The JobMaker hiring credit scheme is now open for registration.
The Economic Recovery Package (JobMaker Hiring Credit) Amendment Bill 2020 has been passed into law, receiving Royal Assent on 13 November. The legislation allows the Treasurer to make rules by way of legislative instrument relating to the hiring credit scheme including:
• which employers qualify for the payment
• the employees to which payments relate
• the amount payable and timing of payments, and
• the obligations for recipients of the payment.
For background, JobMaker was announced by the government in the October 2020 federal budget, and will operate until 6 October 2021. JobMaker is designed to improve the prospects of
younger individuals obtaining employment, by incentivising employers to hire them where they otherwise may not have done so. This follows the devastating impact of COVID-19 on the labour
market. We now examine the rules contained in the abovementioned legislative instruments.
The hiring credit is backdated to 7 October 2020 (applying to new employees from that date) and will provide eligible employers with the following payments for up to 12 months for new jobs
created from that date:
• $200 a week for hiring a worker aged 16 to 29 on at least 20 hours a week during the JobMaker period and
• $100 a week for those aged 30 to 35 on at least 20 hours a week during the JobMaker period.
Although the credit is slated to operate 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 for those employees. 20 HOURS
To be clear, eligible employees must have worked an average of at least 20 hours per week over a JobMaker period (which is a quarter of the year – see later) for the employer to qualify for the
payment in respect of that employee.
The 20 hour average applies in relation to the number of whole weeks that an employee was employed in a period. While the hours that an individual worked during a part week count towards
whether an employee has met this threshold, the threshold itself is only based on the number of full weeks that the employee was employed. For example, if an employee was employed for 38
days in a period because they commenced or terminated their employment during the period, the 20 hour threshold would be based on the five full weeks that they were employed. The employer
would be required to demonstrate 100 hours of work for which the employee was paid over the period.
The criteria are broad (having an ABN, being registered for PAYG withholding, 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, and
• sovereign entities (except those who are resident Australian entities owned by a sovereign entity).
There is also a tax compliance component to the eligibility rules. At the time an employer gives information to the Commissioner about its hiring credit entitlement for the period, the employer
must not have any outstanding income tax returns or GST returns that they were required to lodge in the two years prior to the end of the JobMaker period.
Entitlement to a hiring credit payment is assessed in relation to three-month periods known as “JobMaker periods”. These periods are relevant for the purposes of the additionality criteria (see
Claims can only be made during the claim period. No exemptions or extensions are available. There are strict dates by which claims for a period must be reported by (for example, 30 April
2021 for the first period ). These dates are shown in the table above.
JobMaker Period Claim Period
Period 1 7 October 2020 to 6 January 2021 1 February 2021 – 30 April 2021
Period 2 7 January 2021 to 6 April 2021 1 May 2021 – 31 July 2021
Period 3 7 April 2021 to 6 July 2021 1 August 2021 – 31 October 2021
Period 4 7 July 2021 to 6 October 2021 1 November 2021 – 31 January 2022
Period 5 7 October 2021 to 6 January 2022 1 February 2022 – 30 April 2022
Period 6 7 January 2022 to 6 April 2022 1 May 2022 – 31 July 2022
Period 7 7 April 2022 to 6 July 2022 1 August 2022 – 31 October 2022
Period 8 7 July 2022 to 6 October 2022 1 November 2022 – 31 January 2023
Once the claim period has ended, an employer can no longer make a claim for the JobMaker period. However, they can make claims for future periods (assuming all other eligibility criteria are
met and the claim is within the next claim period). No amendments can be made to claims after the claim period has ended. Amendments can however be made during the claim period, for example, if an error is made.
Key to the hiring credit scheme is that employers must have added additional employees and also have increased their payroll during the relevant JobMaker period, as compared to a baseline date
(together, this is known as the “additionality critieria”).
First four JobMaker Period
The additionality criteria for the first four JobMaker periods requires that there is an increase in total employee headcount (minimum of one additional employee) from the baseline date of 30
September 2020 compared to the last day of a JobMaker period.
Treasury example 1
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 eight employees. Therefore TBT Co’s baseline headcount is eight. During the first JobMaker period, one of the eight employees voluntarily ceased employment and TBT Co employed three new employees during the period. This meant that at the end of the last day in the first period, TBT Co had ten 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 ten exceeds its 30 September 2020 headcount of eight.
