For many people, repaying student loans is low on the list of priorities for life. You may have relied on the Higher Education Loan Program (HELP) during your student days, or a Trade Support Loan (TSL) during an apprenticeship, but paying it back is often treated as an optional obligation – especially by Aussies heading overseas.
While leaving Australia used to mean leaving your student debt behind (at least until you returned), this is no longer the case. With almost $2 billion in student loans reportedly being written off each year, the government is eager to recoup more of its investment in education by imposing stricter tax rules on overseas workers.
Since 1st January 2016, Australians who spend more than 6 months a year abroad have the same repayment obligations as those in Australia – namely, starting to make payments when their income hits the minimum payment threshold (currently $53,000).
If you're planning to go abroad, or you're there already, you're now required to file an overseas travel notification online. You'll also have to lodge an annual tax return stating your foreign income, or a non-lodgement advice form if you earned below $13,717 in the financial year.
This does not apply to certain types of student loans such as a Financial Supplement, Student Start-up Loan (SSL) or ABSTUDY Student Start-up Loan (ABSTUDY SSL). This debt will continue to be maintained in Australia and indexed every year.
What happens if I don't pay?
The Australian Tax Office (ATO) announced these changes as a voluntary scheme, but hefty fines can apply to those trying to avoid their financial responsibilities.
If you're discovered to have spent more than 183 days abroad per year without having notified the ATO, reporting your income and making any repayments required, the maximum fine is $3,600.
What do I need to do?
If you're getting ready to go abroad or you're already there, and you'll be spending more than 6 months (183 days) away from Australia within a 12-month period, you need to:
- notify the Tax Office online within 7 days of your departure
- lodge a tax return or non-lodgement advice form each year
- provide any documents needed to calculate your income and loan payments, e.g. payment slips, tax assessments and deduction receipts
- declare your total income through self-assessment, overseas assessment or comprehensive tax-based assessment
- make the loan payment required, either voluntarily or through an overseas levy
How can I pay off my debt faster?
Your student debt will continue to grow with added interest the longer you leave it unpaid. If you're planning to return to Australia for work in the future, or if you find the new repayment scheme a hassle, you can choose to make voluntary loan payments to take care of your student debt faster.
If you need some debt advice, or you're thinking about taking out a loan to pay off your student debt, talk to Debt Fix's experts today for unbiased advice. Call us on 1300 332 834 to find out what your options are.