Understanding the 20% HECS-HELP Debt Reduction

As part of its re-election promise, the Government committed to reducing all outstanding HECS-HELP debts by 20%. The legislation passed through the Senate today, 31^st July 2025. Once it has received Royal Assent, the discount will apply retrospectively to any student loan balances as of June 1, 2025. While many Australians have noticed an increase in their student loan balances due to the annual indexation of 3.2%, the government has clarified that the 20% reduction will be calculated based on the pre-indexation amount.

How the Reduction Will Be Applied

Once legislated, the Australian Taxation Office (ATO) will automatically adjust eligible student loan accounts. The indexation will be recalculated based on the reduced debt amount, ensuring that borrowers benefit from both the discount and a lower indexed balance. This change is part of a broader effort to make student loan repayments more manageable, following last year’s reform that linked indexation to the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI), rather than CPI alone.

Tax Season

For those preparing their tax returns, it’s important to note that the discount has not yet taken effect. There’s no need to delay filing your return, as the ATO will apply the discount automatically. However, borrowers who paid off their loans after June 1 may be eligible for a refund equivalent to the 20% discount (provided they don’t owe additional tax). The cut will take a few months for the Australian Tax Office to implement.

Other Updates

The legislation also includes reforms to the repayment system, ensuring compulsory repayments are marginal. The threshold at which students are required to start paying back their loans will be lifted from $54,435 (2024-25 minimum) to $67,000 from 1 July 2025.

Contact your Harris Black team member for any questions regarding this new legislation.

14 August 2025

• Lodge PAYG withholding payment summary annual report for:
  • Large withholders whose annual withholding is greater than $1 million
  • payers who have no tax agent or BAS agent involved in preparing the report.

21 August 2025

• Lodge and pay July 2025 monthly business activity statement.

25 August 2025

• Lodge and pay quarter 4, 2024–25 activity statement if you lodge electronically.

If you’re planning to travel or live overseas for an extended period, it’s essential to understand your obligations to the Australian Taxation Office (ATO).

Whether you’re going for work, study, or a lifestyle change, the ATO requires certain individuals to submit an overseas travel notification—and failing to do so could lead to penalties or complications with your tax and loan obligations.

Who Needs to Submit an Overseas Travel Notification?

Individuals who have a Higher Education Loan (HELP), VET Student Loan (VSL) or Australian Apprenticeship Support Loan (AASL) will need to lodge an overseas travel notification if any of the following apply:

• You intend to remain outside Australia for 183 days or more in any 12-month period
• You have already been outside Australia for 183 days or more, even if that wasn’t your original intention

Even if you become a foreign resident for tax purposes, you still have obligations to repay these loans.

What You Need to Do Before and After Departure

Before leaving Australia:

• Ensure your contact information is correct with the ATO
• Lodge an overseas travel notification with the ATO via myGov or with a tax agent

While overseas:

• If you remain an Australian resident for tax purposes, you will need to continue to lodge your Australian tax return which will include your worldwide income
• If you become a non-resident of Australia for tax purposes, you will need to lodge a worldwide income report each year via myGov or with a tax agent

Final Tips

• Tax residency can potentially impact the amount of taxable income to be reported and the required repayments on your loan. If you are unsure of your tax residency status, consider discussing with your tax agent.
• Ensure that you stay on top of your reporting obligations while away either through myGov or with your Australian tax agent

Need help determining your tax residency or managing your obligations while abroad? Contact your Harris Black team member for personalised advice before you go.

As we come to the end of the 2025 financial year, it is important for businesses to plan for upcoming obligations and consider any tax planning opportunities before 30 June.

Tax planning can assist you with the following:

• Maximising tax efficiency
• Reducing the likelihood of unexpected tax liabilities
• Allowing for tax liability funding options to be proactively considered
• Allowing for potential tax issues to be addressed before they become a problem
• Capitalising on tax incentives
• Capitalising on opportunities to grow personal wealth
• Maintaining compliance with rules around trust distribution resolutions and dividend resolutions where necessary

Click the link below to download our Tax Planning Checklist

Responsibilities and Considerations

Complete Trustee Resolutions by 30 June

Each financial year, trustees must determine which beneficiaries are entitled to the trust income. The resolution confirming the distributions should be completed and signed prior to 30 June.

Review Trust Deed Regularly

Understand who the eligible beneficiaries are and the types of income that can be distributed according to the Trust Deed.

Upcoming PAYG Instalments

Plan for any changes in PAYG instalments for the remainder of current year and new financial year. Consider variation of instalments where not in line with expected tax position.

Section 100A Compliance

Ensure that the trust distribution entitlements are valid and that each distribution creates a legal entitlement for the beneficiary.

Division 7A Loans

Ensure appropriate interest charged on complying Division 7A loans. If minimum repayments on loans are being paid in cash, flow these funds to the company. If repayments made via dividends, dividend documentation should be prepared. Consider the impact of any required dividends on overall tax position.

ATO Interest – Non-deductible from 1 July 2025

Consider the cost of outstanding debt with the ATO. Previously, interest charged by the ATO on late payment of tax obligations incurred interest which could be claimed as a deduction. The deduction no longer applies to interest incurred on or after 1 July 2025.

Check in with your Financial Adviser

Consider checking in with your financial adviser in relation to any proposed superannuation contributions, review of personal insurances, or other items that may impact your tax affairs.

If you would like to book a Tax Planning meeting, please contact your Harris Black team member.