Blog

We’re all getting excited about our Office Christmas party – but here’s a quick reminder about the tax implications from the ATO Grinch!

If your business holds a Christmas party:

• on a working day, on your business premises, and only for your current employees, you don’t pay fringe benefits tax (FBT) for the food and drink
• off your business premises, or the party includes associates of employees (such as their partners), you don’t pay FBT if the party is a minor benefit – that is, the cost for each person is less than $300 and it would be considered unreasonable to treat it as a fringe benefit
• that includes clients, you don’t pay FBT for the costs relating to the clients.

If you give your employees a Christmas gift, you don’t pay FBT if the value of the gift is less than $300 per person and it would be considered unreasonable to treat it as a fringe benefit.

If the Christmas party is not subject to FBT, you can’t claim income tax deductions (or GST) for the cost of the party.

https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/entertainment-related-fringe-benefits/how-to-work-out-fbt-on-entertainment

Quick Guide to FBT (Fringe Benefits Tax)

Fringe Benefits

A fringe benefit is a payment made to an employee but in a different form to salary or wages. Benefits made to volunteers or contractors are NOT fringe benefits. A fringe benefit is provided “in respect of employment”. It can also be a benefit given to an associate of the employee. So, for example if an employer pays the gym fees of an employee’s spouse, this is considered a fringe benefit provided to an associate of the employee.

Examples of fringe benefits include:

• allowing an employee to use a work car for private purposes
• car parking
• paying an employee’s gym membership
• providing entertainment by way of free tickets to concerts
• reimbursing an expense incurred by an employee, such as school fees
• giving an employee a discounted loan

Some work-related items (mainly used for work purposes) are exempt benefits. The exact exemption rules vary for small businesses:

• Portable electronic devices
• Software, protective clothing, tools of trade

‘Minor benefits’ are also exempt

• When it’s both less than $300
• And ‘unreasonable for it to be treated as a fringe benefit’

Fringe Benefits Tax – FBT

FBT is the amount of tax that would have been paid by the employee if they had paid for the benefit out of their own wages, at the top marginal tax rate including the medicare levy (47%) – eg. To buy a gym membership costing $1,100 including GST, the wages required would be $2,075: – $975 tax and $1,100 membership.

Instead of paying the employee extra salary of $2,075, the employer pays the gym membership of $1,100, claims $100 GST credits, and pays the tax required directly to the ATO as FBT. The employer can claim an income tax deduction for both the cost of the gym membership, and the cost of the FBT.
The employee then does not pay income tax on the fringe benefit.

The FBT year is from 1st April to 31st March, and a FBT return must be lodged each year.

For more information visit https://smallbusiness.taxsuperandyou.gov.au/expense-payments-fringe-benefits-tax and https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax

Author:
Wendy Nathan
Kookaburra Veterinary Employment

This information includes the views and opinions of Kookaburra Veterinary Employment and is of a general nature only. Factual information is believed to be correct at the time of writing, however, should not be relied upon and any person should confirm details with the relevant authorities and through their own research prior to acting on any of the suggestions in this article.

So you’ve been searching through the abundance of veterinary industry job ads listed on Kookaburra’s site or App and have found yourself a dream job – Yay you!

Now what?

How do you convince the Recruiter that you are the person they have been looking for… the one they NEED?

Let’s look at ways to impress and not depress them 😊. Resumes are not known to be exciting discussion points, but they are necessary at some point. 

Whether you’re a graduate looking for first employment, someone moving to a new location, seeking a career change or making a career progression, you will need to update your resume, and just like everything, the standards and formats change, so it’s important to be current and move with the times. 

Resume or CV? We mostly use the word Resume here in Australia, and for the purpose of his article we’ll use Resume.

It’s beneficial to view your Resume as the clever marketing tool of You. 

This article mainly concentrates on the Resume, but at the end I’ll also touch on the very important ‘Cover Letter’ which can have an impactful way of creating a first impression. 

