By Andy Hutt, Director, Australian Tax Centre, KPMG Australia
As outlined by Andy Hutt, there are a number of criteria that employers and employees must meet in order for the credit to be payable.
The Federal Treasurer has now registered the legislative instrument that makes the JobMaker Hiring Credit (JHC) a reality for eligible Australian employers.
In parallel, the Commissioner of Taxation has registered a legislative instrument that sets out some of the administrative requirements for providing information to the Commissioner in support of JHC claims.
These employers can receive a wage subsidy of up to $200 per week for eligible employees hired at any time from 7 October 2020 to 6 October 2021, over the first 12 months of the employment.
There are a number of criteria that employers and employees must meet in order for the JHC to be payable. In estimating their likely eligibility over time, employers need to keep in mind that the broad objective of the JHC is to support employers in hiring people aged 35 or under who have recently experienced a period of unemployment, but only where those new employees genuinely increase the employer’s workforce and the amount it spends on wages.
JHC works on “JobMaker periods” of three months. The first JobMaker period ends on 6 January 2021 and employers can register and submit their claim for this JobMaker period between 1 February and 30 April 2021. They will also need to provide certain information to the ATO via Single Touch Payroll (STP) by 27 April 2021. The information and claim requirements for later JobMaker periods follow a similar date pattern.
The ATO has now made detailed information available on its website setting out the eligibility requirements and registration and claims process. The expectation is that the ATO will calculate the employer’s JHC amount using the information the employer provides, rather than using a self-assessment approach.
Not all employers are eligible
If the employer is receiving JobKeeper for any fortnight that begins in a JobMaker period, then it is not eligible for JobMaker in respect of that period. Also, by the time the employer makes its claim for a JobMaker period, it must have lodged all of its income tax and GST returns that were due in the last two years.
Similar to JobKeeper, government bodies, their subsidiaries and sovereign entities are ineligible. Also ineligible are individual entities, or consolidated groups with a member liable for the Major Bank Levy for a quarter ending 30 September 2020 or earlier.
Which new hires will attract the JHC?
The employee must be between 16 and 35 years of age at the time of commencing employment, and must have been eligible for a government income support payment (e.g. JobSeeker) during at least 28 consecutive days out of the 84 days preceding commencement of employment. Eligible employers will be pleased to know that they are entitled to rely on the employee’s self-certification of meeting these requirements using a standard ATO form.
There are also integrity measures which exclude relatives and close associates of business proprietors /company directors from eligibility.
The new hire must work an average of at least 20 hours a week during the part of the JobMaker period in which the person works for the employer. This may be an additional piece of data for the employer to record and track, depending on what the employee’s work arrangement is and what the employer is already recording for payroll purposes.
Further eligibility requirements
The employer must also meet requirements for headcount and payroll increase for the particular JobMaker period in order to be able to claim for that period.
Very broadly, for the first four JobMaker periods, the employer needs to show that its headcount at the end of the JobMaker period is higher than it was at 30 September 2020. It also needs to show that its total payroll spend for the JobMaker period was higher than in the three-month period ending on 6 October 2020. An employer’s JHC for a period cannot exceed this increase in the payroll spend.
For later JobMaker periods, the “baseline” for demonstrating a headcount increase is stepped up, so as to eliminate any incentive to replace employees whose JHC eligibility will shortly run out with new eligible employees.