Changes to payroll tax exemption for trainees announced

Date: 01 December 2017

Payroll tax exemption for traineeships to be limited to new employees saving about $100 million over the forward estimates

The McGowan Labor Government has today announced it will fund 9,600 training places in 2018 by closing a loophole that has seen companies avoid paying their fair share of payroll tax.


The McGowan Government will redesign the scheme over a two stage process and initially redirect the savings into 9,600 training places.  Stage two will explore a grant scheme for apprenticeships and traineeships that can be accessed by all businesses, not just those that pay payroll tax.


Effective from December 1, 2017, exemptions will be limited to all apprenticeships, and to traineeships undertaken by new employees earning no more than $100,000 per annum at the date of lodgement of the contract with the Department of Training and Workforce Development. The savings will be redirected to fund 43,350 training places over the forward estimates.


Existing worker contracts lodged before December 1, 2017 will continue to be exempt providing the employee's annual wages do not exceed $100,000.  Stage one will not alter the exemption for apprenticeships.


There is evidence to suggest that the exemption for trainees is not delivering value for money for taxpayers, and are instead used as a tax avoidance measure and are not targeting real skills gap in the economy.


The Government has recognised that the expenditure on this scheme, which equates to 2.4 per cent of the total payroll tax base, is unaffordable particularly when the payroll assistance provided by other States and Territories is far less generous.


This is why the Government will work with industry in developing stage two of these changes, to replace all remaining apprentices and trainee exemptions with a grant scheme.  Options will be considered in mid 2018 for possible commencement from July 1, 2019.


A grant scheme will be a more transparent and equitable approach to helping employers provide staff training where it is most needed in the economy.  A grant scheme would make assistance available to all businesses, not just those that pay payroll tax.


Comments attributed to Treasurer Ben Wyatt:


"We need a system which provides support for real training for real jobs and value for WA taxpayers.


"The previous system has been open to abuse. A grant scheme will be far more transparent.


"This new system will also be a boost to small businesses as we work towards a grant system which is available to all businesses, not just those who pay payroll tax."


Comments attributed to Education and Training Minister Sue Ellery:


"Today's changes mean thousands more training places can be funded, training can be better targeted and small businesses will also have access to training support.


"This will help fill the gap created by the Federal Government's changes to Commonwealth funding agreements for training places, which has resulted in $54 million less for Western Australia compared to 2016-17.


"The Federal Government isn't making it easy and is leaving WA to pick up the shortfall."


Treasurer's office - 6552 5900

Education and Training Minister's office - 6552 5700

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