Changes continue to be rolled out by the Department of Immigration & Border Protection (DIBP).  A recent change relates to the training benchmarks that 457 business sponsors are obliged to meet - this article explains how the changes impact employers.

Benchmark A - Payments to a Training Fund

This involves paying 2% of payroll to an industry training fund. From July 2017 payments may be made to one of the following:

  • Industry training fund
  • Fund managed by recognised Industry Body
  • Scholarship fund operated by Australian TAFE or University.

The following types of expenditure are now not eligible:

  • Funds operated by RTOs or private individuals
  • Funds paying commissions or offering refunds if application fails

The main impact of this change is that the previous practice of private education providers accepting payments for Benchmark A will be discontinued.

Benchmark B - Expenditure on Training Australians in the Business

This involves spending 1% of payroll on training Australians in the business. From July 2017 payments may include:

  • Apprentices, trainees or recent graduates
  • RTO's delivering face-to-face training which contributes to formal qualification
  • e-Learning or training software
  • Formal courses of study + associated costs (e.g. travel)
  • Training officers - must be "sole role" of the employee (to train other employees in the business)
  • Attending conferences for Continuing Professional Development (CPD).

 

The following types of expenditure are now not eligible:

  • Salaries of staff attending training
  • Membership fees - this was previously counted
  • Books, journals or magazine subscriptions - this was previously counted
  • Conferences for purposes other than CPD
  • Hiring a booth at trade show, conference or expo 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.

Based on current information, it appears that payment of external providers to deliver training for Australian employees, is excluded unless it leads to a formal qualification. This would form the bulk of the training expenditure of most businesses and so many will need to restructure their training to comply with the new Benchmark B. Once further clarity is available we will let you know.

What is also unclear at the moment is whether 457 business sponsors who have been calculating their training benchmark expenditure on the previous training benchmark provisions will be deemed to have satisfied the requirement. 

We are awaiting further clarification on these points from DIBP and will provide further updates once available.

Calculating 'Payroll'

As a general rule, payroll 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

If the business does not have ‘a payroll’ they are expected to count Directors' salaries, fees and drawings, or the profit of the business.

Timing of Training Activities

Payroll and training expenditure must be for the same period.

From July 2017, it has been clarified that this expenditure may be for the 12 months prior to lodgement of an application, or for the previous full financial year - this should help employers to gather relevant information and documentation.

Start-up businesses operating for less than 12 months will be required to show they have an auditable plan to meet these benchmarks.

We will provide ongoing updates as information becomes available, including the training requirements from March 2018 when the new ‘Temporary Skills Shortage’ (TSS) visa commences (replacing the current 457 visa).
Whether you are an individual visa holder considering how these changes affect you personally or an employer wondering how these and the further proposed changes affect your ability to recruit globally please feel free to contact us at Nevett Ford to see how we are able to assist.