The JobMaker Hiring Credit was brought out in the recent Federal Budget with the aim of accelerating growth in the employment of younger people during the COVID-19-19 recovery. This aims to improve their economic, health, and social outcomes and reduce the scarring from long term unemployment.
From 7th October 2020, eligible employers will be able to claim $200 a week for each additional employee they hire aged 16 to 29 years old; and $100 a week for each eligible employee aged 30 to 35 years old. New jobs created until 6th October 2021 will attract the JobMaker Hiring Credit for up to 12 months from the date the new position is created.
To be eligible, the employee must have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one of the previous three months at the time of hiring. The JobMaker Hiring Credit will be claimed quarterly in arrears by the employer from the Australian Taxation Office (ATO) from 1st February 2021. Employers will need to report quarterly that they meet the eligibility criteria.
The Additionality Criteria
To attract the JobMaker Hiring Credit, the employee must be in an additional job created from 7th October 2020. To demonstrate that the job is additional, specific criteria must be met. The additionality criteria require that there be 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.
The amount of the hiring credit claim cannot exceed the amount of the increase in payroll for the reporting period. Total employee headcount on 30 September 2020 and payroll in the three months to 30 September 2020 represent the baseline values for the employer. The baseline headcount will be adjusted in the second year of the program to ensure an employer can only receive the JobMaker Hiring Credit for 12 months for each additional position created.
Employers are eligible to receive the JobMaker Hiring Credit if they:
- have an Australian Business Number (ABN)
- are up to date with tax lodgement obligations
- are registered for Pay As You Go (PAYG) withholding
- are reporting through Single Touch Payroll (STP)
- meet the additionality criteria
- are claiming in respect of an eligible employee and
- have kept adequate records of the paid hours worked by the employee they are claiming the hiring credit in respect of.
Newly Established Businesses
Newly established businesses and businesses with no employees at the reference date of 30 September 2020 can claim the JobMaker Hiring Credit where they meet the criteria. The minimum baseline headcount is one, so employers who had no employees at 30 September 2020 or who were created after this reference date will not be eligible for the first employee hired, but will be eligible for the second and subsequent eligible hires.
If the JobMaker credit is something you feel your business is eligible for do not hesitate in getting in contact with your local Registered Tax Agent at R T Accounting & Taxation Services, and a member of our team will get in contact with you.