Regardless of whether you are applying with a small independent or a large company, unfortunately if your resume or cover letter doesn’t make the cut in comparison to others, and instead bores or confuses the reader into a micro-sleep – you may not get to an interview.

It starts at the top..

The top third of your resume is where you have a brief moment to captivate & intrigue the reader with a Profile section. 

Profile. 

This is a summary section where you can use a few sentences to highlight your skills and experience & achievements. Also cater your profile to address the qualities or skills being required in the application. 

1. Use keywords which are used in the Job Description in the ad so it resonates with the recruiter – speak their language.
2. Write the Profile in ‘first person implied’ . This is taking the “I” and “My” out and replacing with a verb.  This sounds powerful, shows action and outcomes. A bit like someone announcing you walking into a room!

Eg: “Qualified Cert IV Vet Nurse with 15 years experience working with small animals, supporting vets in surgery in procedures such as IV catheter & blood collection. Friendly and understanding with animals and humans alike – owner of 2 dogs & 3 cats! Enjoys a dynamic fast paced workplace and implementing systems and changes to streamline an effective and productive clinic. More than advanced in the operation of Ezyvet & Vet Radar. Looking for further career progression in a community minded & progressive clinic. “

3. Speak from the heart. Recruiters are looking for glimpses of you so don’t be afraid to bring your personality or story into this section. This is where you can drop in insightful facts about yourself eg “Grew up loving animals working on a dairy farm”
4. Be Factual. It sort of goes without saying, but don’t say you can do something which you can’t! It will catch up with you eventually.
5. Avoid using clichés or filler jargon such as : –  passionate, diligently, thoroughly, strategic, team player, strong work ethic, detail oriented. 
6. Adjust your Profile section for each individual application to best market yourself for each particular role and work place. 

Under the Profile

Contact Details, Name, Email & Mobile. 

• For privacy purposes you don’t need to place your home address. Most contact is done by phone or email – there will be no snail mail acknowledgement or rejection letter. You can put your address on your Contract when you get the job 😉
  • You  could put your Residing Suburb/City if you want the recruiter to know that you are within a reasonable distance showing your short travel is not an issue.
• Ensure your email is professional or industry related DON’T USE your tomboypartay@ email you’ve had since uni!
  • Side Note: Make sure your message bank message is professional, it might need an update as well?

Employment History Section

• List your previous employment from most recent at the top.(Recruiters comment that this area is often ordered incorrectly and makes for a confusing read)
• For each previous employment show:
  • The Company Name
  • Your role there
  • Start Month & Year, Finished Month & Year
  • An overview or summary of your responsibilities and achievements, which will be directly applicable to the job you are applying for now. 
• Only show a maximum of your past 15 years work history

Education Section

• Again, the most recently completed at the top. The recruiter may find it fascinating where you spent your high school years, but they are really more interested in your most recent study & education. 
• Course or qualification & Institution’s name, & year graduated
• Any short courses which may show more specialised attention to a certain area or skill 

Skills

• A small section normally at the bottom of the page.
• It’s a list of your proficiencies for the recruiter to highlight your abilities quickly.
• List these skills in bullet point form.
• Identify skills required from the Job description and list those which you fulfill. Basically this shows how you ‘tick the recruiters boxes’ so to speak.
• If there’s an Applicant Tracking System (ATS) used to scan the resume, it may assist to have keywords appearing from the job’s ad to highlight your application.

Finally – The Cover Letter

Spend some time on this. It’s a super important letter of introduction which will introduce your resume. Often ‘optional’ , it is recommended to include a Cover Letter..

It’s your chance to grab the recruiter’s attention with your personality and story. Speak from your heart directly to the recruiter to show how perfect you fit the role. 

One of the big reveals that recruiters are looking for is… your WHY. In this letter address: 

• WHY you are applying as in why you were attracted to apply
• WHY you would be perfect in this role
• WHY do you want to work for this company/business. Have you heard good things about the company? If you are applying for a role in a large company – have you worked for this company previously?
• Why did all your previous life experiences bring you to this point right now to apply for THIS job.

