Thousands of Australians long ago discovered that repaying their HECS bill for the time at university to obtain degrees could be permanently avoided if they decided to live and work overseas, out of reach of the Australian tax office. The government had made university study possible for low earner families by folding tuition fees into what was then known as a "HECS "loan - later renamed to " HELP " - which would start being repaid when their earning level reached an agreed minimum. The weak point was that they needed to remain working in Australia for that to happen.
A law change means that Australians with HECS or Help loams or who have accumulated Trade Support Loans ( TSL ) will now need to report their global income to the Australian Tax Office each year. If they have earned more than $ 53,000 they will have to start paying back their loans under legislation that is now law.
Unpaid HEC loans are becoming a drag on the Federal budget. A 2016 report predicted that nineteen percent of the total are "doubtful " or unlikely to be repaid and that this is likely to rise to twenty-two percent by 2025-26. Two billion worth were being written off each year and this could increase to four billion by 2026. This puts the continuation of the entire debt deferment scheme in doubt.
Australians debt dodging overseas have reason to worry. The ATO has nineteen thousand public servants at its disposal to start chasing the money. At present, social media is being used to widely disseminate the information that this new law extends the ATO reach. In particular, those living in the UK, Japan and Canada are definitely on the hook for their HEC debts because Australia has reciprocal tax arrangements with those countries. Debt recovery action is possible immediately.
This law change alters the entire complexity of having Australian citizenship. The protection of an Australian passport brings with it the responsibility of living with Australian law while that person resides in another country as far as finance reporting is concerned. Prior to the law change, this was a grey area. Now failure to report overseas earnings is a crime of the same magnitude as an Australian living in Australia failing to lodge an annual tax return.
A person who fails to comply risks being served with an arrest warrant the moment they step off a plane on returning to Australia. What was seen as a "legal tax dodge "in the past has taken on new meaning. It is now an offence under the criminal code and it can be punished accordingly.
In many cases, failing to repay HECS seems to be "opportunistic ". There is no doubt that some people duck off overseas with the main intention of avoiding the debt that allowed them access to a well paying job and a high degree of social success, but many others are seeking a broader experience and the advancement opportunities that are lacking in Australia. Their delay in repaying what they owe is more an "interruption " rather than a "denial ". It is their intention to eventually return to Australia, at which time they will begin to meet their obligations.
It seems that the Australian government is serious about collecting the money owing and we can expect that the diplomatic service will seek to extend reciprocal tax arrangements with many other countries. The net will tighten further and it is likely that public opinion will harden. Putting the opportunity for a university education at risk for following generations may quickly become an unacceptable social crime !
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