Compliance
Ensuring Compliance with New PAYG and Loan Repayment Tables in Australia
Australia’s updated tax tables impact anyone with study or training loans. This article breaks down the changes to PAYG withholding and what you need to do to stay compliant.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## Overview of Recent Changes to PAYG Withholding and Loan Repayments
From **24 September 2025**, Australia introduced updated **Schedule 8 – NAT 3539** tax tables for study and training loan repayment components. These changes affect how much is withheld for employees with such loans. These are key points: the schedule now uses linear equations (y = a x − b) instead of previous methods. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2025-pay-you-go-payg-withholding-tax-tables?utm_source=openai))
Also, **all back payments** that accrued more than 12 months before their payment date are now treated as **Lump Sum E** payments for Medicare levy purposes, regardless of amount. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2025-pay-you-go-payg-withholding-tax-tables?utm_source=openai))
## Who is Affected and When It Starts
- **Employees** with study or training loans: salary or wages after **24 September 2025** will use the new withholding formula. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2025-pay-you-go-payg-withholding-tax-tables?utm_source=openai))
- **Employers and digital service providers** responsible for PAYG withholding must adopt the new tables from that date.
- Anyone receiving back payments or arrears spanning over 12 months before payout: these will now trigger different Medicare levy calculations.
## Practical Compliance Tips
- **Check your software**: ensure accounting tools or payroll systems are updated to reflect NAT 3539 changes.
- **Inform employees**: let them know about changes to deductions so they aren’t surprised by lower take-home pay.
- **Review historical arrears payments**: if you're making back payments, catch up on proper withholding and Medicare treatment.
- **Record keeping**: maintain precise dates of accrual and payment to correctly assess whether back payments exceed 12 months.
## Example Application
- *Jane* works full time and has a HELP loan; she earns income each fortnight. From her pay on **24 September 2025**, her employer applies the new withholding schedule. Before that date, older tables apply.
- *Mark* receives unpaid wages from two years ago in one lump sum in October 2025: regardless of the lump sum amount, it's now treated as Lump Sum E—and Medicare levy calculations follow the new rule.
## Consequences of Not Complying
Failing to update withholding tables can lead to:
- Underwithheld amounts—tax debts and penalties.
- False lodgements or misreporting in PAYG statements.
- Increased scrutiny in audits for incorrect Medicare and loan repayment treatment.
## Actionable Checklist
- [ ] Update payroll software with new Schedule 8 rates by 24 September 2025.
- [ ] Train staff and payroll teams in handling back payments correctly.
- [ ] Review employment contracts or agreements affecting arrears.
- [ ] Consult with tax or accounting advisors to verify compliance steps.