JobMaker COVID-19 2021 Stimulus measures

JobMaker Hiring Credit: your complete guide

by Robyn Jacobson, CTA, Senior Advocate

   

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Registrations are now open for the Federal Government’s JobMaker Hiring Credit scheme (JobMaker), an incentive for Australian businesses to employ job seekers aged between 16–35 years. Eligible employers can access JobMaker for each eligible additional employee they hire between 7 October 2020 and 6 October 2021.

The JobMaker Hiring Credit (JobMaker HC) legislative framework is contained in:

It’s crucial that tax practitioners understand the requirements of applying for JobMaker and the benefits their clients may be entitled to under the scheme.

To assist The Tax Institute’s members in quickly and correctly understanding JobMaker, I have developed the below article in cooperation with the ATO. It breaks down the need-to-know facts of JobMaker, and provides a useful example so you can see at a glance how the scheme applies in practice.

Key points

  • The new JobMaker HC payment scheme is an incentive program to employ additional young job seekers.
  • JobMaker HC payments are available for new jobs created between 7 October 2020 and 6 October 2021 (inclusive).
  • The JobMaker program runs from 7 October 2020 to 6 October 2022.
  • Claims can be made for each additional eligible employee up to a maximum of 12 months from the start of their employment.
  • Employers claim JobMaker HC payments in arrears every 3 months from 1 February 2021 to 31 January 2023.
  • The employer must increase their headcount and their payroll.
  • Employers cannot claim JobKeeper1 and JobMaker at the same time.
  • Employers have regular JobMaker reporting obligations. Single Touch Payroll (STP) is the only means of reporting JobMaker information to the ATO.
  • Employers must register for a JobMaker period at any time before the end of the claim period.2
  • Claims can be made only during the claim period. There are strict dates and there is no discretion to extend the claim period.

JobMaker payment rates

TABLE 1: JobMaker payment rates

Age of eligible employee3

JobMaker rate per eligible employee

16–29 years old

$200 per week (higher rate)

30–35 years old

$100 per week (lower rate)

JobMaker dates

TABLE 2: JobMaker periods and deadlines

No.

JobMaker period
(column A)

Registration deadline
(column B)

STP JobMaker reporting deadline (column C)

Claim period
(column D)

1

7 Oct 2020–6 Jan 2021

30 Apr 2021
(can register from 6 Dec 2020)

27 Apr 2021

1 Feb 2021–30 Apr 2021

2

7 Jan 2021–6 Apr 2021

31 Jul 2021

28 Jul 2021

1 May 2021–31 Jul 2021

3

7 Apr 2021–6 Jul 2021

31 Oct 2021

28 Oct 2021

1 Aug 2021–31 Oct 2021

4

7 Jul 2021–6 Oct 2021

31 Jan 2022

28 Jan 2022

1 Nov 2021–31 Jan 2022

5

7 Oct 2021–6 Jan 2022

30 Apr 2022

27 Apr 2022

1 Feb 2022–30 Apr 2022

6

7 Jan 2022–6 Apr 2022

31 Jul 2022

28 Jul 2022

1 May 2022–31 Jul 2022

7

7 Apr 2022–6 Jul 2022

31 Oct 2022

28 Oct 2022

1 Aug 2022–31 Oct 2022

8

7 Jul 2022–6 Oct 2022

31 Jan 2023

28 Jan 2023

1 Nov 2022–31 Jan 2023

Notes on JobMaker periods and deadlines

  1. Employers can register at any time before the end of a JobMaker claim period.
  2. There is no entitlement to payments for a JobMaker claim period if an entity registers after that period closes.
  3. Employers must provide employee information for the JobMaker period (column A) before the STP JobMaker reporting deadline (column C). A JobMaker HC payment claim cannot be made until it is provided to the ATO through STP.
  4. The information provided through STP is populated in the claim form within 72 hours. This accounts for the three-day buffer from the STP JobMaker reporting deadline (column C) to the end of the claim period (column D) for the JobMaker period (column B).
  5. Reporting JobMaker information through STP does not impact on the entity’s ordinary STP reporting obligations.
  6. While entities have nearly 4 months to claim JobMaker, the earlier an entity reports through STP, the earlier the claim can be made and processed, and the sooner payment can be made.
  7. Claims can be made only during the claim period. These are strict dates and there is no discretion to extend the claim period.
  8. Claims cannot be amended after the claim period has ended.

