Setting Up HECS (Student Loan) Overview
As of 1st July 2020, tax year a number of these HECS debts, HEX debts and various student loans were merged into the STSL tax scales. The HECS or Student Loan tax scale in previous years was a single tax scale that the Payroll Officer would have to check and probably modify the tax scale so that it suited the employee’s requirements.
On inspection for the tax year 2023, there are now over 10 tax scales now have this STSL suffix. The scale that appears the same as the original HECS scale is the 3+STSL Non-Residences. This to some degree explains the limitations of the old single tax scales for employees with student loans.
When the employees details have been entered on the controls Page, SapphireOne will propose a tax rate that it has calculated to be the correct match for the employee. The user or payroll officer, will have to check and see if the STSL tax scale is the correct one. If not they may ignore it and use any tax scale that they deem to be correct, or is most suitable scale for the employee’s circumstances.
The Less Than, A and B data entry fields are user enter-able, enabling the payroll officer to set up the exact details as required by the tax office. However, if additional employees are added at a later date, they will probably use this same tax scale as well. That is because the government of the day do change these rates from time to time and each time they are changed the Payroll officer will have to alter these rates.
Since any employee who has a HECS debt or as it is known now as a Student Loan debt, they will use one of the new STSL tax scales now in SapphireOne.
At the time of writing this section of the reference manual, February 2023, the STSL debt functionality will not become active until the employee’s income exceeds around $48,000. To view the rates currently applicable by the Australian Tax Office, click here, to see the current loan repayment rates.
These figures are changed by the ATO from time to time, and these changes are reflected in the tax scales that must be imported into SapphireOne at the beginning of each tax year. For many reasons it is imperative that the new Tax Scales are imported into SapphireOne before commencing any pay runs for a new tax year.
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