Training Benchmark Changes for Employer Sponsors from 1 July 2017
Standard Business Sponsor applications in the 457 Program are subject to Training Benchmark changes.
Training benchmarks are relevant also for applications for Employer Nomination Scheme (ENS) and Regional Sponsored Migration Scheme (RSMS).
On 1 July 2017, critical changes were made to rules surrounding training benchmarks.
NOTE: THERE ARE SEPARATE RULES FOR TRAINING OBLIGATION FOR 186 DIRECT ENTRY, AND 457, 186 TEMPORARY RESIDENCE TRANSITION STREAMS.
Benchmark A – Payments to a Training Fund
Benchmark A requires 2% of payroll to be paid into an industry training fund. Since the changes were introduced, employers now need to demonstrate:
- Industry training fund
- Fund managed by recognised Industry Body
- Scholarship fund operated by Australian TAFE or University
Expenditures previously accepted that are now removed include:
- Funds operated by RTOs or private individuals
- Funds paying commissions or offering refunds if application fails
Private training providers can not longer accept payments for Benchmark.
Auditable Training Plan Compilation Service
Benchmark B – Expenditure on Training Australians in the Business
Benchmark B involves 1% of payroll to be paid on training Australian employees in the business.
Training benchmark changes now include the following:
- Formal courses of study + associated costs (eg travel)
- RTOs delivering face-to-face training which contributes to formal qualification
- eLearning or training software
- Apprentices, trainees or recent graduates
- Training officers – must be sole role
- Attending conferences for CPD
The following expenditures are no longer acceptable:
- On-the-job training – previously, structured on-the-job training could be counted in some circumstances
- Training not relevant to business’ industry – it is not clear how closely related the training must be to the industry
- Training of principals or family members – previously, training of family members could be counted providing it was also made available to other employees
- Induction training
- Salaries of staff attending training
- Membership fees – previously allowable
- Books, journals or magazine subscriptions – previously allowable
- Conferences for purposes other than CPD
- Hiring a booth at trade show, conference or expo
The above changes to Benchmark B will affect many employers in ways that had not previously impacted.
For expenditures made to external providers, payments are only eligible where the program or course leads to a formal qualification. This is likely to impact most businesses that previously relied on a wide range of in house and external training for meeting the benchmark requirement.
Calculation of Payroll
Payroll generally includes:
- wages and salaries as per state payroll legislation, and
- payments made to contractors or subcontractors if the work completed is related to services or products provided by sponsor
In the absence of payroll figures, directors’ fees, salaries and profits of the business can be used.
Timing of Training Activities
Payroll and training expenditure must be made in the period.
Previously, businesses operating for 12 months or more were required to demonstrate this expenditure in the 12 month period prior to lodgement. From July 2017, this expenditure may be for the 12 months prior to lodgement, or previous full financial year – this should help employers to gather relevant information and documentation.
Start-up businesses operating for less than 12 months are required to provide an auditable training plan to meet these benchmarks.
NOTE: There are changes to the occupation lists that will adversely impact a significant number of nominations.