New government subsidies make the hiring of mature age apprentices a very attractive proposition. By Frank Leggett
The Australian Government is putting some serious money behind a number of schemes to encourage the hiring of mature age apprentices. While the main thrust is to purely increase the number of mature age apprentices in the workforce, it can also aid in the rebuilding of businesses in the post-COVID environment. The financial benefits are substantial and these schemes offer a unique opportunity for those in the hospitality industry.
“I’d really encourage all businesses to look at the apprenticeship incentives that are available at the moment,” says Peter Gilchrist, general manager of Business Australia’s Apprenticeship Support Australia. “They offer significant savings, particularly in restaurant and catering businesses when they’re coming back from COVID-19.”
“The life experiences and knowledge that mature aged apprentices have can be such a valuable resource for any hospitality business,” adds Katrina Higham, Head of Training & Education at R&CA.
“As a business owner, taking on a mature aged apprentice could add value to other parts of your business depending on their previous experiences.”
Defining a mature age apprentice
An adult apprentice is someone who is 21 years or older if they commenced on or after 1 July 2019. If they commenced prior to 1 July 2019, then they must be aged 25 years or older to take benefit of the incentives. There is no upper age limit—a 50-year-old apprentice is as eligible as a 21-year-old to take part in the scheme.
Support for Adult Australian Apprentices incentive
The Support for Adult Australian Apprentices incentive (SAAA) is a payment to eligible employers of $4000 after the apprentice completes 12 months of training. One important thing that needs to be ascertained is that the apprenticeship is on the national skills needs list.
“For the restaurant and catering industry, it may include things like cook, baker or pastry cook but not chef,” says Gilchrist. “There are about 60 vocations on the list and employers needs to ensure they are employing an apprentice under the correct vocation.”
The best thing to do is to contact an apprenticeship network provider, such as Apprenticeship Support Australia (www.apprenticeshipsupport.com.au). It will help you understand and meet all the necessary criteria. Employers must provide evidence that they are paying the correct wage to claim the additional $4000. This scheme is ongoing with no end date yet announced.
Boosting Apprenticeship Commencements wage subsidy
While SAAA has been around for a while, the Federal Government announced the Boosting Apprenticeship Commencements (BAC) wage subsidy in the October 2020 budget. If a commencing or recommencing apprentice is put on, then employers could be eligible for a subsidy of 50 per cent of the apprentice’s gross wage. This is up to $7000 per quarter from 5 October 2020 until 30 September 2021.
“The beauty of SAAA and BAC is that they can be accessed simultaneously,” says Gilchrist. “These great initiatives offer substantial financial benefits while increasing the skills levels of Australia.”
The advantages of mature age apprentices
A common problem that many employers find with young apprentices is that by transitioning from school, they are not work-ready. They haven’t got used to turning up on time and haven’t had the opportunity to obtain a real work ethic. Generally, mature age apprentices have been working for a few years. They know how to communicate successfully in the workplace, work as part of a team, turn up on time, and understand customer service expectations.
“There’s a higher rate of completion from mature age apprentices than there is from younger apprentices,” says Gilchrist. “Their apprenticeship and career choice is not one they’ve fallen into, but one they’ve carefully chosen to enter.”
Tax implications
GST does not apply to payments paid to employers under the program. By supplying an ABN to the Department of Education, Skills and Employment, tax will not be withheld from the SAAA payments. However, the SAAA payments must be declared as income to the Australian Taxation Office. If no ABN is supplied, then each payment will have a withholding tax of 47 per cent.
“Generally, these types of incentives are considered to be business income,” says Gilchrist. “Additionally, business owners with apprentices can take advantage of payroll tax deductions. Ultimately, these schemes make sound financial and business sense while upskilling the Australian workforce in an effective manner.”
The way forward
There is no arguing that there are tough times ahead as Australia bounces back from the damaging effects of COVID-19. The hospitality industry has been hit particularly hard and it’s going to be a long slow climb back to normalcy. In the past budget, the Australian Government pledged over $1 billion in subsidies for apprentices.
Taking on mature age apprentices offers many advantages to our industry. They are more inclined to go the distance and complete the apprenticeship, they have a more considered approach to their career choice, and they have a work ethic that can be missing from younger employees. The various incentives available for business owners makes mature age apprentices a serious consideration. Contacting an apprentice network provider should be your first port of call, followed by a financial professional to explore the various taxation options. Post-COVID, mature age apprentices may be the way forward into a brighter, more profitable 2021.