In addition..

• Who are the hirers? Be prepared, by doing a little bit of research. So much information is available to us so you can look at the company’s website, Facebook, Google reviews, Instagram & LinkedIn This will give you an indication of the culture and values of the workplace which can help you write your Cover Letter & resume.
• The Best Resumes are clean and simple. No need to put in it that time your Poodle won best haircut last year at the Dog show. This does not make you a good candidate for the job – unless you are applying for a Dog Grooming position!!
• Don’t rinse and repeat your Cover Letter. Repeating, duplicating and sending out the same general information is boring and lazy & the reader gets the impression that little effort has been made.

Good luck with your applications and remember to ask after your submissions if there is any feedback on your application format or gaps in the information delivered so you can improve – they may give you feedback.

Author:
Rachael MacLaren
Kookaburra Veterinary Employment

This information includes the views and opinions of Kookaburra Veterinary Employment and is of a general nature only. Factual information is believed to be correct at the time of writing, however, should not be relied upon and any person should confirm details with the relevant authorities and through their own research prior to acting on any of the suggestions in this article.

As the veterinary industry faces increasing levels of consolidation, it’s important to be aware of ownership of practices, as it can factor in to decisions about job applications. Some ‘independently owned’ practices are starting to promote this as an attractive option to job applicants, and new graduates are faced with a barrage of promotion from the major consolidators, who are able to offer attractive graduate training packages.

So, who are the major players?

Around 60% of veterinary practices in the U.K. are owned by six large consolidators, according to the CMA (the UK Competition and Markets Authority). The CMA has identified six large corporate groups (CVS, IVC Evidensia, Linnaeus, Medivet, Pets at Home, VetPartners) owning veterinary practices, including three that are owned by private equity firms.  After an initial review in September 2023, The CMA has reached a provisional decision to open a formal market investigation.

In the United States, about 30% of general practices and 75% to 80% of specialty practices are owned by consolidators, together accounting for at least 50% of industrywide revenue, by the reckoning of Chicago-based Brakke Consulting.

Levels of ownership concentration in Australia are lower, though by how much is unclear. According to data compiled by IBISWorld in 2023, VetPartners controls some five per cent of the Australian veterinary industry compared with Greencross, which has a 6.1 per cent share. The remaining 88.9 per cent is split among the remaining operators, many of whom are single-practice businesses. Australian consolidators have also acquired veterinary education facilities, pet crematoria, pet stores, and pathology businesses.

Some of the major Australian consolidators at the moment are:

• Vetpartners –  acquired by Swedish private equity firm EQT (BPEA Private Equity Fund VIII) in 2023. Vetpartners practices are individually branded, but also incorporate some GP groups such as Vetwest and AdelaideVet, and a growing ream of referral centres including Southpaws, Brisbane Veterinary Specialist Centre, North Shore Veterinary Specialist Centre, Sydney Veterinary Emergency & Specialists, Peninsula Vet Care, and Perth Veterinary Specialists.
• Greencross – acquired by US private equity firm TPG Capital (55%) in 2019. A 45% stake is owned by AustralianSuper and HOOP. There has been some interest in the group from Wesfarmers. GP clinics are branded Greencross, and there’s a network of Animal Emergency Centres, and also the Animal Referral Hospital group. Greencross also owns Petbarn, Animates, City Farmers and Habitat Pet Supplies.
• Apiam Animal Health Limited, including Furlife Vet  companion animal clinics – ASX listed public company. With 80 clinics, Apiam is touted to be an attractive target for a buyout.
• Vets Central – Pemba Capital Partners, Australian private equity firm (2021). Over 45 clinics according to the Pemba Capital Partners website. Pemba Capital Partners also has an interest in Queensland Veterinary Specialists, and VSA in New Zealand (Veterinary Specialists Aoteara).
• CVS – CVS Group plc – UK listed public company currently expanding their consolidation of clinics in Australia, currently standing at around 28.
• Petstock – Petspiration Group. 55% owned by Woolworths since the end of 2023
• OurVet – PetO –  Australian owned private company. In 2024 PetO has taken over the practices divested by the Petspiration Group following the Woolworths deal (41 stores and 25 co-located vet clinics, branded Best Friends, Our Vet, My Pet Warehouse and Pet City), to add to a handful of clinics in Sydney.
• Animal Emergency Australia, AES – Independent Employee Owned. Practices in 6 states.
• Small Animal Specialist Hospital, SASH – Independent Vet Owned, private equity company has a minority stake

