Cathal Crowe
Question:315. Deputy Cathal Crowe asked the Minister for Finance if he will clarify the situation regarding the rumoured tax bill at the end of the year for those on the temporary wage subsidy scheme. [15967/20]
View answerTuesday, 14 July 2020
Questions (315)
Written answers
Section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides for the Temporary Wage Subsidy Scheme (TWSS). The scheme is designed to maintain the relationship between employers and employees and minimise the impact on the economy to the greatest extent possible during the public health restrictions necessitated by the COVID-19 pandemic.
Payments made under the TWSS are income supports and share the characteristics of income and so are subject to income tax. The TWSS is also subject to USC, however, it is exempt from PRSI charges.
While the TWSS is not being taxed in real-time through the PAYE system, recipients may become liable for income tax and USC at the end of the year, which will be calculated by Revenue through the employee End of Year Review process.
The level of tax and USC due by any person at year end in respect of TWSS may be reduced or eliminated by the amount of unused tax credits available. Any liability due may also be further reduced if the person has additional tax credits, for example health expenses, to offset. Revenue has also very recently placed all recipients of the TWSS on the ‘week 1 basis’ of taxation for the remainder of 2020 to ‘preserve’ unused tax credits that can then be used to offset any tax or USC liabilities that arise.
Revenue has also assured me that if any tax and USC liabilities still arise following the allocation of unused credits, it will work with the persons impacted upon to collect the outstanding liabilities over an extended period. This will be achieved by reducing their tax credits for future years, thereby minimising any financial hardship to the greatest extent possible.
I am advised by Revenue that the final calculation of the end of year liability for each person is dependent on a range of factors, including a person’s civil status, the available tax credits, the actual amounts received during the year under the TWSS, any top-up payments made by the employer, as well as other entitlements and credits, such as health expenses. As there are considerable differences in each person’s tax circumstances, it is not yet possible to provide details of the estimated undercharges (if any) arising from the taxation of TWSS. It is also not yet possible to estimate the numbers of taxpayers who may have such undercharges as these details will not be available with any degree of accuracy until after the year end.