Registered User
Who's the best person to speak to re. HECS type stuff
need advice girls. Not sure who I/we n eed to talk to. An accountant or finacial planner?? I have put heaps of research into which course I want to do and have found "the one". Its 12K and i can do it on a vet help (Hecs) scheme. DH is worried that it will stop us getting loans in the future and that because we are trying to pay debt off that this will stop that.
In my head I have a plan that once I get this (even the first part - cert 3) that I can start doing some extra work - in a salon or from home. I don't have to start paying back the hecs stuff until i start earning over $47K which even now - even now I don't earn close 2 that working 4 full days! so it would be a little while until I can start to pay it back. Any extra we can earn at the moment will be helping to pay off debt we have.
I need to take DHto talk to someone so they can explain it all too him because he needs to hear it from someone other than me. So who is best at this sort of stuff - an accountant or a financial planner? I really want to do this and know I can do well at it but i need his support to do it.
Registered User
do you get your taxes done with an accountant? maybe you could ask them to explain how it works
it doesn't impact your access to loans at all - just means you have a bit more deducted with your tax each week/fortnight. in all honesty, i have never been asked about student loans when applying for finance. they tend to look at net income to check servicability - and your hecs/help debt has already come out by then!
Registered User
We refinanced our home loan while I still had my $20k HELP debt and it didn't factor into it at all. The person we spoke to at our bank explained it was because it comes out with your tax. And remember, you only start paying it back once you earn over a certain amount.
Moderator
Whilst accountants know about dealing with HECS/HELP debts for tax purposes, they may not be up on what a bank is looking for loan wise. As BG said if they are just looking at your take home pay, then you HECS payment is already dealt with. I would be more inclined to chat to someone at a bank about this. Good luck
Registered User
It's worth checking out more thoroughly because I'm pretty sure the non-HECS/HELP funded places cost a LOT more than the HECS/HELP ones do.
Even if you do the HECS fee, you can opt to make payments throughout your course if you want to reduce the final debt amount. There is normally a discount for voluntary payments or payments made up front. Doing it this way would still be cheaper than paying for a non HECS place.
Registered User
The one i'm looking at is VET Fee - HELP.
Thanks eveyone
Registered User
When/if you apply for finance does it aske you about any hecs/help loans? Do you list it as a current debt? I'm hoping that this is going to be the last thing that DH is worried about. Our friend that is here tonight told him that he thinks its a good idea... just the last hurdles...
Effectively, my take hm pay will be less until i pay back the debt yeah? because they with hold the tax? If i don't earn over the threshold and therefore don't have to pay back anything at that point, what happens with the tax that was withheld?
Sorry for all the questions.
Registered User
[i presume] most payroll systems have acheckbox for deduct help per employee.
When you fill in your tax dec you would tick the box that says help debt and your employer would then tick the box that says yes deduct help.
then afaik it will automatically deduct once you are over the threshold.
so 47k is the threshold at the moment so your taxable income would need to be $900 per week for it to start being deducted (i think)
then it is 4% of your taxable income.
if you pay an amount back but then your annual income is lower than the threshold, it's too bad - you dont get it bacl... but better than owing it at the end of the year if you did go over the threshold.
i only work with one piece of software so im not 100%, but is this what you meant?
BellyBelly Life Subscriber
Hi hun - HECS/HELP expert here - I have such a big one it is crazy LOL
It isn't taken into account when applying for "real" loans like home loans etc.
To repay it what happens is - when you are working you have to tell your employer that you have a HECS/HELP debt. They then use a different set of tables to calculate the amount of money that they withhold. But if your income is below the first repayment threshold then you don't have anything withheld (just your normal tax). Once you reach the threshold your employer witholds tax like normal but also a little more to cover the HECS. Once you do your tax return the tax office then makes sure that you have paid enough and gives you a refund or a notice to pay extra (just like tax).
It is not an onerous amount that with withheld each week/fortnight once you do start repaying it.
