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Learn more about the payroll tax rebate for wages paid to apprentices and trainees, and how to correctly declare these wages in your payroll tax return.
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How apprentice and trainee wages are treated for payroll tax
All wages paid to apprentices and trainees are liable for payroll tax. Wages include:
salary and wages
superannuation (both employer contributed and salary sacrifice)
fringe benefits
termination payments
taxable allowances (excluding the exempt components relating to accommodation and motor vehicle allowances)
A payroll tax rebate can be claimed on wages paid to registered apprentices and new entrant trainees during the eligible period of their training.
The eligible period is from the commencement date of their course until the date of completion or cancellation.
If an employee’s job start date and training commencement date are different, or they continue to be employed after completing their training, only the period for which they are in a registered course is eligible.
Trainee wages
The eligibility for the rebate on wages paid to trainees is based on the “training type” as defined by TSN.
You can claim the rebate if TSN defines your training type as “new entrant traineeship”.
You cannot claim the rebate if TSN defines your training type as “existing worker traineeship”.
We rely on the apprentice and trainee register maintained by TSN. If you disagree with how your trainee is classified contact TSN to raise your concerns.
Apprentice wages
You can claim the rebate on all wages paid to TSN-approved apprentices for the period of their apprenticeship.
No additional eligibility rules apply.
Group Training Organisations
A Group Training Organisation (GTO) recruits potential and/or existing apprentices or trainees under a training contract and places them with a “host” employer.
As the GTO is responsible for paying any wages it is considered the employer under the Payroll Tax Act 2007 (PTA).
The GTO must declare the wages paid in their payroll tax returns.
Only the GTO can claim the rebate. Host employers are not entitled to claim the rebate as they are not considered the employer of the trainee or apprentice.
Wages paid or payable to any employee who is employed by a TSN approved non-profit GTO are exempt wages.
Exempt wages include wages paid to:
all apprentice and trainees employed by the GTO, and
other staff engaged by the GTO (such as admin staff and directors).
A non-profit GTO must hold a current payroll tax exemption from Revenue NSW. Read more about how to apply for an exemption. We review an organisation’s exemption status every 3 years.
Sally starts working at a café operated by Business B to assist with catering.
She subsequently enrols as a new entrant trainee in a Certificate III in Hospitality.
Her employment starts on 1 June 2024, with the traineeship commencing on 1 July 2024 and finishing on 31 December 2024.
The apprentice and trainee rebate can be claimed on wages paid to Sally between 1 July 2024 and 31 December 2024 while the traineeship is undertaken.
However, wages paid to Sally between 1 June 2024 and 30 June 2024, prior to the course commencing, are not eligible for the rebate and must be disclosed as liable wages.
Mohammad starts working with Business C as an apprentice electrician.
He is registered as an apprentice with TSN and enrols in Certificate III in Electrotechnology Electrician.
The apprenticeship starts on 1 September 2021 and Mohammad completes his training on 31 July 2024.
Following completion Mohammad continues to work for Business C until 30 June 2025
The apprentice and trainee rebate can be claimed on wages paid to Mohammad between 1 September 2021 and 31 July 2024 while the apprenticeship is ongoing.
However, wages paid to Mohammad on or after 1 August 2024, following the completion of the apprenticeship, are not eligible for the rebate and must be disclosed as liable wages.
Meilin starts working at a warehouse owned by Business D. She enrols as a new entrant trainee in a Certificate III in Supply Chain Operations.
Meilin’s employment and traineeship starts on 1 July 2024 and is expected to finish on 31 December 2024. However, Business D ends Meilin’s employment on 30 September 2024.
The apprentice and trainee rebate can be claimed on wages paid to Meilin between 1 July 2024 and her employment end date on 30 September 2024.
Any payments relating to termination would also be eligible for the rebate.
When reporting apprentice and trainee wages in your payroll tax returns, it is important that you correctly report the total wages paid during the eligible apprenticeship or traineeship period.
To receive the correct rebate, the total apprentice and trainee wages that are paid should be reported in the “Apprentice and trainee wages” field in your payroll tax returns.
The amount needs to be excluded from other NSW wage categories for your tax amount to be calculated correctly.
Why accuracy is important
Errors in your returns may result in the underpayment of payroll tax, which is also known as a tax default.
Interest will be imposed on any underpayments. Your business may also be liable for penalty tax. Read the interest and penalty tax page for more details.
Always maintain relevant records showing how your apprentice/trainee wage figures were calculated. Records must be:
retained for at least 5 years
sufficient for a payroll tax liability to be properly assessed
in English, or a form easily translated to English, and
readily available to us if requested, for example as part of a payroll tax audit.
