Do you have to pay HECS debt if you work overseas?

Travel figurines on a blue and pink background.

Thinking of heading overseas? You may be wondering what happens to your HECS debt.

Recent changes mean you're still on the hook for your HECS-HELP debt even while living abroad. This article ensures you're up to date, helping you navigate repayment options such as International Money Transfers.

Key points if you have HECS-HELP debt and plan to be overseas for longer than 183 days:

* Alert the ATO before departure. You must notify the ATO that you’ll be leaving Australia within 7 days of leaving if you plan to reside overseas for more than 183 days.

* Report your earnings. You must report all your earnings, even if you don’t work for the entire time. 

* Annual salary thresholds. For this financial year (23/24) the threshold for making repayments on your HECS debt is $51,550, which includes income both from Australia and abroad.

* 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.

RELATED: Help! The HECS debt is set to increase by 550%

How to pay HECS debt from overseas

Paying your HECS debt from overseas actually starts before you move. Here’s everything you need to know about taking care of business from abroad:

Step 1: Fire up your myGov account

Having a myGov account when you're 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.

Step 2: 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.

Step 3: Declare 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 $12,090 - File a non-lodgement advice

In the instance where you earn less than 25% of the minimum repayment threshold, which is $12,090 AUD for the 2023-24 financial year, you are required to submit a non-lodgement advice with the ATO. Simply log into myGov and follow 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 $12,091 and $51,549 - Report income but don’t make repayments

For expats that make more than $12,090, 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 $51,550 AUD you are still below the repayment threshold, so no overseas levy will be raised.

Income over $51,550 - Report income and make repayments

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.

Step 4: Make your 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 says.   

“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 directly 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.

Is HECS debt wiped out after 5 years overseas?

We've noticed a common misconception floating around, so let's set the record straight. Contrary to what some may believe, your HECS debt will not be wiped after 5 years of living abroad. In fact, your debt will persist, and with indexation, it may even continue to grow during your time away. It's important to stay informed about your obligations and repayment options, even when living overseas.

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FAQs for HECS debt and working overseas

Is HECS debt wiped out after 5 years overseas?

We've noticed a common misconception floating around, so let's set the record straight. Contrary to what some may believe, your HECS debt will not be wiped after 5 years of living abroad. In fact, your debt will persist, and with indexation, it may even continue to grow during your time away. It's important to stay informed about your obligations and repayment options, even when living overseas.

Do I have to convert my overseas income to AUD?

Yes, when reporting overseas income for HECS-HELP repayments, you convert your earnings to AUD, based on the average exchange rate for that income year. For help with this, you can use the ATO's handy Foreign Income Calculator.