Unlike most other stimulus measures the Government has announced, the JobMaker Hiring Credits have been more scrutinised by our politicians. The Bill to introduce the scheme has been referred to a Senate Committee and we are expecting a report on 6 November. When you look at the details of this scheme, you can see why it is being questioned.
The intention of the JobMaker Hiring Credit was to incentivise business to create jobs and hire our unemployed youth. In theory, this is a lovely idea, but when you start looking at the practicalities of this, we start to see flaws that may have not been immediately evident on Budget night.
If you think back to Budget night (as I am sure it was the highlight of your year), the JobMaker Hiring Credit was something that has not been leaked, and was no doubt meant to be a headline item. The scheme is estimated at $4 billion and expected to create 450,000 new jobs. The budget speech announced the basics; a credit of $200 per week for eligible employees aged 16-29, and $100 per week for those aged 30 -35.
Almost instantly questions were being raised about how to take advantage of this extra money. Can one new full time job be broken into two part time jobs so that more funds are received? Would this result in a “clearing out” of older employees, replacing them with younger employees?
There was also a lot of talk about the government missing the target by applying the credit only to people between the age of 16-35 who had been on either Jobseeker, Youth Allowance (other) or Parenting Payment. What about the unemployed who do not fit into that criteria? Isn’t this going to make get a job much more difficult for those who are not eligible for the credit?
Now that the Parliamentary Bill is available we have a much better understanding of how it may be difficult to get access to this money.
Conditions that must apply
The employer must:
· Have an ABN
· Be up to date with their tax lodgements
· Be registered for PAYG Withholding
· Report through Single Touch Payroll
· Create a new job for more than 20 hours a week.
· Make sure the new employee works an average of 20 hours per week over the quarter.
· The ATO will be monitoring your headcount and it needs to be greater than the headcount for the 30 September payroll.
· You cannot get Jobkeeper as well as the JobMaker Hiring Credit.
The employee must have been on JobSeeker (not JobKeeper), Youth Allowance (Other) or Parenting Payment for at least 1 of the 3 months before you hired them. You cannot have hired them prior to 7 October 2020.
Who is not going to benefit
There are a number of small family businesses who have elected not to use Single Touch Payroll. They will not be eligible. Neither will the many businesses who are not up to date with their lodgements. Realistically, this is an incentive to get up to date with your taxes and start to use Single Touch Payroll. Single Touch Payroll is eventually going to be mandatory for everyone, and having your taxes up to date is a legal requirement.
Of more concern in my mind is that employers are incentivised to choose one potential employee over another, purely because of this payment. They may not be the best person for the job. The employer may be excluding someone as much in need of the job, who may do the job better. I understand why the employment groups are raising concerns.
Not everyone who is unemployed is on JobSeeker. Young people who try to obtain Youth Allowance are subject to income tests based on their parent’s income. Likewise, not all people on JobSeeker are under the age of 35. There are many people between the ages of 36-65 who are unemployed and I question why their right to work is less important than that of our younger people.
How it will work
The credit is available for 1 year and will be administered through the ATO. Claims will start to be paid from February 2021 and will be paid on a quarterly basis. Whether this money is used to offset PAYG Withholding obligations (like Cashflow Boost) is yet to be seen, but I imagine that would be the simplest way to administer the payment.
Doing the math, the payment will be either $10,400 or $5,200 (depending on the age of your employee) if you manage to maintain the employee and extra position for the full year. It will definitely help some employers, but is it really going to make you create a new role?
If you are interested in applying for the JobMaker Hiring Credit make sure you get your facts straight. Make sure your business is eligible. Make sure the employee is eligible. Make sure you have created a new job. If these things all genuinely apply, then please make the most of this. There are a number of unemployed young people who are eager to work, and hopefully the right one is waiting for your job.
