Dáil Éireann Debate, Tuesday - 9 June 2020
69. Deputy Michael McGrath asked the Minister for Finance the expected tax due from the pandemic unemployment payment for 2020; the way in which the Revenue Commissioners plan to collect this tax; and if he will make a statement on the matter. [10313/20]
View answerPayments made under the Pandemic Unemployment Payment (PUP) Scheme are income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages and payments made under the PUP scheme are subject to income tax. However, tax will not be collected in real-time while the scheme is in operation. This is in keeping with the Government’s intention to get much needed financial support into the hands of affected workers as quickly as possible.
I have been advised by Revenue that, at this stage, it is not possible to quantify the likely amount of tax to be received from persons in receipt of the PUP. This will require assessment at year end, to consider their length of time on the PUP Scheme, the amount of payments received, and any other income earned over the course of 2020. The taxation position will follow the general taxation rule for social welfare payments and, thus, while liable to income tax, the payments will be exempt from PRSI and the Universal Social Charge. This will be the case whether the recipient of the PUP is a former PAYE worker or a person who was previously self-employed.
While not liable to tax in real time under the PAYE system, the liability to tax on payments under the PUP Scheme will instead normally be determined by way of review at the end of the tax year. I am advised by Revenue that when an end of the year review takes place, it may be the case that an employee’s unused tax credits will cover any further liability that may arise as a result of taxation of PUP payments. Where this is not the case and should a tax liability arise, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for a future year or future years in order to minimise any hardship. Additionally, if an individual has any additional tax credits to claim, for example health expenses, this will also reduce any tax that may be owing. I have been assured by Revenue that they will be adopting a fair and flexible approach to collecting tax due on payments made under the PUP scheme.
