Salary packaging with a HELP/HECS debt
You can benefit from salary packaging even if you have a HELP (Higher Education Loan Program) or HECS (Higher Education Contribution Scheme) debt.
Understanding your 'adjusted taxable income'
Although salary packaging can reduce your taxable income, it can increase the gross value of your salary. This is referred to as your 'adjusted taxable income'. So, your adjusted taxable income equals your salary plus the gross value of your fringe benefits (e.g. $40,900 + $17,000 = $57,900)
How your adjusted taxable income impacts HELP and HECS repayments
The ATO assesses you on your 'adjusted taxable income' when working out how much you should pay in HELP or HECS repayments. Therefore, if your gross salary increases, you may need to increase your regular HELP or HECS repayments. Otherwise you may end up with a bill at tax time.
A salary packaging and HELP/HECS debt example:
Potential annual benefit for a health employee
| Salary | Take home pay without salary packaging ie. $9,010 on living expenses after-tax | Take home pay with salary packaging ie. $9,010 on living expenses before-tax | Benefit (annual) after repaying the HELP repayment |
|---|---|---|---|
| $60,000 | $40,402 | $42,101 | $1,699 |
ASSUMPTIONS: Estimated annual benefit based on an eligible employee salary packaging the full $9,010 per annum limit. PAYG tax rates effective 1 July 2024 have been used. HELP repayments are based on 2024-2025 HELP repayment thresholds and rates. The actual administration fee that applies to you may vary depending on your employer and may alter the calculation. Estimated annual benefit based on the assumption that an employee does not have any accumulated Financial Supplement debt. Your benefits will vary depending on your income and personal circumstances. Compulsory HELP repayments commence once your adjusted taxable income reaches $54,434.
IMPORTANT INFORMATION: The information provided in this brochure is factual information only and is not intended to constitute taxation or financial advice on the relative merits of salary packaging or on any other basis. Benefits and savings will vary depending on personal objectives, financial situation and needs. Maxxia recommends obtaining independent financial advice before making any financial decisions. Eligibility criteria and terms and conditions apply. All salary packaging proposals are subject to the requirements of the employer. Fees and charges apply. Maxxia may pay and receive commission or rebates in connection with some services and products it provides or arranges to be provided by third parties.
Potential annual benefit for a charity employee
| Salary | Take home pay without salary packaging ie. $15,900 on living expenses after-tax | Take home pay with salary packaging ie. $15,900 on living expenses before-tax | Benefit (annual) |
|---|---|---|---|
| $60,000 | $33,512 | $36,750 | $3,238 |
ASSUMPTIONS: Estimated annual benefit based on an eligible employee salary packaging the full $15,900 per annum limit. PAYG tax rates effective 1 July 2024 have been used. HELP repayments are based on 2024-2025 HELP repayment thresholds and rates. The actual administration fee that applies to you may vary depending on your employer and may alter the calculation. Estimated annual benefit based on the assumption that an employee does not have any accumulated Financial Supplement debt. Your benefits will vary depending on your income and personal circumstances. Compulsory HELP repayments commence once your adjusted taxable income reaches $54,434.
IMPORTANT INFORMATION: The information provided in this brochure is factual information only and is not intended to constitute taxation or financial advice on the relative merits of salary packaging or on any other basis. Benefits and savings will vary depending on personal objectives, financial situation and needs. Maxxia recommends obtaining independent financial advice before making any financial decisions. Eligibility criteria and terms and conditions apply. All salary packaging proposals are subject to the requirements of the employer. Fees and charges apply. Maxxia may pay and receive commission or rebates in connection with some services and products it provides or arranges to be provided by third parties.
What are the current HELP repayment rates?
HECS/HELP repayment threshold and rates for 2024-2025:
| HECS/HELP repayment income (HRI) | Repayment rate |
|---|---|
|
Below $54,435 |
Nil |
|
$54,435 – $62,850 |
1.0% of HRI |
|
$62,851 – $66,620 |
2.0% of HRI |
|
$66,621 – $70,618 |
2.5% of HRI |
|
$70,619 – $74,855 |
3.0% of HRI |
|
$74,856 – $79,346 |
3.5% of HRI |
|
$79,347 – $84,107 |
4.0% of HRI |
|
$84,108 – $89,154 |
4.5% of HRI |
|
$89,155 – $94,503 |
5.0% of HRI |
|
$94,504 – $100,174 |
5.5% of HRI |
|
$100,175 - $106,185 |
6.0% of HRI |
|
$106,186 - $112,556 |
6.5% of HRI |
|
$112,557 - $119,309 |
7.0% of HRI |
|
$119,310 - $126,467 |
7.5% of HRI |
|
$126,468 - $134,056 |
8.0% of HRI |
|
$134,057 - $142,100 |
8.5% of HRI |
|
$142,101 - $150,626 |
9.0% of HRI |
|
$150,627 - $159,663 |
9.5% of HRI |
|
$159,664 and above |
10.0% of HRI |
*HRI = Taxable income plus any total net investment loss (which includes net rental losses), total reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income.
Before you start…
Before you start salary packaging, please tell your payroll department to take additional HELP or HECS repayments from your salary. Please also seek financial or taxation advice if you're unsure.
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