Dáil Éireann Debate, Tuesday - 11 May 2021
228. Deputy John McGuinness asked the Minister for Finance if he will review the concession put in place by the Revenue Commissioners relative to the payment of tax due by employees arising from the temporary wage subsidy scheme allowing the employer to pay the tax without any benefit-in-kind implications for the employee; if so, if categories of employees (details supplied) will be included; and if he will make a statement on the matter. [23798/21]
View answerThe 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-a9 pandemic on the economy. Over 66,600 employers were supported through the TWSS in respect of more than 664,500 employees at a cost of €2.8bn. 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, tax on TWSS payments was not collected in real-time through the PAYE system and that 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 income tax and Universal Social Charge (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 previously confirmed that it is facilitating employers who wish to pay the tax liabilities of their employees where such income tax and USC 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 (BIK) rules that would usually apply where employers make payments of this nature on behalf of their employees.
Revenue has informed me that in order to facilitate employers who wish to make good their employees' liabilities and ensure they have the fullest information available following the TWSS Reconciliation process, this concessional treatment is extended to run until end September 2021.
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.
Revenue has also recently clarified that the BIK concession will apply where an employer pays the tax and USC liabilities of an employee who is a self-assessed taxpayer or, in joint assessed cases, if the employee's spouse is self-assessed.
Revenue also confirmed that the BIK concession will apply where an employer pays the tax and USC liabilities of a proprietary director(s) in the company, provided that the employer pays the TWSS related liabilities of all employees in the company.
Full details are available on Revenue's website in Revenue eBrief No. 097/21 - https://www.revenue.ie/en/tax-professionals/ebrief/2021/no-0972021.aspx
