The bill to change the annual indexation for study and training loans has passed parliament and is awaiting Royal Assent. Here’s what this means for you:
- • Indexation Update
From 1 June 2023, indexation will be calculated based on the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI).
- • Backdated Rates:
- ¬ 2023 Indexation Rate: Reduced to 3.2% (from 7.1%)
- ¬ 2024 Indexation Rate: Reduced to 4.0% (from 4.7%)
- • Refund for Over-Indexation
If your study or training loan is in credit after the adjustment,:
- ¬ The ATO will process a refund for the excess amount to your nominated bank account – if they have no other outstanding tax or Commonwealth debts.
- ¬ Most people will see their credits by end of January, though some may take longer depending on account complexity.
What You Need to Do
You don’t need to do anything. If you have a student loan that was indexed in the last two years, the ATO will commence recrediting the excess indexation amounts to your study or training loan. This will commence after the bill receives Royal Assent.
If your study or training loan account is in credit after the adjustment, this credit will be transferred to the Income Tax account for offsetting (if applicable) and any remaining amount refunded to your nominated bank account.