New CTH Bill to Establish JobMaker Hiring Credit Scheme

Friday 9 October 2020 @ 9.21 a.m. | Legal Research

On 7 October, the Federal Treasurer introduced the Economic Recovery Package (JobMaker Hiring Credit) Amendment Bill 2020 (Cth) (‘the Bill’) to the House of Representatives. 

What is the purpose of the Bill?

The Bill is intended to provide the Treasurer with the power to make rules in order to establish the JobMaker Hiring Credit Scheme which was introduced as part of the 2020-2021 Budget. The Bill itself does not contain the details and rules for how the Scheme will operate in practice. Following the passage of the Bill, the Treasurer will formally establish the rules governing the Scheme as a form of delegated legislation. The rules will set out the eligibility criteria for employers and employees, the quantum and timing of payments, and the obligations of recipients of payments. However, in his announcement of the Federal Budget, the Treasurer has already outlined how the Scheme is proposed to operate.

What is the JobMaker Hiring Credit Scheme?

According to the Federal Treasurer’s Media Release, the 2020-2021 Federal Budget has assigned $4 billion to the Scheme which will allow the Government to make payments to eligible employers who hire eligible employees aged 16-35. The Treasurer stated:

The Hiring Credit will be paid quarterly in arrears at the rate of $200 per week for those aged between 16-29, and $100 per week for those aged between 30-35. Eligible employees are required to work a minimum of 20 hours per week.

The Scheme is intended to operate from 7 October 2020 until 6 October 2022.

What is the purpose of the JobMaker Hiring Credit Scheme?

The Bill specifies that the Treasurer is to be provided powers to make rules in relation to Commonwealth payments primarily for two purposes:

  • Improving the prospects of individuals getting employment in Australia; or
  • Increasing workforce participation in Australia.

The Treasurer stated in an October Media Release that the Treasury estimates that the Scheme will support around 450,000 jobs for young people.

Who is an eligible employer?

The Australian Tax Office, which will administer the JobMaker Hiring Credit Scheme conditional to the passage of the Bill, has outlined the eligibility criteria under the Scheme:

To be eligible, employers must:

  • hold an Australian Business number (ABN)
  • be up-to-date with their tax lodgement obligations
  • be registered for Pay As You Go (PAYG) withholding
  • be reporting through Single touch payroll (STP).

An eligible employer must employ an eligible employee in order to receive payments under the Scheme.

Who is an eligible employee?

Similarly, the ATO has outlined the proposed eligibility criteria for employees under the Scheme:

For the employer to be eligible, new employees must:

  • be aged 16 to 35 years
  • be in receipt of income support payments (such as JobSeeker Payment, Youth Allowance (Other), or Parenting Payment) for at least one of the three months before they were hired.

Furthermore, the employee must work an average of at least 20 hours per week over the quarter in order for their employer to qualify for payment. If an employee begins and/or ceases their employment during a quarter, a similar test must be met based on the duration of their employment.

The ATO notes that further eligibility conditions will be established in relation to the employer's headcount and payroll on 30 September 2020. These statutory tests will ensure that credit is provided for the creation of additional jobs rather than the replacement of existing employees who are not eligible employees under the Scheme.

Does the JobMaker Hiring Credit Scheme affect the JobKeeper Scheme?

The ATO states that, conditionally on the passage of the Bill, an employer will not be able to claim JobKeeper and JobMaker Hiring Credit at the same time. However, the amendments within the Bill do not alter any of the existing provisions that authorise the JobKeeper scheme.

The Explanatory Memorandum clearly establishes that further amendments to the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) would be required to either:

  • authorise the Treasurer to make further rules for any other types of payments other than payments of JobMaker hiring credit; or
  • extend the current 28 March 2021 limit for the period within which payments under the JobKeeper scheme can be made

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Economic Recovery Package (JobMaker Hiring Credit) Amendment Bill 2020 and explanatory memorandum, available from TimeBase's LawOne service

Media Release: Economic recovery plan for Australia (Treasurer - Mr Josh Frydenberg, 6 October 2020)

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