If your business is thinking of hiring new staff, now is the time to get moving with the Federal Government paying employers a subsidy (of sorts) for each eligible young worker employed over the next 12 months.
Legislation for the scheme passed on 11 November 2020, and the amount of the payment depends on the age of the employee:
- $200 per week for those aged 16 to 29.
- $100 per week for those aged 30 to 35.
The rules are not overtly complex, but the scheme is limited to certain types of employees and there are several key conditions that apply to both employers and the new employees so care should be taken.
JobMaker Hiring Scheme
JobMaker takes the form of a payment to employers for each new job they create over the next 12 months. It is estimated that the scheme will cost $4 billion and support about 450,000 employees. So it could help a lot of businesses and there is quite a bit of money available – up to $200 for each 'new' employee each week!
It is available for eligible individuals who commence work between 07 October 2020 and 06 October 2021. Note the term 'eligible' – there are certain conditions that must be met before a business (the employer) can receive the payment.
Firstly, the employee must be aged between 16 and 35 years at the time they start work. One crucial thing to note is that the payment rate is higher for those aged 16 to 29 years ($200 per week) than it is for those aged 30 to 35 years ($100 per week).
Further, each employee must work an average of 20 hours a week for the JobMaker period (a rolling three-month period).
Another important condition is that the new employee must, for four out of the 12 weeks preceding the employment start date, have received either the parenting payment, the youth allowance or the JobSeeker payment. In other words, your prospective employee must have come from having had recent government support to employment. JobMaker is not designed to support people who are switching from one job to another.
The type of employer who can benefit from the scheme is quite broad. JobMaker is open to those who are carrying on a business at the time they elect to participate in the scheme. The employer must already have an ABN and be registered to withhold PAYG.
If you're intending to start a business, you must be well advanced from the planning stage – seeking professional advice would be wise.
The ATO has flagged that the requisite information will be provided through the Single Touch Payroll system, so if you're not using STP, then you cannot participate in JobMaker.
To participate in the scheme, employers must be up-to-date with their tax return and BAS lodgments. If there are any outstanding income tax returns or BAS, the employer will not be eligible.
Employers must also have an overall headcount increase as a result of taking on more employees. This is measured by comparing the employee count in the JobMaker period to the number of employees on the payroll at 30 September 2020 (this reference point will change over time).
In addition, employers must have what is termed a 'payroll increase' in the JobMaker period. This is worked out by comparing the total payroll in a JobMaker period to the payroll for the period that ended immediately before 06 October 2020 (this will also change over time). This test is designed to stop employers cutting the wages of existing staff to access JobMaker. So if you are changing the pay arrangements of your staff as a result of COVID-19 (eg. to facilitate cash flow), you’ll need help to navigate this particular test.
More JobMaker advice
If you are planning to employ more staff in the short-term, there are things you can be doing right now that will help you qualify for the JobMaker Hiring Scheme. The rules around JobMaker can be easily navigated with the right processes, tools and advice.
Contact one of our Business Accounting Advisers at The Peak Partnership to discuss JobMaker for your business.