The JobMaker Hiring Credit
written by Josh McMullen
Employers now have more incentive to employ workers under 35 with the JobMaker Hiring credit legislation recently becoming law.
The credit is designed to improve the prospects of young individuals getting employment following the devastating impact of COVID-19 on the labour market.
The scheme is backdated to commence on 7 October 2020 and provides eligible employers with the following payments for up to 12 months for new jobs created for which they hire the following young workers:
- $200 a week for hiring a worker aged 16 to 29 on at least 20 hours a week and
- $100 a week for those aged 30 to 35.
Although the scheme is slated to run for just 12 months, that period is the hiring period – not the payment period. Eligible employers who hire an eligible employee on the last day of the scheme (6 October 2021), may be eligible for hiring credits for the subsequent 12 months until 6 October 2022.
The criteria are broad (e.g. having an ABN, being registered for PAYG withholding, being up-to-date with lodgement obligations, reporting through STP), however some employers are specifically excluded:
- employers who are claiming JobKeeper
- entities in liquidation or who have entered bankruptcy
- commonwealth, state, and local government agencies (and entities wholly owned by these agencies
- employers subject to the major bank levy
- sovereign entities (except those who are resident Australian entities owned by a sovereign entity).
Key to the scheme is that employers must have hired additional eligible employees.
The additionality criteria for the first six months of JobMaker requires that there is 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.
Eligible employees are these are those who commenced employment between 7 October 2020 and 6 October 2021, were aged between 16 and 35 years at the time they commenced employment and have worked an average of 20-hours a week for each whole week the individual was employed by the qualifying entity during the JobMaker period.
Additionally, the worker must have met the pre-employment condition which requires that for at least 28 of the 84 days (i.e. for 4 out of 12 weeks) immediately before the commencement of employment of the individual, the individual was receiving one or more of the following payments:
- parenting payment;
- youth allowance (except if the individual was receiving thus payment on the basis that they were undertaking full time study or was a new apprentice); or
The new worker must also be in a genuine employment relationship. For example, ‘non-arms length’ employees will not be considered eligible employees. This includes family members of a family business, directors of a company and shareholders of a company.
If you have – or are thinking of – hiring younger workers in the 12 months since October last year, contact your PT Partners advisor to help determine your eligibility for the credit and to get registered for the scheme.
Josh McMullen is a senior tax writer at PT Partners.
Image credits: indeed.com