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If you have a HELP debt, 1 June is an important date for you. This is the date that indexation is added to your debt each year.
HELP debts are indexed to keep up with changes in the cost of living, and is based on the Consumer Price Index.
You may notice that HELP debts have risen substantially, and this is due to higher inflation. Recently the Government announced changes to reduce the indexation that is applied to HELP loans by capping the indexation rate at the lower of the Consumer Price Index or Wage Price Index. If passed, these changes will be back-dated to 1 June 2023. At the writing of this article this announcement is not law.
It is important to note that HELP debts are not indexed until they are 11 months old. Also, compulsory repayments are made when Income Tax Returns are assessed by the Australian Taxation Office. If your return is lodged late or if you amend your return, you may have a higher compulsory repayment based on this updated debt.
If you have any questions regarding your HELP debt and indexation, please contact our office.