Eligibility for JobMaker

Qualifying entities

An entity (the employer) is eligible for JobMaker for a JobMaker period if it meets all the following conditions:

  1. The period is a JobMaker period.
  2. The employer elects to participate in the JobMaker program.
  3. The employer carries on business in Australia, is a non-profit body that pursues its objectives primarily in Australia or is a deductible gift recipient that meets certain additional conditions (see s 28(1)(a)(iii) of the JM Rules.
  4. From the time the employer chooses to participate in the JobMaker program, the employer has an ABN and is registered for PAYG withholding.
  5. At the time of the claim, the employer does not have any outstanding income tax return or business activity statement lodgments that were required to be lodged in the two years before the end of the JobMaker period. (This allows the entity to rectify any lodgments that were outstanding at the end of the JobMaker period before they claim the JobMaker HC payment.)
  6. The employer is not an excluded entity, i.e. it is not:
    • Subject to the Major Bank Levy (MBL) (nor is a member of a consolidated group of which the employer is a member and one of those entities is subject to the MBL) before 1 October 2020.
    • An Australian Government agency, local governing body or a wholly-owned entity of those.
    • A sovereign entity (i.e. a body politic of a foreign country or foreign government agency). A wholly-owned resident subsidiary of such a body politic may however be a qualifying entity.
    • At any time in the JobMaker period subject to the appointment of a provisional liquidator or liquidator or a trustee in bankruptcy.

Integrity rules

Aside from the general integrity rule in s 19 of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020, even if an entity qualifies for JobMaker, it may be disqualified from the program under s 29 of the JM Rules if it:

  • terminates the employment, or reduces the hours, of an employee; and
  • the termination or reduction is done as part of a scheme for the sole or dominant purpose of the entity obtaining, or increasing the amount, of a JobMaker HC payment.

Eligible additional employees

An individual is an eligible additional employee for a JobMaker period if they:

  1. Are employed by the entity during the period.
  2. Commenced employment with the entity between 7 October 2020 and 6 October 2021 (inclusive).
  3. At the time they commenced employment with the entity, were 16 to 35 years of age (inclusive).
  4. Worked, or have been paid for, an average of 20 hours per week for each whole week they were employed by the entity during the period.
  5. Received at least one of the following income support payments under the Social Security Act 1991 for at least 28 consecutive days in the 84 days immediately preceding the commencement of employment (i.e. 4 out of 12 weeks):
    • Parenting Payment;
    • Youth Allowance (Other); or
    • JobSeeker Payment.
  6. Have given a notice to the entity stating that they satisfy the above requirements.
  7. Are not already receiving a wage from another employer that is subsidised by the JobMaker HC payment in the period.
  8. Are not excluded (see Table 3 below).

TABLE 3: Excluded individuals

Circumstance

Exclusion

Entity is a sole trader

Individual is a relative of the sole trader.

Entity is a partnership

Individual is a partner in the partnership or a close associate of a partner in the partnership.

Entity is a trust (other than a widely held unit trust)

Individual is a trustee or beneficiary of the trust, or a close associate of a trustee or beneficiary of the trust.

Entity is a company (other than a widely held company)

Individual is a shareholder in or a director of the company, or a close associate of a shareholder in or a director of the company.

Recently engaged other than as an employee

The individual was engaged other than as an employee (e.g. as a contractor) to exercise powers, or perform functions or duties, for the entity at any time in the 6-month period ending on 6 October 2020 that are substantially similar to the powers exercised, or the functions or duties performed, by the individual as an employee of the entity.

Employed more than 12 months earlier

The individual commenced employment with the entity 12 months or more before the first day of the JobMaker period.

Calculating the JobMaker HC entitlement

To be entitled to a JobMaker HC payment, the employer must have a:

  • Headcount increase; and
  • Payroll increase.

The ATO will provide a downloadable calculator which will estimate the amount of the JobMaker HC for a period. This will assist employers in deciding whether to take on additional eligible employees. Employers need to provide the information outlined at the steps below by reporting it:

  1. at registration;
  2. by nominating eligible additional employees (through STP-enabled software); and
  3. as part of the JobMaker HC payment claim process.

TABLE 4: Steps to work out entitlement to a JobMaker HC payment

Step

Explanation

Step 1

JobMaker period

Select the JobMaker period (1 of 8 periods: see Table 2 above)

Step 2

Headcount

Baseline headcount: For the first four JobMaker periods (7 October 2020 to 6 October 2021), the number of employees employed by the entity at the end of 30 September 2020 is reported to the ATO at the time of registering. This figure is
pre-filled into the claim form. This figure does not change for the first year of the JobMaker program. The baseline headcount may be adjusted for the fifth and subsequent JobMaker periods.

