Confused about the new ATO changes for Expats with Student Loans?

From 1 July 2017, based on your worldwide income for the 2016–17 income year some Australian Expats must begin repaying their student loans.

There is naturally confusion about who has to repay and how much so here are answers to the Top Five Questions being asked by our Members.

The Australian Government has introduced changes to Higher Education Loan Program (HELP) and Trade Support Loan (TSL) repayment obligations. Under these changes, your first repayment against your HELP and TSL loan will commence from July 1st, 2017 based on your worldwide income.

Australia and the US have different tax years so the confusion is compounded by the fact that you have to manually calculate your worldwide income from July 1st of 2016 up to June 30 of 2017.

Q: Who is effected?

A: If you owe money for your HELP or TSL, and you meet the Substancial Presence Test, making you a US Tax Resident.

Q: What is the Income Threshold before I have to begin making repayments?
A: If your worldwide income from July 1st 2016 to June 30, 2017 is:

  1. at or below $13,717 AUD for the 2016/17 income year, you will need to submit a non-lodgment advice through myGov.
  2. above $13,717 AUD and below $54,869 AUD for the 2016–17 income year, you will need to declare your worldwide income through myGov. An overseas levy would not be raised.
  3. above the $54,869 AUD for the 2016–17 income year, you will need to submit your worldwide income through myGov. An overseas levy will be raised as your worldwide income exceeds the minimum repayment threshold and you will need to repay this amount.

Here is the link to the ATO Indexation Rate Table.

Q: How do I convert my US earning into AUD to see if I exceed the worldwide income threshold?
A: Here is the link to the ATO’s FOREX Conversion Table.

Q: What if I choose not to file or repay my loan?
A: The ATO can defer repayments for those with financial challenges, however the ATO has many options at its disposal to collect debts including charging interest, fines, collection and bankruptcy proceding for those who ignore their student debt.

Q: How do I make a repayment?
A: You can use BPay from your Australian Bank Account. If you are transferring money to your account from the US, be sure to research the exchange rate your bank or financial institution is offering to be sure you get the most AUD for your USD.

You can click here to see the Member Preferred Rate that was negotiated with OFX for members of The Australian Community to compare against your current provider.  Spoiler Alert: It is a better rate than TransferWise!

Your situation may be more complex, so if you have any additional questions you can visit the ATO’s Overseas Obligations FAQ’s page, call the ATO or contact your Australian Accountant or Tax Advisor.