2023 HECS-HELP Debts – Indexation Set For 1 June

Government assistance for students in the form of HECS-HELP debts are indexed to CPI each year on 1 June. Over the past 10 years the indexation of these balances has not caused concern as the CPI has mostly been under 2%.

However, in 2023 the rate is set to skyrocket to around 7% (the exact rate is yet to be determined). So whilst interest is not applied to these debts, the rate of inflation will see these debts increase significantly to keep pace with this rate, and for the first time in quite a while, Taxpayers will be considering HELP debts as more than an afterthought when it comes to their planning.

Compulsory Repayments

Compulsory amounts of HELP debts are repaid on lodgement of the individual’s tax return.

The amount applied is a percentage (the “Repayment Rate”) multiplied by “Repayment Income” (RI). A full table of 2023 repayment thresholds and rates can be found on the ATO website, but as a guide, if an individual has repayment income below 48,361, their rate is Nil.

For someone on $65,000 it is 3%, and for $120,000 it is 8.5%. As such, someone with a $120,000 salary would repay an amount of 0.085 * 120,000 = $10,200 on lodgement of their tax return, or the balance of the loan if it was below this amount. 

Consideration to Voluntary Repayments

Scope exists for voluntary repayments of HECS-HELP debts.  Whilst there is no discount for early repayment, if the amount is paid prior to indexation on 1 June, the debt will avoid the CPI increase.  This payment may be particularly attractive to those approaching the final payments of their debt and may have effectively remitted sufficient to the ATO through their PAYG Withholding payments in their payroll. 

PAYG Withholding relating to HELP debts effectively means repayments are paid in advance of the indexation, with the credit not appearing on the loan until the lodgement of the tax return. This means that if a HELP debt is fully repaid by way of voluntary repayment in May 2023, then any additional withholding will be refunded on lodgement of the 2023 tax return.

For Example

Take our example above of an individual with a $120,000 income.
If their remaining HELP debt at 1 June 2023 was $10,200, the indexation applied at 7% would be $714.

If the balance was paid off completely in May, the indexation would be nil and the Taxpayer could advise their payroll to cease PAYG Withholding relating to HELP, immediately starting to make up for the cash payment brought forward to make the voluntary repayment.

Lodge in July, and ceteris paribus, a refund would be received of $10,200 (the amount remitted in payroll) which offsets the $10,200 paid voluntarily. The end result being a cash neutral position and no HELP debt.

Don’t make the payment and the debt increases to $10,914.  After the return is lodged, a nil cash position is still obtained, but with a remaining debt of $714.
Political Pressure on Indexation & Other Considerations

Such a high level of indexation is attracting considerable media attention, however, given the state of the budget and the fact the increase is written into law already, it is not something that is expected to be addressed in the upcoming budget or for relief to be provided.

While the level of indexation is high this year, there is no way to know where CPI will be over the coming years and HELP debt may, once again, be one of the cheapest sources of debt to have.

Not Financial Advice

Harris Black do not offer financial advice and can only offer factual information on this topic.

Please do not hesitate to contact your Harris Black team member should you require any assistance or further clarification.

Important Tax Date

21 April 2023
March monthly activity statements – final date for lodgement and payment.
28 April 2023
Quarter 3 (January-March) activity statements – final date for lodgment and payment.
30 April 2023
Quarter 3 (January-March) TFN report closely held trusts for TFNs quoted to a trustee by beneficiaries – final date for lodgement.
12 May 2023
Quarter 3 (January-March) activity statements lodged electronically- final date for lodgement and payment.
21 May 2023
Lodgement due date for your FBT return. For 2021, if you prepare your own return you can lodge by 25 June without incurring late lodgment penalties.

Final date to pay when you prepare your own FBT return.

Meet The Staff – Kyle Underhill

Meet Kyle Underhill, the newest member of the Harris Black accounting team. Kyle joined us in January 2023 and has quickly become a valuable member of our team. In this interview, we get to know a little bit more about Kyle, his hobbies, interests and dreams.

Kyle’s passion for golf is evident in his responses to our questions. If he could only eat one meal for the rest of his life, it would be a rib eye steak with thick cut chips and pepper sauce. However, Kyle would probably prefer to be out on the golf course, especially if he were stranded on a deserted island with his golf clubs and simulator. If he could share a meal with any four individuals, living or dead, he would choose Tiger Woods, John Daly, Ayrton Senna, and his dad. Kyle’s dream car is an Aston Martin DBS superleggera, but he is also looking forward to the delivery of his new car, a Hyundai i30 N.

