Compulsory repayments

How compulsory repayments work

Compulsory repayments of your study and training support loan are made through the income tax system.

You don't have to provide loan information in your tax return. If you have a loan when you lodge your tax return and your repayment income is above the minimum repayment threshold, we will work out your compulsory repayment and include it on your notice of assessment. This will occur even if your tax return is for an income year before you started studying.

Your compulsory repayment rate increases as your income increases. The more you earn, the higher your repayment. Your compulsory repayment is based on your income alone – not the income of your parents or spouse.

You will not have to make a compulsory repayment if you have a spouse or dependants and if (due to low family income) you:

• are entitled to a reduction of the Medicare levy
• do not have to pay the Medicare levy.

If you do not have to make a compulsory repayment, you may ask your employer not to withhold additional amounts from your pay by completing the Medicare levy variation declaration form (NAT 0929).

You can also make additional voluntary repayments.

Ask a question or read answers to questions at our online community:

ATO community

For more information see:

• Study and training loan repayment thresholds and rates
• Medicare levy variation declaration
• Study and training loan repayment calculator

Advising your employer

You must advise your employer if you have a study or training support loan. Under the pay as you go (PAYG) withholding system, your employer will withhold an additional amount from your salary and wage income to cover your compulsory repayment.

Advise your employer by ticking the relevant box on one of the following forms that applies to your situation:

• If you're starting a new job, complete a Tax file number declaration (NAT 3092) and include your loan type when asked to do so.
• If you're already working and being paid, complete a Withholding declaration (NAT 3093) and include your loan type when asked to do so.
• When you pay off your loan in full, complete a new Withholding declaration (NAT 3093) to advise you no longer have an outstanding loan. Update your loan type when asked to do so.

These forms are usually given to you by your employer or you can obtain one from the links below.

Employer deductions showing on your account

When your employer withholds additional amounts to cover your anticipated compulsory repayment, these amounts are remitted to the ATO as part of the employer's PAYG withholding obligations.

The additional tax withheld is not applied to your loan account until:

• you have lodged your tax return, and
• a compulsory repayment has been calculated based on your repayment income.

Your loan balance doesn’t reduce after each pay cycle; it is only applied as a lump sum after your income tax return is lodged.

For more information see:

• Types of loans
• Tax file number declaration (NAT 3092)
• Withholding declaration (NAT 3093)
• Tax in Australia: what you need to know
• Tax tables

If you earn business or investment income

Pay as you go (PAYG) instalments is a system where you make regular payments towards your expected tax liability if you earn business or investment income. You pay your tax in instalments throughout the year rather than when you lodge your tax return.

If you are making PAYG instalments, we take your loan into account when working out your PAYG instalment amount and rate.

You can vary your instalment amount or rate to allow for your personal circumstances.