• Federal Budget 2016 - Individuals

Higher Education Loan Programme

The Government introduced changes to the Higher Education Loan Program (HELP) repayment framework in the 2015 Budget to recover repayments of debts owed by overseas residents who live or intend to live overseas for more than six months in any 12 month period.

From 1 January 2016, individuals were required to update their contact details with the ATO within seven days of leaving Australia. This date extends to 1 July 2017 where an individual already resides overseas.

From 1 July 2017, individuals will be required to submit details of their worldwide income for the financial year to the ATO by 31 October each year. If this income exceeds the minimum repayment threshold, they will be required to make compulsory payments at the same repayment rates as taxpayers who reside in Australia.

Options for reform

The Government has released for community consultation its Redesigning VET FEE-HELP discussion paper, which details the options for reform.

The following changes to the repayment of HELP debts framework to be implemented in 2018 are up for consideration:

  • Decreasing the minimum compulsory repayment threshold
  • Changing the indexation of HELP repayment thresholds to CPI
  • Introducing a renewable lifetime limit on HELP loans
  • Restricting the availability of HELP loans for individuals who have permanently left the workforce
  • Introducing a household income test for HELP repayments
  • Recovering HELP debts from deceased estates.

BDO Comment

The current measures rely heavily on individuals accurately disclosing their worldwide income to the ATO. Furthermore, the proposed reforms do not address the difficulty faced by the ATO in enforcing compliance and collecting repayment of HELP debts from individuals without assistance from foreign tax authorities.