Explanatory Memorandum
(Circulated by the authority of the Minister for Education, the Honourable Julia Gillard MP)Outline and financial impact
Outline
This Bill exempts the value of the payments, made under the Skills for Sustainability for Australian Apprentices and Tools For Your Trade (under the Australian Apprenticeships Incentives Program), from treatment as assessable income for taxation, social security and veterans' affairs purposes. The amendments ensure that eligible Australian Apprentices receive the full benefit of the payments made under the two new programs, and are consistent with the taxation treatment of previous programs that have paid personal benefits to Australian Apprentices.
The Skills for Sustainability for Australian Apprentices payment is a pilot program within the Skills for the Carbon Challenge initiative. This initiative is an outcome of the Australia 2020 Summit which aims to accelerate industry's and the tertiary education sector's response to climate change. To encourage Australian Apprentices to undertake sustainability-related training, the payment of $1,000 will be provided to eligible Australian Apprentices who have successfully completed the required level of training which teaches skills in sustainability and environmentally sustainable work practices.
The Tools For Your Trade payment, within the broader Australian Apprenticeships Incentives Program, combines and extends three administratively complex programs previously available to Australian Apprentices into one payment. The new payment comprises five separate cash payments totalling $3,800 paid over the life of the Australian Apprenticeship. The new arrangements reduce the administrative burden on employers, broaden eligibility criteria (benefitting more Australian Apprentices) and ensure that Australian Apprentices in skills shortage trades are eligible for the same level of financial support regardless of age and employer size.
These two new programs represent significant measures that encourage Australian Apprentices to develop skills in sustainability in order to participate in a workforce that is ready to meet the rising demand for sustainable buildings and industry, and to ease the financial burden for Australian Apprentices undertaking Australian Apprenticeships in areas of national skills shortage.
Financial impact
Payments for both programs are to be funded through annual appropriations. Skills for Sustainability for Australian Apprentices is estimated to cost $20 million over 4 years. Tools For Your Trade for Australian Apprentices is estimated to cost $670.1 million over 4 years.
It is not possible to estimate the financial impact of the income exemptions as this will be determined by the number of Australian Apprentices who qualify for the payments.
NOTES ON CLAUSES
lause 1 - Short title
Provides for the Act to be cited as the Social Security and Other Legislation Amendment (Australian Apprentices) Act 2009.
Clause 2 - Commencement
Clause 2 has the effect of providing for the Act to commence on 1 July 2009.
Clause 3 - Schedule(s)
Provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule and that any other item in a Schedule has effect according to its terms.
Schedule 1 - Amendments
Income Tax Assessment Act 1997
Item 1 - Section 11-15 (at the end of the table item headed "education and training")
Amends the "education and training" entry in the table in section 11-15, to add the recipients of a Skills for Sustainability for Australian Apprentices payment and a Tools for Your Trade (under the Australian Apprenticeships Incentive Program) payment to the list of classes of exempt income to reflect the amendment made by item 2.
Item 2 - Section 51-10 (at the end of the table)
Inserts new items 2.7 and 2.8 in the table to section 51-10, which has the effect of adding Skills for Sustainability for Australian Apprentices payments and Tools for Your Trade (under the Australian Apprenticeships Incentive Program) payments to the list of education and training amounts exempt from income tax.
Item 3 - Application of amendments
Provides that the amendments made by items 1 and 2 apply to assessments for the 2009-10 income year and later income years.
Social Security Act 1991
Item 4 - After paragraph 8(8)(ta)
Inserts new paragraphs 8(8)(tb) and (tc) to exempt the amount of a Skills for Sustainability for Australian Apprentices payment and the amount of a Tools for Your Trade (under the Australian Apprenticeships Incentive Program) payment from the definition of income under the Act.
Veterans' Entitlements Act 1986
Item 5 - After paragraph 5H(8)(xaa)
Inserts new paragraphs 5H(8)(xab) and (xac) to exempt a payment made by the Commonwealth under the Skills for Sustainability for Australian Apprentices program and the Tools for Your Trade (under the Australian Apprenticeships Incentive Program) from the definition of income under the Act.