Australia Changes in Tax, Hiring Restrictions, and Leaves

Various provisions have been implemented in Australia for the year of 2021. These provisions have set-forth updated structures for tax, leave, and hiring restrictions.

Australia Lowers Tax Rate and Raises Threshold

A new, lowered tax rate and raised tax threshold has been proposed by government officials in New South Wales, effective as of July 1,2020. This will be a provisional decrease in the rate in, and will put it at 4.85% for 2020-21 and 2021-22. The tax threshold will also be raised by AUD 300,000, putting it at AUD 1,200,000.

Employer Considerations:

These provisional tax changes will ease the burden of payroll tax for employers, and will place small businesses outside the parameters of payroll tax.

Hiring Credit Introduced for Employers

A JobMaker Hiring Credit has been introduced in Australia, enabling eligible employers to hire supplementary individuals within the 16-35 age bracket. The credit can be applied in all eligible hiring scenarios that take place after October 7,2020 and before October 6, 2021.

Eligibility requirements for employers are as follows:

• Must be registered for the JobMaker Hiring Credit
• Is a registrant for PAYG withholding (pay as you go)
• Employers’ initial employee headcount prior to implementation of the credit is lower than the headcount at the end of each period that the JobMaker credit is used
• Has business operations in Australia, and possesses a business number in the Country (ABN- Australia Business Number)
• A rise in payroll must be apparent in the period where the JobMaker credit was used compared to the prior period
• Was not a JobKeeper payment recipient for a period of fourteen consecutive days that began during the JobMaker period
• Has current, updated GST and income tax returns
• Utilizes up to date Single Touch Payroll (STP)

The JobMaker Hiring Credit has a total of 8 periods, each consisting of 3 months. Starting February 1st, 2021, claims can be made for each permitted employee at the end of each period.

Employer Considerations:

Eligible employers can receive payments through this credit as an incentive to hire additional, young job applicants. Employers are also ineligible for the credit if any of the ineligibility criterion apply to them; thus it is imperative to review the ineligibility categories as well.

Leave Extensions Added to the Fair Work Act

As of November 26,2020, the Fair Work Act has been amended to extend the amount of unpaid parental leave allotted to employees affected by the death of an infant. The new amendment gives employees facing such tragedy at any point during the first 2 years of the child’s life, access to unpaid parental leave for up to a year. Applicable employees will also now be entitled to more flexibility for up to 30 days of their granted leave period, and thus can be taken consecutively all at once or sporadically. Compassionate leave may also be accessible to employees while on unpaid parental leave dealing with the loss of a child.

Employer Considerations:

Employers will need to update employment policies and other relevant material to include new leave extensions.