Complete your training without the financial burden. With a Trade Support Loan (TSL) you can get the money you need to cover your everyday costs during training. Keen to know more? Read on for Monzi’s complete Trade Support Loan guide.
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What is a Trade Support Loan?
Trade Support Loans are loans that help apprentices cover the everyday expenses and training costs that come along with completing an apprenticeship.
They are paid by the Government and come in monthly cash instalments, paid over a four year period.
Once your training is complete and you earn over the relevant income threshold, you will repay the loan through your tax.
There’s a brief introduction, however, there’s so much more to know. Monzi has compiled this guide containing everything you might need to know. Let’s go!
How does a trade loan work?
TSLs are paid over four years, with the amount decreasing each year. The cash you receive each year is evenly divided into 12 annual payments.
As a guide, the four-year payment breakdown for the 2019-20 financial year can be seen below:
|1st Year||$8,431 ($706.62 per month)|
|2nd Year||$6,324 ($526.96 per month)|
|3rd Year||$4,216 ($351.31 per month)|
|4th Year||$2,108 (175.65 per month)|
Ultimately, this comes to a total of $21,078. This figure is correct for the 2019-20 financial year. These numbers do change from year to year though so ensure you do your own research to confirm.
You are able to opt-out at any time. However, you will still need to repay the amount you have borrowed up to that point.
Finally, your income does not affect your eligibility for these loans.
Am I eligible?
In order to be eligible for trade support you must be an Australian resident and citizen, or hold a permanent visa. In addition to this you must be completing one of the following:
- A Certificate III or IV that leads to an occupation on the Trade Support Loan Priority list. This list contains most common trades (e.g. plumber, electrician)
- Agriculture-related Certificate II, III or IV.
- A Certificate II, III or IV in the horticultural industry completed in a regional or rural location.
Finally, you must have a tax file number (TFN) to apply. If you are unsure about how to find your tax file number or apply, then check out Monzi’s guide today.
Are Trade Support Loans interest free?
Trade Support Loans don’t accrue interest. However, they are indexed to inflation. That means they are adjusted annually in order to maintain their real value. The index adjustment occurs every year on June 1st.
The indexation percentage does change each year based on inflation and other economic factors, however, it typically does not exceed a few percentage points. For instance, the annual indexation in 2018 was just 1.8%.
Repay your Trade Support Loans
You will repay your Trade Support Loans through tax once you reach the repayment threshold. For the 2019-20 financial year, the threshold is $45,880. However, it does change every year.
The amount you need to repay is calculated as a percentage of your income and is automatically deducted as part of your tax payment.
Obviously, the more you earn, the greater the percentage will be. This percentage is based on the income bracket you belong to. Do a quick search and you can find these brackets online.
Can I apply if I am under 18?
Trade Support Loans are available for people under 18 years of age, however, parental approval will be required.
You must get parental permission to prove that, as a minor, you have considered the obligations that come with the loan. In other words, that you have recognized that the loan must be repaid.
Are Trade Support Loans taxable?
No, as with all loans, TSLs don’t count to your taxable income. As a result, there’s no need to worry about how much you have received once tax season rolls around.
While we’re on the topic of tax, once you meet the minimum earning requirement, you will need to repay your loan through the tax system. Repayments are automatic through your salary. However, if you wish to contribute an additional amount to pay off the debt sooner than you may.
Should I repay my loan early?
As TSLs don’t accrue interest, they’re known as the ‘best kind of loan’. In other words, you’ll never pay more than the real value of the loan.
Given this, you don’t necessarily need to be in any rush to repay it. You will already repay a percentage based on your income.
In saying this, being free from debt is never a bad thing. If you have additional cash available, then making extra payments may not be the worst idea.
However, before making a decision, consider your financial situation to determine if this is the most effective use of your resources.
Is there financial help for apprentices?
Yes. Various State and Federal Government schemes and benefit payments are available for young people.
Depending on your situation, you may be eligible to apply for Youth Allowance, Austudy or ABSTUDY through Centrelink. Alternatively, if you’re living away from home you may be able to apply for rent assistance or the Living Away from Home Allowance (LAFHA) which is paid as an allowance through the first three years of training.
Finally, a range of state-based grants, concessions and programs may be in place to assist you with your training. Moreover, your employer may be eligible for grants for hiring an apprentice.
Do your research to find the help that may be available for you.
Assistance for apprentices with a disability
The Australian government has made sure to make training and apprenticeships accessible for individuals with a disability. In short, they’ve made a commitment to ensure that apprentices with a disability can still reach their full potential.
A key part of this commitment is the Disabled Australian Apprentice Wage Support (DAAWS). This is paid to employers to help fund services such as mentoring, additional assistance or even interpreters (where required).
In addition to this, the Employment Assistance Fund helps people with disability and mental health conditions pay for necessary work-related modifications and services.
What should I consider before taking out a loan?
Applying for a TSL is a serious financial commitment. A loan of over $21,000 is no small amount and it must be repaid over time. Once you meet the income threshold, it could take you years.
As a result, it’s crucial to understand your financial situation and how the loan would impact this. Think about your income now as well as in the future and how your repayments may fit with your budget.
Finally, only apply for the loan if you need it. While it would be nice to have some additional cash, applying simply to boost your bank balance isn’t advisable. After all, you’ll need to repay that money in the future.
For further information, Moneysmart has provided a useful information hub covering a range of financial decisions for young adults undertaking study or training; check it out here.
What expenses can I cover with Trade Support Loans?
Once you receive your loan, it really is up to you what you do with it. However, remember that the intended purpose is to cover your everyday costs while you are completing your apprenticeship.
As a result, common expenses you may need to cover include:
- Tools and equipment
- Workwear: clothes, boots, etc.
- Training or education supplies: you may need a laptop or phone.
- Living expenses: food, rent, bills
- Car running costs: fuel, repairs
Are there any other benefits?
As an apprentice there may be a number of other benefits that you can take advantage of. These include:
A 20% loan discount
As an incentive, if you successfully complete your apprenticeship then you will receive a 20% discount on your loan from the Australian government. This exists to encourage young people to complete a trade.
This 20% discount is a substantial amount of money that will end up in your savings once you’ve repaid the balance of your loan. For TSLs over $20,000, you’re looking at a saving of over $4,000!
However, you don’t receive the discount in cash. Instead, it will simply be deducted from the amount that you currently own.
Low income health care card
As an apprentice or trainee, you may be eligible to receive a Low Income Health Care Card from the Australian government. This card allows you access to cheaper prescription medicines as well as a range of concessions and discounts from the government and other organisations.
These concessions may vary from state to state so check with your government to see what may be available to you.
In any case, in order to be eligible you must meet the following criteria:
- Australian resident.
- Australian citizen or hold a permanent or special category visa.
- Satisfy the Low Income Health Care Card income requirements (i.e. earn below a certain amount).
Personal loans through Monzi
While we’ve outlined Trade Support Loans for you, unfortunately, they’re not a product Monzi can offer. After all, they’re a government-issued loan.
In any case, through Monzi’s lender-finder service, you might be able to match with a credit provider offering personal loans. Cover a range of costs with cash loans up to $10,000. Apply and you might be matched with a lender before you know it.
In short, we make it simple to find lenders online. If a personal loan sounds like the right choice for you, scroll up and begin your application now.