Apprentice and trainees in other states and territories
Not all states and territories treat apprentice and trainee wages the same.
If an interstate jurisdiction allows a rebate in respect to apprentice and trainee wages, it does not reduce an employer's taxable wages in that jurisdiction. These apprentice & trainee wages must be included as part of your NSW interstate wages when determining your NSW payroll tax liability.
If apprentice and trainee wages are exempt, they are excluded from the taxable wages in that jurisdiction. These apprentice & trainee wages are excluded from your NSW interstate wages when determining your NSW payroll tax liability.
Business A pays interstate wages of $1,000,000, of which $150,000 is paid to apprentices and trainees in a jurisdiction where the wages are treated as exempt wages.
Business B pays interstate wages of $1,000,000, of which $150,000 is paid to apprentices and trainees in a jurisdiction where a rebate applies.
Interstate wages in NSW will be $1,000,000.
How the apprentice and trainee rebate is calculated
The apprentice and trainee rebate is calculated as the difference between the payroll tax tax amount when NSW apprentice and trainee wages are included in taxable wages and the tax amount when these wages are removed.
Interstate wages reduce your tax-free threshold entitlement which impacts your apprentice and trainee rebate. If your business, or a member of your group, pays interstate wages the threshold entitlement needs to be adjusted when calculating the tax amount without apprentice/trainee wages. Read the interstate wages page and refer to the example below for more details.
During the month of April 2024, Business A paid $240,000 to its NSW employees including $80,000 to apprentices.
The April 2024 monthly return for Business A is as follows:
Component
April 2024 figures
NSW wages (excluding apprentices and trainees)
$160,000.00
+ Eligible apprentice and trainee wages
$80,000.00
= Gross NSW wages
$240,000.00
– Monthly tax-free threshold
$98,360.66
= Amount subject to payroll tax
$141,639.34
x Payroll tax rate
5.45%
= Gross payroll tax liability
$7,719.34
– Apprentice and trainee rebate
$3,359.34
= Net tax payable
$4,360.00
The rebate is calculated as the difference between the tax amount when apprentice and trainee wages are included in gross NSW wages and when they are removed.
The tax amount with apprentice/trainee wages included in the gross NSW wages is calculated as follows.
During the month of October 2024 (not a leap year), Business B paid
$330,000 to its NSW employees including $110,000 to new entrant trainees.
$150,000 to employees in other states.
The October 2024 monthly return for Business B is as follows:
Component
October 2024 figures
NSW wages (excluding apprentices and trainees)
$220,000.00
+ Eligible apprentice and trainee wages
$110,000.00
= Gross NSW wages
$330,000.00
– Monthly tax-free threshold
$70,068.49
= Amount subject to payroll tax
$259,931.51
x Payroll tax rate
5.45%
= Gross payroll tax liability
$14,166.67
– Apprentice and trainee rebate
$5,478.96
= Net tax payable
$8,687.31
The rebate is calculated as the difference between the tax amount when apprentice and trainee wages are included in gross NSW wages and when they are removed.
As Business B pays wages in other states and territories first calculate their tax-free threshold entitlement with apprentice/trainee wages included as follows
(NSW wages ÷ Total Australian wages) × Tax-free threshold ($330,000.00 ÷ $480,000.00) × $101,917.81 = $70,068.49
The tax amount with apprentice and trainee wages included is calculated as.
an apprentice or new entrant trainee that is not recognised by Training Services NSW
a trainee who is classified as an “existing worker trainee” by Training Services NSW, or
an apprentice or trainee outside of their eligible training period (the rebate can only be claimed during the time the employee is undertaking eligible training).
Apprentice/trainee wages are not exempt from payroll tax in NSW. They need to be declared separately in your return and form part of total taxable wages.
The rebate will be shown as a deduction from your gross payroll tax liability.
This situation may occur when a group member employs the apprentice or trainee, however the apprenticeship or traineeship is registered with Training Services NSW under another group member.
Only the business that the apprentices or trainees are registered with can claim the rebate.
If you engaged apprentices or trainees from an external source, you do not report their wages as part of your payroll tax return.
Voluntary disclosure
Contact us to make a voluntary disclosure if you have not declared all liable amounts in your monthly and/or annual returns, including previous financial years.
Voluntary disclosures attract a reduced level of penalty tax compared to cases where we identify an underpayment. Interest will still be imposed.
Non-compliance identified through our data matching activities will result in penalty tax and interest charges, in addition to any underpayments detected.
