Take home pay dropped after paying off HECS

Discussion in 'Accounting & Tax' started by eggnog, 17th Jan, 2019.

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  1. eggnog

    eggnog Well-Known Member

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    I thought paying off HECS would help increase my take home pay and improve my serviceability. Thats why I paid it off early. But looking at my take home pay, its dropped :mad: Is that suppose to happen? What's the point of paying off my HECS early then?
     
    eggnog, 17th Jan, 2019
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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Gross pay - tax withheld = Net pay (takehome)

    When paying HELP debts the employer uses a higher scale of tax. So net pay reduces. If you have told the employer to cease HELP debt repayments then net pay should rise. Has the employer stopped deducting the higher tax ?? You can check using the ATO withholding calculator here before raising with the payroll person
     
    Paul@PAS, 17th Jan, 2019
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  3. eggnog

    eggnog Well-Known Member

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    Yeah, as soon as I paid off my HECS i notified them and they sent through some paper work to sign. Something definitely wrong here.
     
    eggnog, 17th Jan, 2019
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  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I have seen some payroll systems that use a base tax scale and any HELP adjustments etc have to be manual. They may have one like this and have created a negative change that increased tax ??

    Discuss your concern with payroll staff
     
    Paul@PAS, 17th Jan, 2019
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  5. eggnog

    eggnog Well-Known Member

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    All fixed. I didnt tick to claim the tax free threshold. Lol. Silly me. Feel so embarrassed :oops:
     
    eggnog, 17th Jan, 2019
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