Yahoo Finance Huge tax mistake cutting Aussies pay: ‘Zero benefit’
If you’re lucky enough to have paid off your HECS debt, don’t forget to tell your employer about it or it could cost you.
A common mistake means Aussies are continuing to pay off their HECS debt, even when they have already cleared the debt. This could mean you are essentially docking your pay and giving the government an interest-free loan.
When you start a new job, you will have filled out a tax file number declaration form and ticked a box to let them know you have a HECS debt. By doing so, your employer knows to automatically withhold money from your pay to contribute towards your debt.
Tax Invest Accounting director Belinda Raso told Yahoo Finance many Aussies didn’t realise they needed to tell their employer when their HECS debt was repaid or they could continue paying off their debt.
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Raso said employers had “no way of knowing” if your circumstances changed unless you told them about it. This can be done by completing a “Withholding Declaration” form, which you can find through myGov.
“The form can be completed at any stage of your employment and that’s the only way that you can actually communicate with your payroll,” Raso told Yahoo Finance.
“So if any circumstances change so if you start studying, if you pay off your HELP debt, if you get a second job, all of those things the tax file number declaration form isn’t just for when you start a new job, it’s for when your circumstances change in your same job.”
Raso said taxpayers should be looking at their HECS balance through their myGov account to avoid this situation.
Do you have a HECS story to share? Contact tamika.seeto@yahooinc.com
What happens if I overpay my HECS debt?
If you do forget and end up overpaying your HECS debt, the Australian Taxation Office (ATO) will refund you the overpaid amount. But you’ll only be refunded when you lodge your tax return.
The ATO can also use this amount to offset any tax debt that you may have.
Raso said she is aware of some people who overpay their HECS on purpose as a type of “forced savings”. She said this wasn’t the best move.
“They are getting zero benefit from this. It’s only the government that’s making anything from it,” she said.
“You could be putting it in an offset account and dropping your interest rate down if you have a mortgage, there’s so many things you could be doing with it.”
Don’t forget to tell your employer about HECS debt
Aussies are also being urged to tell their workplaces of any outstanding HECS debt when they start a new job.
Recruitment worker Cassidy shared she received a $1,515 tax bill after she realised she hadn’t ticked the student loan box on their tax file number declaration form when starting her job.
Finance expert Ben Nash said Aussies needed to be careful when completing their tax declaration forms.
"Understand what the rules are and how they work, because there are a lot of myths out there,” he told Yahoo Finance.
“And put yourself in the driver's seat as opposed to having stuff catch you out of the blue and cause you stress.”
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