TBT Co’s headcount increase amount for the first period is two. Fifth and subsequent JobMaker periods For the fifth to eighth JobMaker periods, an employer will need to increase its baseline headcount by the aggregate number of eligible additional employees that the entity was entitled to the JobMaker Hiring Credit payment for the earlier corresponding period 12 months prior or the
increase of the previous period, whichever is higher. The baseline headcount increase means that the employer may only receive the JobMaker credit in respect of each additional headcount for a period of 12 months. This ensures that an employer does not have an incentive to separate from an eligible additional employee at the end of 12 months and hire a new eligible employee in order to claim for a further 12 month period. For the fifth JobMaker period, the baseline headcount increase is worked out as the lesser of:
• the headcount increase amount in the first JobMaker period and
• the total counted days in relation to the headcount increase amount in the first JobMaker period divided by the total days in the period and rounded down to the nearest whole number
(the concept of ‘total counted days’ is explained further below).
For the sixth, seventh and eighth JobMaker periods, the baseline headcount increase is again calculated with reference to the headcount increase amount, total counted days and total days in
the corresponding period (second, third and fourth periods) as explained above for the fifth period. However, for these three periods, there is an additional step. Ths is, the employer needs to
compare the result from the above calculation with the baseline headcount increase amount for the previous period (the period that ended immediately before the current period). The employer
must take the greater of the above step and this step in working out the baseline headcount increase amount for these periods. For example this means that for the seventh period the base
headcount would be the greater of the increase for the sixth and seventh periods. After working out the baseline headcount for the JobMaker period, the employer must compare
the baseline headcount for the period against the number of employees employed at the end of the JobMaker period to determine if it has a headcount increase in the period and if so, its
headcount increase amount for the period
Treasury example 2
Following on from example 1, TBT Co continues to be a qualifying entity under the JobMaker scheme for the sixth JobMaker period (7 January 2022 to 6 April 2022). TBT Co’s baseline
headcount increase amount for the sixth JobMaker period is worked out as the greater of the baseline headcount increase amount for the corresponding period and the amount by which TBT
Co’s baseline headcount was increased by in the fifth period. The corresponding period for the sixth JobMaker period is the second JobMaker period (7 January
2021 to 6 April 2021). The baseline headcount for the second JobMaker period was eight. The baseline headcount increase for the fifth period was two.
TBT Co’s baseline headcount increase for the corresponding period for the sixth period is worked out as the lesser of:
• the headcount increase amount for the second JobMaker period and
• the total counted days divided by the total days in the period – this formula calculates the proportion of the claim in relation to the headcount increase in the corresponding period
where the maximum payable days has not capped the total counted days.
TBT Co applies the formula using the following information:
• the headcount increase amount for the second JobMaker period was 4
• total counted days for the second JobMaker period was 280
• the total days in the 6th JobMaker period was 90 and
• 280/90= 3.111, rounded down to 3.
Further, TBT Co’s baseline headcount increase for the sixth JobMaker period (3) is greater than TBT Co’s baseline headcount increase amount in the fifth JobMaker period (2) and therefore TBT
Co’s baseline headcount increase for the sixth JobMaker period is three. This means that TBT Co’s baseline headcount for the sixth JobMaker period is increased to 11
(being the 30 September 2020 headcount of eight, plus the baseline increase amount of three as worked out above).
At the end of the sixth JobMaker period (6 April 2022), TBT Co had a total of 14 employees. This number is greater than the increased baseline headcount of eleven (as worked out above) and
therefore, TBT Co has satisfied the headcount increase for the sixth JobMaker period.
An employer satisfies the payroll increase condition for a JobMaker period if the employer’s total payroll amount for the period is greater than the entity’s baseline payroll for that period.
For the purposes of the JobMaker scheme:
• an employer’s total payroll amount for a JobMaker period is the sum of payroll amounts (see below) for each of the employer’s employees for payroll amounts paid during the JobMaker
• an employer’s baseline payroll amount is the sum of the payroll amounts paid during a period comprising the same number of days that ended on 6 October 2020.
The payroll increase is worked out as the excess of the entity’s total payroll amount for a JobMaker period from the baseline payroll amount.
Treasury example 3
Continuing on from example 1, TBT Co operates on a fortnightly pay cycle that is paid every second Wednesday. There were seven fortnightly pay cycles paid in the first JobMaker period of
7 October 2020 to 6 January 2021, with the first fortnightly payment made on 14 October 2020, and the final payment made 6 January 2021.
