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Taking a Closer Look at the JobMaker Scheme
The JobMaker scheme was announced in the 2020/21 Federal Budget and follows on from a raft of changes and schemes brought in by the federal Government to reduce the impact COVID-19 has had on the Australian economy – particularly on employment. While we covered it briefly in our Federal Budget Update, now that some time has passed it is now a little clearer how JobMaker applies to businesses in a practical sense. So, let’s take a closer look at JobMaker and its eligibility criteria, as well as some other considerations to be made.
JobMaker: A Review
Overall, the JobMaker scheme aims to incentivise employers to create jobs and employ more staff by offering them credits to partially cover wages. The credit provides $200 per week for new eligible employees aged between 16 and 29; and $100 per week for those aged between 30 and 35. The credit is available for businesses who are creating jobs between 7 October 2020 and 6 October 2021 (i.e. not simply replacing an employee who has left the business), and payments are made from the employee’s start date, going for 12 months.
The JobMaker credit will be claimed in arrears on a quarterly basis by the employer to support wage costs, so this payment isn’t passed onto the employee. The ATO will begin making JobMaker payments on these terms from 1 February 2021.
JobMaker Eligibility Tests
In order to qualify for JobMaker credits, three separate eligibility tests must be passed.
- In order to satisfy the tests for JobMaker, employers must:
- Have an ABN;
- Be completely up to date with their tax lodgements and obligations;
- Be PAYG-registered and report through Single Touch Payroll (STP);
- Keep appropriate and sufficiently detailed records regarding the paid hours worked by the employee/s for whom they are claiming the credit;
- Ensure that no other businesses are claiming JobMaker credits for the same employee; and
- Ensure that they are not claiming other government assistance for that employee, e.g. JobKeeper, apprenticeship subsidy.
- As far as employees are concerned:
- They must have been in receipt of JobSeeker, Youth Allowance or Parenting payment for a minimum of one month out of the three before being hired;
- They must be aged between 16 and 35 at the time they commence employment;
- They must work a minimum of 20 hours per week for the weeks employed in the first period claimed;
- Work must commence between 7 October 2020 and 6 October 2021; and
- They cannot have worked for the employer previously.
- A further “Additionality Test” must be passed by the employer for each reporting period:
- The employer’s total headcount on the final day of the reporting period must have increased by a minimum of one – firstly compared to 30 September 2020, and then to the previous reporting period; and
- The employer’s total payroll for the reporting period must have increased initially compared to the September quarter 2020, and then to each previous reporting period for which JobMaker credits are being claimed.
There are some additional things to consider when looking at how JobMaker may apply to your business:
- The following do not qualify for JobMaker: businesses in liquidation; foreign Government entities (except resident entities); Australian Government agencies/entities; and institutions subject to the bank levy.
- The baseline for your “additionality” tests for payroll and headcount starts from the new employee’s start date
- Assessment Example: If you hire an employee in October (that’s eligible per the notes in part 2 of the above section), your baseline is set at October. Then, if you were to take on another employee in January 2021, your headcount is measured from December, and your payroll is measured from the December quarter.
- Employers will need to re-assess their eligibility each month before claiming JobMaker.
- If a business didn’t have any employees as of 30 September 2020, JobMaker cannot be claimed for a first employee hired in, say, November 2020. That said, JobMaker can be claimed for any further eligible employees hired between now and 6 October 2021.
Note that the information in this article is subject to the passage of legislation and is correct as of 20 November 2020. Should there be any changes to the scope, eligibility criteria or other details of JobMaker, we will update this article accordingly.
It can prove increasingly difficult to navigate the COVID-19 stimulus measures and keep on top of the reporting obligations that go with it. If you’re unsure as to your business’ eligibility to receive the JobMaker credit, get in touch with McKinley Plowman today on 08 9301 2200 or visit our website at www.mckinleyplowman.com.au/contact-us/.
You can find more information on JobMaker on the ATO’s website HERE.
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