In the recent federal budget, the government announced a new incentive for businesses to employ additional young job seekers called the JobMaker Hiring Credit.

The current status is that draft rules are being reviewed and legislation is yet to be passed. Please note that the details below refer to the draft rules and the final legislation may differ.

Scheme Intention

The scheme aims to increase employment through businesses hiring new employees and increasing headcount. As a result, there are rules about not hiring family members or contractors as employees and rules to ensure the business’s total staff numbers increase.

What is proposed

The JobMaker credit is a subsidy for employers who hire staff for ‘each new job’ the business creates.

The subsidy is

  • $200 per week for each eligible employee aged 16 to 29
  • $100 per week for each eligible employee aged 30 to 35.

Who is an eligible employee?

Eligible employees are those who:

  • commence employment between 7 October 2020 and 6 October 2021,
  • are aged between 16 to 35 years at the time they are hired,
  • have previously received the JobSeeker payment, Youth Allowance or Parenting Payment for at least one month out of the three months prior to when they are hired.
  • Have worked for a minimum of 20 hours per week averaged over a quarter in the job that the JobMaker credit is being claimed.

Contractors and Prior Employees or Contractors and Family Members are Ineligible

The draft rules state that the employee must be engaged as an actual employee rather than a contractor and must not have been engaged by the employer as a contractor or subcontractor in a substantially similar role at any time between 6 April 2020 and 6 October 2020.

The draft rules also note that relatives of a sole trader, partner in a partnership, trustee or beneficiary of a trust, or shareholder or director of a company will not be considered as an eligible additional employee for the credit.

What dates does it apply and how long can you receive the credit?

As stated above, the eligible employee must commence employment between 7 October 2020 and 6 October 2021.

The credit applies for a maximum claim period of 12 months from the employee’s employment start date.

There are eight JobMaker periods in which employers can lodge claims for eligible employees, with the first period being 7 October 2020 to 6 January 2021 and the eighth and final quarter applicable from 7 July 2022 to 6 October 2022.

General Employer Obligations

Employers must

  • have an Australian Business Number (ABN),
  • are registered for Pay-As-You-Go (PAYG) withholding,
  • are up to date with relevant income tax and goods and services tax (GST) lodgment obligations,
  • report through Single Touch Payroll, and
  • not be claiming JobKeeper payments.

This means that sole traders who are not already employing staff may miss out, as they may not be reporting any wages through single touch payroll. This is an area of review by the Government and maychange.

More Information

See these links for ATO details and a Federal Government factsheet.

https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/jobmaker-hiring-credit-passes-parliament

https://budget.gov.au/2020-21/content/factsheets/download/jobmaker_hiring_credit_factsheet.pdf

Summary

The JobMaker credit is an attractive proposition but the need to prove a headcount increase compared to a prior period may be challenging. This is especially the case  for businesses that have constantly changing staff numbers as staff resign in the ordinary course of business. For smaller businesses, the credit’s attractiveness still needs to be weighed up against the most suitable applicant and whether the applicant will be eligible for the credit.

The uncertainty over the rules is also an issue, given the JobMaker periods have already commenced but the rules have not been finalised.