What You Need to Know About HECS-HELP Repayments via the ATO

HECS-HELP repayments via the ATO can create unexpected cash flow pressures for business owners who thought their student days were behind them. If you’re running a business and still carrying HELP debt, understanding how these repayments work through the tax system could save you from nasty surprises at year-end and help you better manage your cash flow throughout the year.
Many ACT business owners find themselves caught off guard by HELP debt obligations, especially when their income fluctuates or when they’re dealing with the feast-or-famine cycles common in trades and services. This guide cuts through the confusion to explain exactly how HECS HELP repayments work, what’s changing, and how to manage these obligations without disrupting your business operations.

How HECS-HELP Repayments Actually Work Through the ATO

The compulsory repayment system operates differently depending on whether you’re an employee or running your own business. Understanding these differences is crucial for proper cash flow planning and avoiding unexpected bills from the Australian Taxation Office. For the 2024-25 financial year, compulsory repayments kick in when your repayment income hits $54,435. But there’s a major change coming – from 2025-26, this threshold jumps to $67,000, and the calculation method shifts to a marginal system. These thresholds are adjusted annually based on the wage price index to keep pace with income growth across Australia.

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For employees, your employer automatically withholds extra tax from each pay to cover anticipated HECS repayments. The Australian Taxation Office then calculates your actual repayment when you lodge your tax return and applies it against your loan debt. Your loan balance doesn’t reduce after each pay – it only gets applied as a lump sum after your tax return is processed. This system covers all study and training support loans, including HELP loans for tuition fees paid to higher education providers, and other loans like the student start up loan that helps with living costs.
For business owners and self-employed individuals, the process is more hands-on. When you lodge your tax return, you calculate your compulsory repayment based on your repayment income, then pay this amount to the ATO along with any outstanding tax obligations. This can create cash flow challenges if you haven’t planned for it throughout the year. Your repayment income includes more than just your taxable income – it also captures total net investment losses, reportable fringe benefits, reportable superannuation contributions, and exempt foreign employment income. This broader definition can push you into higher repayment brackets even when your take-home pay doesn’t feel substantial, regardless of whether you borrowed up to the loan limit or enrolled after the census date.

Current Repayment Rates and What’s Changing

The current system applies graduated repayment rates for HELP debts, starting at 1% of your income for those just over the minimum threshold and climbing to 10% for higher earners. For example, if your income is $70,000, you would pay 2.5% of your income, or $1,750, towards your HELP debt, regardless of the higher education provider where you studied.

From July 2025, there will be a major change to how repayments work. The marginal system being introduced means repayments are only required on income above $67,000, instead of the entire amount. So, if you earn $80,000, you’ll pay 15% only on the $13,000 above the new threshold, which comes to $1,950. This shift is particularly relevant for business owners and professionals whose incomes fall just above the new threshold, as it will generally lower their annual repayment amounts.

Alongside these changes, all HELP borrowers will benefit from a one-off 20% reduction to their outstanding loan balance before the annual indexation rate is applied on 1 June 2025. Keeping an eye on the indexation rate is important because it determines how much your remaining loan grows each year, and these new reforms aim to help reduce the long-term burden for those still repaying student debt.

Managing HECS Repayments as a Business Owner

Cash flow planning becomes critical when you’re responsible for calculating and paying your own HECS repayments. Unlike employees who have amounts automatically deducted, business owners need to develop strategies to manage these obligations without disrupting their operations.

Set up quarterly provisions – Estimate your annual HECS repayment based on projected income and set aside roughly a quarter of this amount every three months. This prevents the shock of a large year-end payment that could disrupt your working capital.
Monitor your repayment income – Remember that business income, rental losses, and super contributions all count towards your repayment income. If you’re close to a threshold, consider the timing of income recognition or major transactions that might push you into a higher bracket.
Consider voluntary repayments – If you have good cash flow periods, voluntary repayments can reduce your debt faster and lower future compulsory payments. However, these voluntary payments aren’t tax deductible, so factor this into your decision-making. You can make these payments through ATO online services using BPAY or credit card.

Employer Obligations for Business Owners with Staff

If you employ people who have study and training loans, you have specific obligations under the PAYG withholding system. Getting these obligations right protects both you and your employees from compliance issues and unexpected tax bills.

Employees must tell you if they have a study loan by ticking the relevant box on their Tax File Number Declaration or Withholding Declaration forms. Once notified, you must withhold additional amounts from their salary to cover anticipated HECS repayments. The ATO provides tax tables that show exactly how much extra to withhold based on the employee’s income level. These withheld amounts get remitted to the ATO as part of your regular PAYG obligations.

Key Responsibilities

Fulfilling your obligations as an employer ensures your staff’s HECS-HELP repayments are managed smoothly and keeps your business compliant with the latest tax rules.

Using updated tax tables that account for HECS withholding obligations
Remitting withheld amounts to the ATO with your regular PAYG payments
Updating withholding when employees pay off their loans or circumstances change

Getting this wrong can create complications for your employees at tax time and potentially expose you to compliance issues with the ATO.

Using ATO Online Services to Track Your HELP Debt

The ATO’s online services make it simple to keep track of your study and training support loans. These digital tools help you stay on top of your loan balance and make informed decisions about voluntary repayments and cash flow planning.

You can access these services through myGov by linking your account to the Australian Taxation Office. Once logged in, you can view your loan accounts, check your current loan balance, and see your payment reference number for making voluntary repayments.

Check Your HELP Loan Balance:

Checking your current loan balance takes just a few clicks through the Australian government’s online system:

Sign in to myGov and select Australian Taxation Office
Select Tax, then Accounts, then Loan accounts
From here you’ll see any government loans you have and the balance

You can also use the ATO app to quickly check your loan balance on your phone. The online services also show your indexation amounts and track both voluntary repayments and compulsory repayments over time.

Planning for the 2025-26 Changes

The upcoming changes to HECS repayments present both opportunities and challenges for business planning. Understanding these changes now allows you to adjust your financial strategies and take advantage of the reduced payment obligations coming next year.

The higher threshold means some business owners currently making repayments will stop entirely if their income sits between $54,435 and $67,000. For those above the new threshold, the marginal rate system will generally reduce repayment amounts. However, you’ll need to adjust your cash flow planning to account for the new calculation method. The ATO is working to update tax tables and systems to reflect these changes.

Action Steps for Business Owners:

Understanding HECS-HELP changes is easier with a clear, practical plan—here’s how business owners can confidently get ahead of the upcoming shifts.

Review your current HECS debt balance using ATO online services and estimate how the 20% reduction will affect you
Recalculate your expected 2025-26 repayments using the new marginal system
Adjust your quarterly provision strategy to account for potentially lower payments
If you employ staff, prepare for changes to withholding obligations and updated tax tables

The transition period may create some administrative complexity, but most business owners will benefit from reduced repayment obligations, freeing up cash for business investment and growth.

Conclusion

HECS-HELP repayments don’t have to become another cash flow headache for your business. By taking the time to understand how the Australian government manages these loans through its tax system, planning for the upcoming changes, and setting aside funds on a regular basis, you can handle these obligations without disrupting your day-to-day operations. If you’re not sure how the Australian government’s policies will affect your situation or need support preparing for what’s ahead, your accountant can help you map out a strategy tailored to your business’s cash flow needs.