The Federal Government has replaced the Tools for Your Trade Payments with the “Trade Support Loan” from 1st July 2014 for eligible apprentices doing a Cert III or Cert IV qualification on the National Skills Occupations Shortage List.
Trade Support Loans provide up to $20,000 to assist them with the costs of living and learning while undertaking an apprenticeship. A 20% discount is applied on the amount borrowed when the apprentice successfully completes their apprenticeship. Apprentices are required to repay the loans through the tax system when their repayment income meets the repayment threshold
(see point 10 below).
The loans are flexible to meet the needs of each individual. For instance an apprentice can apply for six months only to buy their tools, they could save up their first year’s payments to buy 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.
What this means:
- Bricklaying Cert III is a three or four year apprenticeship, so the loan is up to $20,000.
- First year =$8,000 2nd Year = $6,000 3rd Year = $4,000, 4th Year = $2,000. In Victoria and Western Australia where the apprenticeship term is three years, the fourth year payment is excluded.
- No, you do not have to take out a Trade Support Loan even if you are eligible. Taking out a loan is a serious financial responsibility, and it is recommended that you do your research and assess whether it is the best option for you. Information to help you make a decision and identify the responsibilities involved in taking out a loan is available on the Money Smart website at www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics.
- It is your responsibility to be aware of your obligations under Trade Support Loans.
- You can opt in for a six month loan with a view to opt in for another six months at a time.
- Trade Support Loan payments are paid by direct credit into your nominated bank account.
- You can opt-out of receiving loan payments at any time. To do this, you must contact your Australian Apprenticeship Centre (AAC) by phone, email or in writing. Following this, the AAC will provide you with confirmation that you have opted-out. Ref point 15.
- Your AAC will provide you with a Trade Support Loan Application Form if you are potentially eligible. To apply you must lodge a Trade Support Loans Application Form which includes your tax file number.
- You are required to repay the amount of Trade Support Loans that you have borrowed. You will not be charged interest or fees on the loan; however, your Trade Support Loan is indexed each year in line with the Consumer Price Index to maintain its real value. Visit the Australian Taxation Office (ATO) website at www.ato.gov.au for further information about Trade Support Loan repayments.
- Repayments are made through the tax system once your repayment income is above the minimum repayment threshold which is $53,345 for 2014 2015. This is known as a compulsory repayment. Repayment amounts are determined using a percentage of the individual’s income.
- You can also choose to make payments on a loan prior to reaching the minimum repayment income. This is known as a voluntary repayment and there are no discounts or penalties for making a voluntary repayment. Voluntary repayments are in addition to compulsory repayments. They are not refundable.
- If you successfully complete your apprenticeship, you will receive a discount of 20% which is applied to the total amount borrowed.
- Once you have been paid a loan, you are required to pay it back regardless of whether you continue with your apprenticeship.
- For further information on eligibility and applying for a Trade Support Loan, contact your AAC. If you do not know the name of your AAC, call the AAC referral line on 13 38 73.
ABBTF VIC Manager