Something to remember is that it is indexed so every year that you have the debt it increases at the rate of CPI - but that is still heaps cheaper than a bank loanAnd while it is not a pleasant thought - HECS/HELP debts also die with you - so if something were to happen to you DH wouldn't have to repay it.
Hope that that helps!
ETA - Just read DC's post - I did get a repayment one year when I had overpaid - but that was about 10 years ago - so maybe that bit has changed.
Registered User
Thats been helpful. Tks
So - if i'm earning 36K p/a wk would tick the box that says yes - deduct help, i tick the box that says deduct help but really nothing gets paid because i haven't earn't enough? But my take hm pay each wk would be less throughout the rest of the year because wk have been with holding tax for cover the debt? ITMS?
- if we were to apply for a home loan for eg in a few years, does hecs/help affect this?
Argh - think i'm confusing myself trying to get this through to DH!
Moderator
This is what payroll does with your pay when taxing it:
Payroll will deduct tax and HELP/SFSS as per what you have selected on TFN declaration, if at a later date things change, then complete a PAYG Withholding Variation (adding or removing HELP debts, changing to or from tax free threshold etc.)
All the deductions are lumped together. There is no differentiation between what was deducted for PAYGW tax, HELP or SFSS. At tax time when you do your tax return. Your whole liability will be calculated together based on your taxable income.
So if you have a salary of $48,000, then both PAYGW and HELP will be deducted. At tax time, if after your deductions your taxable income is only $45,000 and below the HELP threshold, then your tax debt calculated will only include PAGYW, not any HELP. If more has been deducted, then you get that back.
It often looks like people have not paid enough HELP when they do their tax returns. It seems that the ATO calculates the PAYGW component, first then everything else after. So often, if you owe something, then payroll gets blames for not deducting enough HELP. What tends to happen if you pay is up and down through the year, or moves from a no HELP bracket to a HELP one, that some pays may not have HELP calculated on them (as per the ATO tax tables) and others will do, but at the end of the year they are all lumped together. This often can create a shortfall in tax/HELP deducted.
At any time you can opt for more tax to be deducted from your pay. If you over pay, you get that back with your tax return (assuming you have no other tax liability that will absorb it). If you think that your pay may be up and down, it is something worth considering.
Just a warning. If you start study at the beginning of a calender year, the ATO will apply your HELP liability to your whole financial year income. Really sucks, as the first half of the year you don't know you have a HELP debt, then in the last half you do have one. Been stun like that myself when working full-time and studying part-time.
Last edited by Astrid; July 1st, 2011 at 09:25 PM.
Moderator
If you have HELP debt always tick the box. Each pay period when your pay is calculated it will be compared to ATO tax tables, which state the amount to be withheld. So if you are under the threshold for that pay, then HELP will not be deducted, if you are over for that pay (you may have worked a lot of overtime, or had a bonus), then HELP will be calculated.
The ATO site has a calculator that you can use to work out different scenarios of tax deducted with or without a HELP debt.
BellyBelly Life Subscriber
OK - breathe
If your income is only $36K a year you are below the threshold so there would be no additional HECS debt deducted each week - it would just be tax like any other person who didn't have a debt. Once you reach $47,196 pretax income you repay 4% HECS (this percentage increases as your income increases) so that would be about $36 a week that would be deducted from your pay in addition to the normal tax that would be deducted.
And no - the HECS debt isn't counted as a "debt" when you are applying for a home loan - the only way it is taken into account is that they tend to use your take home income to do the calculations so yours would be slightly lower each week if you were earning above $47K. So if you are below $47K it is not taken into account at all.
Registered User
Interesting about the hecs being repaid as my DH got a hell of a lot of tax back in his first full year of work, but paid hecs and did not *need* to, but that remained paid...
that is why i said about the hecs not being refunded, could be my mistake!
Registered User
When I started work, I earnt enough to pay back HECS each fortnight. But as I only worked March-June that year, I got a huge tax refund which included what I'd paid towards HECS. It didn't state that anywhere on the refund, but there was no reduction showing on my HECS statement the following year.
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