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Covid-19 Pandemic Supports

Dáil Éireann Debate, Wednesday - 21 April 2021

Wednesday, 21 April 2021

Questions (504)

Neale Richmond

Question:

504. Deputy Neale Richmond asked the Minister for Finance if he has considered encouraging employers who are financially able to help contribute to employees tax bills garnered as a result of the temporary wage subsidy scheme to alleviate the burden on workers; and if he will make a statement on the matter. [19412/21]

View answer

Written answers

The Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020. It was legislated for in Section 28 of the Emergency Measure in the Public Interest (Covid-19) Act 2020 and was an emergency measure to deal with the impact of the Covid-19 pandemic on the economy. Over 66,500 employers were supported through the TWSS in respect of more than 664,000 employees at a cost of €2.9bn. The Scheme operated until 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.

It will be recalled that in order to maximise the financial support provided to recipients, income tax and the Universal Social Charge (USC) on TWSS payments was not collected in real-time through the PAYE system and instead the liability for the 2020 tax year was determined at the end of the year by Revenue through the regular ‘end year review’ process.

Revenue made a Preliminary End of Year Statement available to all employees from 15 January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Social Protection, as well as their tax credit entitlements. For the tax year 2020, the Statement also includes information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement provides employees with a preliminary calculation of the tax and USC position for 2020 and indicates whether their tax position is balanced, underpaid, or overpaid for the year.

Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees have an opportunity to complete their income tax return for 2020, declaring any additional income and claiming any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.

When a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.

Revenue has also confirmed that it will facilitate employers who wish to pay the income tax and USC liabilities of their employees where such liabilities arise from the TWSS. Details of these arrangements are available on the Revenue website at www.revenue.ie/en/employing-people/twss/employers/index.aspx. Should an employer wish to pay these liabilities on behalf of their employees, on an exceptional, once-off basis and subject to certain conditions, Revenue will not apply the Benefit-in-Kind rules that would usually apply where employers make payments of this nature on behalf of their employees.

It should be noted that employers paying amounts to settle employee income tax liabilities will not be entitled to the usual tax deduction in respect of such payments, as the payments would not be regarded as wholly and exclusively incurred for the purposes of the employer’s trade or profession.

To prevent any abuse of this arrangement, while still allowing the employer sufficient time to consider the option on behalf of their employees, this facility is limited to payments made by employers on behalf of their employees up to end June 2021.

I would encourage any employers who are in a position to discharge such liabilities on behalf of their workers to do so, but I also acknowledge that the question of whether an employer pays the income tax/USC owed by employees in respect of the TWSS is a matter between the employer and the relevant employee.

In this regard, an individual’s entitlements and rights in an employment context, the amount of wages that an employer may be legally obliged to pay employees in respect of hours worked as well as an employer’s capacity to pay wages to employees in light of the impact of the Covid-19 pandemic on the employer’s business are all matters that are outside the remit of TWSS.

The EWSS, which replaced the TWSS from 1 September 2020, re-established the normal requirement to operate PAYE on all employee salaries, providing for the regular deduction and remittance of income tax, USC and employee PRSI.

Question No. 505 answered with Question No. 503.
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