So how about New Zealand? Vet Clubs are being corporatized and clinics are also being consolidated, although it may not be as immediately obvious.

• Vetpartners – owned around 50 clinics in NZ in 2023. Including Pet Doctors (most now de-branded). Foreign owned – acquired by Swedish private equity firm EQT (BPEA Private Equity Fund VIII) in 2023
• Vetora – Vet Club
• Vetlife Animal Health Partners – vet club/private company
• VetEnt – Veterinary Enterprises Group Limited, Petfirst – private company
• Anexa Veterinary Services – Anexa FVC – private company

The Kookaburra Vet Employment Salary Survey in 2022 highlighted some differences between corporate and non-corporate practices, one of which was the ‘happiness’ scores (243 responses).

It’s to be hoped that as levels of consolidation increase, these companies take the crisis in veterinary mental health seriously, and implement measures to improve support and working conditions for all their employees.

Author:
Wendy Nathan
Kookaburra Veterinary Employment

This information includes the views and opinions of Kookaburra Veterinary Employment and is of a general nature only. Factual information is believed to be correct at the time of writing, however, should not be relied upon and any person should confirm details with the relevant authorities and through their own research prior to acting on any of the suggestions in this article.

For all those future vets…  how to pay for your uni tuition fees…

HECS/HELP: Is it more of a “hex” than a “help”? What does it even mean?

What is HECS debt?

HECS stands for Higher Education Contribution Scheme. HECS is the type of loan you take out as a student to pay your contribution of your tuition fees.
HELP stands for the Higher Education Loan Program. This is the overall program that provides loans to eligible students (whether at TAFE, college or university).

When you attend university or an approved higher education provider* you can take out a HECS-HELP loan to pay for your studies.

Once you take this loan out then the loan amount is typically referred to as your “HECS debt”.

To become a vet, then your education provider will need payment for your tuition. Studying to become a vet takes between 5-7 years depending on your university/higher education provider and your course structure. That can be 5-7 years of tuition fees.

Sounds a bit scary? Well, any debt is at least a teensy scary in my opinion, however, many students do need to go into some debt to fund their university studies. So I recommend you take a deep breath, be assured you are not alone, accept your debt fate to a certain degree and lets move on to figuring out what a HECs debt actually entails. I promise there is light at the end of the tunnel…keep reading.

What does HECS debt include?

A HECS-HELP loan is used to pay your Student Contribution Amount.

This leads to the obvious…

So what is your Student Contribution amount?

If you are enrolled in an education institution that is a Commonwealth supported place (CSP)*, the Australian Government pays some of your tuition fees while you pay the remaining portion. This remaining portion of tuition fees is called your ‘student contribution amount’.

* You can only get a HECS-HELP loan if you are enrolled in a Commonwealth supported place (CSP).

Each unit of study is classified into a student contribution band, that differs according to the study area of the unit.

For example, the 2024 maximum student contribution amount (per Equivalent Full Time Student Load (EFTSL)) for a Veterinary Science student would be $12,720.  Note, while this is a maximum student contribution amount, that maximum is only for 1 year’s ie 2024 tuition.

So, after a few years of study at a uni…how long does it take to become a vet again? …oh that’s right it can be between 5 and 7 years … you can see how the debt can mount up to many thousands depending on how much you need to borrow.

What does HECS debt not include but you still may need to pay for as a uni student?

