Study Loan Refunds: What You Need to Know

A recent change in legislation may result in refunds for some clients.

What’s Changed?
A new bill has passed in parliament to update how annual indexation is calculated for study and training loans. Starting from 1 June 2023, indexation will now be based on the lower of two measures:

• The Consumer Price Index (CPI)
• The Wage Price Index (WPI)

This change has been applied retroactively, reducing indexation rates for the past two years:

• 1 June 2023: Reduced from 7.1% to 3.2%
• 1 June 2024: Reduced from 4.7% to 4%

How Does This Affect You?
For most clients, there’s no action needed! Excess indexation amounts are being automatically credited back to loan accounts.

If the adjustment results in a credit balance on a loan account, here’s what happens next:

1. Loan Credits: Excess amounts will be transferred to the client’s Income Tax account.
2. Debts Settled: Credits will be applied to any outstanding tax or Commonwealth debts.
3. Refunds Issued: Any remaining credit will be refunded to the client’s nominated bank account.

Most credits will appear on accounts by the end of January 2025. Complex cases may take a little longer to process.

What Should You Do?
To ensure smooth and timely refunds:

• Update Bank Details: If you’re listed as the nominated account, you’ll receive the refund. Reconcile this amount with your records.

Clients can visit the ATO website for more information by searching QC 49409 and reviewing the “Manage Agent Trust” (MAT) service section.

Please note: The ATO cannot provide a list of clients eligible for refunds at this stage.