The Small Business Owners Guide
The confusion surrounding the 30th March, 2020 announcement of the economy saving Jobkeeper payment scheme was understandable. This was a ground breaking policy that has assisted 920,000 Australian organisations and 3.5 million individuals (source https://treasury.gov.au/sites/default/files/2020-07/jobkeeper-review-2020_0.pdf) to weather the Covid19 storm. Initial confusion over organisational and individual eligibility and administration took a few months to settle down – remember the Treasury calculation glitch that had the program costed at $130b when it was actually only $70b? Now the majority of small business owners have become familiar with the monthly jobkeeper declaration through the ATO Business Portal, although Jobkeeper 2.0 eligibility changes announced in September have required more investigation. The Jobkeeper scheme is due to end on March 28th, 2021.
The Second Act of the Morrison governments “Job” series was rebranding the Newstart unemployment benefit to Jobseeker and adding a substantial Coronavirus supplement which temporarily doubled the rate of the benefit. Coincidentally the number of Australians receiving the benefit also doubled from December 2019 to May 2020 from 820,000 to 1,640,000 people. Whilst there was no direct impact on small business, anecdotally the higher benefit made it harder to find willing employees for the businesses that were still experiencing growth. This situation appears to be changing as the supplement was reduced from the original $550/fortnight to the current $250 (https://www.abc.net.au/news/2020-10-04/small-businesses-that-need-staff-welcome-jobkeeper-cuts/12722098). It reduces again on Jan 1, 2021 to $150 before phasing out completely at the end of March, 2021.
On 6 October 2020 as part of the 2020–21 Budget, the government announced the Third Act – Jobmaker. This new incentive for businesses to employ additional young job seekers signifies the beginning of economic rebuilding in Australia and is projected to cost $74b.
As with Jobkeeper the JobMaker Hiring Credit will be administered by the ATO. Eligible employers will have access to a JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for which they hire an eligible employee, for a maximum claim period of 12 months from their employment start date.
Employers will need to register with the ATO and make claims quarterly, with claims commencing in February 2021.
The JobMaker Hiring Credit will be:
$200 per week for each eligible employee aged 16 to 29
$100 per week for each eligible employee aged 30 to 35.
An employer cannot claim JobKeeper and JobMaker Hiring Credit at the same time.
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
not be claiming Jobkeeper payments
be reporting through Single touch payroll (STP)
Eligible employees must have worked an average of at least 20 hours per week over the quarter for the employer to qualify for the payment. Employees that start and/or stop employment during a quarter must meet a similar test based on the length of time in employment.
For the employer to be eligible, new employees must:
be aged 16 to 35 years
not be receiving other Commonwealth wage subsidies eg. Boosting Apprenticeship or Trainee subsidies
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.
Only one employer can claim Jobmaker for each employee – so employers need to check that a potential employee has not already been “claimed” by another employer.
Further eligibility conditions will apply to employers based on the employer's headcount and payroll on 30 September 2020. These conditions ensure that employers claim credits for additional jobs created rather than for replacing existing employees.
New businesses (formed after September 30, 2020) will be eligible for Jobstarter but there is an assumed initial headcount of 1 employee – so it will only be available for the second eligible employee onward.
SIDE ISSUE: The impact on workers over 35 years of age in a highly competitive job market will be very interesting. Here at MMJ we are expecting to see an increase in interest in purchasing a business from workers with limited opportunities for career advancement into 2021 as they struggle to compete with subsidised younger workers.
Stay tuned for further developments on eligibility criteria and how employers can register for the JobMaker Hiring Credit as it becomes available.
Here’s the latest from the Australian Government https://budget.gov.au/2020-21/content/factsheets/download/jobmaker_hiring_credit_factsheet.pdf
With more business sales transactions anticipated in 2021 now is a very positive time to list a business for sale. We recommend starting with a complimentary, no obligations business appraisal to determine the fair market value of your business.
To organise your business appraisal click here https://www.mmj.com.au/business/sell-my-business/.