 A HECS-HELP loan does not and I repeat DOES NOT cover the following:

• Accommodation
• Living expenses (food, utilities, transport)
• Laptops or text books

It is purely to cover tuition fees.

HELP loan limits

A loan limit means the maximum HELP will loan to an individual student starting a course at a CSP in 2024.

For 2024, the HELP loan limits are: $121,844 for most students and

• $174,998 for students studying:
  •  Medicine, dentistry or veterinary science courses leading to initial registration.

Remember this is the cap for a HECS HELP loan will let you borrow from them, not necessarily, all you need to borrow to cover all your expenses. Remember they are only lending funds to you to cover the portion of tuition fees that the Australian government does not cover.

It’s good to know there is a limit to how much you can borrow. To me given the high level maximum amount quoted as examples here, this says that for most courses this won’t limit what most people would  want to achieve. For example, if you take as a very rough example, using the 2024 max student contribution amount of $12, 720 , then (assuming this is for a full time student) multiplying this by 5 for a 5 year course rough estimated total = $63,600 (remember the actual annual amount will differ each year so this only a rough example) . This is considerably less than the total max threshold for vet students of $174,998  (quoted above).
However, if I fail too many units and need to re sit exams then those course fees will likely need to be paid again, and possibly again ☹ and this is where a financial borrowing limit comes into place.

Remember, the borrowing limit referred to here, HELP loan limits, means that’s the maximum they would lend you for tuition only.

Census/Administrative dates

“I keep reading about Census dates and Administrative dates relating to HECS-HELP loans.
What is a Census date? What is an Administrative date?  What is the difference?”

Census date

A census date is the last day you can make an upfront payment, apply for a HELP loan, accept an offer in a CSP or formally withdraw.
Each university or higher education provider sets their own census date, so the date will be different for different courses and providers.

If you do not submit your HELP loan form by the census date:

• you will not be eligible to access a HELP loan for that study period
• your enrolment and subsidy (if enrolled in a CSP) will be cancelled.

Administrative date

Some higher education providers set an extra deadline date, called an administrative date, which is before the census date. If your provider has an administrative date, you must submit your HELP loan form, accept your offer in a CSP, pay your fees or withdraw your enrolment before this date.
If you miss the administrative date, you may have to pay a late enrolment fee or a late withdrawal fee.
To find out if your provider has an administrative date you should contact and confirm with your higher education provider.

Recent Changes to Indexation of HECS/HELP Loan Debt

“I heard on the news that the indexation rate that applies to HECS debt has been changed. It sounds as though its meant to reduce my debt and to be better for me but I don’t really understand what it means. ….What does it all mean and how will I benefit?”

To better understand how the proposed, indexation legislation changes impact you, then you should have a basic idea of the process used to calculate the loan amount. I’ll go through the process using an example below. This does not cover every single fee/charge associated with HECS/HELP loans but helps explain the indexation process applied to them.

When you take out a HELP loan to pay off your student contribution amount you are taking out a loan for the student contribution amount you need to pay for the units you are studying.

The loan is based on an estimated cost of the student contribution amount.

Example:

Let’s say you have a 5 year university degree course. You need to pay your student contribution amount for each of the units you study in those 5 years.  The below example (not real amounts) shows nice round figures for each year’s student contribution amounts. (The nice round figures is how you know this is only an example 😊).

For 2020-2022 Student contribution amount for your units by the census date was $10,000 so $30,000.

For 2023 Student contribution amount for your units by the census date was $11,000.

For 2024 Student contribution amount for your units by the census date was $12,000.

Assuming you did not repay any of the loan amount between 2020 and 2024 ie you made no repayments while still studying, then at the end of the 5-year course your total student contribution amount paid across to your higher education provider was $53,000.

