Taxation Ruling

IT 134

Commonwealth rebate for apprentice full-time training scheme

• Please note that the PDF version is the authorised consolidated version of this ruling and amending notices.
  This document has been Withdrawn.
  View the Withdrawal notice for this document.

FOI status:

may be releasedFOI number: I 1101390

Facts

The following advice issued concerning the introduction by the Government of a new apprenticeship support scheme.

2. As indicated in the News Release, a key feature of the scheme - the Commonwealth Rebate for Apprentice Full-Time Training (CRAFT) scheme - is that rebates payable under the scheme to employers of apprentices will be exempt from income tax.

3. The Parliamentary Counsel is in the course of drafting a provision for insertion in section 23 of the Income Tax Assessment Act to authorise the proposed exemption of CRAFT rebates in the hands of employers.

4. In certain circumstances, apprentices required to leave home to obtain or remain in apprenticeship will be entitled to claim special allowances under the new CRAFT scheme. The allowances are referred to in the News Release as "Apprentice Allowance for Living-away-from-home Expenses."

Ruling

5. These allowances are to be subject to income tax in the assessments of apprentice-recipients in the same way as other similar periodical payments are allowances that are in the nature of income.

6. In this regard, it is considered that apprentices in receipt of the special allowance under the CRAFT scheme would, as a general rule, fall to be treated in line with the principles relating to junior employees as set out in paragraphs 13 to 18 of CITCM No.821.

7. A deduction under section 51A will therefore only be available in assessments of junior apprentices in receipt of CRAFT allowances where it can be demonstrated as a fact that the parental home of the apprentice remains his usual place of abode (cf., paragraph 16 of CITCM No.821).

8. It follows that the treatment of CRAFT allowances paid to apprentices will not correspond with the treatment that is to be accorded to living-away-from-home allowances paid under the National Apprenticeship Assistance Scheme (NAAS).

9. As for tax instalment deductions, it is proposed to amend the definition of "salary or wages" in sub-section 221A(1) to expressly cover allowances paid to apprentices under the CRAFT scheme. This will ensure that the allowances can be subjected to appropriate tax instalment deductions under Division 2 of Part VI of the Income Tax Assessment Act.

Commissioner of Taxation
9 March 1977

References

ATO references:
NO J153/123/1 P1 F161

Date original memo issued:
09.03.77

Subject References:
craft scheme
employees
employers

Legislative References:
ITAA 23(jc)
ITAA 51A
ITAA 26(e)
ITAA 221A(1)