Can you vary the STSL deduction amount

Question

I have selected No Tax Free Threshhold/STSL as per the Employee's TFN Declaration.  He has advised that the amount being deducted is too high for the student loan and the ATO told him I should be able to vary this.  I cannot find how to do this.  I do not have the option to adjust the Withholding Variation Rate.  Can anyone advise?

JulieAC · Answer

hi @Simonev88351

He either hasn't listened to them correctly or whoever he talked to didn't explain the process correctly.

He has to apply to them for a withholding variation.  Once he receives the letter or email from them confirming the amount to withhold he then needs to give you a copy of it.

You then go to his card, choose taxes, then drop down the choices to withholding variation and enter the amount that the ATO have advised there.  Keep the letter/email on file for proof of why it has been changed.  DO NOT change this until you have the proof of why.  The employer CAN NOT just change the amount deducted on an employee's advice alone.

If however, he thinks that his debt was small enough that it would be repaid with what has been taken out so far this year, he can always give you a new tax file dec stating that he has no STSL debt and wish to claim the tax free threshold.  That way you will also be covered if he is undertaxed at end of year.

Shella_A · Answer

Hi @Simonev88351,

Thanks for your post and welcome to the Community Forum.

If it's an Australian government study or training, loan repayments are included in the employee's PAYG withholding obligations. This means that you need to select the applicable tax table on the employee card. The software will calculate the amount to withhold based on that tax table. The employee notifies the employer which tax table to use by ticking the applicable table on their Tax File Declaration. The employer selects the same tax table in the employee card>>Payroll Details>>Taxes>>Tax Table. After determining the exact rate to be deducted, I would advise checking the setup of your deduction to see how it is calculating (Payroll > Pay Items > Deductions) and reverting the deduction to how it should be. This helpful article, Taxes FAQ's, will give you the details on how you can handle the withholding variation rate.

These links to the ATO website have more information on student loans:

Study and training loans

Tax tables

Should you require any assistance, don't hesitate to post again. We also encourage you to connect with our virtual assistant, MOCA, through this link: myob.com/support, for prompt support.

Otherwise, if my response has answered your question, please click on "Accept as Solution" to help other users find this information.

Kind regards,

Shella