Accounting & Tax

JobMaker Hiring Credit: What You Need to Know

JobMaker Hiring Credit - what you need to know

The JobMaker hiring credit incentivizes Australian businesses to hire new young employees in response to the economic impact of the COVID-19 pandemic. Here’s what you need to know about JobMaker.

The JobMaker hiring credit is an initiative designed to provide employment opportunities to young job seekers by incentivizing businesses to take on additional employees. Launched in response to the economic impact of the COVID-19 pandemic, JobMaker is intended to expand the number of job opportunities available to young people during the economic recovery period.

Employers that create new jobs will be able to claim the JobMaker benefit when they hire an eligible young person, defined as an individual between 16 and 35 years old, between October 2020 and October 2021. The Australian Government expects that roughly 450,000 new positions will be made available to young people due to JobMaker.

What is JobMaker, though, and which employers are entitled to claim the JobMaker hiring credit?

What is JobMaker?

In simple terms, JobMaker is an initiative that allows employers to claim a hiring credit for hiring eligible individuals during the JobMaker period. JobMaker is intended for both existing businesses and new businesses that meet eligibility requirements.

The JobMaker program creates new jobs, improves the ease with which new and existing businesses can grow, and supports economic activity.

How Much is JobMaker Worth?

The JobMaker hiring credit allows eligible employers to claim $200 per week for each new employee hired during the JobMaker program period aged between 16 and 29. Employers that hire new employees between the ages of 30 and 35 are able to claim $100 per week.

The total amount that can be claimed through JobMaker for employees that meet the eligibility requirements is $10,400 for employees between the ages of 16 and 29, or $5,200 for employees that are aged between 30 and 35.

The JobMaker initiative is relatively flexible — new jobs created up until the end date of the JobMaker program on the 6th October 2021 will allow employers to claim the JobMaker hiring credit for up to 12 months after the position is created. An employer that hires an eligible individual on October 5th 2021, for example, will be able to claim the JobMaker hiring credit until October 2022.

Employers that participate in the JobMaker program will claim the JobMaker hiring credit from the ATO on a quarterly basis in arrears from Feb 1, 2021.

JobMaker Eligibility

    In order to qualify for the JobMaker scheme, positions created by employers must meet additionality criteria. The Australian Government outlines specific criteria that defines a job as additional. These criteria dictate that:

  • The total employee headcount of the business claiming JobMaker must increase from the reference date of September 30 2020
  • The payroll of the business claiming JobMaker must increase in comparison to a three-month baseline period
    It’s important to note that the total JobMaker hiring credit claim made by a business cannot exceed the total increase in payroll expenses for the reporting period. Baseline values for employers claiming JobMaker are determined based on:

  • Total employee headcount on September 30, 2020
  • Total payroll over a three-month period leading up to and including October 6, 2020

Which Employers are Eligible for JobMaker?

    Employers claiming the JobMaker hiring credit must meet a range of eligibility requirements. Businesses claiming JobMaker must:

  • Possess an Australian Business Number (ABN)
  • Remain current with all tax lodgement obligations
  • Be registered for Pay as You Go (PAYG) withholding and report through Single Touch Payroll (STP)
  • Meet the additionality requirements outlined above
  • Claim the JobMaker hiring credit in respect of an eligible employee
  • Maintain highly accurate records of all paid hours worked by the employee that the hiring credit is claimed for

Businesses that are hiring a first employee are able to claim the JobMaker for any new eligible employees hired during the JobMaker program period if they meet the eligibility requirements. Employers that are currently claiming the JobMaker payment are not eligible for the JobMaker hiring credit.

Which Employees are Eligible for JobMaker?

    Employers must ensure that new employees meet a range of eligibility requirements. In order to meet eligibility requirements, new employees must:

  • Be aged between 16 and 35 years of age at the time they are hired by the business
  • Work at least 20 paid hours per week on average during the period an employer claims the JobMaker hiring credit
  • Have received the JobSeeker Payment, Youth Allowance, or Parenting Payment for a minimum of 28 consecutive days in the 84 days leading up to hiring
  • Remain employed for the duration of the period in which the employer claims the JobMaker hiring credit
  • Be employed on a permanent, casual, or fixed-term basis

It’s not possible to claim the JobMaker hiring credit in respect to an employee for whom the employer is already receiving a wage subsidy, such as the Boosting Apprenticeship Commencements wage subsidy.

How are JobMaker Claims Made?

To claim the JobMaker payment employers must first register for the JobMaker Hiring Credit scheme. Registration is accessed via ATO online services. It’s important to note that employers don’t need to be registered for JobMaker when they hire an employee eligible for the scheme — it’s possible to retroactively register for JobMaker for an employee hired at any point during the program duration.

After registering for JobMaker, employers must identify and nominate eligible employees through STP software and maintain up-to-date reports. Claims for JobMaker can be made on a quarterly basis from February 1 2021 through the ATO online portal, or through a registered tax or BAS agent.

JobMaker Reporting

    Reporting for the JobMaker hiring credit is performed through Single Touch Payroll (STP). When reporting, employers must include the following details:

  • Tax File Number (TFN)
  • Date of birth and full name
  • The start date of the employee within the JobMaker period
  • The end date of the employee within the JobMaker period if applicable
  • Whether or not the employee an employer is claiming the JobMaker hiring credit meets the paid hours requirement of 20 paid hours per work

The details outlined above are entered into the JobMaker claim form and used to calculate the employer’s claim. JobMaker claims can’t be made until the details provided to the ATO by the employer have been submitted through STP.

Key Takeaways

    The JobMaker hiring credit is relatively straightforward, but there are a number of important points to consider when claiming JobMaker.

  • The employer’s payroll and employee headcount must remain higher than the baseline headcount and payroll set at September 30 during the entire claim period in order for the employer to remain eligible.
  • JobMaker hiring credits can only be claimed by employers for up to 12 months for each new job created.
  • The total JobMaker hiring credit claimed by an employer cannot exceed the total amount of increase in payroll during the reporting period

Determining whether your business qualifies for the JobMaker hiring credit can be complicated. If you’re considering claiming the JobMaker hiring credit for your business or are unsure of the implications of JobMaker when starting a new business, reach out to Fullstack for comprehensive guidance today.

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