Riskybusiness
You are displaying a somewhat less than honest mindset and if an applicant does not declare something like a HELP debt - which will show up on their pay slips anyway - they risk being seen as withholding information from a lender tantamount to deception.
MissAlison, I read your question as whether your rent income will be deemed to be income and added to your annual income from which HELP is deducted. Is that right?
What happens is this:
You will receive rent income from the property. This income is not taxed at source.
So your gross income for the year is Wages plus Rent
If you are currently earning, say, $50,000 per annum and receive rent of $15,000 your gross annual income will then be $65,000
You then add up all the expenses involved in earning that income:
eg personal items (sunglasses) $250
Interest on Loans $17,500
Letting and Management Fees $3,000
Rates and Insurance $1,500
Repairs and Maintenance $750
Total deductions for the year: $23,000
So your taxable income is now $42,000
You have already paid tax and HELP from your 'day job' PAYG income of $50,000, being ordinary single person tax of $9,000, plus HELP @ 4% = $2,000
But
A taxable income of $42,000 would have ordinary tax of $6,600 although your HELP would still be calculated on the $50,000 (thanks to u3228133 below for posting the link on this to the ATO)
In theory, you would then be entitled to a tax adjustment refund of $4,400.
When calculating return on the investment, don't forget to include the $4,400 as 'income' from the investment, as without the investment you would not have received the tax refund.
Obviously, all the usual disclaimers apply regarding this post, but to the best of my knowledge this may be the answer to your question.
As you are considering investing in income producing assets (property) you may care to spend a bit of time on the ATO website. There are all sorts of downloads available for property investors. 'Negative gearing' is a wonderful tool and the sooner you invest in property, and the longer you hold the property, the greater your benefit will be.
Hope this helps
Kristine
By the way, MissAlison: The only reason you have a 'huge HECS bill' is because you have received a tertiary education and have been allowed time to pay for that education. Many people do not have that option - a lot of education is paid for 'up front' so although those people do not have a HECS / HELP bill, huge or otherwise, they have had to pay cash for their education. If that cash has been borrowed then the repayments would be significantly more than the contribution required by the Australian Government in repaying the fees for the education.
HECS / HELP is a wonderful innovation in achieving more Australians to gain tertiary qualifications. We value our 'brainy' people and you are a National Asset. However, do not let yourself be blinkered 'Oh! I have to pay HELP so I'm not going to invest'!
Be aware and glad of the opportunity you have had through your brains and your education and make the most of the higher income you are now going to be earning because of that education. Go forth and become wealthy, be successful and be a shining, glad and grateful example to others so that this wonderful, Lucky Country of ours can have more brainy people earning more money. The more wealthy individuals there are in a population the better and stronger the whole country is. Good on you for your study, and good on your for investing. Go for it!
