The recent passing of federal legislation to establish the JobMaker Hiring Credit scheme means that employers who create new jobs and hire new staff to fill those roles will benefit from a Hiring Credit where they meet the eligibility criteria.
This legislation is in direct response to the impact Coronavirus has had on the Australian jobs market with the intention of helping under 35 year old’s move back into the workforce. The Government’s reason behind limiting the JobMaker Hiring Credit to this age group is due to their research indicating youth employment is what has been hit the hardest during the pandemic. They are hoping that this scheme will incentivize businesses to bring youth back into the workforce.
The scheme will operate from the 7th October 2020 and will have a maximum claim period of 12 months from the employment start date of the eligible employee up to 6th October 2021.
Below is a summary of the eligibility criteria that must be met to access the JobMaker Hiring Credit Scheme.
Are you an eligible employer?
If you carry on a business in Australia or are a non-profit body pursuing its objectives principally in Australia and hold a valid Australian Business Number (ABN), are up to date with your tax lodgment obligations (including income tax and GST), are registered for PAYG Withholding, report to the ATO through Single Touch Payroll (STP), and are not claiming JobKeeper, you can register with the ATO as an eligible employer. You must also keep adequate records of the hours worked and paid for employees you are claiming for.
Is your employee eligible?
To be eligible the employee must have commenced employment/will commence employment with you between the period of 7 October 2020 to 6 October 2021 in an ‘additional job’ created by your business.
Further, they must be between the ages of 16 to 35 years old and have been in receipt of either the JobSeeker Payment, Youth Allowance (excluding full-time study or apprentice support) or Parenting Payment for at least one of the three months before they were hired by you.
Lastly, the employees are required to work a minimum of 20 Hours per week.
There are some exclusions in relation to who can be an eligible employee. In general this is limited to related parties of the business owner (eg. a relative of a sole trader business or an individual partnership will be excluded as will an individual employed by a Trust where they are a beneficiary or a relative of the beneficiary or an individual employed by a Company where they are a shareholder or director or a relative of a shareholder or director of the company) or where the individual has had a previous relationship with the employer (eg. contractor within 6 months prior to 6 October 2020).
What constitutes an additional job?
This condition stipulates that the total headcount of the business must increase with the new hire and that the payroll costs incurred by the business increases from the 3 months ending 30 September 2020.
The total headcount increase and payroll cost increase will therefore form the baseline values that the employer must take into account in assessing satisfaction of this condition. The legislation provides more detail in relation to how this assessment works over the 12 month claim period.
How do you register and claim?
Registrations for the scheme will open via ATO online services from 7th December 2020 with claims able to be submitted from 1st February 2021. This first claim will cover the period from 7 October 2020 to 6 January 2021.
The amount you are able to claim for each eligible employee is tiered based on their age. The amount is $200 per week for employees aged 16 to 29 years old and $100 per week for employees aged 30 to 35 years old. Payments will be made by the ATO on a quarterly basis.
What about new businesses established after 30 September 2020?
If you are a new business that did not have any employees at 30 September, you can still take advantage of this scheme by claiming eligible employees that you employ from 7th October, excluding your first employee hired.
Please note though that only one type of Commonwealth Government subsidy can be claimed for each employee. If you are claiming any other subsidy, such as the Supporting Apprentices and Trainees Wage Subsidy or the Department of Education, Skills and Employment wage subsidy, then you are ineligible from claiming the Hiring Credit as well.
For a detailed outline of the scheme and its eligibility criteria the Government have created a Fact Sheet that you can access here. Further, you can contact your Davidsons team member direct or email us at firstname.lastname@example.org.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.