Training Benchmark Changes for Employer Sponsors from August 12 2018
Training benchmarks were relevant for applications for TSS/457, Employer Nomination Scheme (ENS) and Regional Sponsored Migration Scheme (RSMS).
On August 12 2018, critical changes were made to rules surrounding training benchmarks with the Skilling Australia Fund.
Skilling Australia Fund Nomination Applications
In a move that has radically simplified the training fund commitment by sponsors and nominators for TSS, ENS, RSMS visas, the Skilling Australia Fund commences 12 August 2018.
The change represents a welcome simplification of the benchmark system, a system that was increased risk of application refusal and was complex in administration.
The SAF charge to be levied on nomination applications at time of writing are as follows (be sure to ensure that the following rates are correct for you at time of application): Skilling Australia Fund Nomination Applications:
- Temporary sponsored visas $1,200 per year of the proposed visa period for businesses with an annual turnover of less than $10 million;
- Temporary sponsored visas $1,800 per year of the proposed visa period for businesses with an annual turnover of at least $10 million per year of the proposed visa period;
- Nominations that relate to permanent visas (RSMS, ENS) incur a once only charge of $3,000 for businesses with an annual turnover of less than $10 million;
- Nominations that relate to permanent visas (RSMS, ENS) incur a once only charge of $5,000 for businesses with an annual turnover of at least $10 million.
Exceptions are available in the following situations only:
If nomination is made under a labour agreement providing for the nomination of the occupation of Minister of Religion or Religious Assistant..
SAF replaces the Training Benchmarks A and B system that was clunky and complex in calculation where spending on training was diffuse, with some expenditures falling outside of eligiblity.
NOTE: THERE ARE SEPARATE RULES FOR TRAINING OBLIGATION FOR 186 DIRECT ENTRY, AND 457, 186 TEMPORARY RESIDENCE TRANSITION STREAMS.
Please note the following information is legacy and not applicable to new applications.
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.
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
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.