HPAS
Defence states that the Home Purchase Assistance Scheme payment is included in taxable income and tax is deducted when it is paid. Check the income statement before adding anything manually.
Watch — Defence housing and tax
Defence Housing & Tax: What ADF Members Need to Know
Housing support is not one tax category. Identify the exact benefit first, then check the income-statement, fringe-benefit and property consequences that apply to it.
What this video covers
- Why an HPAS payment is not treated the same way as a DHOAS loan subsidy
- How a reportable fringe benefits amount can affect other income-tested calculations
- Why rent allowance and Defence-provided accommodation require their own checks
- What to review if a DHOAS-supported home later becomes a rental property
Match the rule to the housing benefit
The name of the benefit, the way Defence reports it and any later change in property use all matter.
DHOAS
A DHOAS loan subsidy is generally handled through the fringe-benefits system rather than simply being added to salary. A reportable amount may still affect HELP repayments, child support and some government benefits.
Documents to gather before lodging
Use the actual entitlement and reporting documents rather than treating every housing payment as taxable salary.
Income statement and payslips
Confirm whether a payment such as HPAS has already been processed and reported through Defence payroll.
Housing assistance letters
Keep the approval, entitlement and subsidy statements that identify the scheme and relevant dates.
Loan and property records
Retain loan statements and dates showing when you occupied, vacated or rented the property.
Change of use
If the home becomes a rental, check the DHOAS reporting requirements and the interest calculation rather than assuming the owner-occupied treatment continues unchanged.
Common Defence housing tax questions
Is an HPAS payment taxable?
Defence states that HPAS is included in taxable income and tax is deducted when the payment is made. Confirm how the payment appears on your payslip and income statement.
Is a DHOAS subsidy simply added to taxable salary?
Generally, no. Defence identifies DHOAS loan payments as a fringe benefit. A reportable fringe benefits amount can still be relevant to income-tested calculations even though it is not taxed as ordinary salary.
What if I later rent out my DHOAS-supported home?
Tell your accountant and check the requirements with Defence. The fringe-benefits reporting and the rental-interest calculation may need review from the date the property use changes.
Video transcript
The supplied transcript has been lightly edited for punctuation, clarity, names and Australian spelling.
Defence helps with your housing costs. Does that mean the assistance is tax-free? Not every housing payment works the same way. Help with buying a home, rent assistance and a home-loan subsidy can have different tax treatment. The first step is identifying exactly which benefit you receive.
Take the Home Purchase Assistance Scheme, or HPAS. This payment is generally taxable and processed through Defence payroll. When budgeting for your home purchase, do not assume the advertised payment is the amount you will receive after tax. Check your payslip and income statement, and do not add the payment again if it is already included.
The Defence Home Ownership Assistance Scheme, or DHOAS, is different. It helps with an eligible home loan and is generally treated as an expense-payment fringe benefit. Defence handles any employer fringe benefits tax. You do not simply add the subsidy to taxable salary, but a reportable fringe benefits amount can still affect your finances.
A reportable amount may be used in calculations for HELP repayments, child support and certain government benefits. The figure reported can also be higher than the subsidy received because it is grossed up for reporting purposes. Not taxed as salary does not necessarily mean no effect on your overall position.
Rent allowance and Defence-provided accommodation need their own checks. Do not assume they follow the same reporting rules as DHOAS. Some Defence benefits have specific reporting exclusions. Use your actual entitlement documents and Defence reporting information rather than treating everything labelled housing as taxable salary.
If you later rent out a home supported by DHOAS, tell your accountant and check the requirements with Defence. An otherwise-deductible declaration may change the fringe-benefits reporting. The rental-interest calculation also needs checking. Do not assume the treatment stays the same after you move out.
Before lodging, gather your income statement, housing-assistance letters, subsidy statements and relevant loan records. Tell us which property you lived in, whether it was rented out and when anything changed. Receiving Defence housing assistance? Make sure the right rules are applied to the right payment. Book your consultation with DefenceTax today. Visit defencetax.com.au.
General information only. Tax treatment depends on the applicable law, relevant dates, supporting records and your individual circumstances.