Dáil Éireann Debate, Wednesday - 3 February 2021
200. Deputy Seán Haughey asked the Minister for Finance the reason an employee (details supplied) who was on the temporary wage subsidy scheme recently received a tax bill for 2020; if it is open to them to query this bill given their circumstances; and if he will make a statement on the matter. [5666/21]
View answerThe Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020 to provide income support to eligible employees where their employer’s business activities were negatively impacted by the COVID-19 pandemic. The scheme operated until 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.
TWSS payments were liable to income tax and USC in the same way as ‘normal’ wages. This ensures consistent treatment with other workers whose pay was not subsidised by the State, including those in receipt of pay commensurate with the levels of income paid out under the measures such as minimum wage workers.
However, these liabilities were not deducted from payroll in the usual manner during 2020 and instead became due at year end. This decision was taken in order to maximise the amount of financial support that was provided to recipients at a time when it was considered that they needed such support most.
It is important to note that some employees in receipt of the TWSS received tax and USC refunds during 2020 because their subsidy payments were not taxed in real-time and the cumulative system of tax deduction calculated that refunds were due to them based on their income and tax deductions at each pay date.
According to Revenue’s records, the person in question had two active employments in 2020, with one employer participating in the TWSS. The person received TWSS payments of €350 per week through this employer for seventeen weeks during the period 2 April 2020 to 30 July 2020. The only exception was for the pay date of 11 June 2020 where the person did not receive a subsidy payment. The person also received varying ‘top-up’ payments from the employer during the period, which were taxed in real-time through the PAYE system.
The person submitted his 2020 Income Tax return on 9 January 2021 and, based on the information provided, a final Statement of Liability issued to him on 16 January 2021, confirming an underpayment for the year.
While Revenue is satisfied that the underpayment calculations are correct, it has confirmed that it will make direct contact with the person to explain how the liability arose. Revenue will also assure the person that the amount will be collected, interest free, over a four-year period beginning in January 2022 by reducing his tax credits for those years.
