Those with HELP Debts will have their debt increased/indexed by 4.7% on 1 June 2024 (or 4% under the recently announced proposal). A voluntary repayment made prior will reduce this cost.
Whilst compulsory repayments are deducted from an employee’s wage (once earning sufficient income) throughout the year, they are not applied to the HELP debt until lodgement of the income tax return. The amount withheld effectively sits with the ATO, not saving the indexing cost, until the applicable financial year’s income tax return is lodged.
This presents a saving opportunity for those whose HELP Debt would be compulsorily repaid on lodgement of their 2024 Income Tax Return in any case. Their HELP Debt could be voluntarily repaid in full by the 1st of June 2024, thereby avoiding the indexing cost, and the compulsory repayments withheld throughout the year will instead be refunded to them on lodgement of their annual tax return.
The government has recently announced the intention to “undo” a portion of the 1 June 2023 indexing. Those that have paid off their HELP debt since then, are still expected to receive the benefit (ie. refund of the overpaid amount).
If you or your associates have a HELP Debt, feel free to contact our office to discuss options.