What are Trade Support Loans?
Trade Support Loans are loans paid in instalments totaling up to $20,000 over the life of an Australian Apprenticeship. These loans are intended to assist apprentices with everyday costs while they complete their apprenticeship. Eligible trade Australian Apprentices may apply (opt-in) for regular instalments according to their needs.
How do Trade Support Loans work?
Trade Support Loans are a more effective method of assisting eligible apprentices with their everyday costs while they undertake their apprenticeship. The programme provides apprentices with up to $20,000 as an income contingent loan.
Trade Support Loans
Up to $20,000
Monthly in arrears, adding to:
Up to $8,000
Up to $6,000
Up to $4,000
Up to $2,000
Indexation of Lifetime Limits of available support
Indexed on 1 July 2017 and each later 1 July in line with increases in the consumer price index to maintain real value.
Apprentices apply for a loan through their Australian Apprenticeship Support Network (Apprenticeship Network) provider in line with the year of their apprenticeship. They can then ‘opt in’ six monthly. Apprentices can opt out at any time.
Loan amount repaid through the taxation system when the minimum income threshold is reached.
In 2015-16 the minimum repayment occurs at income threshold of $54,126.
Once an apprentice successfully completes their apprenticeship, a 20% discount is applied to the loan amounts borrowed.
Loan value is indexed in line with increases in the consumer price index to maintain real value.
Where can more detailed information be accessed?
More detailed information is available from your local Apprenticeship Network provider. Contact details for your Apprenticeship Network provider can be accessed using the"Find my Apprenticeship Network provider" search tool or calling 13 38 73.
Why is the Government introducing Trade Support Loans?
The Australian Government is strongly committed to Australian Apprenticeships and to apprentices’ future training needs. While the number of trade commencements has been steadily increasing over the last decade, completion rates have remained relatively static.
Research suggests that the focus of financial incentives should be on ensuring Australian Apprentices are well supported and provided with the best possible chance of completion. The Programme provides assistance with the expenses associated with living, learning and completing an apprenticeship and helps apprentices focus on completing a trade qualification.
Following the Fair Work Commission’s decision to increase apprentice wages, with some employers providing tools for their apprentices and most awards including a tool allowance it was timely to review apprentice programs.
Who is eligible to receive Trade Support Loans?
The Trade Support Loans Priority List identifies those occupations and qualifications eligible for Trade Support Loans. This list includes certificate III or IV qualifications leading to certain priority trade occupations that currently appear on the National Skills Needs List as well as a number of agriculture and horticulture qualifications at the certificate levels II, III and IV levels.
Are school-based and/or part-time apprentices eligible for Trade Support Loans?
Yes, subject to meeting eligibility criteria. Payments are made at the same rate as for full-time apprentices.
Are the Trade Support Loans compulsory for Australian Apprentices?
Uptake of the loan is optional. Eligible Australian Apprentices may decide if taking out the loan is the right choice for them. If they do choose to opt in, it will be for six-monthly periods and apprentices can choose to opt out at any time.
Information about the debt burden and responsibility for repayment of the loan can be found here.
Additional information for eligible Australian Apprentices under 18 years of age, and their parents/guardians, of age to ensure they understand the implications and their obligations can be found here.
How much will an apprentice receive if they opt in to receive the Trade Support Loan?
Eligible apprentices can apply for loans totaling up to $20,000 over the life of an apprenticeship. Apprentices will opt in for six monthly periods with loan payments paid monthly in arrears. The amount an apprentice is eligible to receive as a Trade Support Loan is determined by the year of their apprenticeship, that is, whether they are a first, second, third or fourth year apprentice.
Apprentices will receive up to $8,000 in the first year of their training, $6,000 in the second year, $4,000 in the third year and $2,000 in the fourth year. Apprentices can opt out at any time.
Apprentices who successfully complete their apprenticeship will receive a 20 per cent discount, meaning that the amount they borrowed will be reduced by 20 per cent.
How will payments be made?
Payments are made directly to Australian Apprentices to their nominated bank account and paid monthly in arrears. Payments provide regular income support to apprentices.
What is the time limit for payments - is there a waiting period to claim?
Eligible Australian Apprentices can claim a Trade Support Loan payment only while undertaking their apprenticeship.
Unlike other personal benefit payments Australian Apprentices can not claim Trade Support Loan payments retrospectively and there is no waiting period to claim.
Will payments be made available in the three month probationary period of an Australian Apprenticeship?
Yes, payments are available in the three month probationary period as long as the Australian Apprentice qualifies for, and opts in to receive payments. This ensures Australian Apprentices have additional financial support from the beginning of their apprenticeship.