Let’s assume you borrowed this amount using the HELP loan facility. This is a loan taken out with the Australian government which the ATO effectively administer. The ATO will assess your loan balance at 1 June each year and index any amount that was unpaid for more than 11 months. This means a index factor (currently the Consumer Price Index (CPI)) would be applied to the portion of your outstanding loan balance that remains unpaid for more than 11 months as at 1 June. This would typically increase that portion of your loan by that rate.

On 1 June 2020 – HECS HELP Loan balance borrowed $10,000
Indexation –  No indexation is applied by the ATO as loan amount was unpaid in total for less than 11 months).

June 2020 Total HECS/HELP loan balance of $10,000

On 1 June 2021 – HECS HELP Loan balance borrowed is now $20,000
Indexation –  Indexation is then applied to the initial $10,000 from 2020 as this remains unpaid for more than 11 months.

2021 CPI =  0.6%. So $10,000 * 0.6% = $60 inflation adjustment. This increases the >11month balance to $10,060.

Unindexed portion – In addition, there is the student contribution amount for 2021 unpaid for < 11 months of $10,000 (remains unindexed at this date).

Therefore, the June 2021 total combined inflation adjusted loan balance is now $20,060.

1 June 2022 – Loan balance now $30,060. ($20,060 from end of 2021 plus $10,000 2022 Student contribution amount borrowed ).
Indexation –  Indexation is applied to the portion of the loan that is unpaid for > 11months. This is the $20,060.
2022 CPI = 3.9% So 20,060 * 3.9% = $782.34. This increases the unpaid for >11month balance to $20,842.34.
Unindexed portion – In addition, there is the student contribution amount for 2022 unpaid for < 11 months of $10,000 (remains unindexed at this date).

June 2022 Total inflation adjusted loan balance = $30,842.34

1 June 2023. Loan balance has increased now to $41,842.34 (pre indexation). ($30,842.34 from end of 2022 plus $11,000 2023 Student contribution amount borrowed).

Indexation – At this point CPI had risen to 7.1%. An adjustment for indexation was 30,842.34 * 7.1% = $2,189.80. This adjustment is purely indexation.
Unindexed portion – In addition, there is the student contribution amount for 2023 unpaid for < 11 months of $11,000 (remains unindexed at this date).

June 2023 Total inflation adjusted loan balance is now $44,032.15

1 June 2024. CPI has reduced to 4.7%.
HECS loan plus 2024 student contribution amount borrowed = $44,032.15 +$12,000 ie $56,032.15.
Inflation adjustment= 44,032.15*4.7% = $2,069.51

Unindexed portion – In addition, there is the student contribution amount for 2024 unpaid for < 11 months of $12,000 (remains unindexed at this date).

June 2024 Total inflation adjusted loan balance is now $58,101.66.

For a tabular view of the above calculations refer below:

Impact of indexation

This means, $5,101.66 of the loan balance was purely inflation adjustments added to the initial $53,000 course Student Contribution Amount borrowed (across the 5 year period). Obviously, the bigger the rate then the bigger the inflation adjustment will impact your debt balance.

The reason the rates jumped dramatically was due to a variety of macro-economic factors but primarily by the interest rate increases imposed by the Reserve Bank Australia to reduce inflation. Regardless of the cause, where we had for a few years a stable low CPI rate, meaning debt balances were not impacted dramatically by changes, this has now changed and changes are potentially and in 2023, were certainly, more volatile.
Recognising this is a potentially significant impact for students, the government have proposed new legislation to allow that HECS debt should be indexed by the lower of the CPI or the Wage Price Index (WPI). The idea behind this is to provide a more stable indexation rate.

In 2023 the WPI was 3.2% compared to the CPI of 7.1%. This would have meant, using the example above, a reduction of the inflation adjustment to $986.95 compared to $2189.90 ie a difference of $1202.85.

For 2024 the WPI is 4.0% instead of 4.7% so the differences are not always as pointed. However, when it comes to loan adjustments and percentages applied then it all adds up. 

