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Edited version of private ruling
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Ruling
Subject: HECS minimum repayment thresholds
Question
Is the grossed-up taxable value of reportable fringe benefits used to calculate the Higher Education Loan programme minimum repayment thresholds?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
In addition to your regular salary you receive fringe benefits from your employer.
You have a HELP debt.
Relevant legislative provisions
Higher Education Support Act 2003 Section 154-5
Fringe Benefits Tax Assessment Act 1986 Section 135M
Reasons for decision
Until 2005, students enrolled in study in higher education institutions were required to pay a contribution towards the cost of their study under the Higher Education Contribution Scheme (HECS). On 1 January 2005 a new suite of loans known as the Higher Education Loan Programme (HELP) came into effect. Debts incurred by taxpayers under HELP from 1 January 2005 were added to their existing HECS debts to become one accumulated HELP debt on 1 January 2006.
Students who elect to repay their HELP debt through the taxation system will not have to make any repayments until their repayment income reaches a minimum level. Repayment income is the sum of taxable income, reportable fringe benefits (as reported on the payment summary) and any exempt foreign employment income for the year, adjusted for any net rental loss on rental property investments (section 154-5 of the Higher Education Support Act 2003).
For the year ended 2009-10 the HELP minimum repayment income is $43,151.
Section 135M of the Fringe Benefits Tax Assessment Act 1986 includes that employers are required to record on payment summaries the grossed-up taxable value of fringe benefits (other than excluded fringe benefits) provided to employees during the FBT year, where the value of the benefits provided to an employee exceeds $2,000.
As the sum of your taxable income and grossed-up reportable fringe benefits exceeds the HELP minimum repayment income, you are required to make a compulsory repayment.