In addition to golf, Kyle enjoys watching sports, particularly motorsports. He wishes that cars with larger engines would come back into fashion so that they could make more noise. When he’s not golfing or watching sports, Kyle enjoys cooking. His favorite dishes to cook include garlic bread, rib eye steak, roast potatoes with rosemary, and Oreo cheesecake.

Kyle’s favorite quote comes from professional golfer Rory McIlroy: “Next time I cry about golf it will only be with joy.” This quote has influenced Kyle’s life, reminding him to focus on the positive aspects of life and to find joy in the things he loves.

Kyle’s ultimate superpower would be time travel, so he could go back and witness major sporting events. If he won one million dollars, Kyle would go on an American road trip in a 1967 Corvette Stingray. However, his retirement plans would require a bit more, as he would need to win five million dollars to retire today.

When it comes to relaxation, Kyle has found the most peaceful place in Phuket. He refuses to watch the show Married at First Sight, but he is looking forward to learning more at work and enjoying his university break.

We are thrilled to have Kyle on our Harris Black team, and we look forward to seeing how his passion and skills will contribute to our success.

Working From Home Deductions From 2023 Onwards

The ATO announced changes to working from home (WFH) deductions.

Taxpayers can choose either the ‘actual cost’ or the ‘fixed rate’ method to claim WFH deductions. Only the fixed rate method is changing. The revised fixed rate method applies from 1 July 2022 and can be used when taxpayers are working out deductions for their 2022–23 income tax returns.

From 1 July 2022 to 28 February 2023, the ATO will accept a record representing an estimate of the total number of hours worked from home (such as a 4-week diary). From 1 March 2023 onwards, taxpayers must keep records of the total number of hours they actually work from home.

Revised fixed rate method

The changes are:

  • The cents per work hour have increased from 52 cents to 67 cents and it covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables.
  • Expenses that can be claimed separately:
    • Depreciation of equipment used while WFH.
    • The repairs and maintenance of these assets.
  • The costs associated with cleaning a dedicated home office.
  • Taxpayers are not required to have a dedicated home office to claim WFH expenses under this method.
  • Taxpayers need to keep a record of all the hours worked from home for the entire income year. The ATO will not accept estimates, or a 4-week representative diary or similar document, under this method from 1 March 2023.
  • Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.
  • Records must be kept for each expense that taxpayers have incurred which is covered by the fixed rate per hour.

Actual cost method

The actual cost method hasn’t changed. Taxpayers can claim the actual work-related portion of all running expenses.

The Extreme Cost Of Paying Super Late

Superannuation Guarantee (SG) payments for employees are due on the 28th day after the end of each quarter. The penalties for making this payment late are severe and rigorously enforced by the ATO.

Even if a payment falls one day late, the additional cost will always include:

  1. The requirement to lodge a Superannuation Guarantee Charge (SGC) statement.
  2. An admin fee per employee
  3. Interest
  4. A requirement to pay super on all salaries and wages (including overtime)
  5. Lost tax deduction for the payment

Other possible costs:

6. Penalties up to 200% of the “Super Guarantee Charge”
7. Director’s personal liability
8. Possible criminal charges for directors  
9. Other considerations

Penalty number 1: The Superannuation Guarantee Charge Statement

This time-consuming form needs to be lodged with the ATO any time the SG payment for a quarter is made late. It is due one calendar month after the SG due date. The form calculates the super, admin and interest amounts payable.

Penalty number 2: An admin fee per employee

An automatic non-deductible admin fee payable of $20 per employee, per quarter.

Penalty number 3: Interest

This is charged at a nominal rate of 10% and is calculated from the beginning of the relevant quarter until the lodgement of the SGC statement. It is paid to the ATO as part of the SGC, then paid to the employee’s super accounts by the ATO as a concessional contribution. The interest cannot be reduced or waived. 

Penalty number 4: Requirement to pay super on all salaries and wages

Normally SG is payable on Ordinary Time Earnings (OTE), which doesn’t include overtime. When calculating the SG shortfall, the amount is calculated on all salary and wages.

Penalty number 5: Lost tax deduction on late super

No amount of the SGC statement payment, including the superannuation, is tax deductible under s26.95 of ITAA97. This will likely be the largest cost to a business when the super is paid only slightly late.

Penalty number 6: 200% “Part 7” Penalty

This is a further penalty that can be imposed by the ATO for late lodgement of an SGC statement. The default rate of the penalty is 200% of the SGC amount.

Penalty number 7: Director’s personal liability

The ATO may issue a Director Penalty Notice (DPN) for unpaid SGC amounts, making directors personally liable. If the SGC statement was lodged on time, the DPN can be negated by appointing an administrator within 21 days. If the SGC statement was lodged late, the only way to settle the DPN is by paying the amount in full. The ATO is able to estimate SG amounts and assess them to directors even after a company has been liquidated.

