A young Australian woman has issued a warning after she received a bill of more than $1,500 from the ATO for failing to include HECS repayments in the tax she had withheld from her wages.
Cassidy from Queensland took to social media to share that she had filed her tax return for this year, but instead of receiving the expected refund, she was presented with a huge bill.
“Let this be a lesson to make sure your employer deducts the mandatory HECS debt repayments from your wages so you are not left with a tax bill,” she said.
The 22-year-old explained that the problem arose because she had not ticked the student loan box on her tax return form when she started a new job in recruitment.
‘[The tax bill] “It was completely my fault,” she told news.com.au this week.
She discovered the error after people in an earlier video suggested she might get a tax bill, so she voluntarily paid back $2,000 for her HECS.
However, this amount did not compensate for the mandatory repayments and was simply added as an additional contribution.
“It turns out that voluntary repayments don’t work like that… It’s definitely something people with HECS debts need to be careful about… I’ve still paid more than the minimum amount in voluntary repayments,” she said.
Queenslander Cassidy took to TikTok to reveal that she had completed her tax return for this year, but instead of receiving the expected refund, she was left with a huge bill
She said she would advise others to ensure employers are aware of any HECS debt and to check that the student loan repayment box is ticked on tax forms.
People with HECS debts should also be aware that any repayments are held by the ATO and not paid to HECS until a tax return is filed. So interest is earned on the full amount until it is reduced annually.
As of June 1, the interest rate on HECS loans rose by 4.7 percent, after a 7.1 percent increase the previous year. This is the largest increase in thirty years.
The loans are indexed annually based on inflation figures.
The changes in this year’s budget will see the lower of the two indices, the consumer price index (CPI) or the wage price index (WPI), used for indexation. This should reduce the interest on HECS.