Apprentice and new entrant trainee wages

Apprentice and trainee rebate

All wages paid to apprentices and trainees are liable for payroll tax purposes (except for non-profit group apprenticeship and traineeship schemes). However, NSW has specific provisions allowing taxpayers to claim a payroll tax rebate on wages paid to approved apprentices and trainees as recognised by the NSW Department of Industry (NSW DOI).

For NSW payroll tax purposes, an apprentice/trainee is as defined in the Apprenticeship and Traineeship Act 2001

Trainee wages

The rebate only applies to a trainee who has been continuously employed by the employer for no more than 3 months full-time or 12 months casual or part-time immediately prior to commencing employment as a trainee. A trainee who satisfies this criterion is commonly referred to as a new entrant trainee.

We only accept claims for a payroll tax rebate for those wages paid to trainees that NSW DOI accepts as new entrant trainees. If unsure, employers should seek clarification from NSW DOI regarding the status of their trainees.

Examples of trainee wages that would be eligible for the payroll tax rebate:
  • Jane Doe has just finished her High School Certificate and decides to join ABC Accounting firm with the hope of becoming a bookkeeper one day. After Jane completes her 2 month probationary period, ABC Accounting receives approval from NSW DOI for her to enter a Certificate III in Business Administration traineeship with a defined start and finish date. ABC Accounting can claim the payroll tax rebate on all Jane’s wages while she is employed as a trainee.

  • After completing her first traineeship, Jane wishes to further her studies and work experience in order to achieve her goal of becoming a bookkeeper. Her employer enrols her into a Certificate IV in Bookkeeping and applies to NSW DOI to commence her next traineeship. Jane’s status as a new entrant trainee will be maintained as long as the next traineeship is commenced within 3 months of completing her first traineeship. Additionally, in this case the course of study must be a progression as it is in the same traineeship vocation for Jane’s wages to continue to be eligible for the rebate (for example, Business Services - Business Administration Certificate III to Business Services – Bookkeeping Certificate IV).

  • Alternatively, if Jane wanted to change her traineeship to a different vocational field the course would not need to be a progression for her wages to remain eligible for the rebate (for example, Business Services – Business Administration Certificate III to Automotive – Tyre Management Certificate III).
Example of existing worker trainee wages that would not be eligible for the payroll tax rebate:
  • John Connor has been employed by Cyborg Pty Ltd for the past 2 years and then decides to undertake a computing traineeship. Cyborg Pty Ltd will not be able to claim the payroll tax rebate on John’s wages as he is considered an existing worker trainee.

Common errors discovered during payroll tax investigations

Some common errors made by employers claiming the rebate include:

  • continuing to apply old rules by claiming an exemption instead of the rebate by not including apprentice and/or new entrant trainee wages after 1 July 2008

  • apprentices and/or new entrant trainees not registered with NSW DOI

  • continuing to claim the rebate despite the worker no longer being considered an apprentice or new entrant trainee by the NSW DOI

  • not claiming the rebate despite being eligible

  • only claiming the rebate on apprentice/trainee hourly wage, instead of including all remuneration to them such as superannuation, allowances, and bonuses.

How the rebate is claimed

The rebate can be claimed monthly or annually as part of the monthly returns and annual reconciliation.

Example

July 2018 NSW wages = $240,000 (including $80,000 apprentice and trainee wages “A/T”)

Threshold July 2018 = $72,192

Taxable wages with A/T less the threshold = $167,808 ($240,000 – $72,192)

Taxable wages without A/T less the threshold = $87,808 ($160,000 – $72,192)

Tax payable with A/T = $9,145.54 ($167,808 x 5.45%)

Tax payable without A/T = $4,785.54 ($87,808 x 5.45%)

Rebate value = $4,360.00 ($9,145.54 – $4,785.54)

Note: If a business also has interstate wages, the inclusion of the apprentice/trainee wages will affect threshold deduction entitlements between each State/Territory.

Employers are required to include all remuneration paid to apprentices and trainees in their payroll tax calculation, such as wages, salaries, superannuation, allowance and bonuses. These are required to be reported and declared as part of your payroll tax calculation and return.

The rebate operates as a self-administered offset scheme by allowing the rebate amount to be calculated and offset against both the monthly payroll tax payments and the annual reconciliation calculation. The rebate can be calculated using the offset facility provided through the online monthly calculator and annual reconciliation.

Alternatively, if you use your own spreadsheet or a commercial software package such as MYOB to calculate your monthly payment, you have the option of either determining your own monthly offset or claiming it at the end of the financial year.

Wages are exempt if they are paid to an employee who is employed by a non-profit organisation in accordance with a group apprenticeship or traineeship scheme approved by NSW DOI. Such wages do not need to be declared as part of payroll tax returns.

Online services

Our online payroll tax tools help you:

  • calculate your monthly payroll tax

  • lodge your annual reconciliation

  • lodge a ‘nil return’

  • update your contact details

  • register to pay your payroll tax online

  • schedule a future dated payment.

For more information on payroll tax, contact us.

Contact us

Payroll tax clients - registered before 1 July 2018

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Or phone 1300 139 815*
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New payroll tax clients - registered after 1 July 2018

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02 9761 9366
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Lodgement enforcement

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Jobs Action Plan

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Last updated: 28 June 2018