Penalty number 8: Possible criminal charges for directors

Since 2019, the Commissioner of Taxation has had the power to pursue criminal penalties for serious breaches of SG obligations, including up to 12 months imprisonment for directors.

Other considerations:

  • Single Touch Payroll (STP) and electronic super reporting means the ATO has real time data on late super payments. There has been an increase in engagement by the ATO in the area.
  • There is no minimum dollar amount the ATO will chase for SGC. They will fully pursue every dollar.
  • Since there is no discretion under the law, it is irrelevant if the SG is owed to a sole director and shareholder.
  • Prospective purchasers of businesses will likely look back at a number of years of super payments to ensure there are no unlodged SGC statements during the due diligence process.
  • Employees are able to check their super balances more easily than ever. The ATO will investigate every single complaint they receive in relation to unpaid super.

When is super considered paid?

Super is considered paid when it is received in the employee’s super fund bank account. Some clearing houses advise employers to allow 10 business days, but this should be checked with the clearing house used.


Assume SmallBus Pty Ltd has 10 employees and the wages paid in the March 2022 quarter were $250,000 with super accrued during the quarter of $25,000. SmallBus Pty Ltd makes the $25,000 payment in full on 27 April 2022, but the payment doesn’t reach the employee’s super funds until April 29. No SGC statement is lodged until 1 April 2023 after a letter is received from the ATO.

The non-negotiable cost of the late payment would be:

Admin fee                                            $200

Interest                                                $3,116

Lost tax deduction at 25%                  $6,250

Total                                                    $9,566

Additionally, the total penalty available to the ATO would be 200% or $19,132. Assume this is reduced by the ATO to 100% or $9,566.

Total cost of paying the super one day late: $19,132

On top of this, the directors could be personally liable for the SGC amount, even if SmallBus Pty Ltd were placed into liquidation. 

Tips for reducing SGC risk:

  • Paying super monthly or together with each pay run will reduce the overall cost of any mistake at the end of a quarter
  • Make payments well in advance of the due date
  • Monitor the super payable account to ensure super accrued from payroll is matched to payments

Please do not hesitate to contact your Harris Black Team member should you require any assistance or further clarification.

Brentnalls Leadership Hub Program Summary

by Michael Scott

In the accounting profession, we are always learning and undertaking training as there are always changes to the tax legislation that we need to be across; however, this training is always focused on improving our technical abilities only. This is why when invited to take part, I eagerly accepted the offer to undertake some leadership training to help round out my leadership capabilities. Over the past 8 months myself, and 14 other team members from throughout the Brentnalls network have undertaken the Brentnalls Leadership Hub Program. This Program has been run by Courageous Leaders and facilitated by Kevin Holloway who has been a knowledgeable and insightful instructor and coach.

The Program comprised of 8 monthly group face to face (via teams) presentations and discussions with a new topic each month. Each session stood alone but by the 3rd or 4th session we could see how each new topic was building on the previous learnings. The most helpful part of the course though was the habit builder, which ran for 21 days after each presentation and required us to check in daily to make sure that we were putting into practice what we had learnt. I found it to be very valuable in keeping what I had learnt in the forefront of my mind. We also had a buddy from the program (new buddy each month) which kept us accountable to completing our required check-ins.

The program covered the following topics:

  • Leadership is not a title, it’s a mindset
  • Self-Management;
  • Developing your delegator talent;
  • Supporting high performance;
  • Feedback conversations that empower change;
  • Deepening trust; and
  • Taming the advice monster in coaching

There were a few concepts which were harder to grasp and a few difficult conversations, but there were also some real breakthroughs. I think for me personally, I’ve found the confidence to delegate the jobs I need to, which will allow me to do my own job effectively and to trust other staff that with the right training and support they will be able to perform to the same level (if not better!) I’ve also learnt the importance of growing trust not only with you clients, but also within your own team, which will empower them to develop their skills much quicker than they otherwise would.

The program culminated with the Brentnalls national network conference on the Gold Coast in March. This was where the success of the program really shone – as several of the participants had only been to a few conferences (if any) and now suddenly there was an immediate group of friends from across all the firms which meant that rather than trying to meet a few people for the first time, there were already strong connections which could be further built upon.

I’d like to publicly thank the Brentnalls Executive Committee and the directors of Harris Black for running this course and for my invitation to attend.

How can we help you?

Today’s financial environment demands a regular review of strategy and a focus on execution.