Note for those worrying about the poor borrowers who did suffer from the inflation adjustment of 7.1% in 2023, the proposed legislation will allow adjustments to be backdated to 1 June 2023 so assuming the legislation gets passed, these people will get a credit back. Yay!! Here is finally a reason to check on what laws have gone through in parliament!! This may directly impact you!

How do I avoid inflation adjustments?

The only real answer is for those who have taken out a HECS-HELP loan and who then pay the debt back in total before the debt becomes greater than 11months old. We must note this is extremely impractical for most people. However, it is the only way to avoid additional inflation adjustments to HECS/HELP debt, that are in theory, unnecessary.

So, I’ve got a large HECs debt. Now I’m starting work. I don’t earn a lot yet, but I’ve got this large debt balance. … how much and when do I need to pay it back?

This is where the ATO come in. Its actually always been there – remember those inflation adjustments – that’s done by the ATO.

However, now you are earning income. The unfortunate thing about most income types is Yay MONEY 😊 but also Yuck TAX ☹.  Revenue is tax assessable. You now need to submit tax returns where you may actually need to pay some tax (because you’ve earned some income remember) not just get a nice tax refund.

Your loan balance is sitting with the ATO.

You start earning from a job.

When you earn above a certain amount for the tax year then this is assessed, and a compulsory repayment amount is required from you via your tax assessment, if your taxable reportable income is above the minimum repayment income threshold.

Remember your loan is still sitting there getting inflated each year, if you do not pay any back.

When you prepare your annual tax return, the ATO will assess whether you have earned over the minimum repayment income threshold (repayment income = taxable income plus any net investment losses (remember losses are negative) ) . If you have, they will then apply a repayment rate ( % of your repayment income) and assess this as the minimum compulsory repayment required from you for the tax year.

The minimum repayment rate (%) are subject to change each year and the % will increase the more you earn. The ranges for 2024/2025 coming tax year are in the below extract from the ATO. See link.

https://www.ato.gov.au/tax-rates-and-codes/study-and-training-support-loans-rates-and-repayment-thresholds

Don’t worry you have to have a reportable Income of at least $54,435 to be required to pay anything.

Example of minimum compulsory repayment

So in our previous example, our total HECS/HELP loan inflation adjusted balance was $58,101.66.

If in 2024/2025 you take a first job and have a reportable taxable income of over $60,000 then you will be required to pay 1% of $60,000 ie $600 as a compulsory repayment that first tax year out of the $58,101.66 owed. That’s not actually a lot right? I mean $600.00 being deducted in one go could be quite a hit but across the year it is a small proportion of what you earn. Assuming you are paid monthly this would be $50 a month for that tax year.

To avoid a significant impact at 30 June, generally, your employer will hold back a % proportion from your salary using an estimated Reportable Income level based on the salary they pay you. Any excess or overpayment throughout the year will be sorted out at the point you submit your tax return.

Be aware that as your reportable income increases then the % you are required to repay of your loan balance also increases. So, in the above example if your reportable income becomes $70,000 then you would be required to pay $70,000 x 2.5%=$1,750 the year. That’s a bit more significant. However, remember that is $145.83 per month if that makes it a little more palatable.

What are key points to take away here?

The amount of minimum compulsory repayment will be assessed as part of your annual tax return process.

To avoid a larger, significant impact around tax return time, it is generally advisable to save (or ensure your employer is deducting tax on your behalf) throughout the year to repay these amounts against your loan.

Inform your employer when starting a role, that you have HECS/HELP debt so they can apply a repayment % deduction from your salary for you. Remember this will have the advantage of also reducing your unpaid loan amount throughout the year and thereby reducing the indexation impact just by repaying amounts earlier.

Are there advantages to not paying off my HECS HELP loan as soon as possible?

Well sure, if you don’t repay the loan then of course you have more cash in hand or much more likely more funds in your bank account where your salary gets deposited.  You could theoretically start comparing earnings on interest rates versus the indexation rate applied on the unpaid amounts.

