The JobMaker Scheme

The Economic Recovery Package (JobMaker Hiring Credit) Amendment Bill 2020 received Royal Assent on 13 November 2020. Final Rules governing JobMaker will be released after public consultation, therefore the information provided in this document is based on the draft rules.

The JobMaker scheme will provide employer entities with a JobMaker hiring credit payment for the first 12 months employment of new eligible employees hired between 7 October 2020 and 6 October 2021. Following are the payment rates for eligible employees, note that the rate is based on their age when they commenced employment:
 
  • $200 per week for eligible employees aged 16–29
  • $100 per week for eligible employees aged 30–35

Employer entities receiving JobKeeper in any of the JobMaker periods will be ineligible for JobMaker payments for that same period. At this stage, JobKeeper scheme ceases on 28 March 2021.


Summary

The JobMaker hiring credit payment basically applies to the first 12 months of a new eligible employee, therefore a new employee who commenced work on 7 October 2020 will attract the payment until 6 October 2021, compared with a new employee commencing on 6 October 2021 who would be eligible for the payment until 6 October 2022.

The JobMaker scheme commences on 7 October 2020 and ends on 6 October 2022, with each period being three months. Accordingly, each of the following is a JobMaker period:

 
Period Dates
1 7 October 2020 to 6 January 2021
2 7 January 2021 to 6 April 2021
3 7 April 2021 to 6 July 2021
4 7 July 2021 to 6 October 2021
5 7 October 2021 to 6 January 2022
6 7 January 2022 to 6 April 2022
7 7 April 2022 to 6 July 2022
8 7 July 2022 to 6 October 2022
 
The ATO will administer the JobMaker hiring credit payment and entities will be required to supply information through the single touch payroll regime.
 

Which entities are eligible and how does it work?

Businesses, not for profits and certain deductible gift recipients that have an ABN and are registered for PAYG withholding may be eligible to participate in the JobMaker Scheme. The entity must also be up to date with its tax lodgements (income tax returns and BAS’) over the last two years and must not have any outstanding lodgements. Excluded entities are the same as that for JobKeeper.

In addition to the above, the employer must pass both of the following requirements:
 
  • Employer must have a headcount increase – the employer must hire additional eligible employee(s) during the period as compared to 30 September 2020 (base line headcount) for periods 1 – 4. For periods 5 – 8, employers will need to increase the base line headcount based on the method set out in the rules and have an increase as compared to the adjusted base line headcount. Note that if a qualifying entity has no employees at 7 October 2020, the JobMaker hiring credit payment will not be available for the first employee, only on second and subsequent new eligible employees.
  • Employer must have a payroll increase – the employer must show an increase in payroll spend during the relevant period as compared to a similar period prior to 6 October 2020 (the baseline amount).
Eligible entities will need to register with the ATO by the end of the period in which they elect to participate i.e. if an employer wishes to participate in Period 1, they will need to register by 6 January 2021.

Example: Headcount increase - first four periods

TBT Co has elected to participate in the JobMaker scheme. To be entitled to the JobMaker Hiring Credit payment for the first JobMaker period (between 7 October 2020 and 6 January 2021), TBT Co must have a headcount increase. At the end of 30 September 2020, TBT Co had 8 employees. Therefore, TBT Co’s baseline headcount is eight.

During the first JobMaker period, one of the eight employees ceased employment and TBT Co employed three new employees during the period. This meant that at the end of the last day in period one, TBT Co had 10 employees.

TBT Co has had a headcount increase for the period because at the end of the last day of the period, its headcount of 10 exceeds its 30 September 2020 headcount of eight. TBT Co’s headcount increase amount for the first period is two.
 

Example: Payroll increase

TBT Co operates a fortnightly payroll and there were seven fortnightly pay cycles during the first JobMaker period between 7 October 2020 and 6 January 2021. During this period, TBT Co’s total payroll amount was $102,500.

In the seven fortnightly periods prior to 6 October 2020, TBT Co’s total payroll amount was $88,300. This is their baseline amount.

Since TBT Co had an increase in their payroll amounts, they have met the condition. The payroll increase amount is $14,200.
 
 

Once you have established whether the entity has met the conditions above, the payment rate is worked out and limited to the lesser of:
 
  • The headcount amount – this is essentially the number of days an eligible employee was hired for during the JobMaker period multiplied by the payment rate (i.e. $200 or $100 depending on age at employment commencement). However, the number of days is capped at the number of days in the period multiplied by the headcount increase amount. Using TBT Co’s example above - even if the 3 new employees were hired for the entire period i.e. 276 days (3 x 92 days), the maximum TBT would be able to claim is based on 184 days (2 x 92 days) as that is how much their headcount actually increased by. The amount of the claim would then depend on the age of the employees.
  • The payroll increase amount – using the example above, $14,200.
To ensure employers do not have to do these complex calculations themselves, it is expected that the ATO systems will automatically calculate this for employers.

Eligible Employees – who is eligible?

The employee needs to:
 
  • have commenced employment between 7 October 2020 and 6 October 2021
  • be between 16 and 35 years of age when they commence employment
  • have worked for an average of 20 hours per week
  • have been in receipt of the parenting payment, youth allowance (exceptions may apply) or JobSeeker payment for at least 28 days of the 84 days before commencing employment
  • not be an excluded individual such as:
    • a sole trader or a relative of a sole trader
    • a partner or a relative of a partner in a partnership
    • a trustee or beneficiary of a trust or their relative, or
    • a shareholder or director of a company or their relative
    • An individual that was previously a contractor or subcontractor to the employer
  • meet additional notification requirements
As mentioned previously, the employer can only claim the hiring credit for a maximum of 12 months for each eligible employee from the time they commence employment. After 12 months, the employer can no longer receive payments in relation to that employee, but can continue to qualify for payments in relation to a further additional eligible employee.

Conclusion

We will continue to keep you up to date on the finalisation of these draft rules. We expect the ATO to provide extensions in relation to the registration process for the scheme if the final rules are not released soon.

Lastly, like JobKeeper, the devil will be in the detail so please make sure you speak to your Moore Australia advisor if you have any queries.