What is JobMaker and how does it work?

From the outset, the Morrison Government has been adamant that both JobSeeker and JobKeeper payments are temporary measures to keep people in jobs and prop up the economy.

With economic recovery now in his sights, the PM has outlined how the JobMaker scheme will help reduce youth unemployment and close the skills gap across various industries.

What is JobMaker and how does it work?

While the name ‘JobMaker’ hit headlines back in May, the recent 2020–21 Budget gave Scott Morrison a chance to define his long-term strategy for Australia’s economic recovery, with an emphasis on creating jobs for young people.

With youth unemployment accelerating to a whopping 14.3% this year (over double the national unemployment average of 6.8%), the JobMaker scheme incentivises employers to create new jobs for people aged 16 to 35.

Under the scheme, the Government will support approximately 450,000 jobs, by providing eligible employers with a hiring credit for every new job they create over the 12-month period beginning October 7, 2020, with a maximum claim period of 12 months from the employee’s start date.

Who is eligible for the JobMaker scheme?

JobMaker can be broken down into two eligibility criteria – for employers and for employees – although the payments and frameworks are the same.

Employer eligibility

Employers need to have all the essentials of a genuine Australian business (for example an ABN, registration for PAYG and reporting through STP). They must also keep stringent records about the paid hours worked by employees in their newly created roles for which they are claiming the JobMaker Hiring Credit.

New business owners can take advantage of this scheme as long as they meet the baseline eligibility. It’s important to note that the minimum employee headcount is one, so employers with zero staff, or if the business was created after 30 September 2020, won’t be able to make a claim on their first employee hired. However, they can do so for the second (and any further) employees in newly created roles.

Unlike the JobKeeper scheme, the employer receives the full JobMaker Hiring Credit but only pays employees for the hours they have worked.

How much is the JobMaker Hiring Credit?

  • $200 per week: For every newly hired eligible employee aged 16–29
  • $100 per week: For every newly hired eligible employee aged 30–35

Employee eligibility

Employees themselves need to be aged between 16 and 35. More importantly, they must have received youth allowance, a parenting payment or the JobSeeker payment for at least one of the previous three months leading up to their hiring. They must also not be receiving other financial assistance or subsidies such as apprenticeship funding.

An employee’s job structure can be permanent, casual or on a fixed-term basis. However, it is important that they work at least 20 paid hours per week (on average) throughout their employment reporting period.

You can read more about the specific eligibility criteria in the Budget’s JobMaker Hiring Credit breakdown.

NOTE: These ages are valid when the hiring occurs. So if an employee is hired aged 35 and turns 36 the following week, their employer can still make a JobMaker Hiring Credit Claim for the 12 months following the initial hire.

What other JobMaker eligibility criteria are there?

The ATO will be keeping a close eye on every JobMaker claim, and they’ve even installed two safeguards to ensure newly created jobs and their subsequent claims are genuine. According to The Guardian:

  • The business’s total employee headcount must be greater than on 30 September 2020; and
  • The payroll of the business must be greater in the reporting period compared with the three months to 30 September 2020.

What this means is that an employer can’t make a full-time worker redundant, replace them with two part-time workers on lower wages and then claim the JobMaker Hiring Credit. In this instance, while headcount has indeed risen, payroll has not.

It’s also worth noting that the baseline for hiring credit claims (as of 30 September 2020) will be tweaked in the second year of the scheme.

What are the important dates and figures around JobMaker?

  • New jobs must be created between 7 October 2020 and 6 October 2021
  • Employers can register from 7 December 2020 via the ATO
  • JobMaker Hiring Credit is available for 12 months from creation of the job
  • The scheme will finish on 6 October 2022
  • Total cost is estimated at $4 billion over 3 years

How do I apply for JobMaker?

As above, employers will be able to apply for a JobMaker Hiring Credit through the ATO’s online services from 7 December. However, businesses need not be registered for the scheme in order to create jobs right now – new jobs are eligible from 7 October 2020.

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