Financial Q&A: Ask a Question
Question 1: I’ve paid off most of my HECS debt, should I just repay the rest now?
Whether to repay your HECS-HELP debt early depends on a few key factors. Unlike most other debts, HECS doesn’t attract interest. Instead, it’s indexed each year based on the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). That said, because repayments are automatically made through your tax return once your income reaches the annual threshold ($54,435 for 2024–25), there’s no interest penalty for not paying it off sooner.
If you’re not likely to earn significantly more in the near future or have other debts with higher interest rates, prioritising those instead may make more financial sense. However, if you have surplus savings and specific goals or obligations, voluntarily reducing or clearing your HECS could be worthwhile.
Your Carrick Aland Wealth Advisor can help you weigh up whether repaying your HECS now aligns with your broader financial strategy.
Question 2: My salary package includes super. What happens when the super guarantee rate increased to 12% in July?
From 1 July 2025, the Superannuation Guarantee (SG) rate rose from 11.5% to 12%. If your salary package is “inclusive of super,” this means your employer contributions are part of your total remuneration, not on top of it. So, unless your employer increases your total package, your take-home (base) salary could decrease slightly to allow for the higher super contribution.
For example, if your total package remains the same, the extra 0.5% going into super will come out of your pre-tax income. On the other hand, if your salary is “plus super,” the increase will be added on top of your base salary, so your take-home pay won’t be affected. It’s a good time to check your employment contract and clarify how your package is structured.
It also serves as a reminder to see a Carrick Aland Wealth Advisor who can help you understand what the SG increase means for your income, retirement savings trajectory, and whether it might be worth reviewing your salary arrangements.
Question 3: In helping Mum with her estate planning, someone mentioned a “life interest” in her home. What does that mean?
A life interest is a legal arrangement often used in estate planning that allows someone (often a surviving spouse or partner) to live in a property for the rest of their life, even if ownership is left to someone else, like children from a previous relationship. The person with the life interest can live in the home or receive income from it, but they can’t sell it or leave it to someone else in their own will. Once they pass away, full ownership typically passes to the “remainder beneficiaries.”
Life interests can be a useful way to balance competing interests between partners and children, especially in blended families.
However, they can also add complexity and create tension if not well understood or clearly documented. There may also be implications for aged care assessments and Centrelink entitlements. If your family is considering this approach, it’s important to involve an adviser and estate planning solicitor to ensure it’s structured appropriately.
Contact Carrick Aland’s Wealth Planning team on 1300 466 998 or visit carrickaland.com.au/wealth-planning/.
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