The JobMaker Hiring Credit Program Explained for Small Business Owners

The Federal Budget has been delivered and it's all about jobs. In fact, in delivering his budget speech Josh Frydenberg said the word "jobs" 37 times in as many minutes. If you operate a small business that employs people, the budget brought with it some good news for you.

What is the JobMaker Hiring Credit Program?

As the government attempts to transition the economy off covid-relief JobSeeker payments, it has recognised the difficulty facing young Australians looking for work. This is the rationale for the implementation of the JobMaker Hiring Credit which offers a financial incentive to business owners like yourself to hire additional young people.

How much can employers claim?

Eligible employers can claim:

• $200 per week for each additional eligible employee they hire aged 16-29 years old; and
• $100 per week for each additional eligible employee aged 30-35 years old.

What makes an employer eligible?

You will be an eligible employer if you:

• Have an ABN;
• all your tax lodgements are up to date;
• you’re registered for PAYG withholding; and
• you are using Single Touch Payroll (STP) Reporting;
• you are claiming in respect of an eligible employee; and
• you are claiming in respect of an additional job (calculated using the baseline method – explained below).

The JobMaker Hiring Credit can only be claimed for an additional job created from 7 October 2020. This will be calculated using the baseline method, which compares the total employee headcount for the 3-month period to 30 September 2020 (baseline date), with the payroll of the business for the reporting period in which the JobMaker Hiring Credit is claimed. The value of the Hiring Credit claim cannot exceed the increase in payroll between the reporting period and the baseline period.

What makes an employer ineligible?

You will NOT be an eligible employer if:

• You are, or an entity wholly owned by, a federal, state or local government agency;
• you are, or are an entity whole owned by, a sovereign entity;
• an entity in liquidation or have entered bankruptcy;
• you are claiming the JobKeeper Payment; or
• you are subject to the major bank levy. 

What makes an employee eligible?

Eligibility criteria requires that a new employee must:

• be aged 16 to 29 years old;
• have received the JobSeeker Payment, Youth Allowance (or equivalent), or Parenting Payment for at least one of the previous three months before they were hired;
• be employed on a permanent, casual or fixed term basis;
• be employed for at least 20 paid hours per week on average for the weeks they were employed during the reporting period;
• commence their employment between 7 October 2020 and 6 October 2021;
• be in their first year of employment with this employer; and
• must be employed for the period that the employer is claiming for them.

What makes an employee ineligible?

An employee will NOT be eligible for the JobMaker Hiring Credit if:

• they do not satisfy the eligibility criteria at the time they start their employment;
• the employer receives a wage subsidy under another Commonwealth program for that employee (e.g. Apprenticeship and Trainee subsidies); or
• if another employer is claiming the JobMaker Credit for that employee.

When does it start?

It’s already started! The hiring credit will apply to all new jobs created for between 7 October 2020 and 6 October 2021.

An eligible employer will be able to claim the credit for up to 12 months from the date the eligible employee commenced employment. That means, for example, if you hire someone on 5 October 2021, you can claim the hiring credit for up to 12 months which takes the support through to 4 October 2022.  

I’m eligible! Sounds great! How do I claim the JobMaker Hiring Credit?

Simple really, get hiring eligible employees! Then you’ll be able to claim the JobMaker Hiring Credit quarterly in arrears from the ATO from 1 February 2021. As an eligible employer you will need to report your eligibility every quarter that you claim, but unlike JobKeeper you are not required to satisfy fall in turnover test to prove your eligibility.

What if I’m starting a new business?

If you are starting a new business, or have been operating without employees, you can still claim the JobMaker Hiring Credit if you satisfy the eligibility criteria. However, the minimum baseline headcount is one, so you won’t be able to claim for your first hire, but any subsequent eligible employees will attract the hiring credit.

Questions? Looking for tailored advice?

YOUtax is all over the new JobMaker program, and the Government’s full suite of Covid-relief packages. If you are wondering how to grow your business in the current climate and make the most of Government support, get in touch and we’ll help you navigate your eligibility to find the best option for your business.