Willie O'Dea
Question:233. Deputy Willie O'Dea asked the Minister for Finance if he will address a series of issues raised in correspondence (details supplied); and if he will make a statement on the matter. [10567/21]
View answerWednesday, 24 February 2021
Questions (233)
Written answers
The Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020 to provide income support to eligible employees where the employer’s business activities were negatively impacted by the COVID-19 pandemic. This scheme ended on 31 August 2020 and was replaced by the Employer Wage Subsidy Scheme (EWSS) from 1 September 2020.
The transitional phase of TWSS operated until 3 May 2020 and provided a subsidy of 70% of the average net weekly pay up to a maximum of €410 in respect of eligible employees. The operational phase of the scheme was introduced from 4 May 2020 and included increased subsidy rates up to 85%, to a maximum subsidy payment of €410. The operational phase also included a tapering mechanism that ensured the subsidy payment plus any additional payment by the employer did not exceed the employee’s ‘normal’ average weekly wage (ARNWP). This ARNWP, was calculated using the pay and tax details as reported to Revenue in the employer’s payroll submission for each pay date in January and February 2020.
Under the TWSS the employer was expected to make best efforts to maintain employees’ net income for the duration of the scheme. However, there was no legal requirement for an employer to pay an additional gross (top up) payment that fully or partially made up the difference between the amount provided by the subsidy scheme and the employee’s normal wage (ARNWP). The TWSS legislation also required employers to separately identify subsidy payments on employee payslips from any top-up payments made.
Regarding an employee’s ultimate tax liability, the TWSS payments were subject to income tax and the Universal Social Charge (USC) but were taxed at the end of the year rather than the normal (real-time) manner that operates through the PAYE system. Any top-up payments made by the employer continued to be taxed in real-time. The EWSS has re-established the practice of operating PAYE in the normal (real-time) manner and will not result in employees having tax/USC undercharges at year-end for 2021.
Revenue provided a 2020 Preliminary End of Year Statement to all employees in January 2021, including those who were in receipt of the TWSS. The preliminary statement sets out the detail of the employee’s income for the year according to the payroll submissions received from the employer and includes any TWSS payments received. The statement also provides a preliminary calculation of the income tax and USC position for 2020 and indicates whether their tax position is balanced, underpaid or overpaid for the year. The employee can then claim any additional benefits, for example, health expenses, to arrive at the final liability for 2020. Where a tax liability still exists, after all tax credits have been allocated, the amount owed can be paid as single payment or can be paid over four years from 1 January 2022 (interest free) by reducing the employee’s tax credits.
Revenue has advised me that the employer in question operated the TWSS on behalf of its employees from 3 April 2020 to 31 August 2020. Following a review of the matter, Revenue is satisfied that the business operated the scheme correctly and took account of any top-up payments made to the employees in calculating the amount of subsidy due, having regard to each employee’s ARNWP.