How HECS Withholding Works
When an employer takes extra tax from your wages for your HELP/HECS debt, it’s not kept separate from your normal PAYG withholding tax, it just increases the amount of PAYG Withholding that has been deducted.
At the end of the financial year, when you lodge your tax return, the ATO will work out if you need to pay off some of your HELP/HECS amount and, if so, will add this to the tax you have to pay for the year.
Usually, the total PAYG withheld from your wages is then enough to pay your normal tax and the HELP/HECS payment amount. Sometimes too much will have been deducted by your employer so you will receive a refund of the extra. Sometimes not enough will have been deducted, generally because your employer didn’t know you had a HELP/HECS debt or because you have more than one job, and then you will have to pay extra tax when your tax return is assessed.
It is important to note that when the ATO work out the amount of your repayment for your HELP/HECS debt, they add things like any
fringe benefits you have received, any extra super payments you’ve made through salary sacrifice and any investment losses (including rental properties) that have been used to reduce your taxable income.
They have specified that:
you cannot claim a deduction for general exercise clothing which is considered to be part of ‘conventional clothing’. This includes track suits, shorts, tank tops, running shoes, sweat socks, arm bands, head bands, t-shirts and other such items.
Generally this means that clothing from “conventional” shops cannot be claimed, even if it is of some particular colour or style that is requested by your employer. For example, a requirement to wear black pants and white tops doesn’t make those clothes tax deductible even though you might wear them only for work.
On the other hand “you can claim the cost of clothing that forms part of a compulsory uniform and is required to be worn while on duty.” A compulsory uniform is generally recognised by the fact that it has the employer’s logo on it or that it has been purchased from a “uniform supplier”.
Image courtesy Flickr Creative Commons by brettanomyces