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So, I am now able to use a salary packaging/ sacrifice type system at work now however I am wondering if it will affect my HECS repayments in any way. I'm currently not having to make payments as I don't make enough to do so. If I use salary sacrifice will I have to make payments or how does it work really.
Yes you will. I years ago salary packaged with a HECS debt, I just was advised by pay office how much to increase tax payments buy each pay and then had to send them a letter stating amount and all was fine at tax time. They had taken out enough so that I got a return and did not need to pay tax.
Yes, you need to pay your HECS at the equivalent pay bracket your fringe benefit puts you in (as per the grossed up amount).
Sounds complicated and possibly not worthwhile. So does that mean I would have to pay a lump sum of HECS at end of financial year once tax was done? Or would it somehow be known as soon as my salary sacrifice went through and HECS payments taken out each pay day?
I think it depends on what the salary sacrifice / package is.
Although your pay slip says work took out x number of $ to put towards HECS, it doesn't actually go into a HECS account. It goes to the ATO with your other tax money. Then at tax time, you're assessed as to if and how much you need to pay towards your HECS debt. That money is taken from the tax money submitted throughout the year. Then your tax debt and HECS contribution come out of that. So if work takes $5000 in tax from my pay throughout the year and the ATO days I need to pay $2000 tax that leaves me $3000. If the ATO says I need to pay money off my HECS debt (say $1000) then that comes out of the remaining $3000 which leaves me a balance of $2000 which I get back as a rebate. These are all just numbers as an example though.
On the other hand, if you haven't pay enough, you will get a debt.
With salary packaging, the amount you package is added to your pre tax income which then determines your tax rate for HECS and things like family tax benefit - so be careful. Whether you then have to pay HECS or not for this financial year will depend on the tax bracket it puts you in.
HECS repayments (at the end of financial year) are a percentage of your total income.
It is best to get advice from an accountant or to just get extra tax taken out by your employer. I was advised by accountant that an extra $50 per pay is usually enough to cover it.