The 2020 Federal Budget announced the introduction of JobMaker Hiring Credit. The goal of the JobMaker Hiring Credit is to provide Australian businesses with incentives to employ young people. With many young people losing their jobs due to COVID-19, this will help the economy recover as more Australians return to the workforce. The JobMaker Hiring Credit will be applicable to employers for each new job they create over the next year (12 months). To receive the JobMaker Hiring Credit, the young person must be eligible, meaning that they are aged between 16 to 35 years old and fall within the specific criteria. The JobMaker Hiring Credit is expected to have a significant impact on the number of jobs created, with over 450,000 positions predicted to become available. This program will cost $4 billion from 2020/21 to 2022/23. Disclaimer: The information provided in this knowledge base article is general in nature and is not intended to substitute for professional advice. Information can also be updated at any time. If you are unsure about how this information applies to your specific situation, we recommend you contact Employment Innovations for further advice or visit the Government website for more information. This information has been sourced from budget.gov.au. View the official fact sheet here.
How much can employers claim from the JobMaker Hiring Credit?
Employers will be able to claim $200 per week for each additional eligible employee they hire aged between 16 – 29 years of age. Employers will be able to claim $100 per week for each additional eligible employee aged 30 to 35 years of age. The JobMaker Hiring credit will be available up until 6 October 2021 and businesses will receive the $100 or $200 credit for up to 12 months from the date the new position is created. For employees to be eligible for the JobMaker Hiring Credit, they must have received government support in the previous three months from the start date of their new role. These may include:
- Job Seeker Payment
- Youth Allowance (Other)
- Parent Payment
An overview of the JobMaker Hiring Credit for employers
The JobMaker Hiring Credit will be claimed quarterly in arrears by the employer from the Australian Tax Office (ATO), starting 1 February 2021. For employers to receive the credit, they must report that they meet the eligibility criteria each quarter. Employers will not be required to complete a decrease in turnover test. For employers to receive the JobMaker Hiring Credit, they must hire an additional employee from 7 October 2020. For the employer to prove that the employee is in a newly created role, they must be able to show that there has been an increase in:
- The business’ total employee headcount from the 30 September and;
- The business’ payroll reporting period, as compared to the three months prior to 30 September 2020.
The Government has stated that the amount claimed for the JobMaker hiring credit cannot exceed the amount of the increase in payroll for a reporting period. Businesses will be assessed on baseline values determined by the total employee headcount and payroll information from 30 June to 30 September 2020 (the three months preceding 30 September). The baseline headcount will be adjusted in the second year of the program to ensure an employer can only receive the JobMaker Hiring Credit for 12 months for each additional position created.
What is the eligibility criteria for employers?
Employers will be eligible for the JobMaker Hiring Credit if they:
- Have an Australian Business Number (ABN)
- Are up to date with tax lodgement obligations
- Are registered for Pay As You Go (PAYG) withholding
- Are reporting through Single Touch Payroll (STP)
- Meet the additionality criteria
- Are claiming in respect of an eligible employee
- Have kept adequate records of the paid hours worked by the employee they are claiming the hiring credit in respect of
Which employers are not eligible for the JobMaker Hiring Credit?
The Government has created a list of ineligible employers. These include:
- Commonwealth, state and local government agencies, and entities wholly owned by these agencies
- Sovereign entities (foreign Governments, their agencies and wholly owned foreign resident subsidiaries). However, Australian resident entities owned by a sovereign entity that meet all other eligibility criteria are eligible
- Entities in liquidation or who have entered bankruptcy
- Employers who are claiming the JobKeeper Payment
- Employers subject to the major bank levy
What is the eligibility criteria for employees?
For an employee to be eligible, they must:
- Be aged either:
- 16 to 29 years old ($200 per week);
- or 30 to 35 years old ($100 per week) at the time their employment started
- have worked at least 20 paid hours per week on average during the reporting period;
- commenced their employment between 7 October 2020 and 6 October 2021;
- have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one month within the past three months before they were hired;
- be in their first year of employment with this employer,
- must be employed for the period that the employer is claiming for them.
Please note: Employees may be employed on a permanent, casual or fixed term basis.
Which employees are not eligible for the JobMaker Hiring Credit?
Some employees will not be eligible for the JobMaker Hiring Credit. These include:
- Employees under 16 or over 35 at the commencement of their employment
- Employees that have worked less than 20 hours per week (on average), for the weeks employed during a reporting period (they will be ineligible for that period)
- Employees for whom the employer is also receiving a wage subsidy under another Commonwealth program e.g. the Boosting Apprenticeship Commencements wage subsidy, the Supporting Apprentices and Trainees subsidy or the Australian Apprentice Wage Subsidy Trial
- Employees that another employer is claiming the JobMaker Hiring Credit
How do I register for the JobMaker Hiring Credit?
Registrations will open through ATO online services from 7 December 2020. Employers do not need to be registered at the time that they hire an employee in order to be eligible. Registration can occur before a claim is made for the JobMaker Hiring Credit. Employers can begin to submit claims for the JobMaker Hiring Credit from 1 February 2021 (for new jobs created in the first reporting period of 7 October 2020 to 6 January 2021)
Can I receive the JobMaker Hiring Credit for any existing employees?
No, you can only claim for those who were newly employed on or after 7 October 2020.
When can Australian businesses begin accessing the JobMaker Hiring Credit?
Australian businesses will be able to begin accessing the JobMaker Hiring Credit from 7 October 2020. Information source from this article: budget.gov.au. View the official fact sheet here.