In what has been billed as one of the most important budgets in Australia's history, the Australian Treasurer Josh Frydenburg presented the Federal Government's 2020-21 budget. In this article we examine the employment issues from the 2020-21 Federal Budget.

Predictably, the 2020-21 budget is aimed at addressing the impact that the pandemic has had on the Australian economy, with a particular focus on employment in comparison to previous years. We have set out the major announcements and issues to come out of the Budget and their impact on employers.

JobMaker wage subsidy scheme

One of the employment issues from the 2020 Federal Budget involved the Treasurer announcing the introduction of the JobMaker Hiring Credit, the government's wage subsidy program which aims to boost the number of new jobs for Australians under the age of 35. Under the JobMaker Plan, employers will be subsidised to the tune of $200 per week to employ workers who are between the ages of 16 to 29, and $100 per week to employ workers between the ages of 30 to 35 for up to 12 months for each position created.

There are several conditions to the JobMaker Hiring Credit which mean that the impact on employers may not be as big as the JobKeeper Payment, as not every employer will be eligible to receive it.

In order to receive the JobMaker Hiring Credit the following main conditions must be met:

  • the new employee must have been receiving one of the income support payments available (JobSeeker, Youth Allowance (Other) or the Parenting Payment) in at least one of the three months prior to being hired;
  • the employer cannot be receiving the JobKeeper payment;
  • the employer must prove that the overall number of employees has increased; and
  • the new employee must work an average of at least 20 hours per week over the quarter.

It is important to note that the JobMaker Hiring Credit, in contrast to the JobKeeper payment, is targeted at the creation of new jobs, not keeping existing jobs alive. The JobKeeper payment will continue on a reduced basis, as the government has previously announced (see our summary of the JobKeeper changes here and here).

Tax cuts

The Government has brought forward the planned reduction in personal income tax rates (which were due to occur on 1 July 2022), which will result in tax relief for workers. The reduction will result in differing increases depending on your tax bracket, for example a person who earns $80,000 would receive an extra $1,080 for this financial year, and a person who earns $100,000 would receive an extra $1,530 for this financial year.

While normally personal income tax rates do not typically have a large impact on employers, given the current economic circumstances employers should take these changes into account if and when they are considering payroll increases.

Boosting Apprenticeships Wage Subsidy

As part of what has been dubbed the "JobMaker Plan", another of the Employment Issues from the 2020 Federal Budget sees the Government introducing the "Boosting Apprenticeships Wage Subsidy" which will subsidise new apprentices and trainees up to 50% of their wages (capped at $7,000 per quarter). This wage subsidy will apply to apprentices and trainees who commence with a business regardless of their size, industry or location.

Instant asset write-off and loss carry-back

The Government has also expanded the temporary changes to asset write-offs, with businesses who have a turnover of up to $5bn being able to deduct the full cost of an eligible asset in the first year that it is used or installed until 30 June 2022.

Businesses who have a turnover of up to $5bn will also be able to receive a tax refund on previous profits if they have made a loss last financial year, this financial year or the next financial year. This loss can be offset against profits and taxes paid from 2018-19.

Although many employers may not be in a position for large capital expenditure, the ability to offset losses against profits from previous years is likely to have a positive impact on employers from the perspective of freeing up extra cash to keep businesses afloat.


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