In short, no!

The amount of HECS you need to pay is based on a few things, your taxable income, any fringe benefits you’ve received, any investment losses, your super contributions and any exempt foreign employment income amounts.

It doesn't include any amounts you have received as an inheritance.

Just how much you pay back is dependent on your income:

For the 2023- 2024 year it starts when you earn over $51,500 (at a 1% repayment rate)... if you’re earning more than $151,201 your repayment rate is 10%. Here is a link so you can see the different income bands and repayment rates.

We don’t have any inheritance tax either (although there is Capital Gains Tax if you sell an asset you inherit or income tax if you receive dividends, distributions or rental income...etc from an inherited asset).

THE RECENT HECS INDEXATION CHANGE ANNOUNCEMENT

Last weekend the Government announced that it would be changing the calculation method for indexation, which happens every year on 1 June.

Instead of an inflation (or CPI) rate, it would also look at the Wage Price Index (WPI) and apply the lower of these.

In fabulous news, they said once this goes through it would be backdated to June 2023 – saving the average HECS holder about $1,200!

The exact indexation amount applicable for 1 June 2024 is yet to be announced...I assume we will get it as part of next week’s budget announcement.

WHAT HAPPENS IF I PAID MY HECS OFF LAST YEAR?

If you freaked out about the 7.1% indexation rate and paid it off during the year, fear not... assuming you have no other tax liability, you will get the refund as a cash refund according to the Federal Education Minister Jason Clare (cha-ching!).

Should you get a refund, think about it not like free money – but the opportunity to super charge your financial goals.

Maybe you need to increase your emergency savings? Or pay down bad debt? Or maybe use it as a starting amount to invest for your medium or long term goals? Maybe you boost your Super or add to your offset account to reduce the amount of interest you pay?

If you want to know how much you might get back as a credit, this handy little calculator will let you add in your info and give you an assumed credit amount.

Jess

PS. Evergreen Money Club Members: I will be hosting an Exclusive 2024 Budget Update next Wednesday at 12:30pm SYD time to get you across the changes and what they mean for you.

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Obvs all of this is general advice only... especially important to note any and all of the comments above do not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.