Employers now have more incentive to employ workers under 35! The JobMaker Hiring credit legislation has now been passed into law!
This credit was part of the 2020-21 Budget, which will operate until 6 October 2022. It is designed to improve the prospects of young individuals getting employment following the devastating impact of COVID-19 on the labour market.
The scheme will be backdated to commence on 7 October 2020 and provide eligible employers with the following payments for up to 12 months for new jobs created for which they hire the following young workers:
- $200 a week for hiring a worker aged 16 to 29 for at least 20 hours a week and
- $100 a week for those aged 30 to 35.
Although the scheme is slated to run for just 12 months, that period is the hiring period – not the payment period.
Eligible employers who hire an eligible employee as late as the last day of the scheme (6 October 2021), may be eligible for hiring credits for the subsequent 12 months until 6 October 2022.
The criteria are broad (e.g. having an ABN, being registered for PAYG withholding, being up-to-date with lodgement obligations, reporting through STP), however some employers are specifically excluded:
- employers who are claiming JobKeeper
- entities in liquidation or who have entered bankruptcy
- commonwealth, state, and local government agencies (and entities wholly owned by these agencies)
- employers subject to the major bank levy
- sovereign entities (except those who are resident Australian entities owned by a sovereign entity.
Key to the scheme is that employers must have hired additional eligible employees.
The additional criteria for the first six months of JobMaker requires that there is an increase in:
- the business’ total employee headcount (minimum of one additional employee) from the reference date of 30 September 2020; and
- the payroll of the business for the reporting period, as compared to the three-months to 30 September 2020.
Treasury 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.
These are those who commenced employment 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, the worker must have met the pre-employment condition which requires that for at least 28 of the 84 days (i.e. for 4 out of 12 weeks) immediately before the commencement of employment of the individual, the individual was receiving 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.
We note that the new worker must be in a genuine employment relationship. For example, ‘non-arms 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.
If you have hired new employees from October 2020 or are planning to do so in the next 12 months, ask your bookkeeper or accountant about how to apply for JobMaker.
This information is provided by Australian Bookkeepers Network Pty Ltd