If you have an STSL debt you should notify your employer via the Tax File Number (TFN) Declaration form. Your employer will then deduct an amount from your pay to help cover your STSL repayment according to the ATO withholding tables.

Keep in mind, this is not an exact science as the actual repayment amount cannot be determined until after you lodge your tax return. The amounts being withheld from your wages are not physically repaid against your STSL debt until your income tax return is lodged.  It is essentially just additional tax being held by the ATO to put towards both your income tax obligations and any potential STSL repayment.

Once you lodge your tax return, the ATO will then look at your total taxable income as well as other factors to determine whether you meet the threshold to make a repayment towards your STSL debt, and if so, how much the repayment will be.

If your actual repayment amount is less than the amounts that have been withheld then you will receive a refund. If you haven’t had enough withheld from your wages then you will have to pay more to cover the repayment amount.