# How Your HELP Repayments Will Work In 2012

If you've been to university in the last two decades, you'll have accumulated a HELP debt at some point. Most people don't start paying that off until they hit the workforce. Here is how HELP repayments will work in the 2012-2013 financial year.

Picture by Alan Levine

The threshold for HELP repayments is now \$49,095: in practical terms, around \$944 pre-tax a week. (In 2011-2012, it was \$47,195.) HELP debts are also indexed each year to reflect the consumer price index; on July 1, your debt will have gone up by 2.9 per cent.

If you earn above the threshold, you need to make sure your employer knows, so that your tax payments can be adjusted appropriately. Otherwise, you'll end up getting an unexpected bill. These are the extra amounts that apply for a range of typical weekly incomes:

Weekly income HELP amount
\$944 \$38.00
\$969 \$39.00
\$1,070 \$48.00
\$1,128 \$51.00
\$1,250 \$69.00
\$1,350 \$81.00
\$1,467 \$95.00
\$1,545 \$108.00

And these are the official percentages used to calculate your extra payments:

Weekly income (\$) HELP repayment percentage
0 to 943.99 0.0
944.00 to 1,050.99 4.0
1,051.00 to 1,158.99 4.5
1,159.00 to 1,219.99 5.0
1,220.00 to 1,310.99 5.5
1,311.00 to 1,419.99 6.0
1,420.00 to 1,494.99 6.5
1,495.00 to 1,644.99 7.0
1,645.00 to 1,752.99 7.5
1,753.00 and over 8.0

When you submit your 2011-2012 tax return, your relevant compulsory HELP repayments will be automatically calculated and included in your final refund calculation. There's a discount for extra repayments, which works out at 5 per cent of the repaid amount, so if you pay \$1000, you'll be credited for \$1050. Whether those payments make sense depends on your individual financial circumstances (and, as ever, you should seek professional advice if you're unsure or planning anything complicated).

ATO

Thanks for this, I broke through the threshold for the first time since I left uni this financial year. \$3k of my tax went into the HELP repayments :(

7.5k went to mine...

If I was on 150k a year I wouldn't be complaining!

edit: am wrong cant do le Math....

I'm on a disability pension and your 3k tax just paid for my new laptop. Cheers.

If you get promoted to a salary wage, or your company is bought out. Make sure they double check that you have HELP and SFSS payments to come out with your tax.
A \$5k tax bill came at a bit of a shock to me

If you work in the non-profit sector or use salary sacrifice, it's worth remembering that the HELP threshold is calculated on taxable income + grossed up reportable fringe benefit - So adding even a small amount to your salary packaging can make a big difference if you are close to the threshold.
This can play out in some weird ways, so it is a good idea to read up/use a salary sacrifice calculator or, if desperate, engage an accountant.

I second what Anthony said. I have been bitten by that in the past and the pain can be a big one.
Another thing to remember is the fringe benefits "year" is April to March (not July to June like your income) so you can be liable for repayments on a "grossed up amount" you earned 14 months before.

I would also wish to point out that the percentages are not marginal rates, but absolute rates. I found that one out on my tax return this year. I earned a bit of interest in the bank, which put me from one threshold beyond the next. This added ~\$300 more to my tax bill since the extra 0.5% was calculated across ALL of my income, not just the additional income I received in the interest.

Wasn't the 5% discount cut to 2.5% for extra repayments?

As I understand it, 10% was cut to 5%.

Tip for new players: I study part time whilst working full time. I initially ticked the help box on my tax declaration form, but was getting charged 8% each pay. It made a nice tax return the first year, but that money was better off in my home loan or savings. So now, I unticked the help box, and I make voluntary contributions each pay at an amount that just covers what I owe each study period. I'm only paying the amount that I need to now. I asked the ato and they said this is kosher.

It's hard enough paying the HELP debt off, I think indexation is not required. The official RBA interest rate is something like 3.75%. They increased the payments by 2.9% this year, less than 1% different to charging interest.

I think the country spends plenty of \$\$ on welfare, that is usually funded by these degree holders. It's only fair to give them a small break and not index the cost of education.

Finally, the inflation rate for 2011/12 was only 1.6%. Funny how they charged 2.9% anyway.

HELP is the cheapest loan you'll ever have, luckily. I'm not overjoyed at paying extra tax for my HELP but the fact remains I couldn't have afforded it at the time I went to uni, so this is the best way I can repay my debt to the uni (which the goverment is kindly covering). I'd rather the government than a bank.
Talk above about ways to legally reduce your taxable income is a great idea, by all means its everyone's duty to manage their tax amounts by managing taxable income. But at some point you do owe it to the government to pay back your education costs, IMHO.
If the scheme becomes unworkable through unpaid debt, I bet it wont be there for our kids to use.

Just putting it out there... I have a little issue with the same people who received a free education imposing costs onto future generations whilst giving themselves massive pay rises every year. Just a little one....