Guide

HECS-HELP after you leave Australia

Your student loan does not stay behind when you go. Since 2017, Australians living overseas have had to report their worldwide income and make repayments on it, just as if they had never left. Here’s what you must do, when, and what actually happens if you decide to pretend the debt no longer exists.

The 7-day notification you probably haven’t made

If you have a HELP or VET Student Loan debt and you leave Australia intending to move overseas for 183 days or more in any 12-month period, you must notify the ATO within 7 days of leaving. You do this through your myGov-linked ATO account. If you are already overseas and only later decide to stay long-term, you have 7 days from the day that intention forms.

Almost nobody does this on time. The notification itself carries little immediate sting, but it is the trigger for everything that follows, the annual worldwide income report and the repayment obligation. Skipping it does not make the debt go away; it just means you are non-compliant on top of owing money.

Worldwide income reporting: the obligation people forget

Once you are overseas, each year you must report your worldwide income to the ATO by 31 October (for the preceding Australian income year). This applies even if you have no Australian-sourced income at all and are not lodging an ordinary Australian tax return. Your Dubai salary, your London contracting income, your Singapore bonus, all of it counts toward the repayment income figure that sets your compulsory repayment.

Repayment thresholds and rates mirror the domestic ones. Once your repayment income crosses the minimum threshold, you owe a percentage of it against your loan, rising as your income rises. Earning a tax-free salary in a zero-tax country does not exempt you, the Australian repayment obligation is separate from, and blind to, whatever the local tax authority does or doesn’t charge.

The three ways to report your income

You choose one of three assessment methods each year, and the choice can meaningfully change what you owe:

• The simple self-assessment method. You convert your foreign income to Australian dollars and apply it directly. Quickest, but ignores the cost of living where you are, so it can overstate your capacity.
• The comprehensive tax-based assessment method. You start from your assessable foreign income and apply deductions and adjustments, producing a figure closer to your real net position. More paperwork, often a lower repayment.
• The overseas-assessed method. You use your foreign country’s tax assessment as the basis, converted to Australian dollars. Useful where the foreign system already produces a clean, verifiable income figure.

The right method depends on your income mix and the country you are in. There is no single “best” one, the cheapest valid method for a high-earner in Dubai is rarely the cheapest for a modest earner in Berlin.

Indexation: the number that grows while you sleep

Your HELP debt is not charged interest, but it is indexed on 1 June each year to keep pace with inflation. From 2023 the indexation rate is set to the lower of CPI and the Wage Price Index, a change made after the 2023 spike, and applied retrospectively to unwind some of that year’s jump. Indexation applies to the portion of your debt that has been outstanding for more than 11 months.

The mechanics matter for a departing Australian because indexation happens whether or not you are making repayments. If your foreign income is below the threshold, or if you simply ignore the debt, the balance still grows every June. A $40,000 debt indexed at even 3% adds $1,200 a year to what you owe, compounding on the new higher base the next year. Time abroad without repayments is time the debt quietly inflates.

What happens if you just ignore it

Nothing dramatic happens on day one, and that is exactly the trap. There is no debt collector at the airport. But the ATO’s position is patient, not forgetful: the debt compounds through indexation and waits. The compulsory-repayment obligations you missed remain owed. Interest-style penalties and general interest charges can attach to overdue compulsory repayments. And the reckoning tends to arrive when you least want it, most commonly the day you return to Australia and start earning here again, when the ATO reconciles the years you were away, or when you next need a clean tax record for a loan or visa.

Data-matching between the ATO and other agencies, and the growing international exchange of financial information, means “they’ll never know’ is a weaker bet every year. The debt is not written off by leaving. It is only paused in your attention, not in its growth.

Pay it off, or keep the cash? (a comparison, not advice)

A common question is whether to clear the debt before leaving or keep the money working. This is a comparison you can frame arithmetically, and it is not our place to tell you which way to go. On one side: the debt costs you the annual indexation rate, call it 3, 4%, with no deductibility and a balance that grows if you are below the repayment threshold. On the other: money kept invested might earn more than that, or might not, and carries risk and volatility the debt does not.

Roughly, if you are confident of steady returns above the indexation rate and comfortable with the risk, keeping the cash may leave you ahead; if you value the certainty of a shrinking guaranteed liability, paying down does that. Voluntary repayments while overseas are allowed and reduce the indexed balance. The point is that this is a modelling decision about your own risk tolerance and expected returns, run the numbers, don’t follow a rule of thumb.

General information only, not tax, legal or financial advice, and no tax agent services are provided. Verify your position with a registered tax agent before acting. Rates and rules last verified: 23 July 2026.