Australia is cracking down on graduates working overseas to recover university debts

Photo: Dan Kitwood/ Getty Images

Australian university graduates working abroad will no longer be able to avoid repaying their HECS debt.

The Federal Government’s new crackdown to recover more than $140 million was announced today by the Minister for Education and Training, Christopher Pyne.

“Currently, because graduates living overseas don’t have to do an Australian tax return, there is no way to know if they are earning above the threshold that triggers HECS repayments and many get off scott-free,” Mr Pyne said.

The new legislation will call for all Australian graduates working offshore to make payments if their income is above the $53,000 threshold in the 2016-2017 tax year.

The massive HECS loophole caused by many students jetting off overseas has put a burden on new and current university students who have faced higher fees and increasing interest.

“There is no good reason why someone working as a banker in London or New York and earning over the threshold shouldn’t pay back what they owe Australia,” Mr Pyne said.

Under the current system, graduates are not bound by any legal obligation to make HECS repayments to the Australian Tax Office.

The Grattan Institute estimated that unpaid loans are expected to reach as high as $13 billion by 2017.

“No government has ever tackled this obviously unfair situation – it’s been in the too-hard basket. Our plan will enforce the same HECS repayment obligations on Australians living overseas that apply to those who remain on our shores.”

The debt recovery scheme will follow in the footsteps of the United Kingdom and New Zealand and will come into effect on 1 July, 2017.

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