The JobMaker Hiring Credit scheme was passed into law in mid-November 2020 as part of the 2020-21 Federal Budget, and will operate until 6 October 2021.
As the COVID shut down will (has?) have a disproportionate effect on younger people (more younger people in casual employment – particularly in hospitality, and potentially less jobs around with higher unemployment rate for those coming out of Uni, TAFE, school etc) the JobMaker credit is trying to incentivise employers to hire them.
In true government fashion it will be backdated to 7 October 2020 which is not only confusing but makes administration more difficult, but I digress. It will provide eligible employers with payments for up to 12 months for new jobs created (i.e additional jobs – not replacement jobs) they fill with younger workers;
- $200 a week for hiring a worker aged 16 to 29 on at least 20 hours a week, and
- $100 a week for those aged 30 to 35.
The 12 months period is the hiring period - not the payment period. Eligible employers who hire an eligible employee on the last day of the scheme (6 October 2021), may be eligible for hiring credits for the next 12 months until 6 October 2022.
Which Employer’s are eligible?
To be eligible you will need to;
- have an ABN
- Up to date with tax lodgements
- Registered for PAYG Withholding
- Report through Single Touch Payroll (STP)
- Meet the additional criteria (discussed below)
- Are claiming in respect of an eligible employee, and
- have kept adequate records of the paid hours worked by the employee
However if you meet the above, you can't claim the JobMaker Credit if you are;
- Claiming JobKeeper (i.e you can’t claim jobkeeper & this)
- In liquidation or entered bankruptcy
What is a JobMaker Hiring Period?
Entitlement to a JobMaker Hiring Credit payment is assessed in relation to the three-month “JobMaker” periods and these periods are relevant for the additional criteria to be satisfied.
Key to the scheme is that business must have hired additional eligible employees. The additional criteria for the first four JobMaker periods requires that there is an increase in:
- the business’s total employee headcount (minimum of one additional employee) from 30 September 2020; and
- the payroll of the business for the reporting period, as compared to the three-months to 30 September 2020.
Example: increase in headcount
Lisa employs two new staff, Emma aged 28 and Jessica aged 32, who both start on 7 January 2021 and meet the employee eligibility requirements.
Angus resigns from his job at Lisa’s business, effective as at 7 January 2021. When claiming for the March quarter reporting period (7 January 2021 to 6 April 2021), Lisa again compares her current situation to her baseline:
- On 30 September 2020, her baseline headcount was 2 and her quarterly payroll was $30,000.
- On 6 April 2021, her headcount was 4 and her payroll for the reporting period was $52,000.
For the March quarter reporting period, as her headcount is 2 above her baseline, Lisa can claim for the 2 additional positions. Lisa notifies the ATO through STP of the commencement of Emma and Jessica on 7 January 2021, and that Angus was no longer employed as at 7 January 2021.
Source: Federal Treasury
What is an Eligible Employee?
To be eligible employees, they must satisfy the following;
- must have started work between 7 October 2020 and 6 October 2021;
- were aged between 16 and 35 years at the time they commenced employment;
- have worked an average of 20-hours a week for each whole week the individual was employed by the qualifying entity during the JobMaker period.
Additionally, they must meet the pre-employment condition, which requires that for at least 28 of the 84 days (that is, for 4 out of 12 weeks) immediately before the commencement of employment of the individual, the individual was receiving at least one of the following payments:
- parenting payment
- youth allowance (except if the individual was receiving thus payment on the basis that they were undertaking full time study or was a new apprentice), or
- JobSeeker payment.
Note that the new worker must be in a genuine employment relationship. For example, “non-arm’s length” employees will not be considered eligible employees. This includes family members of a family business, directors of a company and shareholders of a company.
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How to claim it
To receive the payment for each JobMaker period, employers must have notified the ATO in the approved form of its election to participate in the scheme no later than by the end of the period that the entity first elects to participate.
For example, for an entity that elects to participate for the JobMaker period of 7 January 2021 to 6 April 2021, the notice must be provided to the Commissioner by 6 April 2021.
The reporting requirements will include the details of employees that have commenced or ceased employment during a JobMaker period and the businesses payroll amount. The ATO will also specify that the information must be provided through the Single Touch Payroll.
So if you’re looking to increase headcount, and the best person for the job meets the JobMaker criteria, then you may be eligible to receive a payment from the ATO to help cover the costs of their wages for 12 months. Not a bad outcome - but please keep in mind.
Hire the right person for the job you need done (and make sure you've done these 5 things each time you hire someone), it’ll be cheaper and provide more value in the long run. If they also meet the JobMaker criteria – that’s just a bonus.
If you need a hand working out your eligibility give us a shout.