13.3.8.1 Tax withholding under VCES

13.3.8.1 Tax withholding under VCES

Under the VCES, students are requested to provide DVA with their tax file number (TFN) when they turn 16 years of age. A request for a student to provide their TFN must include a date by which the TFN must be provided in order for payment under the VCES to continue. 

DVA is required under tax law to withhold tax deductions from the education allowance provided to students aged 16 years and over. The total annual education allowance is less than the annual tax free threshold and so DVA may withhold nil tax where a student requests DVA apply the tax-free threshold to their education allowance.

If the student does provide their TFN but does not elect to apply the tax-free threshold to their education allowance, then the minimum tax that must be withheld is calculated using the tax rate tables provided by the Australian Taxation Office

A student can comply with a request to provide their TFN by either: 

• providing their TFN,

• advising that they have applied for a TFN, or 

• advising that they have a TFN but do not know what it is and they have asked the ATO to advise what the number is. 

If a student does not comply with the request to provide their TFN then their VCES payments must cease. 

If payment has been ceased and the student subsequently complies with the request to provide their TFN then payment can recommence. If it has been less than three months since the date payment ceased then payment can recommence from the date of cessation. If it has been more than three months since the date payment ceased then payment recommences from the date they complied with the request to provide their TFN.