Study and Training Support Loan Withholding Updated Mid-Year by ATO

STSL withholding has been updated in a mid-year move by the Australian Taxation Office; here is what it means for your payroll from late September.

From 24 September 2025, the ATO introduced new Schedule 8 formulas and refreshed weekly, fortnightly and monthly Study and Training Support Loans (STSL) tax tables. The changes reflect reduced compulsory repayment settings and a revised calculation method. These settings apply to payments made on or after 24 September 2025 and continue through to 30 June 2026.

Quick summary

• Effective date is the payment date on or after 24 September 2025.
• Scope covers STSL components for employees with eligible loans such as HELP, VET Student Loans, Student Start-up Loans and Australian Apprenticeship Support Loans.
• Duration runs until 30 June 2026, after which the next year’s schedules will apply.

What employers need to do

• Use the new tables and formulas for any pays with a payment date from 24 September 2025.
• Do not reprocess earlier pays. The update does not change amounts already paid before 24 September 2025. If a pay period straddles the change, follow the rules that match the actual payment date.
• Confirm employee loan flags. Ensure employees with STSL debts are correctly marked so the revised withholding applies.

Lightning Payroll status

Lightning Payroll Online and Lightning Payroll Desktop from version 2026.72 already include the ATO’s updated STSL formulas and tax tables. Update to at least 2026.72 before you process pays dated on or after 24 September 2025. After updating, process pay runs as usual; STSL withholding will calculate automatically for employees with a recorded STSL debt.

Why this matters

The STSL tweak lowers compulsory repayment requirements and adjusts how the component is calculated. Applying the new schedule on time helps prevent over or under withholding, which protects employees from end-of-year bill shock and keeps your payroll compliant.

Helpful links

• Lightning Payroll explainer: What changed for ATO STSL withholding in September 2025
• ATO overview of the September 2025 STSL update: Updates to withholding schedule and tax tables
• ATO Schedule 8 formulas: Statement of Formulas for Calculating STSL Components
• ATO STSL weekly table: Weekly tax table with links to fortnightly and monthly tables

Need a quick checklist

• Update Lightning Payroll to 2026.72 or later.
• Confirm which staff have an STSL debt recorded.
• Run pays as normal for payment dates from 24 September 2025.
• Do not amend pays made before that date unless the ATO tells you otherwise.

Lightning Payroll will keep monitoring ATO guidance and will update customers if anything further changes. If you are unsure about thresholds or a specific employee’s situation, use the ATO’s tax withheld calculator or speak with your tax adviser.

This article is general information only and is not tax advice. Always check the ATO’s latest materials for your exact circumstances.

Photo by Kelly Sikkema on Unsplash