Trade Support Loans and tax – what you need to know (updated June 2017)
- Published on Monday 4 July, 2016
- 3 min. read
Trade Support Loans (TSL) provide up to $20,420 over the life of an apprenticeship to assist eligible apprentices with the costs of living and learning while undertaking an apprenticeship. Payments are made monthly in arrears and are structured to provide the most support in the first two years. TSL are not considered to be income and are therefore exempt from income tax.
To be eligible for TSL payments, you must:
- Reside in Australia and be an Australian citizen, or the holder of a permanent visa; and
- Be undertaking either a Certificate III or IV level qualification that leads to an occupation on the TSL Priority List; or
- Certificate II, III or IV agricultural qualification specified on the TSL Priority List or
- Certificate II, III or IV horticulture qualification specified on the TSL Priority List while working in rural or regional Australia and
- Provide your Tax File Number (TFN) on the TSL application form and
- Meet the eligibility criteria assessed by your Apprenticeship Network Provider on receipt of a TSL application form, including any other conditions prescribed in the TSL rules
The loan is flexible and designed to help you with the cost of living while you undertake your apprenticeship. Payments can be used for anything from tools or work clothes to car payments, bills, everyday living expenses or rent. You will not need to provide receipts or proof of what you have purchased with your TSL payments. You will, however, need to repay the loan.
Trade Support Loans are a concessional income contingent loan and as such must be repaid. Trade Support Loans are repaid through the Australian Taxation Office (ATO) once income reaches the minimum repayment threshold, currently $55,874 in the 2017-2018 financial year. Apprentices who complete their apprenticeship will have their repayment amount reduced by 20% of TSL payments received.
You can also choose to start paying off your loan earlier if you wish, by arranging voluntary repayments through the Australian Taxation Office (ATO).
You are required to let your employer know if you are receiving TSL payments.
Under the pay as you go (PAYG) withholding system, your employer will withhold an additional amount from your wage to cover your compulsory repayment.
If you do not advise your employer to do this, you may end up with an amount owing to the Australian Taxation Office when it comes time to lodge your annual tax return. For more information regarding TSL payments and your tax, contact the ATO.