Australians love to travel, particularly after studying.
Most chose to go on a working holiday, or move overseas and work abroad.
According Graduate Careers, the top five overseas destinations of Australian graduates are the United Kingdom, with 26% graduates gaining full-time employment, the USA, Hong Kong, Japan and China (excluding Hong Kong).
However, the rules for graduates working overseas have now changed.
As of January 1, 2016, any Australian university graduate who gets a job abroad will have to pay off their student debt.
Before now, graduates working outside of Australia were not required to do this.
The problem with the old system was that the tax office had no record of how much these graduates were earning, and whether it was over the $54,126 minimum repayment threshold.
As of June 30, 2014, the nominal value of outstanding student debt in Australia was $35.3 billion, accumulated from graduates moving overseas, leaving their HECS bill unpaid.
Under the new law, job seekers now must register with the Australian Tax Office (ATO) before moving overseas, if they plan to be away for six months or more.
“From 1 July 2017, Australian residents with a Higher Education Loan Programme (HELP) or Trade Support Loan (TSL) debt living overseas and earning above the minimum repayment threshold for the 2016-17 financial year will be required to make loan repayments – just as they would if they were living in Australia,” an ATO spokesperson told Business Insider.
This means that as they earn income overseas, the ATO will require student debtors to report their worldwide income.
“We will then make an assessment on their repayment amount based on their worldwide income,” she said.
By recovering these student debts from graduates working overseas, the government expects to save more than $25 million between 2015-16 and 2018-19, and more than $150 million over 10 years, in fiscal balance terms.
With this in mind Business Insider asked the ATO some questions about how these new rules will be carried out, and what will happen if they are broken.
How will the ATO monitor every graduate?
A range of communication strategies have been employed by the tax office to contact Australians living overseas to remind of their obligations, such as when they renew their passport, or when they return to Australia for short periods of time.
What are the penalties for not complying?
While the ATO is serious about cracking down on those who do not meet their obligations, the ATO says their first priority is to educate and encouraging self-compliance.
“At the moment, we’re focused on helping HELP and TSL debtors currently or planning to work abroad for longer than six months to understand their new obligations,” the spokeswoman said.
“Australians planning to move abroad for longer than six months are required to notify the ATO and update their contact details with us within seven days of leaving the country. This can be done easily using our online services.
But that’s not to say you won’t be penalised.
“Individuals who do not comply with their obligations will potentially be subject to the same range of penalties that apply under broader taxation law.”
So, what do you need to know if you’re planning on working abroad after uni?
“Our number one piece of advice at the moment to HELP or TSL debtors planning on working overseas is make sure they notify the ATO and update their contact details with us within seven days of leaving the country,” the ATO spokeswoman said.
“This is a new requirement and when the time comes, will make it a lot easier for HELP and TSL debtors working overseas to report their worldwide income to the ATO.”
More information is available from www.ato.gov.au/overseasrepayments.