australian government expanded the range of loan types available under the Higher Education Support Act 2003, renaming the program as the Higher Education Loan Program (HELP).
As part of this change, the existing Higher Education Contribution Scheme (HECS) was incorporated into the new program, which is now known as HECS-HELP.
HECS-HELP is a loan scheme to assist eligible Commonwealth-supported students in paying their student contribution amount. Students at all public universities and a few private higher education providers can apply for HECS-HELP loans.
HECS-HELP is a loan program available to students who have Commonwealth-supported places at public universities or approved private higher education providers.
On the contrary, FEE-HELP loans are for students enrolled in courses where approved providers set the tuition fees, and the government does not subsidise their education.
The Australian government offers HECS, a loan program with low-interest rates that assists Commonwealth-supported students in paying for their tuition.
HELP refers to the Higher Education Loan Program, which includes various loan options and financial aid for Australian students pursuing higher education.
HECS is one of the loans included in the HELP program.
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