At the time of the claim, report the total headcount at the end of the JobMaker period — this figure needs to be higher than the baseline headcount for the entity to be eligible.

Step 3

Payroll

Baseline payroll: The total payroll — which includes only certain amounts set out at s 32(3) of the JM Rules — for the reference period (broadly 3 months) that ends on or immediately before 6 October 2020 is reported to the ATO at the time of registering.

At the time of the claim, report the total payroll for the JobMaker period — this figure needs to be higher than the baseline payroll for the entity to be eligible.

Step 4

Employee days

At the time of the claim, report the total number of:

  • higher rate days — this is calculated by totalling the number of days that eligible additional employees aged 16–29 worked during the JobMaker period;
  • lower rate days — this is calculated by totalling the number of days that eligible additional employees aged 30–35 worked during the JobMaker period.

Step 5

Maximum payable days

This is determined by multiplying the increase in the headcount (from Step 2) by the number of days in the JobMaker period.

Step 6

Payable days remaining

This is determined by subtracting the number of higher rate days (from Step 4) from the maximum payable days (from Step 5).

Step 7

Lower rate days

This is determined by taking the lesser of the lower rate days (from Step 4) and the payable days remaining (from Step 6).4

Step 8

Uncapped claim amount

The higher rate claim amount is determined by multiplying the number of higher rate days (from Step 4) by $200 and dividing by 7.

The lower rate claim amount is determined by multiplying the number of lower rate days (from Step 7) by $100 and dividing by 7.

Step 9

Payroll cap

The total claim is the lesser of the uncapped claim amount (from Step 8) and the increase in the payroll (from Step 3).

EXAMPLE

Assume 10 additional eligible employees were employed for 90 days during the first JobMaker period. Their annual wage is $50,000 each. At the time of commencement of employment:

  • 6 are aged 16–29 years; and
  • 4 are aged 30–35 years.

Step

Explanation

Step 1

JobMaker period

JobMaker period 1: 7 October 2020 to 6 January 2021

Step 2

Headcount

Baseline headcount at 30 September 2020, provided at registration

Headcount at the end of the JobMaker period, provided at claim

Headcount increase

 30

40

10

Step 3

Payroll

Baseline payroll for period ending on or immediately before 6 October 2020, provided at registration

Payroll at the end of the JobMaker period, provided at claim

Payroll increase

$1,500,000

$1,625,000

$125,000

Step 4

Employee days

Higher rate days (employees aged 16–29): 6 employees × 90 days

Lower rate days (employees aged 30–35): 4 employees × 90 days

540

360

Step 5

Maximum payable days

Headcount increase (from Step 2

Number of days in the JobMaker period

Maximum payable days

10

92 ×

920

Step 6

Payable days remaining

Maximum payable days (from Step 5)

Number of higher rate days (from Step 4)

Payable days remaining

920

(540)

380

Step 7

Lower rate days

Lesser of:

Lower rate days (from Step 4)

Payable days remaining (from Step 6)

 

360

380

Step 8

Uncapped claim amount

Higher rate claim amount:

Number of higher rate days (from Step 4): 540 × $200/7

Lower rate claim amount:

Number of lower rate days (from Step 4): 360 × $100/7

 

$15,428.57

 

$5,142.86

Step 9

Payroll cap

Lesser of:

Uncapped claim amount (from Step 8)

Increase in payroll (from Step 3)

Estimated claim amount

 

$20,571.43

$125,000.00

$20,571.43

Further information

 

1 An entity cannot participate in the JobMaker program if it is entitled to receive a JobKeeper payment in respect of an individual for a JobKeeper fortnight that begins during the JobMaker period. There is no prohibition where a JobKeeper fortnight ends during the JobMaker period — this allows an entity to cease its participation in JobKeeper and begin its participation in JobMaker without requiring a ‘gap’ between the two schemes.

2 The Commissioner has exercised his discretion to defer the due date of registration from the end of the JobMaker period to the end of the relevant claim period.

3 An individual is not eligible if they are less than 16 or more than 35 years of age at the time they commenced employment with the entity.

4 This calculation is necessary to ensure that a JobMaker entitlement does not arise in excess of the maximum payable days (which is determined by the net increase in the headcount for the JobMaker period). This could arise where there are terminations during the period, but the overall headcount still increases.