Dáil Éireann Debate, Tuesday - 9 June 2020
53. Deputy Michael McGrath asked the Minister for Finance the estimated amount of tax to be received from employees in receipt of the temporary wage subsidy scheme; the way in which the amount of tax due will be worked out in practice; the way in which this will be paid in practice; if it is through the deduction of credits in 2021, if that will result in higher taxes being paid in 2021; and if he will make a statement on the matter. [9756/20]
View answerI am advised by Revenue that payments made to employees under the Temporary Wage Subsidy Scheme (TWSS) are liable to Income Tax and the Universal Social Charge (USC). However, in keeping with the Government’s objective of getting much needed assistance to employees during the period of the crisis, the subsidy payments are not taxable in real-time through the PAYE system. Instead, employees will be liable to tax and USC on the subsidy amount paid to them by way of review at the end of the year.
It is not possible for Revenue to quantify the likely amount of tax to be received from employees arising from the TWSS payments at this point in the year. This will require assessment at year end of those who benefitted from the scheme, including their length of time on the scheme, the amounts of subsidy received, and any other income earned over the course of 2020.
When an end of the year tax review takes place, it may be the case that an employee’s unused tax credits will cover any further liability that arises. Where this is not the case, Revenue has informed me that it is normal practice to collect any tax and USC owing in manageable amounts by reducing an individual’s tax credits for a future year(s) in order to minimise any potential financial hardship. Additionally, if an individual has any additional tax credits to claim, for example health expenses, this may also reduce any tax owing.
Revenue has assured me that it will adopt a fair and reasonable approach to the collection of any tax owed arising from the TWSS, having regard to the financial circumstances of the persons concerned.
