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Covid-19 Pandemic Supports

Dáil Éireann Debate, Wednesday - 21 April 2021

Wednesday, 21 April 2021

Questions (528)

David Cullinane

Question:

528. Deputy David Cullinane asked the Minister for Finance the reason PAYE workers who were on the temporary wage subsidy scheme or the employment wage subsidy scheme but file taxes jointly with a self-employed person must pay tax due on the temporary wage subsidy scheme or the employment wage subsidy scheme payment in lump sum and not through tax credits as promised; if he will facilitate this for PAYE workers who file jointly with self-employed persons; and if he will make a statement on the matter. [20295/21]

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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. 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.

I am advised by Revenue, that self-assessed taxpayers whether single or jointly assessed operate to different rules than PAYE taxpayers. The system to collect any underpayment from self-assessed taxpayers from their employment income in the same manner as happens for PAYE workers, such as by reducing the person’s tax credits over a number of years does not exist. A commitment to self-assessed taxpayers about the availability of collecting any tax liability by reducing tax credits over 4 years was not provided; instead Finance Act 2020 included income tax 2020 liabilities (including TWSS liabilities for self-assessed taxpayers) in the debt warehousing programme.

In the case of a PAYE worker who is jointly assessed with a self-employed person, any undercharges of tax and USC arising in 2020 from the TWSS are determined when the couple’s income tax return for the year is submitted. This return is due by 31 October 2021 (with a short extension provided for taxpayers who file electronically) and, in general, any balances due in such cases are settled by direct payment of the amount in question to the Collector General.

However, as the couple is subject to self-assessment and, provided they meet the conditions for income tax warehousing, they can warehouse all liabilities including any tax and USC liabilities relating to the PAYE worker’s TWSS payments. The general terms of the scheme as they apply to income tax can be found in section 3.2 of the Information Booklet on Debt Warehousing - https://www.revenue.ie/en/corporate/communications/documents/debt-warehousing-reduced-interest-measures.pdf.

This facility is not available to a couple whose income is taxed exclusively through the PAYE system. If the self-assessed couple does not qualify for debt warehousing for whatever reason, they should contact Revenue to discuss their options to repay the liability, including their capacity to agree a phased payment arrangement. Revenue is always willing to discuss the payments of arrears with taxpayers and to come to arrangements to ensure that mutually acceptable outcomes are achieved.

Regarding the Employment Wage Subsidy Scheme (EWSS), this was legislated for under the Financial Provisions (Covid-19) (No. 2) Act 2020. The specific nature and terms of the EWSS are separate and distinct from the TWSS. EWSS re-establishes the normal requirement to operate PAYE and normal PRSI on all payments made to the employee by the employer. Employers operate payroll as normal and report employer and employee deductions based on the employee’s appropriate existing tax credits and rate band; this ensures that payroll deductions operate as normal. I am advised by Revenue that no additional tax liability on the salary payments made should accrue to employees.

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