Recent Changes to the 1% Training Benchmark
Written By John Unger
Mon, Jul 24, 2017
In April 2017 the Government announced it would replace 457 visas with new TSS visas in March 2018. It also announced it would create a new national training fund to replace the current training benchmarks. People, therefore, thought that the training benchmarks would cease in March 2018.
However, on 1 July, the DIBP announced changes to the training benchmarks. This suggests that the benchmarks may continue to apply to companies with people on 457 visas even after the introduction of the TSS visa and new national training fund.
When applying to nominate a 457 employee for permanent residency, a company needs to show that it has met its training obligations as a visa sponsor. The wording of the changes suggest that the new rules apply “to nominations or standard business approvals lodged on or after” the introduction of the new rules
Pending further clarification from the immigration department, a sponsoring company may be bound by the new rules for any training from 1 July 2017. It is therefore important to understand the changes to the 1% benchmark as to what expenditure you are entitled to include as training expenditure.
In Summary – What has Changed?
The new requirements for the 1% benchmark are different because they:
incorporate policy guidelines concerning:
• the definitions of payroll and recent expenditure
amend the types of expenditure that are or are not acceptable by:
• clarifying that the benchmark relates to training provided to employees;
• removing on the-job-training as an acceptable type of expenditure;
• incorporating the policy guideline that the purchase of an eLearning platform or standalone training software is acceptable expenditure; and
• providing that expenditure on an employee who trains Australian citizen and permanent resident employees is acceptable where the trainer is engaged solely in that role rather than having training as a key role of their job.
What can be counted?
• Payments for formal course of study, including reasonable costs
• Payments to RTOs to deliver in person training to Australian employees that will contribute to an AQF qualification (Certificate or Diploma)
• Purchase of an eLearning platform or stand-alone training software
• Salary of Australian employee(s) engaged as apprentices or trainees under a formal training contract, or structured graduate program for up to 2 years
• Salary of an employee whose sole role is to provide training to Australian employees
• Expenditure to attend conferences for professional development
What can’t be counted?
• On-the-job training that is not listed as allowable (e.g. eLearning platform)
• Training that is not relevant to the industry in which the business operates
• Training undertaken by principals in the business (or their family members)
• Training that has a very low skill level having regard to the characteristics and size of the business
• Induction training
• Staff salaries apportioned to time spent undertaking online or other training courses
• Purchase of software for use in normal duties
• Membership fees, purchase of books, journals or magazine subscriptions
• Attending conferences for purposes other than professional development
Expenditure must be recent
defined as expenditure made:
• in the previous 12 months; or
• in the previous financial year.
Note: similar time periods when showing expenditure for past years of sponsorship
The new rules commenced on 1 July 2017. Therefore it appears they don’t apply to training provided in FY 2016/2017 or earlier.
Calculating 1% of Payroll
the total amount of:
• any wages, remuneration, salary, commission, bonuses, allowances, superannuation contributions or eligible termination payments, defined as wages in payroll tax legislation for the relevant State/Territory, that the applicant has paid to their employees during the same period; and
• payments made to contractors or subcontractors during the same period if work provided by the contractor is related to the service/product provided by the applicant,
• regardless of whether such payments are included for payroll tax purposes or not;
if the applicant does not pay either of the types of payments specified above:
• the total monetary values of the director’s salaries, fees and drawn payments; or
• the actual profit of the business
Evidence of training expenditure
Under the new rules, it is acceptable to provide:
• receipts for payments; or
• Contracts for employment of the relevant individuals for whom salary payments can count towards the benchmark.
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