HECS Debt set up

Jo Arnold

I have an employee who has a hecs debt. As the repayment amount is calculated as a percentage of gross income, do I need to enter the percentage amount in the employees payroll records or does Reckon automatically calculate the amount?

Kris_Williams

In the tax details of the employee’s name select the relevant tax scale and tick the Help debt box. I’m not sure but I think it’s also based on the income, not just a % of income, and the % changes depending on the income

Jo Arnold

Hi Kris,

Thanks for your response. I've done all of the above. Yes, the percentage of tax for the hecs debt is based on the employees annual gross income. What I'm not sure of is whether I need to put that percentage value into Reckon or if the software makes this calculation?

Thanks

Jo

Kris_Williams

No you just have to tick the Help debt box, Reckon will work it out I believe

Jo Arnold

ok great. Thank you.

KimBoTCC

Hi there

I have staff with HECS debts, and also reportable fringe benefit amounts. They have the HELP Debt box ticked, but it does not seem to be taking out enough tax, as some have been given a HECS bill when preparing there 2023 return.

Is there anyway to fix this @Rav??

Thanks in advance for your help!

KimBoTCC

Just thinking about this further - there is probably not much we can do, apart from adding in an extra tax payment each pay... as the reportable amount is not entered into the system until the end of each FBT year!!!

Kris_Williams

that’s exactly what I would do. Maybe ask employee how much extra she had to pay and work it out weekly

Acctd4

@KimBoTCC

The requirement for compulsory HECS repayments includes ALL taxable income (including income from investments - eg bank interest, cryptocurrency, shares, rental property etc, self-employment) as well as add-back of FBT, RESC & investment losses. These components are referred to as their Repayment Income (or "RI")

Therefore, an employee may have other income sources (that are unrelated to employment) which can result in a tax shortfall. Having additional tax withheld is beneficial as if owed, it covers it & if not, they will receive it back as a refund 😊