Study and training loans? When do they need to be repaid?

As seen in Woopi News April 2022

Gone are the days were we just referred to it as a HECS debt. We how have multiple types of student loan schemes available, that are all repaid through the tax system. In some circumstances your employer may have withheld additional tax to cover this repayment, however a repayment is not actually applied to the loan until you have lodged your tax return.

When determining if a loan repayment is required it’s not always taxable income that is used in the calculation.  If you have net investment or rental losses, reportable fringe benefits or reportable super contributions, these amounts are added to your taxable income to determine your repayment income.

A net investment or rental loss is deducted when calculating taxable income however its added back when determining if the taxpayer will have a student loan repayment.

Reportable fringe benefits and Reportable superannuation contributions are included in a tax return however are not taxable. When determining if a taxpayer will have a student loan repayment these amounts are added onto taxable income to calculate their repayment income, which is then multiplied by the relevant percentage to determine the loan repayment amount.  This often causes a lot of confusion for taxpayers who don’t understand how they exceeded the threshold.

Reportable fringe benefits are most commonly salary packaged benefits provided by an employer whereas reportable superannuation contributions are any amounts contributed to superannuation by your employer over and above the 10% mandatory superannuation guarantee amount. These are often referred to as salary scarified superannuation.

Once repayment income exceeds $47,014 (2022) the taxpayer will be required to make a loan repayment.  The percentage of the repayment income starts at 1% and increases gradually to 10% where repayment income exceeds $137,898. A full table on the ATO website.

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