JobMaker Hiring Credit rules released

Tax Insights

The federal government has registered the JobMaker Hiring Credit rules (‘JobMaker’).

Complex but targeted to create employment opportunities, the rules provide some clarity for employers seeking to claim under the scheme.

The rules are complex and employers seeking to register for the regime are advised to seek professional advice when determining eligibility. As employers must be enrolled in single touch payroll reporting in order to qualify for the scheme, it is hoped the reporting data will substantially reduce the administrative time required to determine ongoing eligibility and claim amounts.

The JobMaker scheme is designed to support businesses to hire additional employees, particularly young people who have been disproportionately impacted by the COVID-19 pandemic.  Under the scheme an eligible entity may receive up to:The federal government have registered the JobMaker Hiring Credit rules (‘JobMaker’).

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

Whilst recognising older Australians may have prior work experience that will assist in gaining employment, the rules contain a number of integrity measures, including measures to protect older employers from experiencing reduced hours or loss of employment in favour of a new employee who would be an eligible employee under the JobMaker scheme.

Employers who reduce the hours, or terminate the employment of an older employee with the sole or dominant purpose of accessing the JobMaker scheme face losing entitlement to the scheme and possible breaches of the Age Discrimination Act 2004 and Fair Work Act 2009.

There are a number of eligibility requirements that must be satisfied before an entity can register for the scheme, we summarise these rules in the table below.  We note, this is a summary only, and entities seeking to access the scheme should appropriate advice in relation to their specific circumstances.

entity eligibility

The eligibility rules apply from the time the entity elects to participate in the JobMaker Hiring Credit scheme and include entities if, at the time of the election, the entity:

Integrity rules apply and an entity may be disqualified from the JobMaker scheme in a period if the entity enters into an arrangement to artificially inflate either their employee headcount and/or payroll.

Examples of the types of activity that may come under the scrutiny of the ATO include:

  • Terminating or reducing the hours of an existing employee then hiring an ‘eligible’ employee in order to facilitate greater access to the scheme.
  • Changing the employment relationship in order to access the scheme (e.g. engaging an existing subcontractor as an employee).

employee eligibility

Under the JobMaker scheme, eligible employers only receive the payment in respect of eligible additional employees. Under the Explanatory Statement an eligible employee is an individual who:

  • Was employed by the qualifying entity at any time during the JobMaker period;
  • Commenced employment between 7 October 2020 and 6 October 2021;
  • Was aged between 16 and 35 years at the time they commenced their current employment with the entity;
  • Has worked or has been paid for an average of 20 hours per week for the time the individual was employed during the JobMaker period;
  • Meets the pre-employment conditions;
  • Meets the notice requirement;
  • Is not excluded as an eligible additional employee.

As can been seen from the conditions, the scheme is extremely targeted and focused on providing new employment opportunities, particularly for those who lost employment during COVID-19 and have been relying on social security payments.

pre-employment conditions

The pre-employment conditions are designed to ensure the JobMaker scheme achieves the policy intent – that is to assist young people who have been adversely affected by COVID-19 back into jobs. As such, the government have introduced strict rules as to pre-employment conditions and excluded employees.

This means, in order to satisfy the pre-employment conditions the employee must:The pre-employment conditions are designed to ensure the JobMaker scheme achieves the policy intent.

  • For at least 28 consecutive days of the previous 84 days (ie. 4 out of 12 weeks) immediately before commencement of employment with the entity, the individual must have been receiving one of the following payments under the Social Security Act 1991:
    • Parenting payment;
    • Youth allowance (except where the individual received the payment on the basis they were undertaking full time study or were a new apprentice; or
    • JobSeeker payment.

Recognising the difficulties employers may have in determining these details, the government has stated the employee will be able to satisfy this requirement by providing a notice to the employer, however employees are expressly prohibited from providing multiple notices to different employers.

Individuals are cautioned false or misleading statements made in respect of the scheme may result in liability for criminal and administrative penalties and may also result in the individual being jointly and severally liable for overpayments.

Exclusions from additional eligible employees

Small family owned businesses may be negatively impacted from the specific scheme exclusions, with related entities and individuals expressly excluded as being an additional eligible employee.

The exclusion is extremely broad and could have an unintended reach where the small business is operated via a discretionary trust (dependent on the definition of beneficiary within the deed).

Exclusions include:

Other express exclusions include:

  • An individual who was engaged in a role other than an employee (e.g. subcontractor) to perform substantially the same duties at any time between 6 April 2020 and 6 October 2020; or
  • They last commenced employment with the entity 12 months or more before the first day of the period.

Administration & Record KeepingAs an employer must be enrolled in STP in order to qualify for the JobMaker scheme, it is hoped the ATO will provide functionality to assist employers determining this information from STP data.

The rules around determining the baseline headcount and baseline payroll are complex and will require analysis of employee eligibility and ongoing employment and payroll data. As an employer must be enrolled in STP in order to qualify for the JobMaker scheme, it is hoped the ATO will provide functionality to assist employers determining this information from STP data.

Given the complexity around the calculation methods, detail has not been provided in this article, we encourage you to contact your trusted adviser to obtain advice specific to your circumstances.

The key takeaway for entities seeking to enrol in the scheme is that accurate payroll data will be essential in assisting determining whether an entity has satisfied the headcount and payroll increase criteria for a period, and whether eligible additional employees have satisfied the average 20 hr per week work criteria.

The JobMaker rules are complex and careful consideration and analysis is required to ensure the various eligibility and ongoing reporting requirements can be satisfied.  If you require assistance, please reach out to your local RSM office.

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