Bosses also benefit from new Tradie Bonus

Employers are set to enjoy a 'staff retention bonus' when the new $1,700 tax-exempt Trades Apprentice Income Bonus comes into effect on 1 January 2011.

Mr Steve Wyborn, General Manager, Sarina Russo Apprenticeship Services said the bonus is paid directly to the apprentice but the positive spin-off for employers will be a reduction in the apprenticeship drop-out rate.

"Low relative earnings lead to recruitment difficulties and reduces rates of completion as too many apprentices are seduced by higher paid but lower skilled work, particularly on mine sites," Mr Wyborn said.

Bill Hammond, owner, Reliance Plumbing said easing an apprentice's cost of living pressures will improve my chances of holding onto my apprentice Kurt until he completes his training.

"It's so frustrating to spend a year to 18 months training a young guy only for him to quit just as he's starting to be useful and paying his way," Bill said.

Kurt said the bonus will come in real handy to buy tools, service my ute, pay for registration and insurance, and meet other expenses.

Mr Wyborn said it's estimated 50% of apprentices don't complete their qualification[1]with one third of those who do drop out likely to be unemployed a year later[2].

"Increased retention and rates of completion by apprentices provide a more skilled and motivated workforce.

"Employers are also benefiting from more mentoring support services for their apprentice which aims to give the apprentice a greater understanding of what is expected in the workplace and give them advice and support throughout their apprenticeship," Mr Wyborn said.

From 1 January 2011, the $1,700 tax exempt Trades Apprentice Income Bonus will be paid on top of the existing Tools For Your Trade payments meaning trade apprentices will get a $5,500 tax exempt bonus over the course of their training.

This means, as trade apprentices, in skill shortage occupations, like carpenters, bricklayers and motor mechanics will receive the bonus payments as they reach milestones in their training:

$200 - bringing the 12 month payment to $1,000.
$200 - bringing the 24 month payment to $1,000.
$500 - bringing the 36 month payment to $1,200.
$800 - bringing the completion bonus to $1,500.

"Research shows having a qualification, like an apprenticeship will give a young person greater earning capacity in the longer term and hopefully start their own business and employ an apprentice," Mr Wyborn said.