In October, as part of the 2020-21 Budget and Economic Recovery Plan, the government announced a new $4 billion stimulus measure called the JobMaker Hiring Credit.
The scheme was designed to encourage businesses to hire young employees aged 16-35. As part of the plan, eligible businesses could receive credit for any qualifying employees hired by 6 October 2021, for a maximum claim period of 12 months from their start date (with the scheme ending 6 October 2022).
The main motivation behind the program was to help get more young people employed, primarily because the unemployment rate for Australians under 35 is currently 8.5%, compared with a rate of 4.2% for those 35 and above.
Through the JobMaker program, a business could receive payments of up to:
- $200/week for each eligible new employee aged 16–29 years old (incl.)
- $100/week for each eligible new employee aged 30–35 years old (incl.)
What’s happened with JobMaker
From the beginning, the scheme was not without its critics – especially those concerned that older, full-time employees might lose their jobs to younger workers, or that the program wouldn’t create the kinds of real, long-term jobs needed.
At the same time, there were concerns about the end of the highly successful JobKeeper subsidy, which is now at an end, and how JobMaker might partially replace it, as businesses were not allowed to receive funds through the JobMaker, JobKeeper and/or apprenticeship training schemes at the same time.
However, the Government recently announced that only 521 jobs are now being supported by the JobMaker program – a far cry from the 10,000 jobs expected during the first stage of an estimated 450,000 over the full course of the program.
Changes and options
What happens now? In order to get more businesses involved, the Government has announced that widespread changes will be coming to JobMaker, especially to the eligibility rules for the program. One possibility is that the Government may allow businesses to take advantage of both JobMaker and the Boosting Apprenticeships Commencements Wage Subsidy, which was designed to support new apprentices and trainees in a wide range of industries. With the end of JobKeeper, it’s now likely that more companies will explore JobMaker, too.
One thing that will not be changing, however, is the age range for new hires. Treasurer Frydenberg has been adamant about keeping the program focused on hiring new employees between the ages of 16-35.
Things to consider before hiring
There are still a lot of questions to be answered about JobMaker changes before the budget is released in May. If you need to hire young employees for your business right now, either the JobMaker credit or the Apprenticeships subsidy could still be a very timely resource. However, you need to plan carefully. Hiring the wrong person can be very expensive, and you want to ensure that a new hire is going to be the right fit for both the position and for your company.
If you decide to apply for JobMaker, you must register for the scheme through the ATO or through your tax agent. You only need to register once, but you must make a claim through your STP-enabled payroll software to prove that the employee has met the minimum hours requirements.
Above all, we urge you to speak with an experienced accountant or tax professional about these government schemes, no matter whether you’ve taken advantage of JobKeeper or are considering registering for another scheme. Now is a good time to discuss your long-term goals with an expert and discuss how these programs (or the end of them) could affect your business, your cash flow and your taxes.
Please get in touch with your local Accru office or adviser if we can be of assistance.