Sometimes life happens, we all need to live and we can have both expected and unexpected expenses. We may need to buy a car or help out a friend, pay a hospital bill. This could be on top of more standard bills eg rent, utility bills, car loan, food etc. You may have expenses that simply eat up your salary and paying off only the minimum amount for the HECS HELP loan keeps your head above water.

When just leaving university/college and starting your career as a vet, your focus may be primarily on finding work, paying your rent and bills, and most likely paying off any other loans you may have taken out for which interest is charged eg car loan. Thoughts of a mortgage are probably far away in the distant future.  As such, not making extra non-compulsory payments is attractive in the short term.

2 issues with this to bear in mind.

• Your HECS-HELP loan balance will keep getting indexed each year for amounts unpaid > 11months. Depending on your income, the loan balance may not even decrease by the minimum compulsory repayment. This means the balance may keep increasing year by year until the relevant repayment rate becomes greater than the CPI/WPI. 
• This HECS HELP loan debt will impact your credit profile.
  This is a profile based on existing debt you hold that financial institutions will use to assess whether you are eligible to borrow money from them. Really, they are assessing your expected ability to repay any money they lend you. They will then determine whether you get the go ahead to borrow money from them and the amount they would be willing to lend you.

You may well not be thinking of buying a house or a property any time soon but at some point in your life, you may at least consider it. The vast majority of people need to borrow from a financial institution to fund buying a property. Having a significant HECS-HELP loan could limit what institutions are willing to lend you.

Given the numerous RBA interest rate rises mortgage rates have risen significantly compared to the much more consistently stable and lower interest rates of the mid 2000s to 2021 period. Having a nice clean credit profile makes this a lot easier and this may well be something you consider much more critical at a later date. 

Also, bear in mind that how you view this issue upon just starting your career may well differ ten years from now. Having an “I’ll only pay off the minimum I need to” attitude for long periods may negatively impact you (credit wise) down the track ie it may come back to bite you later.

How do I make additional repayments if I need to?

Voluntary repayments can be made to your HECS HELP loan any time by logging into your ATO online account. Voluntary repayments reduce the debt straight away. For it to count within your current year tax assessment then payments should be made a few days before 1 June to ensure they have cleared in time for the indexation process ie to minimise the indexed portion.

Conclusion

This article is intended only to shed some light on HECS/HELP loans, how they are operated and also discuss the impact of the proposed government legislation and how this should benefit students with HECS/HELP debt.

Everyone has different financial circumstances. Please read the article and consider whether any of the items discussed would apply to you. 

Is it more of a hex or a help? That depends on your other expenses, your spending habits, and ability to earn. I think of it more as a tool. If you use (manage) it correctly, it can help. If you don’t understand it and don’t keep it under control it could well be a hex for life.

Debt is scary but HECS-HELP debt is one of the methods available to you to get you on the pathway to your chosen veterinary career.  We hope this helps you understand it a little further and manage it accordingly.  😊

Author:

Scarlett Aston
Kookaburra Veterinary Employment

This information includes the views and opinions of Kookaburra Veterinary Employment and is of a general nature only. Factual information is believed to be correct at the time of writing, however, should not be relied upon and any person should confirm details with the relevant authorities and through their own research prior to acting on any of the suggestions in this article.

It has been interesting to read the NSW Parliamentary Committee report from its Inquiry into the veterinary workforce shortage in NSW. ( See Report ) The committee has made over 30 recommendations to help address the concerns demonstrated by the significant number of stakeholders who contributed to the enquiry.

The mention by Southern Cross University of their planned Veterinary School prompted me to compare our schools in Australia & New Zealand to the ones in the UK. Those of us who graduated some time ago may be surprised at the growth that has taken place in the veterinary education sphere.

Author:

Wendy Nathan
Kookaburra Veterinary Employment

This information includes the views and opinions of Kookaburra Veterinary Employment and is of a general nature only. Factual information is believed to be correct at the time of writing, however, should not be relied upon and any person should confirm details with the relevant authorities and through their own research prior to acting on any of the suggestions in this article.