Why it's important
To help avoid an unexpected bill at tax time, tell your employer you have a study loan. In the same way your employer withholds tax throughout the year to cover your end of year tax liability, they can also withhold extra amounts to cover your study or training support loan compulsory repayment. This amount is calculated when you lodge your tax return.
Your employer will determine how much extra to withhold based on the income you earn with them. If you receive income from other sources, your employer’s withholding may not cover the total compulsory repayment amount. For more information, see multiple income sources.
If you don't tell your employer
If you don't tell your employer about your study or training support loan, they won't know to withhold extra amounts for your compulsory repayment. This will likely result in you getting a tax bill when you lodge your tax return. You’ll need to pay your tax bill in full and on time to avoid general interest charge being applied.
Understanding compulsory repayments
You need to start making compulsory repayments when your repayment income is more than the minimum repayment threshold. This applies even if you're still studying or in an apprenticeship.
Your compulsory repayment amount is calculated as a percentage of your repayment income. This means the more income you earn, the higher your compulsory repayment will be.
Your compulsory repayment amount is calculated when you lodge your tax return. Any voluntary repayments made towards your loan will not reduce the compulsory repayment amount.
Work out your compulsory repayment
To estimate your compulsory repayment, use our Study and training support loans repayment calculator.
For current and historical thresholds and rates, see Study and training loan repayment thresholds and rates.
Withholding amounts for your compulsory repayment
When you tell your employer you have a study or training support loan, they will start withholding extra amounts from your income if your annual income is expected to be over the minimum repayment threshold.
The additional amounts withheld are not applied to your loan balance until:
- you lodge your tax return, and
- a compulsory repayment has been calculated based on your repayment income.
This means the amount withheld by your employer won't reduce your loan after each pay cycle. The compulsory repayment amount will reduce your loan as a lump sum once your tax return is processed.
The withholding amount for your loan compulsory repayment may not be listed separately on your payslip. It will be included in the total pay-as-you-go (PAYG) withholding amount.
If too much is withheld during the year, and you don’t have any outstanding tax or other government debts, you will receive a refund of the overpaid amounts at tax time.
How to tell your employer
To tell your employer about your study or training support loan:
- when starting a new job, complete a Tax file number declaration (NAT 3092) and answer 'Yes' at Question 10, or
- if you’re already working, and you're not sure if your employer knows you have a loan, complete a Withholding declaration (NAT 3093) and answer 'Yes' at Question 6.
Give the completed form to your employer so they can work out how much extra to withhold. If you have more than one employer, provide a completed form to each employer.
When you pay off your loan in full, complete a new Withholding Declaration (NAT 3093) to inform your employer that you no longer need extra amounts withheld.
Multiple income sources
If you earn business or investment income, you may be registered for pay as you go (PAYG) instalments. This is where you make regular payments throughout the year towards your tax liability. If you are making PAYG instalments, we take your study or training support loan into account when calculating your instalment amount and rate.
If you earn income from multiple sources, you may need to adjust how much is withheld during the year. This is because your employer doesn't know how much you earn outside of your employment with them. Therefore, the amount they withhold may not be enough to cover your total compulsory repayment amount.
You can adjust your withholding amounts by:
- asking your employer to increase the amount of tax they withhold from your pay, or
- voluntarily registering for PAYG instalments and varying the instalment amount to suit your personal circumstances.
Stay informed and proactive about your loan repayments to avoid financial surprises and manage your loan effectively. For more information, see Study and training support loans.
Authorised by the Australia Government, Canberra.