Do you have a study support loan that needs to be paid off? If so, keep reading to learn when your compulsory repayments will be due and how to be prepared.
Compulsory repayments of your study support loan are made through the Australian income tax system.
It is not essential to provide loan information in your tax return. If you have a loan when you lodge your tax return and your repayment income happens to be above the minimum repayment threshold, the ATO will work out your compulsory repayment and include it on your notice of assessment. This will also occur even if your tax return is for an income year before you began studying.
Once you have finished studying and have headed out into the working world, as your income increases your compulsory repayment rate will also increase. Your compulsory repayment is based on your income alone and is not related to the income of your parents or spouse.
You won’t 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, or, do not have to pay the Medicare levy.
If the above applies to you and you do not have to make compulsory repayments, you may ask your employer not to withhold additional amounts from your pay by completing the Medicare levy variation declaration form.
If you wish, you can also make additional voluntary repayments.
When you begin work at a new company, 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.
Make sure to let your employer know 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 and include your loan type when asked to do so.
– If you’re already working and being paid, complete a Withholding declaration and include your loan type when asked to do so.
– When your loan is paid off in full, complete a new Withholding declaration to advise that you no longer have a debt.
These forms will normally be provided to you by an employer or you can obtain one from the ATO’s online site.
When your employer withholds additional amounts to cover your compulsory repayment, these amounts are remitted to the ATO as part of the employer’s PAYG obligations. This 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 individual repayment income.
If you need assistance with navigating your study support loan repayments in a way that aligns with your personal circumstances, don’t hesitate to get in touch below with the friendly team at 5ivestar.
5ivestar Business Services are tax agents located in Carina Heights on Brisbane’s Southside. We service all areas of Brisbane, Ipswich and the Sunshine Coast for tax, BAS and bookkeeping. We also practice as virtual CFOs, take on interim CFO engagements as well as financial management, reengineering and restructures including business turnarounds and transformations and expert financial modelling.
Let’s chat about your business today https://5ivestar.com.au/contact-us
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