The Australian Taxation Office (ATO) has announced some important changes that will impact how employers calculate and withhold repayments for study and training support loans (STSL). These updates take effect from 24 September 2025 and are designed to align with recent legislative reforms aimed at easing the burden of student debt.
What’s Changing?
From 24 September 2025, the ATO will release updated versions of:
- Schedule 8: Statement of formulas for calculating STSL components
- STSL Weekly Tax Table
- STSL Fortnightly Tax Table
- STSL Monthly Tax Table
These updates are a direct result of the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025, which passed into law on 2 August 2025. The bill introduced a new marginal repayment system and raised the repayment income thresholds. The practical outcome is that many employees with study or training loans will see lower compulsory repayment amounts deducted from their pay going forward.
Why This Matters
If you manage payroll, these changes are not optional. Employers will need to ensure that payroll software and processes are updated in time for the September start date. Without these updates, there’s a risk of withholding the wrong amounts, which could cause issues for both employees and the business.
It’s also important to note that while the changes apply from late September, employers do not need to go back and recalculate amounts withheld between 1 July and 23 September 2025. Any amounts deducted during that period remain valid and should be left as is.
What Employers Should Do
To stay compliant and support your staff, here are the key steps employers and payroll teams should be taking now:
- Review your payroll system and confirm it can handle the new formulas.
- Schedule the update before 24 September, so you’re ready from the first applicable pay cycle.
- Communicate with employees who have study or training loans, letting them know they may notice a small increase in take home pay.
- Stay connected with ATO updates, as further refinements may be issued later in the financial year.
What’s Not Changing
It’s worth mentioning that most other withholding schedules and PAYG tax tables remain unchanged for the 2025–26 income year. The exception to this was an earlier adjustment to Schedule 5, which related to the Medicare levy treatment of certain lump sum payments. Aside from that, the changes announced now are limited specifically to STSL related withholding.
This means that for regular salary and wage payments, superannuation, bonuses, and other categories covered under the existing tax tables, nothing further needs to be done. Your current systems for these areas will continue to operate as normal.
The Bigger Picture
Accurate withholding is more than just a compliance requirement it’s about ensuring employees are not disadvantaged. Over withholding reduces take-home pay unnecessarily, while under withholding can leave workers facing unexpected bills at tax time. By introducing a new marginal repayment system and lifting repayment thresholds, the government is aiming to make the repayment process fairer and more manageable for Australians carrying study debt.
For many, this means seeing a little extra in their pay packet each week, which can provide welcome relief in the current economic climate. Employers play a crucial role in making sure these benefits are passed on smoothly.
Supporting Clients and Businesses
At RG Partners, we encourage all our clients to treat this update as an opportunity to review payroll compliance more broadly. It’s a good time to:
- Double check that your systems are up to date with the latest ATO guidance.
- Ensure your team is trained and aware of the changes.
- Take a proactive approach in communicating with employees about what to expect.
These small steps can help prevent confusion and demonstrate that your business is on top of its obligations.
Final Thoughts
The ATO’s changes to withholding schedules for study and training support loans may feel technical, but the outcome is simple: fairer repayments and a smoother process for employees. By preparing early, updating payroll systems, and keeping staff informed, employers can ensure compliance while also supporting the financial wellbeing of their team.
If you’d like guidance on how these changes affect your business, or need assistance updating your payroll systems, the team at RG Partners is here to help.
Reference: ATO
