What happens if I have HECS-HELP debt while working overseas?
Congratulations! You’ve graduated from university and now you’ve got a fantastic job opportunity overseas. But before you pop the champagne and book the tickets, keep in mind that your student loan payments won’t wait until your return flight.
That’s right. Unfortunately in the past few years, rules around paying back HECS-HELP debt while overseas have changed. Now, the Australian government has made it compulsory to meet your HECS-HELP debt obligations, even if you’re working abroad.
So if you’re an Aussie expat (or planning to become one), it’s vital you’re equipped with as much knowledge about HECS-HELP income requirements as possible. So here are your obligations to the Australian Taxation Office while you’re away, and how to pay your debts – like through using an International Money Transfer.
Key info you must know about HECS-HELP debt and living overseas
- Annual salary thresholds. For this financial year (21/22) the threshold for making repayments on HECS-HELP sits at $47,014. This includes income both from Australia and abroad. For the 2022-23 financial year, the threshold will be $48,361.
- You must report income for trips longer than 183 days. Tell the Australian Tax Office (ATO) of all your earnings when abroad over 6 months, even if you don’t work for the entire time.
- Heavy fines for ignoring HECS-HELP repayments. There are significant penalties of up to $3,600 for travellers who don’t pay back study debt while overseas.
You’ll need an active myGov account
Having a myGov account when your overseas is essential when you are paying off a HECS-HELP loan from outside of Australia. It not only connects you directly to the ATO, but it also puts other government services like Centrelink, Medicare, and My Health Record in one convenient place so you can access them while you’re abroad.
If you intend to change from an Australian to a foreign mobile phone number, the ATO recommends that you deactivate the security code feature connected with your account. This way you will be able to log in from abroad without having to retrieve a code from your old number. Alternatively, if you are holding on to your Aussie SIM, it may be worth keeping this feature for extra security.
But don’t worry if you haven’t got an account and you're already overseas, because you can still create a myGov account online as long as you provide all your relevant details, like your Australian Tax File Number.
Tell the tax office that you are moving overseas
Nowadays, student debt follows working travellers wherever they go, so in the same way you would tell your bank before you travel, you must now contact the tax office if you are planning to leave Australia for more than 183 days and have a HECS-HELP debt.
This is more than just a quick heads-up message, however: you must complete an overseas travel notification either online or through a registered tax agent.
You will be required to provide:
- a copy of your current Australian passport
- your travel plan details like your expected country of residence
- your departure/return dates.
Also keep in mind that if you notify the ATO of your departure online, you must update all your relevant details both on myGov and directly on the ATO website.
So if you are currently working overseas with HECS-HELP debt and have not yet told the ATO, contact them immediately.
Declaring your worldwide income
Whether you’ve just landed an exciting new full-time role in London for the next two years or are just looking to pick up casual jobs, you still have an obligation to stay in contact with the Australian tax office if you have an outstanding HECS-HELP debt no matter how much you make while you’re overseas.
‘Worldwide income’ is a combination of any Australian income and any foreign sourced income you receive while you reside outside of the country.
Earn under $11,753 - File a non-lodgement advice
In the instance where you earn less than 25% of the minimum repayment threshold, which is $11,753 AUD for the 2021-22 financial year, you are required to submit a non-lodgement advice with the ATO. Simply log into myGov and following the prompts to let the tax office know you won't be lodging a tax return in the current financial year. (The general tax-free threshold is $18,200).
Earn between $11,753 and $47,014 - Report income but don’t make repayments
For expats that make more than $11,753, it’s compulsory to report worldwide income to the ATO before 31 October of the following Australian financial year. While you are required to file a report on your overseas income, if you make less than $47,014 AUD you are still below the repayment threshold, so no overseas levy will be raised.
Income over $47,014 - Compulsory repayments kick in
If you do earn over the repayment threshold you will have to start paying your HECS-HELP loan in the form of compulsory repayments or an overseas levy. The repayment rates vary depending on how much income you earn.
All compulsory HECS-HELP payments from overseas are made through your tax return which can be lodged from July through myGov. In this case, once your worldwide income has been assessed, the ATO will notify you on the amount you are required to pay, which is then processed through your tax return.
Be aware that if you don’t lodge your tax return or make your compulsory HECS-HELP payments by October 31st, you can face heavy fines up to $3,600.
Making repayments from overseas
If you are required to pay the overseas levy or you decide to make voluntary repayments on your HECS-HELP loan you have a few different options but bear in mind that the ATO will only accept payments in Australian dollars.
According to Richard Freestone of international money transfer provider OrbitRemit, one of the biggest traps that expats fall into is doing a standard bank transfer from overseas.
“If you’ve got to make compulsory repayments you’ll want to make sure that you get the best exchange rate at the lowest cost possible,” he said.
“With a standard bank to bank transfer not only are you at the mercy of the bank’s exchange rates but you usually have to pay bank fees at both ends of the transfer as well which means less of your actual funds go towards paying back your debt.”
With a specialist international money transfer provider, you can set up an account, choose the currency, date of transfer and set up repayments in AUD to either go direct to the ATO account with your payment reference or your Australian bank account.
To compare exchange rates being offered by specialist IMT providers, check out our exchange rate table below or jump over to our international money transfers hub for even more options from IMT specialists and banks.
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