In the Budget, the Government proposed changes to HELP indexation to be based on the lower of Consumer Price Index (CPI) or Wage Price Index (WPI) each year. The proposal, if passed, would be backdated to 1 June 2023 and would likely result in a HELP indexation credit being issued for both the 2023 and 2024 years.
A HELP debt is an interest-free loan and each year, on 1 June, the debt amount is adjusted (indexed) with inflation so that the debt reflects the changes in the cost of living.
On 1 June 2024, all HELP debt was indexed by 4.7% based on the CPI calculated by the Australian Taxation Office (ATO). However, if the proposal is passed, HELP indexation will be reduced to the lower of CPI or WPI. For the 2023 and 2024 years, this would mean an indexation based on WPI as per the following table:
| YEAR | ||
| 1 June 2023 | 1 June 2024 | |
| CURRENT: HELP indexation rate based on CPI |
7.1% | 4.7% |
| PROPOSED: HELP indexation rate based on lower WPI |
3.2% | 4.0%* |
If the proposed changes are passed, HELP debt will be adjusted to reflect the lower WPI indexation rates for 2023 and 2024 years, and you may be eligible to receive an indexation credit that may reduce your outstanding HELP debt.
The government has provided a HELP indexation credit estimator to calculate how much you might benefit by under the proposed changes: you can use the HELP Indexation Credit Estimator calculator here.
Information sourced from: https://www.education.gov.au/helpestimator/faqs-help-indexation-credit and correct as at 12 June 2024.
Depending on your individual circumstances, participation in a salary packaging arrangement for certain benefits may change the compulsory HELP debt repayment amount that you need to make for the financial year.
Often, this change to your compulsory HELP debt repayment will be a reduction. However, where this change is an increase, the tax savings that you may receive by salary packaging will usually cover this increase. This means you could effectively pay off your HELP debt with money you would otherwise have paid as tax to the Australian Taxation Office.
