When did foreign residents have to start paying HECS debts?

If you have a student debt (a HELP debt, or HECS debt to use the old name), you have to repay some of the debt each time you lodge your tax return – provided your income was above the minimum threshold.

In the good old days, the definition of income for the purpose of HELP debt repayments excluded foreign income but this changed several years ago.

When did foreign residents have to start paying HECS debts?

The change took effect on 1 July 2017, that is, foreign residents had to start declaring their foreign income for the purpose of repaying their HELP debt on their 2017/18 tax return.

IF YOU ARE READING THIS PRIOR TO 1 JUNE 2025 PLEASE READ THE PARAGRAPH AT THE END AS IT COULD SAVE THOUSANDS

Is my foreign income now subject to tax as well?

No.

A foreign resident pays tax on Australian sourced income only. That did not change.

The foreign income you report is only needed in order to calculate how much of your HELP loan you need to repay each year.

How can I calculate my repayments?

First, calculate your income. There are various methods. The simplest one is to work out your foreign income for the Australian tax year (from 1 July to 30 June) and convert it to Australian dollars. You can use the foreign exchange rates on the ATO website.

Secondly, you need to know what percentage of your income you need to repay. The ATO publishes the rates for every tax year here: Study and training loan repayment thresholds and rates

The ATO even have a calculator you can use to work out the amount. Study and training loan repayment calculator

How do I report my income?

You have two options:
1. Self-lodge via MyGov.
Log in to MyGov, add the ATO as a linked service.
Click on the ATO linked service.

The ATO website says:
Note: You can access myTax within ATO online services by logging in to your myGov account. Once you’ve accessed ATO online services, follow these menu items options: Tax>Lodgments>Report worldwide income.
Source: ATO website QC 47358

And yes, I hear you, “MyGov is close to impossible to use when you are not in Australia”. If that’s the case, then try option two.

2. Appoint a tax agent.
We can handle the whole process for you. To appoint us as tax agent, we just need signed, written authority (we can send a form for this) and see one item of photo ID (for security reasons, we’ll organise a time to do this via a video call.

What is the deadline for reporting worldwide income

31 October each year.

For example, at the time of writing, the most recent tax year is 30 June 2024. So the deadline for reporting was 31 October 2024.

My foreign income is nil – or very low. Do I still need to lodge?

No, you don’t. But you need to do a non-lodgment advice. A non-lodgment advice can be done on MyGov.

You qualify for a non-lodgment if your income was 25% or less of the minimum repayment threshold for the year in question.

For example, in the 2023/24 year the minimum income to repay your HELP debt was $51,550. So if your income (in Australian dollars) was at or below $12,887 you can do a non-lodgment advice.

I never knew about this rule, and I have lots of years where I need to report. Am I in trouble?

There are two possible penalties. But please read to the end, as there are ways around both of these.

1. Failure to lodge penalty
You can be fined one penalty unit for each month you are late, for a maximum of 5 penalty units. The current penalty unit is $330, so the maximum fine is $1,650. The penalty is based on the value of a penalty unit in the year you should have lodged. That means it will be lower than the current $1,650.

2. Interest on amounts owed
The ATO can impose general interest charge (around 11% – exact amount on their website)

The interest is compounding, and they backdate it to the time you should have paid.

Can I avoid penalties for not lodging my HELP debt?

Yes.

And, to me, the main advantage of using a tax agent is that we can advise on the best lodgment strategy.

Avoiding failure to lodge penalties
Here are two ideas:

The ATO tends to give you a warning for your first late lodgment, and a fine for your second one. So if you are self-lodging, we recommend lodging all the late ones on the same day. Then, you’ll hopefully get a warning but no fine.
If you appoint an accountant, they can get a six week deferral for you under the “new or re-engaged client deferral” rules. It’s automatic, and any tax agent can apply for this for you. But it only applies to the most recent year.

Minimising interest

If your current year return is on time, lodge this first. It’s only the late returns that should be lodged together. That means the current year repayment is calculated first. That’s a win, because they can’t charge interest on a return that’s not late.
If your lodgments will result in you clearing the debt anyway, just pay it in full instead of paying it via lodgments. The ATO doesn’t charge interest on voluntary repayments, only compulsory ones.
For example, we are seven years into these rules (2018 to 2024 inclusive). Let’s say you owe $18,000 and you work out that lodging will result in $3,000 per year being repaid. That’s over $18,000. Therefore, you are better to repay the debt interest free instead of lodging all those returns.
The ATO has a process for requesting a remission of interest. Interest can be remitted where it is fair and reasonable, and we’ve had interest waived for overseas residents who caught up on their HELP reporting on the grounds that (a) they had no idea of the rule change, and (b) once they knew, they voluntarily caught up ASAP. I can’t guarantee they’ll always waive interest, but it’s worth asking.

How do I actually make the payment?

BPay is the simplest method.
Biller code 75556
Payment reference number See MyGov

What next?

It’s pretty simple: you either self lodge, or appoint a tax agent.

If you found this article useful, and are confident to self-lodge, then please take two minutes to leave a Google review saying something nice about how helpful we were!!

If you’d like to appoint us as tax agent, please use the “contact us” form on this website.

Stop the press! Government announces 20% reduction in HELP debts!

The government has announced a 20% reduction in HELP debts.

This is definitely because they love you, and nothing to do with the 2025 federal election.

So how does it work, and why is it relevant to catching up on old lodgments?

From their website:
Following the passage of legislation, the Australian Taxation Office (ATO) will apply the one-off 20% reduction to an individual’s HELP or student loan account balance, before indexation is applied on 1 June 2025.

This means that indexation would apply only to the remaining loan debt balance e.g. after the HELP debt has been reduced by 20%.

This will be automatically done by the ATO. (bold text added)
Source: https://www.education.gov.au/higher-education-loan-program/20-reduction-student-loan-debt

Your debt will be reduced by 20% at a point in time. There is no legislation for this, but it appears the time is 1 June 2025. The bigger my debt, the bigger my handout.

Therefore, it doesn’t make sense to reduce your HELP debt before that date, either by making voluntary repayments or by reporting your income and having compulsory repayments.

I’m not telling you that you should not comply with tax rules. I’m just wondering whether those with student debts who wait until 1 June 2025 to deal with their debt might be better off than those who lodge now.

Imagine you:

Waited until Monday 21 April 2025 and appointed a tax agent
Authorised your tax agent to apply for a six week deferral
Used that six weeks to get your lodgments ready
Waited for your gratuitous 20% handout on Sunday 1 June 2025
Either lodged your returns (or paid your entire debt) on Monday 2 June 2025

It seems to me that you might be better off than the person who diligently deals with their debt now (time of writing is 10 December 2024). Doesn’t seem fair, really.