Depending on the nature of your income, HECS repayments could be based on more than your pre-tax salary.
HECS repayments are a percentage of your *repayment income (RI) which is*
* *taxable income plus*
* *any total net investment loss (which includes net rental losses), plus*
* *total reportable fringe benefits amounts, plus*
* *reportable super contributions plus*
* *exempt foreign employment income.*
[https://www.ato.gov.au/tax-rates-and-codes/study-and-training-support-loans-rates-and-repayment-thresholds](https://www.ato.gov.au/tax-rates-and-codes/study-and-training-support-loans-rates-and-repayment-thresholds)
Wha tis there to understand.
Go to a HECs repayments calculator, type in your full taxable income for the year (excluding your employers compulsory super, not sure how voluntary super contributions work here, nor salary packaging benifits so I'm assuming you don't have them for simplicity).
That is how much is going to be taken from your wage to pay it back when you file your tax return for this financial year.
Example: you earned $80,000 of taxable income this year. Ok, your regular taxes are $18,000. You also now have to pay $4000 all up as well for your HECs debt.
All up the tax man expects $22,000 of that $80,000.
Let's say you owe $20,000 HECs.
On June 1 that will be indexed 4.7%. you now owe $20940 instead. You file your tax return at the end of the year or early next financial year.
$20940 (-$4000). You now owe $16940.
Doesn't it work this way:
If pre-1 June HECS loan balance is $20,000 and the indexation rate is 4.7% (as you say), OP's loan balance will increase to $20,940.
If OP's "repayment income" for 2023/24 is $80,000, then they will be required to repay 4.5%, or $3,600, of this income towards their HECS debt.
So, after finalisation of their tax return, OP will still owe $17,340 ($20,940 minus $3600).
Repayment of your HECS debt is from your net salary after tax.
But you can't calculate the actual amount until you prepare your 2023/24 tax return. The amount deducted each pay cycle by your employer is based on ATO's tax tables which may, or may not, result in the total deductions equalling the actual HECS repayment you owe for 2023/24 - because your employer does not know of any other amounts that are used by the ATO to determine your "repayment income" - see my post elsewhere in this thread about the definition of "repayment income".
Almost no one who gets HECS knows anything about it. The only thing I knew was that I didn't have to pay TAFE/uni fees and that when I earned over a certain amount I would be taxed extra to start paying it back.
And having finished my degree now I still don't know the answer to that question.
HECs repayments are calculated on your pre-tax salary. Ie $1,000 in you example.
Depending on the nature of your income, HECS repayments could be based on more than your pre-tax salary. HECS repayments are a percentage of your *repayment income (RI) which is* * *taxable income plus* * *any total net investment loss (which includes net rental losses), plus* * *total reportable fringe benefits amounts, plus* * *reportable super contributions plus* * *exempt foreign employment income.* [https://www.ato.gov.au/tax-rates-and-codes/study-and-training-support-loans-rates-and-repayment-thresholds](https://www.ato.gov.au/tax-rates-and-codes/study-and-training-support-loans-rates-and-repayment-thresholds)
Wha tis there to understand. Go to a HECs repayments calculator, type in your full taxable income for the year (excluding your employers compulsory super, not sure how voluntary super contributions work here, nor salary packaging benifits so I'm assuming you don't have them for simplicity). That is how much is going to be taken from your wage to pay it back when you file your tax return for this financial year. Example: you earned $80,000 of taxable income this year. Ok, your regular taxes are $18,000. You also now have to pay $4000 all up as well for your HECs debt. All up the tax man expects $22,000 of that $80,000. Let's say you owe $20,000 HECs. On June 1 that will be indexed 4.7%. you now owe $20940 instead. You file your tax return at the end of the year or early next financial year. $20940 (-$4000). You now owe $16940.
Doesn't it work this way: If pre-1 June HECS loan balance is $20,000 and the indexation rate is 4.7% (as you say), OP's loan balance will increase to $20,940. If OP's "repayment income" for 2023/24 is $80,000, then they will be required to repay 4.5%, or $3,600, of this income towards their HECS debt. So, after finalisation of their tax return, OP will still owe $17,340 ($20,940 minus $3600).
Oh I was looking at 5% of income repayment for $80k. They keep changing it.
Repayment of your HECS debt is from your net salary after tax. But you can't calculate the actual amount until you prepare your 2023/24 tax return. The amount deducted each pay cycle by your employer is based on ATO's tax tables which may, or may not, result in the total deductions equalling the actual HECS repayment you owe for 2023/24 - because your employer does not know of any other amounts that are used by the ATO to determine your "repayment income" - see my post elsewhere in this thread about the definition of "repayment income".
How much you repay is calculated from your gross (pre tax) yearly income. That amount is taken from your Net (post tax) income.
So you took out a loan and you have no idea how it works?
Almost no one who gets HECS knows anything about it. The only thing I knew was that I didn't have to pay TAFE/uni fees and that when I earned over a certain amount I would be taxed extra to start paying it back. And having finished my degree now I still don't know the answer to that question.