What is STSL Tax?

STSL Tax Defined

STSL tax is part of the Australian Government’s income tax system, managed by the Australian Taxation Office (ATO). But what exactly is it and how does it relate to your business? 

Whether you run a small business, are self-employed, or want to understand how STSL tax is affecting your payslips, we’ve got you covered.

STSL Tax Explained

STSL tax helps the Australian Government to recoup money from individuals who received Study and Training Support Loans (STSLs). Essentially, it’s an STSL repayment system which is directly linked to an individual’s taxable income.

Study and Training Support Loans cover a range of different types of loan programs, including:

• Higher Education Loan Program (HELP) – This includes several sub-programs:
• HECS-HELP for eligible students in Commonwealth-supported organisations 
• FEE-HELP for full-fee-paying students studying higher education courses
• SA-HELP for assistance with student services and amenities fees
• OS-HELP for students undertaking part of their Australian course overseas
• VET Student Loans (VSL): For students pursuing vocational education and training at diploma-level qualifications or above.
• Trade Support Loans (TSL): For eligible Australian apprentices needing financial assistance.

How Does STSL Tax Work?

STSL tax works very similarly to the income tax system. When an employee reaches the ATO’s repayment threshold, their employer must deduct the correct repayment amount from their pay and collect it on the government’s behalf. 

The amount of STSL tax payable is directly correlated to the individual’s income. So, the higher the income, the more STSL tax deducted.

Employers must include the STSL repayments to the ATO as part of the regular PAYG withholding payments. These payments are part of the overall tax withheld from employee wages, so the employer should send both income tax and STSL repayments to the ATO.

What is the Difference Between HECS, HELP and STSL Tax?

STSL is an umbrella term for a range of student loans. This includes, but is not limited to the Higher Education Contribution Scheme (HECS) and the Higher Education Loan Program (HELP). 

So, your tax and payroll obligations for HECS and HELP fall under the bracket of STSL tax, and should be labelled as such on your employees’ payslips.

Additional Points to Note About STSL Tax

It’s important to get these compulsory payments right. To help you keep on top of your STSL tax, here are some important things to keep in mind:

• If you fail to withhold the appropriate amount of STSL tax from your employees, you could receive a penalty from the ATO. 
• Tracking employee repayments and deductions can help to ensure compliance and reduce errors.

The rates for STSL repayments change depending on legislation, the Consumer Price Index (CPI), and other factors. To make sure you’re up to date with the latest figures, it’s important to check the latest ATO STSL tax updates.