JobMaker … will it really ‘make’ jobs?
As Australian businesses are being weaned off the JobKeeper scheme on 28 March 2021, the remaining support from the Federal Government to support employment is the JobMaker Hiring Credit scheme.
Just in case you have not been across the detail, the high-level features of this scheme are as follows:
the Objective of jobmaker:
- Create new jobs for younger job seekers.
2. The employee must:
(i) Commence employment between 7 October 2020 and 6 October 2021;
(ii) Be aged between 16 to 35 years old at the time they are hired;
(iii) Meet the ‘pre-employment’ condition for the receipt of JobSeeker, Youth Allowance, or Parenting Payment for at least 4 weeks of the 12 weeks before they are hired; and
(iv) Have worked an average of at least 20 paid hours per week.
3. The employer must:
(i) Have an ABN;
(ii) Be registered for PAYG Withholding;
(iii) Be up-to-date with their income tax and GST obligations;
(iv) Be reporting through Single Touch Payroll (STP); and
(v) Not be claiming JobKeeper payments.
4. Employers that are government entities, foreign incorporated sovereign entities, subject to the Major Bank Levy, and entities that have entered bankruptcy or liquidation are excluded from the scheme.
5. The employer must be able to demonstrate that a new employee will increase the overall employee headcount and payroll amount of the business, compared with the ‘baseline headcount’ and ‘baseline payroll amount’ at the reference date for each JobMaker period (this will keep moving over the life of the scheme).
6. An eligible employer can claim a credit of either $200 (for an employee aged 16 to 29) or $100 (for an employee aged 30 to 35) per week for each eligible employee for up to 12 months.
7. The credits are calculated on a quarterly basis for each JobMaker period over 8 periods. The first JobMaker period is from 7 October 2020 to 6 January 2021. The last JobMaker period is from 7 July 2022 to 6 October 2022.
8. In the first year of the scheme from 7 October 2020 to 7 October 2021, to qualify, you will need to satisfy the following conditions:
(i) Your head count on the last day of the relevant JobMaker period exceeds the baseline head count at 30 September 2020; and
(ii) Your payroll in the relevant JobMaker period exceeds the baseline payroll for the quarter up to 6 October 2020.
The baseline head count will be adjusted in the second year of the scheme from October 2021.
9. You can create your own employee notice or use the ATO prescribed report for your claims for all eligible employees. The JobMaker periods and key dates for nominating eligible employees in STP are as follows:
10. The payments will be made every 3 months in arrears.
11. All claims must be made online through one of the ATO portals.
Anecdotally, while the JobMaker credits do add up over time, it is unlikely that struggling businesses, especially the smaller ones, would be in the position to hire new staff due to the gap between the actual wages and the associated credits. If anything, these businesses are scrambling to cut costs to stay afloat, rather than putting on more staff.
To that end, it remains to be seen as to whether the quantum of the credits is sufficient to stimulate employment as the Government has expected.
Important disclaimer: No person should rely on the contents of this article without first obtaining advice from a qualified professional person. This article is provided on the terms and understanding that the author and BDO Services Pty Ltd are not responsible for the results of any actions taken on the basis of information in this article, nor for any error in or omission from this article. The article is provided for general information only and the author and BDO Services Pty Ltd are not engaged to render professional advice or services through this article. The author and BDO Services Pty Ltd expressly disclaim all and any liability and responsibility to any person in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this article.