Interim repayments if you're self-employed
Important facts about student loan interim repayments
How it works
If you're self-employed and earn over the repayment threshold we'll work out the student loan amount you need to repay once you've filed your Individual tax return (IR3) at the end of the tax year (31 March). This is your repayment obligation. We'll let you know on your end-of-year repayment calculation how much is payable and when.
If your repayment obligation for the tax year is:
- more than $1,000, you'll need to make interim repayments for the following tax year
- less than $1,000, you won't need to make interim repayments, but you'll receive a bill after the end of the next tax year.
How much you need to repay
We'll calculate your interim repayments using your repayment obligation from the previous year plus 5%. This is the standard option.
If you think your income will be less than last year you can use the estimation option. See "Find out more" below, for details.
When to make repayments
Your interim repayment amount is divided into three equal instalments. If your tax year ends on 31 March, you need to make repayments on 28 August, 15 January and 7 May.
What happens in the first year
You won't need to make interim repayments in your first year but if you've earned over the repayment threshold, you'll receive a bill after the end of the tax year (31 March). Important: This means in your second year you'll need to pay your bill by 7 February, and make interim repayments if your repayment obligation is more than $1,000.
Note
Budgeting or making repayments in your first year will reduce the bill for your first year and will ease the cashflow in your second year.
What happens if you earn a salary or wage
We subtract any repayment deductions made by your employer from your repayment obligation (this is called your residual repayment obligation). If your residual repayment obligation is less than $1,000, you won't need to make interim repayments.
Note
Deductions do not include additional or interim repayments.
Example - standard option
Tama completed his BCom with a marketing major, and has a job temping for a marketing agency. He's contracted for 24 months and is receiving schedular payments (formerly withholding payments). Tama's total income for the 2008 tax year was $30,000. Because the marketing agency wasn't required to deduct any student loan repayments from his income, he needs to make interim repayments for the 2009 year (1 April 2008 to 31 March 2009).
His repayment obligation for 2008 was $1,221.60.
|
Repayment obligation (2008) |
$1,221.60 |
|
Plus 5% of obligation |
$61.08 |
|
2009 interim repayment amount |
$1,282.68 |
|
Three instalments due: 28 Aug 2008 |
$427.56 |
|
15 Jan 2009 |
$427.56 |
|
7 May 2009 |
$427.56 |
Tama also needs to pay his bill for the 2008 tax year of $1,221.60 by 7 February 2009.
Example - self-employed and on salary or wages
Anna studied drama at university and hopes to become a professional actress. She currently receives a wage from her job in a city cafe, and schedular payments (formerly withholding payments) from acting in occasional television advertisements. Anna used the Look at Account Information service to see how much she earned in the 2008 tax year and how much she repaid to her student loan. She earned $25,000 from her cafe job and $4,000 from the ads. Student loan repayments of $721.60 were deducted by her employer at the cafe, but no repayments were made from the ad work. Anna's total income for the 2008 tax year was $29,000 and her repayment obligation was $1,121.60.
|
Repayment obligation (2008) |
$1,121.60 |
|
Less repayment deductions |
$721.60 |
|
Residual repayment obligation |
$400.00 |
|
2009 interim repayment amount |
$0.00 |
As Anna's residual repayment obligation is less than $1,000, she doesn't need to make interim repayments for 2009. However, she'll need to pay her bill of $400 by 7 February 2009. Anna decides to apply for a special repayment deduction rate for the next tax year, to get her employer to make additional repayments for her. This will cover her income from the acting work and means she'll avoid getting a student loan bill at the end of the next tax year.
Find out more
Next steps
Date published: 14 Jul 2008
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