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A payroll tax rebate is available for wages paid to apprentices and trainees recognised by Training Services NSW. Learn how to declare these wages in your payroll tax return.
On this page
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 enrolls as a new entrant trainee in a Certificate III in Hospitality.
Her employment starts on 1 June 2022, with the traineeship commencing on 1 July 2022 and finishing on 31 December 2022.
The apprentice and trainee rebate can be claimed on wages paid to Sally between 1 July 2022 and 31 December 2022 while the traineeship is undertaken.
However, wages paid to Sally between 1 June 2022 and 30 June 2022, 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 enrolls in Certificate III in Electrotechnology Electrician.
The apprenticeship starts on 1 September 2019 and Mohammad completes his training on 31 July 2023.
Following completion Mohammad continues to work for Business C until 30 June 2024.
The apprentice and trainee rebate can be claimed on wages paid to Mohammad between 1 September 2019 and 31 July 2023 while the apprenticeship is ongoing.
However, wages paid to Mohammad on or after 1 August 2023, 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 enrolls as a new entrant trainee in a Certificate III in Supply Chain Operations.
Meilin’s employment and traineeship starts on 1 July 2022 and is expected to finish on 31 December 2022. However, Business D ends Meilin’s employment on 30 September 2022.
The apprentice and trainee rebate can be claimed on wages paid to Meilin between 1 July 2022 and her employment end date on 30 September 2022.
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.
If apprentice and trainee wages are exempt, they are excluded from the taxable wages in that jurisdiction.
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.
Rebate calculation example
During the month of April 2023, Business A paid $240,000 to its NSW employees including $80,000 to apprentices.
The April 2023 monthly return for Business A is as follows:
Component
April 2023 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
$98,631.00
= Amount subject to payroll tax
$141,369.00
x Payroll tax rate
5.45%
= Gross payroll tax liability
$7,704.61
– Apprentice and trainee rebate
$4,360.00
= Net tax payable
$3,344.61
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 and trainee wages included in the gross NSW wages is calculated as follows.
Interstate wages reduce your tax-free threshold. 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 for more details.
Common errors with apprentice and trainee wages
Payroll tax audits often uncover errors with apprentice and trainee wages in payroll tax returns.
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.