Can payments be claimed in a period which is greater than one month?
Australian Apprentices can opt in for a six month payment period with payments made in arrears on a monthly basis. Apprentices can opt-in which allows them to receive the next six Trade Support Loan payments that fall due. Following this, apprentices are required to opt-in again to receive further payments. Apprentices can opt-out of receiving payments at any time.
Apprentices cannot claim payments for instalments that have passed (except in very rare circumstances, such as an administrative error).
Will the full loan of $20,000 be paid for shorter duration apprenticeships?
No. If an apprentice completes their apprenticeship before the end of four years, their payments cease on completion, even if they have not received the full $20,000.
Repayment of the loan
When does the loan become repayable?
The loan becomes repayable once the loan recipient’s income reaches the income repayment threshold ($54,126 for 2015-16) similar to repayment thresholds for the Higher Education Loan Programme (HELP).
What if a loan recipient’s income subsequently drops below the income threshold?
The loan is repayable whenever and for as long as the loan recipient earns above the income threshold ($54,126 for 2015-16). The loan will remain payable until it has been fully repaid. If the loan recipient’s income is below the income threshold they are not required to make repayments.
How will loans be repaid?
Loans will be indexed by the Consumer Price Index and repaid through the taxation system, similar to the way HELP loans are repaid. Apprentices who successfully complete their apprenticeship will receive a 20 per cent discount meaning that the amount they borrowed will be reduced by 20 per cent.
The loan is repayable through the tax system once apprentices are earning a sustainable income, ($54,126 for 2015-16).
The current repayment thresholds are available from the Australian Tax Office website.
Will the earnings of an Australian Apprentice affect eligibility for Trade Support Loans?
The income of a loan recipient does not impact on their eligibility for a loan, however it may impact on their requirement to make repayments. Once a loan recipient reaches the income repayment threshold, they must start repaying the loan must start to be repaid, regardless of whether or not the apprentice is still receiving loan payments.
What if a recipient moves overseas?
New laws for the repayment of Trade Support Loan (TSL) debts are now in force. Until now people who took out a loan and moved overseas did not have to repay their debt as long as they remained offshore.
From 1 January 2016, people with a TSL debt who leave Australia and intend to be overseas for more than six months, or who have already been overseas for six months, will be required to notify the Australian Taxation Office of their new contact details by simply creating a myGov account, linking to ATO online serivcces and selecting 'update your details'.
From 1 July 2017, people overseas will need to use their ATO online account to lodge an assessment of their worldwide income.
Conditions of the loan
Is there an approved list of what the loan can be used for?
No. The loans are flexible to meet the needs of each individual. For instance an apprentice can opt-in for six months only to buy their tools, they could save up their first year's payments to by a second hand vehicle then opt-out of further payments or they can take the full loan to cover living expenses, such as rent, public transport and phone bills throughout their years of training.
Will apprentices need to provide receipts for expenditure of the loan?
No. The loans are being provided to assist apprentices with every day costs associated with living, learning and completing their apprenticeship.
Administration of the Trade Support Loans
How do eligible Australian Apprentices apply for Trade Support Loans?
Apprenticeship Network providers, contracted by the Australian Government, administer Trade Support Loans. They determine eligibility for Trade Support Loans and assist recipients to make a claim for payments.
Eligible Australian Apprentices should contact their Apprenticeship Network provider for further details. Contact details for Apprenticeship Network provider can be accessed by using the "Find my Apprenticeship Network provider" search tool or calling 13 38 73.
Will Apprenticeship Network provider collect Tax File Numbers (TFN) for all apprentices accessing the Trade Support Loans?
Eligible Australian Apprentices are required to provide their TFN to qualify for Trade Support Loans. Apprenticeship Network provider s collect TFNs as part of data that will be reported to the Australian Taxation Office. TFNs for Trade Support Loans purposes will be collected as part of the application process and will not require a separate TFN declaration form to be completed/provided.
Trade Support Loans Act 2014 and Guidelines
The Trade Support Loans Act 2014 is the main piece of legislation used to administer the Trade Support Loans Programme. A copy of the Act, the Guidelines and other supporting documents are available on the Department of Education and Training website.
Where can I find out more?
For more information and advice on all aspects of Australian Apprenticeships, contact your local Apprenticeship Network provider or call the Australian Apprenticeships referral line on 13 38 73. Apprenticeship Network providers are contracted by the Australian Government to provide free Australian Apprenticeships support services to apprentices and employers.