Edited version of private advice

Authorisation Number: 1052311997672

Date of advice: 9 October 2024

Ruling

Subject: Student loans and repayment income threshold

Question

Pursuant to section 45-340 of the Taxation Administration Act 1953 ('TAA 1953'), will the study and training loan repayment thresholds and rates for your FEE-HELP loan apply in accordance with the Higher Education Support Act 2003 ('HESA 2003') such that your assessable income will not be subjected to compulsory repayments as long as your assessable income remains below the minimum compulsory repayment threshold?

Answer

Yes.

You are not required to make compulsory repayments towards your HELP-FEE debt so long as your income remains under the repayment threshold for the years relevant to this ruling.

This private ruling applies for the following periods:

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

Year ending 30 June 20XX.

The scheme commenced on:

1 July 20XX.

Relevant facts and circumstances

You are an Australian resident for taxation purposes.

On X May 20XX, you commenced the course.

You completed the course on X September 20XX.

The course cost a total of $XX.

You applied for the loan to fund the cost of the course.

You received the loan on XX September 20XX.

The loan has been subject to indexation since its commencement.

The closing balance of the loan at the date of this private ruling is $XX.

From the commencement date of the course to the date of this ruling, you have not earned over the repayment income threshold.

You commenced and completed the course while you were an Australian resident for taxation purposes.

Assumptions

For the purpose of this ruling, it is assumed that the following actions will happen during the period of the ruling:

•         You will not earn over the Australian income threshold and rates relevant to each financial year that remain outstanding of this ruling.

•         You will move to Country B to reside in the income year ending X June 20XX.

Relevant legislative provisions

Taxation Administration Act 1953 section 45-340

Higher Education Support Act 2003

Detailed reasoning

Three schemes, HECS-HELP, FEE-HELP, and OS-HELP, offer Commonwealth loans to assist students to pay their higher education fees and to study overseas pursuant to the HESA 2003 under the Higher Education Loan Program ('HELP').

Taxpayers who elect to repay their higher education loans through the Australian taxation system will not have to make any repayments until their "repayment income" reaches a minimum level, in accordance with the HESA 2003.

Australians who have moved overseas for more than six months are required to pay back the same amount of their HELP debt as they would if they were residing in Australia, in accordance with section 154-17 of the HESA 2003. For these debtors, an obligation has been created to make repayments on their HELP debts based on their total Australian and foreign-sourced income, known as their worldwide income. From 1 January 2016, debtors going overseas for more than six months (183 days) are required to register with the ATO, while those already living overseas will have until 1 July 2017 to register. Repayment obligations will commence from 1 July 2017, for income earned in the 2016 - 17 year.

The annual income levels below the minimum repayment threshold for the ruling period are set out in the below table.

Table 1: Income level and repayment threshold

Application to your circumstances

You received FEE-HELP in the 20XX income year and since that date, your income level has not gone over the minimum repayment threshold in any of the income years listed in the table above. Therefore, you do not need to make compulsory repayments against your HELP debt for those years.

If you earn over the repayment threshold for the current year, or future income years, you will need to make compulsory repayments to your FEE-HELP debt. If you become a foreign resident you are still required to report your worldwide income in Australia to determine your study and training loan repayment obligation. For more information on calculating your worldwide income, search QC 52826 at ato.gov.au.