The tax office has warned it will track down Australian expatriates who have stopped paying their student loans while overseas and make them pay up under new rules.
The Australian Taxation Office has enlisted the help of the Department of Home Affairs to contact those who have left or plan to leave Australia with outstanding debt.
Those with Higher Education Loan Program (HELP), Vocational Education & Training student loan (VSL) and Trade Support Loan (TSL) debts will likely be contacted by the ATO however no enforcement measures have been made.
According to the ATO, it will locate and reach out to expatriates to ensure that they are paying off their loans in accordance with their salary.
An ATO spokesperson says: “Correct identification of new and existing HELP, VSL and TSL debtors who leave Australia or have already departed, is a major component for successful targeting of communications, provision of self-help information and compliance activity to support the law change.”
There are an estimated 3.2 million Australians with outstanding student loan debts, totalling a new record of over $66 billion.
Assistant commissioner Karen Foat says: “Moving overseas does not cancel student loan debts and your repayment obligations do not change with your address. Current laws give us the power to pursue these debts overseas.”
The new rules dictate that Australians with an income contingent loan travelling overseas need to notify the ATO of their new address and lodge an overseas travel notification.
Expats, like all other Australians, will be required to make repayments once their income reaches a certain threshold.
Foat says: “On average, it takes someone nine years to pay off their HELP debt. But for Australians who travel overseas and don’t make any repayments, it takes significantly longer.”
It was only on 1 July that the Government’s reduced repayment threshold of $45,881 came into effect for 2019/20, a decrease of more than 11 per cent.
This is the largest decrease in the threshold in more than 20 years and will see more than 136,000 additional Australians start to pay off their HELP debt.
The percentage of income to be repaid for the lowest income bracket is one percent and will increase by an additional per cent for each income bracket increase. The percentage is based on income as opposed to the balance of the outstanding debt.
This is capped at a 10 per cent income repayment for those earning over $134,573 annually.
While all HELP loans are interest free, they are indexed annually in June to match the consumer price index. This year 1.8 per cent was applied to all study and training loans.
The ATO advises for those that can’t receive security codes by SMS to an Australian mobile number overseas to download the ‘myGov Access app’ to update a myGov sign-in option.
The income repayment thresholds are as follows: