13.3.8.1 Tax withholding under VCES

Under the VCES, students are required to provide DVA with their tax file number (TFN) when they turn 16 years of age.

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 because.

If the student does not provide their tax file number, or advise the Education Schemes Secretary that they have applied for a TFN, then their VCES payments must cease.

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