Because there were 92 days in the first JobMaker period, the reference period for working out the baseline payroll amount is the 92-day period ending on 6 October 2020 (which commenced on 7
July 2020). To determine whether it had a payroll increase for the first JobMaker period, the employer sums up the total payroll amounts paid in that 92-day reference period as follows:
TBT Co’s payments in the first JobMaker period (7 October 2020) and 6 January 2021)
14 October 2020 $14,000
28 October 2020 $14,000
11 November 2020 $12,500
25 November 2020 $15,000
9 December 2020 $17,000
23 December 2020 $17,000
Total payroll amount in the first JobMaker period:
TBT Co’s payments in the reference period (7 July 2020 to 6 October 2020)
30 September 2020 $12,500
16 September 2020 $12,500
2 September 2020 $12,000
19 August 2020 $12,000
5 August 2020 $15,300
22 July 2020 $17,000
8 July 2020 $10,000
Total payroll amount in the reference period: $88,300
TBT sums up the payroll amounts for the JobMaker period and compares that to the
corresponding reference period. TBT Co has a payroll increase of $14,200 for the first JobMaker
In the event that an employer has not made payments for the period (this could occur, for example, if the business was created after 6 October 2020) the payroll amount for that period is zero.
In working out the payroll amount, payments made that relate to an employee’s termination are not included, however the following payments are:
• salary, wages, commission, bonuses and allowances
• amounts withheld under the Pay As You Go withholding regime
• salary sacrifice superannuation contributions
• amounts applied or dealt with in any way where the employee has agreed for the amount to be so dealt with in return for salary and wages to be reduced – generally, this means amounts
forming part of salary sacrifice arrangements.
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 worked an
average of 20 hours a week for each whole week the individual was employed by the qualifying employer during the JobMaker period (see earlier). 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 the individual’s employment they were
receiving at least one 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
• JobSeeker payment.
Further, the employer must not be receiving a wage subsidy in respect of the particular employee (such as the apprentice wage subsidy announced at the onset of COVID, or JobKeeper).
The new worker must be in a genuine employment relationship. For example, ‘non-arms length’ employees will not be considered eligible employees. This includes:
• a relative of the sole trader
• a partner in a partnership or a close associated or the partner
• a trustee or a beneficiary of the trust, or a close associate of the trustee or beneficiary
• a shareholder or director of the company, or a close associate of the shareholder or director. “Close associate” is a term newly introduced by paragraph 4AA of the JobMaker Rules and is
defined to mean a “relative” of any of the ineligible individuals listed above.
As described in the Explanatory Statement to the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 9) 2020, “relative” is defined in subsection 995-
1(1) of the Income Tax Assessment Act 1997 (“ITAA97”) to be:
• the person’s spouse; or
• the parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendent or adopted child of that person, or of that person’s spouse; or
• the spouse of the parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal
descendent or adopted child of that person, or of that person’s spouse.
In a win for BAS and tax agents, you are not required to undertake the very complex calculation of a client’s hiring credit entitlement amount.
The ATO has constructed an estimator tool for employers and BAS and tax agents who are keen to get a feel for the amount of JobMaker payments that a client’s situation will generate.
The estimator does not determine eligibility, and the calculated results are based solely on the information provided at the input details section.
The exact amount of client’s JobMaker hiring credit payment will be calculated by the ATO only when the claim form is completed.
In terms of tax treatment the JobMaker credit in the hands of the employer is:
• assessable income and included in the recipient’s tax return
• not subject to GST
• not reportable for Activity Statement purposes.
The accounting treatment of the JobMaker payment is essentially the same as JobKeeper and the apprentice wage subsidy. See our Accounting for COVID-19 Incentives Fact Sheet.
PARTICIPATION AND NOTIFICATION
Employers can now register through ATO online services, the Business Portal or via their registered tax or BAS agent via Online Services for Agents.
To be entitled to the hiring credit in relation to a JobMaker period, employers must have notified the ATO in the approved form of their election to participate in the scheme no later than by the
end of the period that the entity first elects to participate. For example, for an employer that elects to participate for the JobMaker period of 7 January 2021 to 6 April 2021, the notice must be
provided to the ATO by 6 April 2021.
Clients need to be registered before you can claim hiring credit payments (the claim for the first quarterly payment can be made from 1 February 2021). Registrations are now open via Online
services for agents. To register clients you will need to obtain their:
• baseline headcount – total employees on 30 September 2020
• baseline payroll amount – for the 3-month period up to and including 6 October 2020
The credit is paid every 3 months in arrears to employers.
Claims for credit payments must be made online – the first claim will be available online by 1 February 2021.