Month: January 2021
JobMaker Hiring Credits – Explained
In November 2020, the Australian Government passed the JobMaker Hiring Credit scheme in Parliament, launching a new incentive for small and medium businesses to expand their workforce and employ younger Australians in need of a job.
The Australian Government intends this new scheme to support Australia’s economic recovery by encouraging businesses to create jobs for younger Australians who have been out-of-work, as well as to deliver growth potential for businesses looking to hire additional employees and increase their business productivity output.
Eligible employers must register with the Australian Taxation Office (ATO) who are administering the scheme. Credits will be paid each quarter and the first JobMaker Hiring Credit claims may be lodged from 1 February 2021.
How much is a Credit?
For each additional eligible employee hired, eligible employers may claim $200 a week for an employee aged 16 years to 29 years of age AND $100 a week for an employee aged 30 years to 35 years of age.
New jobs created for eligible employees hired between 7 October 2020 and 6 October 2021 will mean a business may be able to claim up to $10,400 over a 12-month period (employee aged 16 to 29 years) AND up to $5,200 over a 12-month period (employee aged 30 to 35 years).
Employee Eligibility
To qualify for the JobMaker Hiring Credit scheme, each new employee of a business must:
- Be between 16 years and 35 years of age at the time of being hired.
- Have been receiving a government payment for at least two fortnights (or four weeks out of 12 weeks prior to being hired). Qualifying payments are JobSeeker, Youth Allowance and Parenting Payment.
- Work at least 20 paid hours of work per week on average during the JobMaker Hiring Credit period.
To qualify for the JobMaker Hiring Credit Scheme, an employer must:
- Have an Australian Business Number (ABN).
- Be registered for PAYG Withholding Tax.
- Be up-to-date with tax payment obligations.
- Use Single Touch Payroll (STP) to report to the ATO.
- Not be claiming JobKeeper.
- Demonstrate increased employee headcount (due to a new JobMaker hire).
- Demonstrate increased payroll (due to a new JobMaker hire).
The JobMaker Hiring Credit scheme has been designed with conditions to ensure that a genuine additional job is created for each new eligible employee. By making headcount and payroll increases compulsory, an employer can not simply expel a full-time employee and take on two or more part-time employees under the JobMaker Hiring Credit scheme.
To determine whether a business meets its overall headcount increase and overall payroll increase, reference will be made to a comparative ‘baseline’ headcount and ‘baseline’ payroll from 30 September 2020 and tested quarterly:
- Total employee headcount on 30 September 2020 must be greater than 30; and
- Total payroll in any reporting period (quarter) must be greater than in the quarter to 30 September 2020.
An employer’s payroll department will need to consider these abovementioned factors during each reporting period and over the duration of a business’s participation in the JobMaker Hiring Credit scheme.
As a result of this $74 billion scheme, the Australian Government expects there to be improved national economic stimulus, creating jobs for younger Australians, increasing skill levels of workers and helping businesses to increase productivity and to grow their revenue.
So if you are a small to medium enterprise (SME), consider the advantages, noting that as each Credit claim period of the scheme may not be claimed retrospectively, make sure your business is registered with the ATO for maximum benefit of the scheme.
How can YML help?
Click on the link below to engage us.
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Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with JobMaker Hiring Credits. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
ATO Increased Audit Activity – Including JobKeeper
Deborah Jenkins, the ATO’s Deputy Commissioner, Small Business, stated in October 2020, “We want to keep building confidence by supporting small businesses when they need it, but we need to start shifting the focus back to ensuring good compliance for the health of the system,” and this means audits have recommenced.
As we navigate the latter half of the 2020-21 financial year, what do you need to know about the ATO’s audit focus this year?
Single Touch Payroll (STP) gives the ATO the ability to flag those businesses who have underpaid JobKeeper or who have mismatched JobKeeper payments. Many businesses have not kept up with their Superannuation Guarantee (SG) payments this past year. As with JobKeeper, SG anomalies will be visible to the ATO via STP.
As STP data capture becomes more comprehensive, STP will be a significant tool used by the ATO to assess which businesses they will audit.
It is important to ensure your STP reporting is up-to-date and that your employee details, including payments made, are entered accurately.
JobKeeper
Businesses are most likely to be audited on their eligibility for government payments such as JobKeeper, cash payments and other stimulus payments such as those offered in the more recent JobMaker Hiring Credit scheme.
Government benefit schemes are notoriously audited. This year’s schemes will be no exception. JobKeeper 2.0 continues until the end of March 2021 and eligibility to receive these payments may be readily checked via a business’s STP.
Should your business fail to meet its eligibility criteria or obligations under JobKeeper, such as:
- Falsifying financial records to meet the fall-in-turnover test OR
- Failing to fully pass on the $1500 JobKeeper payment to an employee OR
- Applying for JobKeeper despite not carrying on a business
Other taboo areas related to JobKeeper eligibility will include:
- Increasing staff levels after 1 March 2020 whilst receiving JobKeeper
- Restructuring ownership of assets to meet the reduced turnover test
- Reducing management fees to meet the reduced turnover test
- Changing supplier payment conditions to meet the reduced turnover test
Maintaining correct financial records, timely lodging BAS statements and keeping track of every employee’s hours worked and payments will be advantageous to a business.
Superannuation Guarantee (SG)
Those businesses who did not use the SG amnesty in 2020 and who have fallen behind on their SG payment obligations because of decreases in their cash flow or other reasons during the pandemic will need to expect that through STP reporting and other means, the ATO will be looking closely at them.
Next 5,000 Tax Performance Program
In late 2020 the ATO commenced its Next 5,000 Streamlined Assurance Review Program targeting individuals, and their private group associates, with wealth of more than $50 million. This program is likely to be rolled out extensively in 2021.
The program uses a method undertaken by the ATO to secure assurance that the correct amount of tax is being paid by looking at all financial activities, be they trading, transaction or event. The review proceeds according to the ATO’s defined Next 5,000 Streamlined Assurance Review approach.
Compliance with the ATO should be your first step in protecting your business from any financial misadventure. Your STP reporting is another area you could verify in advance of the 30 June 2021. As official auditing practices become more prevalent this year, you can avoid uncomfortable conversations with the ATO’s auditing team by first talking to YML Group about the best course of action in the event of an audit on your business.
How can YML help?
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with ATO audits. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
Divorce Order – Self-Managed Superannuation Funds (SMSF
Divorce proceedings usually include the division of assets between parties. For self-managed superannuation fund (SMSF) members, whether a separation is amicable or acrimonious, it is essential that a court order is sought upon division of any or all superannuation assets.
SMSF trustees and their financial advisers should ensure that a divorcing SMSF member solidifies a division of superannuation assets with a binding agreement and a court order. Seeking a court order is a judicious step to help avoid future disputes about how equitably assets were split at the time of divorce.
It may feel embarrassing to a divorcing couple who have harmoniously parted to present before a court, but it is extremely important to undertake an irrevocable agreement in the matter of superannuation assets. Why is this important?
If, in the future, one divorced party becomes resentful that they have been hard done by in a financial settlement, then a court order can prevent a secondary claim on the other party’s financial assets. An order, approved by a court, will generally avert any potential future claim that there was not an equitable split at the time of the initial pact.
SMSF trustees may wish to confirm that the language used in a court order regarding division of superannuation assets is unambiguous and clear to all parties, thereby providing a smooth transition for a divorcing member and their spouse.
YML Group can help SMSF trustees administrate during the time of a fund member’s divorce.
How can YML help?
Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
