The calculation of withholding amounts for employees with study and training support loans debt involves mathematical formulas based on linear equations. These equations use weekly earnings, rounded down to whole dollars plus 99 cents, as the basis for determining the study and training support loans component. The formulas vary based on the frequency of payment (weekly, fortnightly, monthly, or quarterly) and include specific coefficients for different earnings ranges.
Linear Equations
Linear equations are in the form (y = ax - b).
The formula is the same that is used to calculate schedule 1.
- y = The amount of tax withheld from the employee’s pay, expressed in dollars.
- x = The employee’s earnings for the week, rounded to the nearest whole dollar, plus 99 cents (this ensures accurate tax calculations).
- a and b = Specific values assigned by the ATO that change depending on the employee’s earnings level and tax scale.
The example below is based on the STSL tax scales effective September 2025.
Step 1: Convert to a weekly equivalent
To convert fortnightly earnings to a weekly equivalent, begin by dividing fortnightly earnings by 2. Then ignore any cents and add 99 cents to the value. If fortnightly earnings were $5752.83, the calculation would look like this: (5752.83/2) + 0.99 = 2876.99
| Fortnightly | 5752.83 |
|---|---|
| Divide by 2 | 2876.41 |
| Ignore the cents and add 99 cents | 2876.99 |
Step 2: Calculate the STSL withholding amount using Schedule 1
To view information about this calculation and its associated rates, go to https://www.ato.gov.au and search for and open the attachment Statement of formulas for calculating study and training support loans components.
To calculate the STSL withholding amount, use Schedule 1 on the Australian Taxation Office (ATO) website to determine the corresponding a and b values defined for x. Then use the following linear equation, y = ax– b to solve for y, which is the STSL withholding amount. In this example, the calculation would look like this: y = (0.49) x (2876.99) – 222.95, which equals 1186.78. The fortnightly withholding would be $2374.
| STSL (y) | a | x | b | Fortnightly Rounding |
|---|---|---|---|---|
| 1186.77 | 0.49 | 2876.99 | 222.95 | 2374 |