Tax Time - Unexpected First Time Debts

CoggerGurry • August 10, 2023

For the first time, many Australians are finding themselves in a position where they are being told they owe the ATO money after completing their tax return this year. A significant number of taxpayers in this position are those that are still paying off their Higher Education Loan Program (HELP) debts – many of them young Australians. 

 

When PAYGW is deducted from salaries and wages to take account of HELP liabilities, the withheld amount is not applied against the HELP debt until after the end of the income year, when the tax return is lodged. This means that indexation is applied to the debt without considering any PAYGW withheld during the year. 

Fact or myth? 

This is a myth. 

Indexation only affects the loan balance. It does not affect the amount of the year-end tax liability. 

 

When an employee has a salary sacrificed, the lower salary will reduce the PAYGW withheld. Still, the reportable fringe benefit is included in the repayment income used to determine liability to HELP repayments. 

Fact or Myth? 

This is a fact. 

HELP repayment income is the total sum of the following amounts from a person’s income tax return for the income year: 

  • taxable income 
  • reportable fringe benefits (as reported on their payment summary) 
  • total net investment loss (which includes net rental losses) 
  • reportable super contributions (including salary sacrificed contributions); and 
  • any exempt foreign employment income amounts 

 

Negative gearing amounts are added back and included in HELP repayment income. The rapid rise in interest rates will flow through to negative gearing amounts, increasing the repayment income. 

Fact or Myth? 

This is a fact. 

However, this will only affect those engaged in negative gearing, which may not be many young Australians with a HELP debt. 

 

The end of LMITO after 2021/22 is only just being realised by taxpayers now, despite two years of talking about this. The message did not get through, or the impact was not fully understood. 

Fact or Myth? 

This is a myth. 

For employees, the PAYGW rates were increased to take the LMITO abolition into account, so yes, no refund, but there should not be tax payable due to just the LIMITO ending. 



Making Electronic Signing Easier for You

By Cogger Gurry • August 29, 2025
We’re excited to share that we’ve upgraded our client signing experience—now powered by FuseSign! This intuitive, secure platform lets you sign documents in minutes (not days), straight from any device, and is simple to use. There’s no need to download apps or remember passwords - just click the link, review your documents, and sign. With industry-leading security and a smooth, hassle-free process, signing important documents has never been faster or easier. You can find out more about FuseSign Here

Understanding The 20% HECS-HELP Debt Reduction

By Cogger Gurry • August 29, 2025
As part of its re-election commitment, the Federal Government has passed legislation to reduce all outstanding HECS-HELP debts by 20%. The Bill passed the Senate on 31 July 2025 and will come into effect once it receives Royal Assent. The reduction will be applied retrospectively to student loan balances held as at 1 June 2025. While many borrowers have recently seen their loan balances increase due to the 3.2% annual indexation, the Government has confirmed that the 20% discount will be calculated based on the loan amount before indexation was applied. How the Reduction Will Work: Once the legislation is in effect, the Australian Taxation Office (ATO) will automatically apply the 20% reduction to eligible student loan accounts. Indexation will also be recalculated using the reduced loan balance, delivering further relief for borrowers. This change builds on previous reforms that now link indexation to the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI), rather than CPI alone, an approach designed to ease the financial pressure on graduates. Lodging Your Tax Return: If you’re getting ready to lodge your tax return, you don’t need to delay. The ATO will automatically apply the discount in the coming months. If you’ve fully repaid your student loan since 1 June 2025, you may be eligible for a refund equivalent to the 20% discount (subject to any other outstanding tax liabilities). Other Changes to Student Loan Repayments: The legislation also introduces changes to repayment thresholds. From 1 July 2025, the minimum income threshold for compulsory student loan repayments will increase from $54,435 to $67,000, making repayments more equitable. If you have any questions about how these changes may affect you or your tax return, please get in touch with CoggerGurry today, we’re here to help. Tel: 03 5571 0111

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By Cogger Gurry • August 29, 2025
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