#HECSHELP #taxtime #taxdebt #ATO #financialtips
Hey there! 😊
So, I found myself in a bit of a pickle…I forgot to declare my HECS-HELP debt to my current employer, and tax time is creeping up on me. Yikes! 😱
Here’s a quick rundown of my situation:
– Started late last year with a taxable income of 95k (79k after tax)
– Been taxed 16.5k so far, but I didn’t factor in the HECS-HELP withheld amount
– According to ATO metrics, I might owe around 5.7k for this financial year
Any advice on how screwed I am and how I can minimize my tax debt? Help a fellow struggler out! 🙏
Possible solutions I’m thinking of:
– Contacting ATO for guidance on how to rectify the situation
– Setting up a payment plan if needed to manage the tax debt
Any other tips or insights are welcomed with open arms! Let’s navigate this tax maze together. 💸🔍
Payment plan for a year. Youll be fine
Start putting money aside for it now.
Lodge return in October. Pay off however much you have put aside between now and then. (Edit: to clarify, pay off the resulting tax debt from your return – not pay a voluntary HECS contribution).
Set up a payment plan and pay the balance off in instalments (should be able to get 12-18 months online, two years if you ring up).
Update your employer so that they start withholding for it from 1 July.
Start saving now, not due until November.
Lol you’re fine. There are many cases like yours. Just talk to your accountant and go through the plan together.
Youll be fine, i used to do this intentionally
No problem. Just declare it when you do your tax.
So you have earnt 95k this financial year? Or that’s the wage/salary you have started on as of late last year?
I was not in a good headspace for a few years and did this. I ended up with some $50k+ tax bill after 4-5 or so years as I also kept putting off my tax return.
The ato were still happy with a payment plan and the max they can go to is apparently around 2 years. Nothing to worry about just pay off at the rate you’re comfortable with. Start to plan a budget now as in my case the ato went through all of my finances to get me to pay it in the shortest time possible. They also wanted an upfront payment to start in my case it was a few thousand. If I could do things again I would have planned out my budget before the Spanish Inquisition with the ato asking about every aspect of my financial position. It would have been much nicer not struggling with tons of debt and tons and tons of interest payments in my case.
You might also be able to negotiate down the interest fees or so I’ve been told. My ato agent was not remotely understanding nor friendly so it didn’t work for me. Ymmv
You’ll be fine. My previous work messed up my forms and didn’t declare my HECS/HELP debt even though I filled out the form correctly. Called up HR to make sure they fix it asap and spoke to someone from the ATO because I was nervous about how much I’d owe, it was about a month before June 30. Explained the situation and they helped me calculate rough numbers, ending up scraping by and not owing a huge amount which I just paid off after doing my return. Worse comes to worse, organise a payment plan 🙂
Those numbers aren’t adding up. You’ve earned 95k in a little over 9 months and they’ve only taxed you 16.5k? Assuming your salary for a full year is 120k, you should be getting taxed about $2,455/month. So for 9 months on that salary, they should he withholding about 22k of tax (not including HELP). Either way I’d look to go with an accountant, so that they can lodge in may of next year and you won’t have to pay until June 2025.
Sign up with a tax agent – even an absolute no frills electronic one for the lowest price you can, and doing that will push back your lodgement date maybe as far as 15 May next year. The tax will then be due at end of June. That gives you a whole year to save it.
1. The Australian tax year runs from July 1st to June 30th.
2. Taxable income is calculated as total income generated during the year minus allowable deductions.
3. Tax is assessed based on the entire financial year’s income, not on fortnightly salary payments.
4. HECS repayment obligations are also determined as a percentage of the taxable income for the entire year, not based on the outstanding HECS debt.
5. Tax withholding and HECS withholding from each pay cycle are estimates. While tax withholding may be mandatory for employers, HECS withholding is optional.
6. Withholding is intended to prevent employees from accumulating a large tax debt by the end of the financial year. It is just an estimate.
7. Therefore, not withholding HECS every fortnight is manageable, provided you have sufficient funds to meet the mandatory payment when due.
8. Additionally, you can arrange a payment plan with the ATO if needed.
Honestly long as you have the money (or are willing to go on a payment plan once you do your tax return, don’t worry
. I didn’t declare my hecs debt the last few years and just paid off what I owed to the ato as and when I did my tax returns. I did this on purpose.
lodge via an accountant. You can delay lodging until May next year and have another monthish before it’s due. So a full year basically to pay the debt which should be easily doable for that amount if you save properly.
Understandably a scary position to be in, however it’s not the worst out come if you manage things right. I personally don’t have my hecs withheld knowing I’ll have a hefty tax bill come the end of the year BUT I’ve had the benefit of the extra money sitting in my offset account saving me 5.99%. A few things to consider:
– Definitely use a registered tax agent;
– Lodge as late as possible (15 May) but you’ll need to engage them early to not appear as a late lodger and advise them you want to wait;
– are you diligent enough to be paid the money and save/invest it moving forward; and
– Figure out how you want to work things moving forward
What’s the drama? Better off keeping the money in your bank account vs interest free at the ATO.
Don’t delay get it sorted with employer now and chat to the ATO for a payment plan they are surprisingly easy to deal with.
Don’t make voluntary contributions it doesn’t count towards compulsory repayments.
Do start putting aside as much as you can and wait to do your tax return. You will incur a debt but you can go on a payment plan.
If you see an account before October, you can pay your taxes next year.