What you need to know before applying for the JobMaker hiring credit

Your new year plans should already be in motion, but with JobMaker subsidies up for grabs until October, it is worth reviewing how the hiring credit could boost your organisation’s productivity, and the implications of claiming it.

The JobMaker scheme was developed by the Australian government and opened in late 2020. Essentially a subsidy to encourage our pandemic-impacted business sector to engage new, less experienced employees, JobMaker is a useful tool. But before your business or NFP commits, be aware of the criteria for making a claim.

JobMaker basics

The JobMaker hiring credit is applied to each eligible employee position created until 6 October 2021, and is valid for up to 12 months from the employee’s start date. It only applies to organisations that are increasing their overall headcount.

As we outlined when the hiring credit scheme was launched last year, eligible JobMaker employers receive:

  • A hiring credit of $200 per week for every eligible worker aged 16–29 years inclusive
  • A hiring credit of $100 per week for every eligible worker aged 30 to 35 years inclusive.

Employers on the scheme will be able to claim the credit from the ATO quarterly in arrears from 1 February 2021. For each additional position the credit is capped at $10,400.

The ATO provides details of the JobMaker hiring credit scheme, its processes and eligibility criteria here.

Since its introduction we have had queries from businesses and NFPs about how to apply the hiring credit and what some of the pitfalls might be. The following tips on meeting the criteria for JobMaker could help you assess its application to your business or NFP.

Tips for meeting JobMaker criteria

1. Choose your subsidy wisely – Other wage subsidies negate JobMaker eligibility

An employer cannot claim the JobMaker hiring credit at the same time as claiming JobKeeper for an employee, or claiming other government wage subsidies, such as the Boosting Apprenticeship Commencements wage subsidy.

It is worth considering whether JobMaker or JobKeeper subsidies will bring the maximum benefit to your business. Factor in the current JobKeeper end date of 28 March 2021.

2. Ensure your business or NFP is eligible

An employer cannot claim the JobMaker Hiring Credit unless the size of the permanent workforce has increased by at least one person, with a due increase in payroll, since 30 September 2020. Your business will also need to hold an ABN, have lodged tax returns as required, be registered for PAYG withholding and report through STP (single touch payroll).

Keep in mind that the ATO has penalties for making a false claim.

3. Claim only newly hired employees who are eligible

An employer cannot claim the JobMaker Hiring Credit if the new employee being hired doesn’t meet the criteria.

Eligible new hires should:

  • be aged between 16 and 35 years
  • before hiring, have received income support for at least one month in the three month period – a JobSeeker payment, a Youth Allowance (other), or a Parenting Payment
  • on hiring, have worked at least 20 hours per week on average over a three month period for you before the hiring credit payment applies.

Employers should ensure they have accurate information about their new employees, including their age and the income support payments they have been receiving, as this will impact their eligibility for the hiring credit.

4. Employers cannot claim for the employment of relatives or ‘close associates’ under the scheme

Employers cannot claim the JobMaker Hiring Credit for relatives or close associates. Individuals and close associates include the following relatives:

  • The individual’s spouse
  •   Relatives of the individual or their spouse, including  
  • a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendent or adopted child, or
  • the spouse of such a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendent or adopted child.

5. Comply with the relevant rulings if you are a new business

New businesses are restricted from claiming the JobMaker Hiring Credit for the first person they hire. However, new businesses can claim for eligible employees hired until 6 October 2021. For new hires made before or on that date employers receive the hiring credit for the next 12 months.

Under this scheme, a new hire is not just for the busy season

The JobMaker scheme is a useful way to encourage employers to benefit from bringing under-35 workers into their operations. It provides greater opportunity and certainty for many young Australians made more vulnerable during the pandemic-related downturn by their relative lack of permanent work experience. The scheme helps the government offset the downturn by renewing the skilled workforce and breaking long-term unemployment patterns.

During and after the 12 month subsidy period, employers and employees have the usual obligations and rights under the Fair Work Act.

If you would like our assistance with reviewing your plans to participate in the JobMaker scheme, get in touch.

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